Exhibit 10.41

EXECUTION COPY

Umbrella Transitional Services Agreement

between

NXP B.V.

and

DSP Group Ltd.

and

DSP Group, Inc.

 

  

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Contents

 

    

Clause

   Page 1.    DEFINITIONS    4 2.    MASTER AGREEMENT AND SERVICE LEVEL
AGREEMENTS    6    2.1    Master Agreement    6    2.2    Service Level
Agreements    6    2.3    Management of Service Level Agreements    8   
2.4    Performance by Affiliates    8 3.    SERVICES, STANDARD OF PERFORMANCE
AND THIRD-PARTY       SERVICE PROVIDERS    8    3.1    Cost    8   
3.2    Standard of Performance    8    3.3    Downtime    9   
3.4    Third-Party Service Providers    9    3.5    Notice period for
outsourcing    10    3.6    11 4.    INVOICING AND PAYMENT    11    4.1    11   
4.2    11    4.3    11    4.4    11    4.5    Cash neutral principle    11   
4.6    Taxes    12    4.7    Parent Guarantee    12 5.    COOPERATION; RECORDS;
ACCESS; CONSENTS    12    5.1    Cooperation    12    5.2    Records    12   
5.3    Access    12    5.4    Consents    13 6.    TERM AND TERMINATION OF
SERVICES    13    6.1    Term    13    6.2    Interdependancy    13   
6.3    Material breach    14    6.4    Effect of termination    14 7.   
INTELLECTUAL PROPERTY RIGHTS    14 8    LIABILITY    14

 

  

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   8.1    No Implied Warranty    14    8.2    No Liability    15 9.    FORCE
MAJEURE    15    9.1    Force Majeure    15    9.2    Force Majeure consequences
   16 10.    CONFIDENTIALITY    16    10.1    16    10.2    16    10.3    17   
10.4    17    10.5    17    10.6    17 11.    DISPUTE RESOLUTION PROCEDURE;
APPLICABLE LAW    17    11.1    Dispute resolution    17    11.2     Applicable
law    17 12.    FURTHER ASSURANCES    17 13.    MISCELLANEOUS    18   
13.1    Notices    18    13.2    Binding effect; amendments and waivers    20   
13.3    Assignment    21    13.4    Waiver    21    13.5    Invalidity    21   
13.6    Third-party rights    21    13.7    Headings    21    Schedules      
Schedule 1         Certain Services       Schedule 2         Service Level
Agreements   

 

  

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THE UNDERSIGNED:

 

(1) NXP B.V., a private company with limited liability incorporated under the
laws of the Netherlands, with corporate seat in Eindhoven, the Netherlands, and
having its address at High Tech Campus 60, 5656 AG Eindhoven, the Netherlands
(“NXP”),

and

 

(2) DSP Group Ltd., a private company with limited liability incorporated under
the laws of Israel, with corporate seat in Herzeliya, Israel, and having its
address at 5 Shenkar Street, Herzeliya, 46120, Israel, entering into this
Agreement on behalf of itself and its wholly-owned Affiliates (collectively, the
“Purchaser”),

and

 

(3) DSP GROUP, Inc., a company incorporated under the laws of the State of
Delaware, United States of America, having its address at 2580 North First
Street, Suite 460, San Jose, CA 95131, United States of America (“Purchaser
Parent”),

WHEREAS:

 

(A) NXP, the Purchaser Parent and the Purchaser have entered into a Share and
Business Sale Agreement dated 3 September 2007 (the “SBSA”) relating to the
Operations (as defined in the SBSA);

 

(B) NXP is willing to provide or to have its Affiliates or Third-Party Service
Providers provide certain services to the Purchaser or its Affiliates in
accordance with the terms of this Agreement;

IT IS AGREED AS FOLLOWS:

 

1 DEFINITIONS

Specific definitions

For the purposes of this Agreement, the following terms shall have the meanings
set forth below:

“Additional Services” shall have the meaning as set forth in clause 2.2.

“Affiliate” shall have the same meaning as set forth in the SBSA.

“Agreement” means this agreement between NXP, the Purchaser Parent and the
Purchaser, including all Schedules thereto and any and all service level
agreements related to the Services to be entered into pursuant to this
Agreement, if any, but are not otherwise set forth as annexes to Schedule 2.

 

  

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“Allocation Key” shall have the meaning as set forth in clause 3.1.

“Business Day” means a calendar day, other than a Saturday or a Sunday, on which
commercial banks in Amsterdam, the Netherlands and New York City, New York,
United States of America, are generally open for business.

“Closing Date” shall have the same meaning as set forth in the SBSA.

“Confidential Information” shall have the meaning as set forth in clause 10.1.

“Continued Operations” shall have the same meaning as set forth in the SBSA.

“Force Majeure” shall have the meaning as set forth in clause 9.1.

“Governmental Authority” means any government or any agency, bureau, board,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.

“IPTLA” shall mean the Intellectual Property Transfer and License Agreement
between NXP, Purchaser Parent and Purchaser.

“MSCA” shall mean the Manufacturing Services Collaboration Agreement between
NXP, Purchaser Parent and Purchaser.

“NXP” shall have the meaning as set forth in the preamble of to this Agreement.

“Operations” shall have the meaning as set forth in Whereas (A).

“Parties” means the parties to this Agreement and “Party” means any one of them
as the case may be.

