(g) “*Compensation*” means an Employee’s base salary from the Company or one or more DesignatedParents or Subsidiaries (as reported on the Employee’s Federal Income Tax Withholding Statement(Form W-2) or equivalent thereof), including (A) such amounts of base salary as are deferred by theEmployee (i) under a qualified cash or deferred arrangement described in Section 401(k) of theCode, or (ii) to a plan qualified under Sections 125 or 129 of the Code and(B) sales commissions. Compensation does not include overtime, bonuses, annual awards, otherincentive payments, reimbursements or other expense allowances, fringe benefits (cash or noncash),moving expenses, deferred compensation, third party sick or disability pay, income or gainsattributable to restricted stock, stock options, stock appreciation rights or other similarequity-based compensation, imputed income or other non-cash items, such as life insurance premiumsand similar items, contributions (other than contributions described in the first sentence) made onthe Employee’s behalf by the Company or one or more Designated Parents or Subsidiaries under anyemployee benefit or welfare plan now or hereafter established, and any other payments notspecifically referenced in the first sentence.(h) “*Corporate Transaction*” means any of the following transactions:(1) a merger or consolidation in which the Company is not the surviving entity, except for atransaction the principal purpose of which is to change the state in which the Company isincorporated;(2) the sale, transfer or other disposition of all or substantially all of the assets of theCompany (including the capital stock of the Company’s subsidiary corporations);(3) the complete liquidation or dissolution of the Company;(4) any reverse merger in which the Company is the surviving entity but in which securitiespossessing more than fifty percent (50%) of the total combined voting power of the Company’soutstanding securities are transferred to a person or persons different from those who held suchsecurities immediately prior to such merger; or(5) acquisition in a single or series of related transactions by any person or related groupof persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficialownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more thanfifty percent (50%) of the total combined voting power of the Company’s outstanding securities, butexcluding any such transaction or series of related transactions that the Administrator determinesshall not be a Corporate Transaction.(i) “*Designated Parents or Subsidiaries*” means the Parents or Subsidiaries of the Companywhich have been designated by the Administrator from time to time as eligible to participate in thePlan.(j) “*Effective Date*” means a date selected by the Board in its sole discretion. However,should any Parent or Subsidiary of the Company become a Designated Parent or Subsidiary after suchdate, then the Administrator, in its discretion, shall designate a separate Effective Date withrespect to the employee-participants of such Designated Parent or Subsidiary.(k) “*Employee*” means any individual, including an officer or director, who is an employee ofthe Company or a Designated Parent or Subsidiary for purposes of Section 423 of the Code. Forpurposes of the Plan, the employment relationship shall be treated as continuing intact while theindividual is on sick leave or other leave of absence approved by the individual’s employer. Wherethe period of leave exceeds three (3) months and the individual’s right to reemployment is notguaranteed either by statute or by contract, the employment relationship will be deemed tohave terminated on the day three (3) months and one (1) day following the expiration of such three(3) month period, for purposes of determining eligibility to participate in the Plan.
 
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(l) “*Enrollment Date*” means the first day of each Offer Period.(m) “*Exchange Act*” means the Securities Exchange Act of 1934, as amended.(n) “*Exercise Date*” means the last day of each Purchase Period.(o) “*Fair Market Value*” means, as of any date, the value of Common Stock determined asfollows:(1) If the Common Stock is listed on any established stock exchange or a national marketsystem, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market ofThe Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (orthe closing bid, if no sales were reported) as quoted on such exchange or system on the date ofdetermination (or, if no closing sales price or closing bid was reported on that date, asapplicable, on the last trading date such closing sales price or closing bid was reported), asreported in The Wall Street Journal or such other source as the Administrator deems reliable;(2) If the Common Stock is regularly quoted on an automated quotation system (including theOTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, theFair Market Value of a share of Common Stock shall be the mean between the high bid and low askedprices for the Common Stock on the date of determination (or, if no such prices were reported onthat date, on the last date such prices were reported), as reported in The Wall Street Journal orsuch other source as the Administrator deems reliable; or(3) In the absence of an established market for the Common Stock of the type described in (1)and (2), above, the Fair Market Value thereof shall be determined by the Administrator in goodfaith.(p) “*Offer Period*” means an Offer Period established pursuant to Section 4 hereof.(q) “*Parent*” means a “parent corporation,” whether now or hereafter existing, as defined inSection 424(e) of the Code.(r) “*Participant*” means an Employee of the Company or Designated Parent or Subsidiary who hascompleted a subscription agreement as set forth in Section 5(a) and is thereby enrolled in thePlan.(s) “*Plan*” means this Employee Stock Purchase Plan.