“Person” means an individual, a company or corporation, a partnership, a limited
liability company, a trust or other entity, organisation or unincorporated
association, including a Governmental Authority.

“Project Manager” shall have the meaning set forth in clause 2.3.

“Purchaser” shall have the meaning as set forth in the preamble to this
Agreement.

“Purchaser Parent” shall have the meaning set forth in the preamble to this
Agreement.

“SBSA” shall have the meaning as set forth in Whereas (A).

“Service Level Agreements” means (i) the service level agreements in effect as
of the Closing Date and attached as annexes to Schedule 2 and (ii) any and all
other service level agreements related to the Services to be entered into
pursuant to this Agreement, if any.

“Services” means (i) the services listed in Schedule 1, (ii) the services
provided by NXP or its Affiliates or Third-Party Service Providers to the
Purchaser or its Affiliates under the Service Level Agreements, (iii) any
services not specifically described in Schedule 1 or under Service Level
Agreements but that are inherent to or a necessary part of the services
described therein, or are reasonably required for proper performance or
provision of such services and (iv) such other services relating to the
Operations that the Purchaser may reasonably request from NXP which services NXP
currently provides to its Affiliates or other

 

  

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business lines of NXP, unless (with respect to item (iv)) such services cannot
be, or cannot be reasonably provided. For the avoidance of doubt: except as
otherwise agreed between the Parties as otherwise provided for in Schedule 1 or
as otherwise provided for in the Service Level Agreements, the Services shall
not include any services which are already provided to the Operations by a third
party immediately prior to and/or on the Closing Date and the Parties
acknowledge and agree that (i) with respect to any Contract (as defined in the
SBSA) with respect to such services, [*] shall apply and (ii) with respect to
any Umbrella Contract (as defined in the SBSA) [*] shall apply.

“Taxation” or “Tax” means all forms of taxation, whether direct or indirect,
including, without limitation, income, gross receipts, windfall profits, value
added, service, severance, property, production, sales, use, duty, license,
excise, franchise, employment, withholding or similar taxes, (including, without
limitation, social security contributions and any other payroll taxes), together
with any interest, additions or penalties with respect thereto imposed by any
governmental, taxing or other authority responsible for the imposition,
administration or collection of any Tax and any interest in respect of such
additions or penalties.

“Tax Authority” means any taxing or other authority competent to impose any
liability in respect of Taxation or responsible for the administration and/or
collection of Taxation or enforcement of any law in relation to Taxation.

“Third-Party Service Provider” means any person or entity other than NXP or its
respective Affiliates (including their respective employees) providing Services
to the Purchaser or its respective Affiliates in connection with this Agreement.

 

2 MASTER AGREEMENT AND SERVICE LEVEL AGREEMENTS

 

2.1 Master Agreement

This Agreement is a master agreement which sets out the general terms and
conditions relating to the provision of the Services from NXP (or its relevant
Affiliates or Third-Party Service Providers) to the Purchaser (or its relevant
Affiliates).

 

2.2 Service Level Agreements

 

  2.2.1  Certain Services are set out in Schedule 1. For each other Service, NXP
(or its relevant Affiliate) and the Purchaser (or its relevant Affiliate) have
concluded or will enter into a Service Level Agreement, the form of which is
attached hereto as Schedule 2 of this Agreement.

 

  2.2.2  If the Purchaser desires to extend the term of any Service (or any part
thereof) or to add any additional service (collectively, the “Additional
Services”) arising out of or relating to the Services, the following shall
apply:

 

  (a) the Purchaser shall give NXP at least thirty (30) days (and in any event
sufficient) prior written notice, which shall include reasonable details
relating thereto;

 

  (b) the Purchaser and NXP shall negotiate in good faith whether and on what
terms NXP shall provide (if at all) any such extended term or any such
Additional Service; and

 

  

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  (c) the Parties acknowledge and agree that NXP at its sole discretion can
reject or consent to any extended term or Additional Service - but only after
NXP has fully complied with its obligation to negotiate in good faith as stated
above - and provided that NXP shall not unreasonably withhold its consent to the
extension of any such term or provision of any such Additional Service if such
extension or Additional Service were inadvertently or unintentionally omitted
from Schedule 1 or a Service Level Agreement as of the Closing Date or is
essential to effectuate an orderly transition of the Operations in accordance
with the SBSA. Notwithstanding the foregoing - but subject to the absence of any
contractual restrictions prohibiting the extension of any term or provision of
an Additional Service - NXP shall comply with the Purchaser’s request for the
extension of the term of such Service (or any part thereof) or the provision of
any Additional Service, if such request is as a result of a material breach by
NXP or any of its Affiliates or any Third-Party Service Provider engaged
pursuant to Section 3.4.2 in the provision of such Services, or the provision of
such Service in accordance with the service levels, pursuant to this Agreement
or a Service Level Agreement under this Agreement.

The applicable Service Level Agreement shall thereafter be amended to include
the extended term or a separate Service Level Agreement shall be entered into to
add the Additional Service. Upon execution of such amendment or new Service
Level Agreement, any Additional Service shall be deemed to be a “Service” for
all purposes hereunder.

 

  2.2.3  The Parties acknowledge and agree that the Services include any
ancillary services, functions or responsibilities not specifically described in
this Agreement (including in Schedule 1), but which are required for the proper
performance and delivery by NXP (or its Affiliates or any Third-Party Service
Provider arranged by NXP in accordance with clause 3.4.2) of - and form an
essential part of - the Services listed in Schedule 1 or set forth in a Service
Level Agreement attached in Schedule 2, including those that are an inherent
part or subpart thereof. Such ancillary services which are an essential part of
the Services referred to in Schedule 1 or set forth in a Service Level Agreement
attached in Schedule 2, will not be deemed to be an Additional Service, and
there will be no separate charge for such ancillary services; rather the price
for such ancillary services shall be included in the charge for the particular
Service referred to in Schedule 1 or set forth in a Service Level Agreement
attached in Schedule 2,of which such ancillary service is a part.

 

  2.2.4  In the event that the terms of this Agreement conflict with the terms
of an individual Service Level Agreement, the terms of the Service Level
Agreement shall prevail.

 

  

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2.3 Management of Service Level Agreements

Each Party shall designate a project manager (a “Project Manager”) to report and
discuss issues with respect to the provision of the Services. The Project
Managers shall meet to discuss the performance of the Services as often as the
Parties deem necessary to ensure the orderly provision of the Services, and in
any event at least bi-annually, and shall have authority to address and remedy
problems related to the provision of the Services. Each Party shall designate
successor Project Managers in the event that a designated individual is not
available to perform such role hereunder.

 

2.4 Performance by Affiliates

NXP and the Purchaser shall procure that their relevant Affiliates and any
Third-Party Service Provider arranged by NXP in accordance with clause 3.4.2
shall perform their relevant obligations in accordance with this Agreement.

 

3 SERVICES, STANDARD OF PERFORMANCE AND THIRD-PARTY SERVICE PROVIDERS

 

3.1 Cost

 

  3.1.1  NXP (or its relevant Affiliates) shall provide the Services to the
Purchaser (or its relevant Affiliates) and the Purchaser (or its relevant
Affiliates) shall obtain the Services from NXP (or its relevant Affiliates) at
the costs determined pursuant to the Allocation Keys (as defined below) - unless
the nature of a Service changes materially due to the separation of the
Operations and the different cost structure reflecting the material change in
the nature of the Service is agreed upon in the relevant Service Level Agreement
- and at the conditions set forth in the Service Level Agreements, whereby the
following cost principles shall apply:

 

  (a) For any Services that NXP is currently providing to the Operations - [*];

 

  (b) For any Services other than those set forth in clause 3.1.1(a) – [*]; and

 

  (c) With respect to the provision of Services after 2008, [*].

 

  3.1.2  The Purchaser and NXP have mutually agreed upon allocation keys
applicable for each Service in each relevant jurisdiction as set forth in the
relevant Service Level Agreements attached in Schedule 2 (the “Allocation
Keys”).

 

3.2 Standard of Performance

Unless (i) a different performance standard is set forth in the applicable
Service Level Agreement, or (ii) the nature of a Service changes materially due
to the separation of the Operations and the different performance standard
reflecting the material change in the nature of the Service is agreed upon in
the relevant Service Level Agreement, NXP agrees to provide the Services in
substantially the same manner and at the same level as such Services were
performed by NXP (and/or its Affiliates or Third Party Service Providers
arranged by NXP in accordance with clause 3.4.2) for the Operations prior to the
date hereof, including (to the extent applicable) with respect to level of
service, priority of service, timeliness and quality and in any event in a
professional and workmanlike manner, using

 

  

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personnel with sufficient training and expertise. Subject to clause 9 (Force
Majeure), NXP shall give the Services substantially the same priority as it
accords its own operations. In the event the Purchaser brings to the attention
of NXP any alleged failure by NXP, its Affiliates or a Third-Party Service
Provider arranged by NXP in accordance with clause 3.4.2 to meet, in whole or in
part, a service level, the Project Manager appointed by NXP shall (i) promptly
investigate and notify the Purchaser of the cause of the alleged problem,
(ii) use commercially reasonable efforts to correct the problem, if any, at no
additional cost to the Purchaser, and to resume meeting the service levels as
promptly as practical and (iii) reasonably advise the Purchaser of the status of
the remedial efforts being undertaken with respect to the problem.

 

3.3 Downtime

In respect of IT Services provided hereunder, NXP shall provide the Purchaser
reasonable notice of any scheduled interference with NXP’s operating or other
systems, including downtime for network maintenance, which is reasonable likely
to interrupt the performance of or the availability of equipment necessary for
the provision of any Service. In connection herewith, the Parties acknowledge
and agree that the Purchaser shall not experience more downtime (pro rata) than
other NXP businesses which make use of the same systems. In line with the
current situation, the Purchaser shall also be obliged to pay any fees with
respect to any period that the Services are interrupted (and hence not provided)
due to scheduled interference with NXP’s operating or other systems.

 

3.4 Third-Party Service Providers

NXP may provide the Services directly (i.e. by means of its or its Affiliates’
own employees) or arrange for a Third-Party Service Provider to provide the
Services. In this respect, the following arrangements apply:

 

  3.4.1  Services already provided by a third-party service provider within the
one month period prior to the Closing Date

Except as otherwise agreed between the Parties herein or as otherwise provided
for in the Service Level Agreements, the Services shall not include any services
which are already provided to the Operations by a third party within the one
month period prior to the Closing Date and the Parties acknowledge and agree
that (i) with respect to any Contract (as defined in the SBSA) with respect to
such services, [*] shall apply and (ii) with respect to any Umbrella Contract
(as defined in the SBSA) [*] shall apply.