 
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(u) “*Purchase Period*” means a period of approximately six months, commencing on February 1 andAugust 1 of each year and terminating on the next following July 31 or January 31, respectively;provided, however, that the first Purchase Period shall commence on the Effective Date and shallend on a date determined by the Administrator that shall be no later than twenty-seven (27) monthsafter the Effective Date. The duration and timing of Purchase Periods may be changed pursuant toSection 19(b) of the Plan.(v) “*Purchase Price*” shall mean an amount equal to 85% of the Fair Market Value of a share ofCommon Stock on the Enrollment Date or on the Exercise Date, whichever is lower.(w) “*Reserves*” means, as of any date, the sum of (1) the number of shares of Common Stockcovered by each then outstanding option under the Plan which has not yet been exercised and (2) thenumber of shares of Common Stock which have been authorized for issuance under the Plan but notthen subject to an outstanding option.(y) “*Subsidiary*” means a “subsidiary corporation,” whether now or hereafter existing, asdefined in Section 424(f) of the Code.3. *Eligibility*.(a) *General*. Any individual who is an Employee on a given Enrollment Date shall be eligibleto participate in the Plan for the Offer Period commencing with such Enrollment Date. Noindividual who is not an Employee shall be eligible to participate in the Plan.(b) *Limitations on Grant and Accrual*. Any provisions of the Plan to the contrarynotwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately afterthe grant, such Employee (taking into account stock owned by any other person whose stock would beattributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or holdoutstanding options to purchase stock possessing five percent (5%) or more of the total combinedvoting power or value of all classes of stock of the Company or of any Parent or Subsidiary of theCompany, or (ii) which permits the Employee’s rights to purchase stock under all employee stockpurchase plans of the Company and its Parents or Subsidiaries to accrue at a rate which exceedsTwenty-Five Thousand Dollars ($25,000) worth of stock (determined at the Fair Market Value of theshares at the time such option is granted) for each calendar year in which such option isoutstanding at any time. The determination of the accrual of the right to purchase stock shall bemade in accordance with Section 423(b)(8) of the Code and the regulations thereunder. In the eventthat an Employee may not be granted an option under the Plan because of the foregoing restrictions,the Employee shall be granted an option to purchase the maximum number of shares that would notviolate the foregoing restrictions.(c) *Other Limits on Eligibility*. Notwithstanding Subsection (a), above, the followingEmployees shall not be eligible to participate in the Plan for any relevant Offer Period:(i) Employees whose customary employment is less than 20 hours per week; (ii) Employees whosecustomary employment is for not more than 5 months in any calendar year; and (iii) Employeeswho are subject to rules or laws of a foreign jurisdiction that prohibit or make impractical theparticipation of such Employees in the Plan.