 

  3.4.2  Services provided by Third-Party Service Providers after the Closing
Date (outsourcing)

Subject to compliance with the terms below, after the Closing Date, NXP is
entitled to arrange that certain Services provided by NXP or its Affiliate to
the Purchaser or its Affiliates will be provided by a Third-Party Service
Provider (in stead of NXP or its Affiliate) for the remainder of the term of the
relevant Services; provided, however, that the use of a Third-Party Service
Provider to provide the Services shall not relieve NXP of its obligations to
provide the Services, if such Third-Party Service Provider fails to provide the
Services or fails to provide the Services pursuant to the service levels agreed
upon in this Agreement or the relevant Service Level Agreement under this
Agreement.

 

  

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For Services that relate to the Operations and to other operations of NXP, at
the request of the Purchaser, the Parties will continue to share these Services
at terms to be agreed upon with the Third-Party Service Provider.

In case of an outsourcing as set forth under this sub-clause 3.4.2, the
following conditions will apply:

 

  (a) With respect to any outsourced Services that only relate to the Operations
(the “Outsourced Dice Services”): the Purchaser expressly agrees with the
appointment of the Third-Party Service Provider prior to the appointment. For
the avoidance of doubt, this sub-clause (a) does not apply to any Outsourced
Shared Services.

 

  (b) With respect to any Services that relate to the Operations and to other
operations of NXP (the “Outsourced Shared Services”): [*].

 

  (c) With respect to any Outsourced Dice Services: [*].

 

  (d) NXP will make a copy of this Agreement available to the Third-Party
Service Provider and will enter into enforceable agreements with the Third Party
Service Provider for the remainder of the term of the relevant Services to bind
the Third Party Service Provider to the provisions of this Agreement, including,
without limitation, clauses 5.2 (Records), 5.3 (Access), 7 (Intellectual
Property Rights) and 10 (Confidentiality).

 

  (e) Notwithstanding sub-clauses (b) and (c) above, the standard of Service to
be provided by the Third-Party Service Provider is at least substantially
equivalent in amount and quality to the standard of Service which had otherwise
been provided or is to be provided hereunder by NXP, including with respect to
level of service, priority of service, timeliness and quality, and in accordance
with any relevant Service Level Agreement the Purchaser executed with NXP or its
Affiliates and in any event in a professional and workmanlike manner, using
personnel with sufficient training and expertise.

 

3.5 Notice period for outsourcing

 

  3.5.1  In case of Outsourced Dice Services: NXP shall give the Purchaser not
less than [*] of prior written notice of an intended outsourcing arrangement,
unless, notwithstanding NXP’s use of commercially reasonable efforts, the
provision of prior written notice within [*] cannot be done for certain Services
in which case NXP shall give the Purchaser at least [*] (and in any event
sufficient) prior written notice.

 

  3.5.2  In case of Outsourced Shared Services: NXP shall give the Purchaser not
less than [*] of prior written notice of an intended outsourcing arrangement,
unless, notwithstanding NXP’s use of commercially reasonable efforts, the
provision of prior written notice within [*] cannot be done for certain Services
in which case NXP shall give the Purchaser at least [*] (and in any event
sufficient) prior written notice.

 

  

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3.6 The Purchaser acknowledges and agrees that as promptly as possible after the
Closing Date it will make every commercial effort to arrange for its own
internal workforce or third-party service providers to provide for the
applicable services directly and independently. For the avoidance of doubt: The
Purchaser’s agreement in the prior sentence shall not relieve NXP and/or its
Affiliates or Third Party Service Providers arranged by NXP in accordance with
clause 3.4.2 to provide the Services to the Purchaser pursuant to the terms and
conditions set forth herein pending such transition.

 

4 INVOICING AND PAYMENT

 

4.1 The Purchaser (or Affiliate designated by the Purchaser) shall issue
purchase orders for the agreed Services. All Services provided during any given
month shall be invoiced by NXP to the Purchaser (or Affiliate designated by the
Purchaser) no later than [*] during which such Services were provided and
invoice was submitted to the Purchaser (or Affiliate designated by the
Purchaser), unless specified otherwise in the relevant Service Level Agreement.

 

4.2 Invoices regarding Services provided by an Affiliate or a Third-Party
Service Provider shall be addressed to the Purchaser (or Affiliate designated by
the Purchaser) directly and paid by the Purchaser (or Affiliate designated by
the Purchaser) directly to such Affiliate or Third-Party Service Provider, in
accordance with this clause 4, in so far as the Parties have not agreed on
otherwise in the relevant Service Level Agreement.

 

4.3 Unless contesting and evidencing in good faith the fees set forth on an
invoice, the Purchaser (or Affiliate designated by the Purchaser) shall or shall
procure that any invoice will be paid to NXP (or to its Affiliate or the
Third-Party Service Provider) within [*] of receipt of the invoice. The invoice
shall make reference to the respective purchase order and/or be accompanied by
reasonable documentation supporting the fees owed and explaining the cost of the
Service based upon the Allocation Key (where applicable), and shall set forth
the Services provided, the fees payable for each Service and invoices for
Services provided by NXP’s Affiliates or Third-Party Service Providers, if any.

 

4.4 The Parties shall settle in good faith any dispute with respect to fees or
amounts payable set forth on an invoice. Such dispute shall not free the
Purchaser from its obligation to settle any undisputed amounts due in the period
agreed under this clause 4.

 

4.5 Cash neutral principle

The Parties acknowledge and agree that the economic effect of this Agreement
should be cash neutral for NXP. For the sole purpose of the foregoing, the
Purchaser shall within five (5) Business Days after Closing pay to NXP a
one-time deposit in cash of [*], representing the cost of the provision of all
Services under this Agreement and the Service Level Agreements for [*] period.
The deposited amount will be adjusted on a quarterly basis based on the
projected level of Services that the Purchaser (and its Affiliates) shall
require under this Agreement and the Service Level Agreements for the upcoming
quarter with any increase of the deposited amount to be paid promptly by the
Purchaser to NXP and any decrease of the deposited amount to be paid promptly by
NXP to the Purchaser. Upon termination of the provision of the Services, any
remaining deposited amount, to the extent such amount has not been credited
against any outstanding invoices, shall be reimbursed promptly by NXP to the
Purchaser.

 

  

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4.6 Taxes

If the transactions as described in this Agreement and the Schedules hereto are
subject to any applicable value added tax (VAT), sales Tax or any other similar
Tax required by applicable law and regulations, NXP will be allowed to charge
such Tax to the Purchaser, which will be paid by the Purchaser in addition to
the fees.

 

4.7 Parent Guarantee

The Purchaser Parent hereby:

 

  4.7.1  as a separate and independent obligation, unconditionally and
irrevocably guarantees to NXP, and shall be jointly and severally liable, as
co-principal debtor to NXP for the due and punctual performance and observance
by the Purchaser of all its obligations under or pursuant to this clause 4 and
the invoicing and payment provisions as set out in the Service Level Agreements
(the “Guaranteed Obligations”); and

 

  4.7.2  agrees to indemnify, defend and hold harmless NXP and, as an
irrevocable third party stipulation, all other members of NXP’s group against
all Losses (as defined in the SBSA) which any of same may suffer through or
arising from any breach by the Purchaser of the Guaranteed Obligations.

 

5 COOPERATION; RECORDS; ACCESS; CONSENTS

 

5.1 Cooperation

The Parties agree to fully cooperate in good faith with each other in connection
with the provision of the Services and the matters related to or arising
hereunder, including, without limitation, NXP’s cooperation with the Purchaser
to enable the Purchaser to establish its own infrastructure to perform the
Services independently of NXP as soon as practicable after the Closing Date.

 

5.2 Records

Each of the Parties shall create and maintain full and accurate books in
connection with the provision of the Services. For a period of no less than [*],
the Parties will maintain, in accordance with their standard document retention
procedures, documentation supporting the information relevant to price
calculations contained in the Service Level Agreements and cooperate with each
other in making such information available as needed in the event of a Tax audit
in any country.

 

5.3 Access

Subject to the Parties’ third-party confidentiality obligations, each Party
shall make available to the other Party during regular business hours (upon
reasonable prior notice) (i) all personnel designated by the Party to oversee
the Services, and (ii) all books and records maintained by the Party in
connection with this Agreement.

 

  

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5.4 Consents / Grace Period

 

  5.4.1  Except as otherwise agreed between the Parties herein or as otherwise
provided for in the Service Level Agreements, the Services shall not include any
services which are already provided to the Operations by a third party within
the one month period prior to the Closing Date. The Parties acknowledge and
agree that (i) with respect to any Contract (as defined in the SBSA) with
respect to such services, [*] shall apply and (ii) with respect to any Umbrella
Contract (as defined in the SBSA) [*] shall apply.

 

  5.4.2  With respect to the provision of the Services by a Third-Party Service
Provider pursuant to clause 3.4.2 (i.e. outsourcing), NXP shall be responsible
to obtain any consent necessary for the performance of the Services under this
Agreement by such Third-Party Service Provider which Services are deemed
critical between the Parties, including without limitation, any required consent
under any real property lease and Purchaser shall [*].

 

6 TERM AND TERMINATION OF SERVICES

 

6.1 Term

This Agreement shall become effective on the Closing Date and, with respect to
each Service, shall automatically terminate on the first anniversary of the
Closing Date, except:

 

  6.1.1  if a different period is set forth in Schedule 1;

 

  6.1.2  if a different period is set forth on an applicable Service Level
Agreement;

 

  6.1.3  if the Agreement is earlier terminated in accordance with clause 6.3;

 

  6.1.4  if the Agreement or a Service is extended in accordance with clause
2.2.2; or

 

  6.1.5  if a Service is earlier terminated in accordance with clause 6.1 below.

Unless otherwise agreed in a Service Level Agreement, the Purchaser may
terminate the provision of any Service by giving NXP [*] prior written notice.
For the avoidance of doubt, none of NXP, an Affiliate of NXP or a Third Party
Service Provider arranged by NXP may terminate the provision of any Service to
the Purchaser (or any of its Affiliates) prior to the end of the term agreed
upon herein with respect to such Service in Schedule 1 or pursuant to the
relevant Service Level Agreement without the Purchaser’s prior written consent.
Further, for the avoidance of doubt, once a Service has been terminated, the
provision of such Service will not recommence unless NXP accepts otherwise.