 
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4. *Offer Periods*.(a) The Plan shall be implemented through overlapping or consecutive Offer Periods until suchtime as (i) the maximum number of shares of Common Stock available for issuance under the Planshall have been purchased or (ii) the Plan shall have been sooner amended or terminated inaccordance with Section 19 hereof. The maximum duration of an Offer Period shall be twenty-seven(27) months. Initially, the Plan shall be implemented through overlapping Offer Periods oftwenty-four (24) months’ duration commencing each February 1 and August 1 following the EffectiveDate (except that the initial Offer Period shall commence on the Effective Date and shall end on adate determined by the Administrator that shall be no later than twenty-seven (27) months after theEffective Date).(b) A Participant shall be granted a separate option for each Offer Period in which he or sheparticipates. The option shall be granted on the Enrollment Date and shall be automaticallyexercised in successive installments on the Exercise Dates ending within the Offer Period.(c) If on the first day of any Purchase Period in an Offer Period in which an Employee is aParticipant, the Fair Market Value of the Common Stock is less than the Fair Market Value of theCommon Stock on the Enrollment Date of the Offer Period (after taking into account any adjustmentduring the Offer Period pursuant to Section 18(a)), the Offer Period shall be terminatedautomatically and the Participant shall be enrolled automatically in the new Offer Period which hasits first Purchase Period commencing on that date, provided the Employee is eligible to participatein the Plan on that date and has not elected to terminate participation in the Plan.(d) Except as specifically provided herein, the acquisition of Common Stock throughparticipation in the Plan for any Offer Period shall neither limit nor require the acquisition ofCommon Stock by a Participant in any subsequent Offer Period.5. *Participation*.(a) An eligible Employee may become a Participant in the Plan by completing a subscriptionagreement authorizing payroll deductions in the form of Exhibit A to this Plan (or such other formor method (including electronic forms) as the Administrator may designate from time to time) andfiling it with the designated payroll office of the Company at least five (5) business days priorto the Enrollment Date for the Offer Period in which such participation will commence, unless alater time for filing the subscription agreement is set by the Administrator for all eligibleEmployees with respect to a given Offer Period.(b) Payroll deductions for a Participant shall commence with the first partial or full payrollperiod beginning on the Enrollment Date and shall end on the last complete payroll period duringthe Offer Period, unless sooner terminated by the Participant as provided in Section 10.
 
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6. *Payroll Deductions*.(a) At the time a Participant files a subscription agreement, the Participant shall elect tohave payroll deductions made during the Offer Period in amounts equal to or greater than onepercent (1%) but not exceeding ten percent (10%) of the Compensation which the Participant receivesduring the Offer Period. Prior to April 1, 2006, a Participant could elect to have payrolldeductions made during the Offer Period in amounts up to twenty percent (20%) of the Compensationwhich the Participant receives during the Offer Period. Such payroll deductions shall be in wholepercentages only.(b) All payroll deductions made for a Participant shall be credited to the Participant’saccount under the Plan and will be withheld in whole percentages only. A Participant may not makeany additional payments into such account.(c) A Participant may discontinue participation in the Plan as provided in Section 10, or mayincrease or decrease the rate of payroll deductions during the Offer Period by completing andfiling with the Company a change of status notice in the form of Exhibit B to this Plan (or suchother form or method (including electronic forms) as the Administrator may designate from time totime) authorizing an increase or decrease in the payroll deduction rate. Any increase or decreasein the rate of a Participant’s payroll deductions shall be effective with the first full payrollperiod commencing five (5) business days after the Company’s receipt of the change of status noticeunless the Company elects to process a given change in participation more quickly. A Participant’ssubscription agreement (as modified by any change of status notice) shall remain in effect forsuccessive Offer Periods unless terminated as provided in Section 10. The Administrator shall beauthorized to limit the number of payroll deduction rate changes during any Offer Period.(d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) ofthe Code and Section 3(b) herein, a Participant’s payroll deductions shall be decreased to 0%.Payroll deductions shall recommence at the rate provided in such Participant’s subscriptionagreement, as amended, at the time when permitted under Section 423(b)(8) of the Code andSection 3(b) herein, unless such participation is sooner terminated by the Participant as providedin Section 10.(e) At the time the option is exercised, in whole or in part, or at the time any of theCompany’s Common Stock issued under the Plan is disposed of, the participant must make adequateprovision for the Company’s federal, state, or other tax withholding obligations, if any, whicharise upon the exercise of the option or the disposition of the Common Stock. At any time, theCompany may, but shall not be obligated to, withhold from the participant’s compensation the amountnecessary for the Company to meet applicable withholding obligations, including any withholdingrequired to make available to the Company any tax deductions or benefits attributable to sale orother disposition of Common Stock by the Employee.7. *Grant of Option*. On the Enrollment Date of each Offer Period, each Participant shall begranted an option to purchase (at the applicable Purchase Price) up to a whole number of shares ofCommon Stock (the “Option Shares”) determined by dividing $50,000 by the Fair Market Value of ashare of Common Stock on the Enrollment Date (subject to any adjustment pursuant toSection 18), and provided that such purchase shall be subject to the limitations set forth inSections 3(b), 6 and 12 hereof. The option shall be exercisable as to 25% of the Option Shares oneach Exercise Date during the Offer Period. Exercise of the option shall occur as provided inSection 8, unless the Participant has withdrawn pursuant to Section 10, and the option, to theextent not exercised, shall expire on the last day of the Offer Period with respect to which suchoption was granted.