 

6.2 Interdependency

The Parties acknowledge and agree that if a Service has been terminated and – as
a consequence thereof – other Services can no longer be provided because of the
interdependency between these Services (as determined between the Parties before
the Closing Date in the Service Level Agreements), such other Services shall be
terminated as well.

 

  

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6.3 Material breach

Notwithstanding the other provisions of this clause 6, this Agreement may be
terminated with immediate effect by either NXP or the Purchaser by providing
written notice to the other Party if the other Party has committed a material
breach in the performance of its obligations under this Agreement, which breach
has not been cured within thirty (30) Business Days after giving a written
notice specifying such breach by the non-breaching Party to the breaching Party.
To the extent applicable, individual Service Level Agreements will specify the
conditions deemed to be a material breach with respect to a specific Service.

 

6.4 Effect of termination

 

  6.4.1  Upon termination of this Agreement (i) the Purchaser (or its relevant
Affiliate) shall be obligated to pay NXP (or its relevant Affiliates or the
relevant Third-Party Service Provider) any outstanding and non-contested
invoices for Services performed prior to such termination, and (ii) NXP shall
deliver to the Purchaser all property belonging to the Purchaser (or its
relevant Affiliate) and provided to NXP pursuant to this Agreement.

 

  6.4.2  The following clauses shall survive the termination or expiration of
this Agreement: clauses 7 (Intellectual Property Rights), 8 (Liability), 10
(Confidentiality), 11 (Dispute Resolution Procedure; Applicable Law) and 13
(Miscellaneous).

 

  6.4.3  Termination of a Service or this Agreement pursuant to the terms hereof
shall not act as a waiver of any breach of this Agreement and shall not act as a
release of either Party from any liability for breach of such Party’s
obligations under this Agreement. Termination or expiration of this Agreement
will not affect the rights and obligations of the Parties under any other
agreement between the Parties.

 

7 INTELLECTUAL PROPERTY RIGHTS

The Parties acknowledge and agree that the IPTLA exclusively sets forth the
Parties’ rights and obligations with respect to (any transfer of) intellectual
property rights.

 

8 LIABILITY

 

8.1 No Implied Warranty

Subject to clause 5.4, NXP represents and warrants that (i) it has the full
power and authority to enter into this Agreement and perform its obligations
hereunder, (ii) there is no other existing agreement or duty on NXP’s part that
would interfere with NXP’s ability to effectively perform the Services in
accordance with this Agreement, and (iii) so far as NXP is aware, the Services
do not infringe or misappropriate any Intellectual Property Rights of any third
party. Except as otherwise specifically set forth in this Agreement, NXP (and
its relevant Affiliates) do not provide any warranty, express or implied, to the
Purchaser (or its relevant Affiliates) with respect to the Services and any
other matters set forth in this Agreement. The Parties specifically disclaim any
implied warranty whether as to merchantability, fitness for a particular purpose
or for any other matter.

 

  

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8.2 No Liability

The Parties acknowledge and agree that the primary objective of this Agreement
is to assist the Purchaser with certain Services for a transitional period of
time after the Closing Date. In furtherance hereof, the Parties agree with the
following:

 

  8.2.1  Services provided by NXP or its Affiliate: NXP (or its relevant
Affiliates) shall not be liable to the Purchaser (or its relevant Affiliates)
for any damages, unless such damages incurred or sustained by the Purchaser (or
its relevant Affiliate) result from: (i) gross negligence or wilful misconduct
by NXP (or its relevant Affiliate or Third-Party Service Provider performing
Services pursuant to clause 3.4.2), (ii) the failure by NXP (or its relevant
Affiliate or Third-Party Service Provider performing Services pursuant to clause
3.4.2) to comply fully with its obligations to any of its employees, including,
without limitation, payment of wages, provision of benefits, and payment of
employment Taxes, or (iii) material breach of any covenant contained in this
Agreement by NXP (or its relevant Affiliate or Third-Party Service Provider
performing Services pursuant to clause 3.4.2). In such event, NXP shall only be
liable for direct damages of the Purchaser (or its relevant Affiliate) and in no
event shall NXP be liable, whether in contract or in tort, for any indirect,
incidental, special, consequential or exemplary damages or loss of profits,
whether arising out of warranty or contract, gross negligence, wilful misconduct
or other non-intentional act, or otherwise, except for damages resulting from
fraud or an intentional breach under this Agreement.

 

  8.2.2  Services provided by Third-Party Service Provider: NXP (or its relevant
Affiliate) shall not be liable to the Purchaser (or its relevant Affiliates) for
any damages incurred or suffered by the Purchaser (or its relevant Affiliates)
relating to or arising out of any failure of any third-party service provider
arranged by the Purchaser and/or any Third-Party Service Provider to provide
Services in accordance with clause 3.4.1 of this Agreement. Notwithstanding the
foregoing, if NXP arranges for certain Services previously provided by NXP or
its Affiliates prior to Closing to be provided by a Third-Party Service Provider
after the Closing in accordance with clause 3.4.2 of this Agreement, NXP shall
be liable to the Purchaser for the Third-Party Service Provider’s provision of
the Services during the remainder of the term of the relevant Services to the
same extent as clause 8.2.1 above.

 

9 FORCE MAJEURE

 

9.1 Force Majeure

“Force Majeure” means events beyond the reasonable control of a Party, which are
not reasonable foreseeable and whose effects are not capable of being overcome
without unreasonable expense, or loss of time and such events shall include
(without limitation) civil war, strike, terrorism, acts of government,
industrial espionage, terrorist activities, natural disasters, fire and
explosion.