 
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8. *Exercise of Option*. Unless a Participant withdraws from the Plan as provided inSection 10, below, the Participant’s option for the purchase of shares of Common Stock will beexercised automatically on each Exercise Date, by applying the accumulated payroll deductions inthe Participant’s account to purchase the number of full shares subject to the option by dividingsuch Participant’s payroll deductions accumulated prior to such Exercise Date and retained in theParticipant’s account as of the Exercise Date by the applicable Purchase Price. No fractionalshares will be purchased; any payroll deductions accumulated in a Participant’s account which arenot sufficient to purchase a full share shall be carried over to the next Purchase Period or OfferPeriod, whichever applies, or returned to the Participant, if the Participant withdraws from thePlan. Notwithstanding the foregoing, any amount remaining in a Participant’s account following thepurchase of shares on the Exercise Date due to the application of Section 423(b)(8) of the Code orSection 7, above, shall be returned to the Participant and shall not be carried over to the nextOffer Period or Purchase Period. During a Participant’s lifetime, a Participant’s option topurchase shares hereunder is exercisable only by the Participant.9. *Delivery*. Upon receipt of a request from a Participant after each Exercise Date on which apurchase of shares occurs, the Company shall arrange the delivery to such Participant, as promptlyas practicable, of a certificate representing the shares purchased upon exercise of theParticipant’s option. The Company may, in its sole discretion, and in compliance with applicablelaws, authorize the book entry registration of shares in lieu of issuing certificates.10. *Withdrawal; Termination of Employment*.(a) A Participant may either (i) withdraw all but not less than all the payroll deductionscredited to the Participant’s account and not yet used to exercise the Participant’s option underthe Plan or (ii) terminate future payroll deductions, but allow accumulated payroll deductions tobe used to exercise the Participant’s option under the Plan at any time by giving written notice tothe Company in the form of Exhibit B to this Plan (or such other form or method (includingelectronic forms) as the Administrator may designate from time to time). If the Participant electswithdrawal alternative (i) described above, all of the Participant’s payroll deductions credited tothe Participant’s account will be paid to such Participant as promptly as practicable after receiptof notice of withdrawal, such Participant’s option for the Offer Period will be automaticallyterminated, and no further payroll deductions for the purchase of shares will be made during theOffer Period. If the Participant elects withdrawal alternative (ii) described above, no furtherpayroll deductions for the purchase of shares will be made during the Offer Period, all of theParticipant’s payroll deductions credited to the Participant’s account will be applied to theexercise of the Participant’s option on the next Exercise Date (subject to Sections 3(b), 6, 7 and12), and after such Exercise Date, such Participant’s option for the Offer Period will beautomatically terminated and all remaining accumulated payroll deduction amounts shall be returnedto the Participant. If a Participantwithdraws from an Offer Period, payroll deductions will not resume at the beginning of thesucceeding Offer Period unless the Participant delivers to the Company a new subscriptionagreement. A Participant’s withdrawal from an Offer Period shall not have any effect upon his orher eligibility to participate in any similar plan that may be hereafter adopted by the Company orin succeeding Offer Periods.