 

  

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9.2 Force Majeure consequences

 

  9.2.1  Should a Party (or its relevant Affiliate) be affected by a Force
Majeure, it shall inform the other Party in writing specifying the Force Majeure
as well as its expected duration. The affected Party (or its relevant Affiliate)
shall be excused by the other Party from performance under this Agreement or any
Service Level Agreement to the extent the Force Majeure prevents such
performance.

 

  9.2.2  The party claiming benefit of this provision shall attempt in good
faith to resume performance as soon as commercially reasonable provided that in
case a Force Majeure lasts for more than 60 (sixty) days, either Party shall be
entitled to terminate the relevant Service Level Agreement.

 

10 CONFIDENTIALITY

 

10.1 Subject to clause 10.2, each of NXP, its Affiliates and Third Party Service
Providers (performing Services pursuant to clause 3.4.2) shall treat as strictly
confidential and not disclose or use, for any purposes other than performing the
Services, any information of the Purchaser received or obtained as a result of
entering into this Agreement or any Service Level Agreement (or any agreement
entered into pursuant to this Agreement) which relates to the provisions of this
Agreement, any Service Level Agreement and any agreement entered into pursuant
to this Agreement or the negotiations relating to this Agreement (and any such
other agreement) (“Confidential Information”).

 

10.2 Clause 10.1 shall not prohibit the disclosure or use of any Confidential
Information if and to the extent:

 

  (a) required by law or the rules and regulations of any recognised stock
exchange on which the shares of any Party are listed;

 

  (b) required for the purpose of any judicial proceedings arising out of this
Agreement or any other agreement entered into under or pursuant to this
Agreement;

 

  (c) the disclosure is made to a Tax Authority in connection with the Tax
affairs of the disclosing Party;

 

  (d) the disclosure is made to professional advisers of any Party that are
subject to a duty of confidentiality;

 

  (e) the information is or becomes publicly available (other than by breach of
this Agreement);

 

  (f) the other Party has given prior written approval to the disclosure or use;
or

 

  (g) the information is obtained free of any restrictions on use or obligations
of confidentiality from a third party which is itself, to the knowledge of the
disclosing Party, free of any restrictions on use or obligations of
confidentiality with respect to that information;

 

  

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provided that, prior to disclosure or use of any Confidential Information
pursuant to clauses 10.2 (a), (b) or (c), NXP shall promptly notify the
Purchaser of such requirement with a view to providing the Purchaser with the
opportunity to contest such disclosure or use or otherwise to agree the timing
and content of such disclosure or use.

 

10.3 It is understood by the Parties that NXP, its Affiliates and any
Third-Party Service Provider arranged by NXP in accordance with clause 3.4.2, on
the one hand, and the Purchaser and its Affiliates, on the other hand, may
disclose Confidential Information to their respective employees, partners and
agents only on a “need to know” basis and that NXP or the Purchaser, as the case
may be, shall cause itself and its Affiliates and such Third-Party Service
Providers (with respect to NXP) to cause their employees, partners and agents to
treat such Confidential Information confidential pursuant to the terms and
conditions set forth herein.

 

10.4 Each Party acknowledges that the unauthorized disclosure or use of
Confidential Information would cause irreparable harm and significant injury to
the other Party, the degree of which may be difficult to ascertain. Such other
Party is entitled to enforce the terms of this clause 10 by a decree of specific
performance or injunction.

 

10.5 All written documents containing Confidential Information and other
materials in a tangible form received by a Party shall remain the property of
the disclosing Party, and all such documents, together with any copies,
excerpts, or notes thereof, whether received, made, complied or otherwise
obtained by the receiving Party shall be promptly returned or to the extent
these cannot be returned, be destroyed by the receiving Party upon reasonable
request by the disclosing Party or upon termination of this Agreement. The
receiving Party shall provide satisfactory evidence of such destruction promptly
upon such destruction.

 

10.6 This clause 10 in no way qualifies, limits, or otherwise restricts any of
the confidentiality provisions, terms or conditions of any of the other
agreements entered into by and between the Parties, including, without
limitation, the SBSA and the MSCA.

 

11 DISPUTE RESOLUTION PROCEDURE; APPLICABLE LAW

 

11.1 Dispute resolution

The terms in the SBSA in respect of dispute resolution shall apply mutatis
mutandis to this Agreement.

 

11.2 Applicable law

This Agreement shall be governed by the laws of Switzerland.

 

12 FURTHER ASSURANCES

Each of the Parties shall from time to time execute such documents and perform
such acts and things as may be reasonably required to give any Party the full
benefits of this Agreement.

 

  

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13 MISCELLANEOUS

 

13.1 Notices

Notices and other statements in connection with this Agreement and any other
agreement that is connected with this Agreement, unless the Parties expressly
agree otherwise, shall be (i) written in the English language, (ii) delivered by
hand, email, facsimile or courier to the recipient’s address as set forth below
or to such other address as a Party may notify to the other Parties from time to
time and (iii) shall be sent:

 

  

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if to the Seller, to:

Name:

   NXP B.V.

Address:

   High Tech Campus 60    5656 AG Eindhoven

Country:

   The Netherlands

Fax:

   +31 (0)40 274 3399

Email:

   Theo.Claasen@nxp.com

Attention:

   Theo Claasen with a copy to:

Name:

   De Brauw Blackstone Westbroek N.V.

Address:

   Burgerweeshuispad 301    1076 HR Amsterdam

Country:

   The Netherlands

Fax:

   +31 20 577 1775

Email:

   Arne.Grimme@debrauw.com

Attention:

   Arne Grimme

and

   if to the Purchaser to:

Name:

   DSP Group Ltd.

Address:

   5 Shenkar Street    Herzeliya, 46120

Country:

   Israel

Fax:

   +972 9 954 1234

Email:

   ayalon@dsp.co.il

Attention:

   Eli Ayalon

 

  

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with a copy to:

Name:

   Morrison & Foerster, LLP

Address:

   425 Market Street    CA 94105-2482

Country:

   United States

Fax:

   +1 (415) 268 7522

Email:

   bmann@mofo.com

Attention:

   Bruce Alan Mann if to the Purchaser Parent to:

Name:

   DSP Group, Inc.

Address:

   2580 North First Street, Suite 460    San Jose, CA 95131

Country:

   United States of America

Fax:

   +1 (408) 986-4323

Email:

   ayalon@dsp.co.il

Attention:

   Eli Ayalon with a copy to:

Name:

   Morrison & Foerster, LLP

Address:

   425 Market Street    CA 94105-2482

Country:

   United States

Fax:

   +1 (415) 268 7522

Email:

   bmann@mofo.com

Attention:

   Bruce Alan Mann

13.2 Binding effect; amendments and waivers

 

  13.2.1  This Agreement shall not have any legal effect until each Party has
validly executed this Agreement.

 

  13.2.2  No amendment to, or waiver of any provision of, this Agreement shall
be effective unless in writing and signed by or on behalf of each of the
Parties.

 

  

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13.3 Assignment

Except as otherwise expressly provided in this Agreement, no Party may, without
the prior written consent of the other Party (which shall not unreasonably be
withheld), assign, grant any security interest over, hold on trust or otherwise
transfer, in whole or in part, any of its rights and obligations under this
Agreement; provided, however, that the Purchaser may assign this Agreement,
together with all of its rights or obligations under this Agreement, without the
prior written consent of NXP, to any Affiliate of Purchaser. Any purported
assignment, sale, transfer, delegation or other disposition by either Party
except as permitted herein, shall be null and void. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
Parties and their respective successors and permitted assigns, including any
successor entity or parent entity of any Party hereto pursuant to any merger,
acquisition, re-structuring, disposal, change of control, or sale or other
similar transaction. Notwithstanding the foregoing, the Purchaser may at its
costs assign, sell, delegate and otherwise transfer this Agreement and the
Schedules hereto, together with all of the Purchaser’s rights and obligations
hereunder without such approval in connection with a merger, reorganization,
reincorporation into another state, or sale of all, or substantially all, of the
business and assets of the Purchaser Parent, if the assignee agrees to be bound
by all of the terms and conditions of this Agreement to the same extent as the
Purchaser.

 

13.4 Waiver

A Party’s failure to enforce at any time or for any period of time of the
provisions of this Agreement shall not be construed a waiver of such provisions
nor of the right of such Party thereafter to enforce each and every provision
herein contained.

 

13.5 Invalidity

If any provision in this Agreement shall be held to be illegal, invalid or
unenforceable, in whole or in part, under any enactment or rule of law, such
provision or part shall to that extent be deemed not to form part of this
Agreement but the legality, validity and enforceability of the remainder of this
Agreement shall not be affected. To the extent permitted by law, such provision
shall be deemed substituted by provisions (i) that are valid, legal and
enforceable and (ii) the operation and effect of which are as similar as
possible to the provisions for which they substitute.

 

13.6 Third-party rights

Except as expressly provided for in this Agreement, nothing in this Agreement
shall confer any rights upon any Person that is not a Party or the successor or
permitted assignee of a Party to this Agreement.

 

13.7 Headings

The clause, subclauses and paragraph headings contained in this Agreement are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

 

  

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THIS UMBRELLA TRANSITIONAL SERVICES AGREEMENT IS AGREED AND SIGNED BY:

 

NXP B.V.   /s/ Theo Claasen Name:   Theo Claasen Title:   Executive Vice
President, Business Development Date:   September 4, 2007

 

DSP Group Ltd, as the Purchaser       /s/ Eli Ayalon       /s/ Dror Levy By:  
Eli Ayalon     By:   Dror Levy Title:   Chief Executive Officer     Title:  
Chief Financial Officer Date:   September 4, 2007     Date:   September 4, 2007

 

DSP Group Inc., as the Purchaser Parent       /s/ Eli Ayalon       /s/ Dror Levy
By:   Eli Ayalon     By:   Dror Levy Title:   Chief Executive Officer     Title:
  Chief Financial Officer Date:   September 4, 2007     Date:   September 4,
2007

 

  

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ALL SCHEDULES HAVE BEEN DELETED FROM THE REDACTED VERSION OF THE UMBRELLA
TRANSITIONAL SERVICES AGREEMENT

Schedule 1 Certain Services

[*]

 

  

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ALL SCHEDULES HAVE BEEN DELETED FROM THE REDACTED VERSION OF THE UMBRELLA
TRANSITIONAL SERVICES AGREEMENT

Schedule 2 Service Level Agreements

[*]

 

  

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