 
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(b) With respect to the termination of employment of a Participant whose new Offer Period doesnot begin until either August 1, 2007 or February 1, 2008, upon termination of such Participant’semployment relationship (as described in Section 2(k)) at a time more than three (3) months fromJuly 31, 2007 or January 31, 2008, as the case may be, the payroll deductions credited to suchParticipant’s account during the Offer Period ending on July 31, 2007 or January 31, 2008, as thecase may be, but not yet used to exercise the option will be returned to such Participant or, inthe case of his/her death, to the person or persons entitled thereto under Section 14, and suchParticipant’s option will be automatically terminated without exercise of any portion of suchoption. With respect to the termination of employment of a Participant whose new Offer Period doesnot begin until either August 1, 2007 or February 1, 2008, upon termination of such Participant’semployment relationship (as described in Section 2(k)) within three (3) months of July 31, 2007 orJanuary 31, 2008, as the case may be, the payroll deductions credited to such Participant’s accountduring the Offer Period ending on July 31, 2007 or January 31, 2008, as the case may be, but notyet used to exercise the option will be applied to the purchase of Common Stock on July 31, 2007 orJanuary 31, 2008, as the case may be, unless the Participant (or in the case of the Participant’sdeath, the person or persons entitled to the Participant’s account balance under Section 14)withdraws from the Plan by submitting a change of status notice in accordance with subsection (a)of this Section 10. In such a case, no further payroll deductions will be credited to theParticipant’s account following the Participant’s termination of employment and the Participant’soption under the Plan will be automatically terminated after the purchase of Common Stock on July31, 2007 or January 31, 2008, as the case may be. If, prior to July 31, 2007 or January 31, 2008,as the case may be, the Designated Parent or Subsidiary by which the Employee is employed shallcease to be a Parent or Subsidiary of the Company, or if the Employee is transferred to a Parent orSubsidiary of the Company that is not a Designated Parent or Subsidiary, the Employee shall bedeemed to have been terminated for purposes of the Plan.(c) With respect to the termination of employment of a Participant whose new Offering Periodbegins on or after August 1, 2006, upon termination of such Participant’s employment relationship(as described in Section 2(k)), the payroll deductions credited to such Participant’s accountduring the Offer Period but not yet used to exercise the option will be returned to suchParticipant or, in the case of his/her death, to the person or persons entitled thereto underSection 14, and such Participant’s option will be automatically terminated without exercise of anyportion of such option. If, prior to the last day of the Offer Period, the Designated Parent orSubsidiary by which the Employee is employed shall cease to be a Parent or Subsidiary of theCompany, or if the Employee is transferred to a Parent or Subsidiary of the Company that is not aDesignated Parent or Subsidiary, the Employee shall be deemed to have been terminated for purposesof the Plan.11. *Interest*. No interest shall accrue on the payroll deductions credited to a Participant’saccount under the Plan.
 
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12. *Stock*.(a) The maximum number of shares of Common Stock which shall be made available for sale underthe Plan shall be two million one hundred fifty thousand (2,150,000) shares (all share numbers inthis Plan reflect the adjustments from actions taken in connection with the spin-off of Ceva fromDSP Group, Inc.), subject to adjustment upon changes in capitalization of the Company as providedin Section 18. With respect to any amendment to increase the total number of shares of CommonStock under the Plan, the Administrator shall have discretion to disallow the purchase of anyincreased shares of Common Stock for Offer Periods in existence prior to such increase. If theAdministrator determines that on a given Exercise Date the number of shares with respect to whichoptions are to be exercised may exceed (x) the number of shares then available for sale under thePlan or (y) the number of shares available for sale under the Plan on the Enrollment Date(s) of oneor more of the Offer Periods in which such Exercise Date is to occur, the Administrator may make apro rata allocation of the shares remaining available for purchase on such Enrollment Dates orExercise Date, as applicable, in as uniform a manner as shall be practicable and as it shalldetermine to be equitable, and shall either continue all Offer Periods then in effect or terminateany one or more Offer Periods then in effect pursuant to Section 19, below. Any amount remainingin a Participant’s payroll account following such pro rata allocation shall be returned to theParticipant and shall not be carried over to any future Purchase Period or Offer Period, asdetermined by the Administrator.(b) A Participant will have no interest or voting right in shares covered by the Participant’soption until such shares are actually purchased on the Participant’s behalf in accordance with theapplicable provisions of the Plan. No adjustment shall be made for dividends, distributions orother rights for which the record date is prior to the date of such purchase.(c) Shares to be delivered to a Participant under the Plan will be registered in the name ofthe Participant or in the name of the Participant and his or her spouse as designated in theParticipant’s subscription agreement.13. *Administration*. The Plan shall be administered by the Administrator which shall have fulland exclusive discretionary authority to construe, interpret and apply the terms of the Plan, todetermine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding,decision and determination made by the Administrator shall, to the full extent permitted byApplicable Law, be final and binding upon all persons.14. *Designation of Beneficiary*.(a) Each Participant will file a written designation of a beneficiary who is to receive anyshares and cash, if any, from the Participant’s account under the Plan in the event of suchParticipant’s death. If a Participant is married and the designated beneficiary is not the spouse,spousal consent shall be required for such designation to be effective.
 
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(b) Such designation of beneficiary may be changed by the Participant (and the Participant’sspouse, if any) at any time by written notice. In the event of the death of a Participant and inthe absence of a beneficiary validly designated under the Plan who is living (or in existence)at the time of such Participant’s death, the Company shall deliver such shares and/or cash tothe executor or administrator of the estate of the Participant, or if no such executor oradministrator has been appointed (to the knowledge of the Administrator), the Administrator shalldeliver such shares and/or cash to the spouse (or domestic partner, as determined by theAdministrator) of the Participant, or if no spouse (or domestic partner) is known to theAdministrator, then to the issue of the Participant, such distribution to be made per stirpes (byright of representation), or if no issue are known to the Administrator, then to the heirs at lawof the Participant determined in accordance with Section 27.15. *Transferability*. No payroll deductions credited to a Participant’s account, optionsgranted hereunder, or any rights with regard to the exercise of an option or to receive sharesunder the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (otherthan by will, the laws of descent and distribution, or as provided in Section 14 hereof) by theParticipant. Any such attempt at assignment, transfer, pledge or other disposition shall bewithout effect, except that the Administrator may, in its sole discretion, treat such act as anelection to withdraw funds from an Offer Period in accordance with Section 10.16. *Use of Funds*. All payroll deductions received or held by the Company under the Plan maybe used by the Company for any corporate purpose, and the Company shall not be obligated tosegregate such payroll deductions or hold them exclusively for the benefit of Participants. Allpayroll deductions received or held by the Company are subject to the claims of the Company’sgeneral creditors, and no Participant shall have rights greater than those of any unsecuredcreditor of the Company.17. *Reports*. Individual accounts will be maintained for each Participant in the Plan.Statements of account will be given to Participants at least annually, which statements will setforth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and theremaining cash balance, if any.18. *Adjustments Upon Changes in Capitalization; Corporate Transactions*.(a) *Adjustments Upon Changes in Capitalization*. Subject to any required action by thestockholders of the Company, the Reserves, the Purchase Price, the maximum number of shares thatmay be purchased in any Offer Period or Purchase Period, as well as any other terms that theAdministrator determines require adjustment shall be proportionately adjusted for (i) any increaseor decrease in the number of issued shares of Common Stock resulting from a stock split, reversestock split, stock dividend, combination or reclassification of the Common Stock, (ii) any otherincrease or decrease in the number of issued shares of Common Stock effected without receipt ofconsideration by the Company, or (iii) as the Administrator may determine in its discretion, anyother transaction with respect to Common Stock to which Section 424(a) of the Code applies;provided, however that conversion of any convertible securities of the Company shall not be deemedto have been “effected without receipt of consideration.” Such adjustment shall be made by theAdministrator and its determination shall be final, binding and conclusive. Except as theAdministrator determines, no issuance by the Company of shares of stock of any class, or securitiesconvertible into shares of stock of any class, shall affect, and no adjustment by reason hereofshall be made with respect to, the Reserves and the Purchase Price.
 
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(b) *Corporate Transactions*. In the event of a proposed Corporate Transaction, each optionunder the Plan shall be assumed by such successor corporation or a parent or subsidiary of suchsuccessor corporation, unless the Administrator, in the exercise of its sole discretion and in lieuof such assumption, determines to shorten the Offer Period then in progress by setting a newExercise Date (the “New Exercise Date”). If the Administrator shortens the Offer Period then inprogress in lieu of assumption in the event of a Corporate Transaction, the Administrator shallnotify each Participant in writing at least ten (10) business days prior to the New Exercise Date,that the Exercise Date for the Participant’s option has been changed to the New Exercise Date andthat either:(1) the Participant’s option will be exercised automatically on the New Exercise Date, unlessprior to such date the Participant has withdrawn from the Offer Period as provided in Section 10;or(2) the Company shall pay to the Participant on the New Exercise Date an amount in cash, cashequivalents, or property as determined by the Administrator that is equal to the difference in theFair Market Value of the shares subject to the option and the Purchase Price due had theParticipant’s option been exercised automatically under Subsection (b)(i) above.For purposes of this Subsection, an option granted under the Plan shall be deemed to beassumed if, in connection with the Corporate Transaction, the option is replaced with a comparableoption with respect to shares of capital stock of the successor corporation or Parent thereof. Thedetermination of option comparability shall be made by the Administrator prior to the CorporateTransaction and its determination shall be final, binding and conclusive on all persons.19. *Amendment or Termination*.(a) The Administrator may at any time and for any reason terminate or amend the Plan. Exceptas provided in Section 18, no such termination can affect options previously granted, provided thatthe Plan or any one or more Offer Periods may be terminated by the Administrator on any ExerciseDate or by the Administrator establishing a new Exercise Date with respect to any Offer Periodand/or any Purchase Period then in progress if the Administrator determines that the termination ofthe Plan or such one or more Offer Periods is in the best interests of the Company and itsstockholders. Except as provided in Section 18 and this Section 19, no amendment may make anychange in any option theretofore granted which adversely affects the rights of any Participantwithout the consent of affected Participants. To the extent necessary to comply with Section 423of the Code (or any successor rule or provision or any other Applicable Law), the Company shallobtain stockholder approval in such a manner and to such a degree as required.(b) Without stockholder consent and without regard to whether any Participant rights may beconsidered to have been “adversely affected,” the Administrator shall be entitled to limit thefrequency and/or number of changes in the amount withheld during Offer Periods, change the lengthof Purchase Periods within any Offer Period, determine the length of any future Offer Period,determine whether future Offer Periods shall be consecutive or overlapping, establish the exchangeratio applicable to amounts withheld in a currency other than U.S. dollars, establish additionalterms, conditions, rules or procedures to accommodate the rules or laws of applicable foreignjurisdictions, permit payroll withholding in excess of the amount designated by a Participantin order to adjust for delays or mistakes in the Company’s processing of properly completedwithholding elections, establish reasonable waiting and adjustment periods and/or accounting andcrediting procedures to ensure that amounts applied toward the purchase of Common Stock for eachParticipant properly correspond with amounts withheld from the Participant’s Compensation, andestablish such other limitations or procedures as the Administrator determines in its solediscretion advisable and which are consistent with the Plan.
 
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20. *Notices*. All notices or other communications by a Participant to the Company under or inconnection with the Plan shall be deemed to have been duly given when received in the formspecified by the Administrator at the location, or by the person, designated by the Administratorfor the receipt thereof.21. *Conditions Upon Issuance of Shares*. Shares shall not be issued with respect to an optionunless the exercise of such option and the issuance and delivery of such shares pursuant theretoshall comply with all Applicable Laws and shall be further subject to the approval of counsel forthe Company with respect to such compliance. As a condition to the exercise of an option, theCompany may require the Participant to represent and warrant at the time of any such exercise thatthe shares are being purchased only for investment and without any present intention to sell ordistribute such shares if, in the opinion of counsel for the Company, such a representation isrequired by any of the aforementioned Applicable Laws.22. *Term of Plan*. The Plan shall become effective upon the earlier to occur of its adoptionby the Board or its approval by the stockholders of the Company. It shall continue in effect for aterm of twenty (20) years unless sooner terminated under Section 19.23. *Stockholder Approval*. The Plan is effective as of the date it is adopted by the Board.The Plan shall be submitted to the stockholders of the Company within twelve (12) months before orafter the date the Plan is adopted for approval to obtain the benefits of Section 423 of the Code.However, the Plan shall not be conditioned upon such approval.24. *No Employment Rights*. The Plan does not, directly or indirectly, create any right for thebenefit of any employee or class of employees to purchase any shares under the Plan, or create inany employee or class of employees any right with respect to continuation of employment by theCompany or a Designated Parent or Subsidiary, and it shall not be deemed to interfere in any waywith such employer’s right to terminate, or otherwise modify, an employee’s employment at any time.25. *No Effect on Retirement and Other Benefit Plans*. Except as specifically provided in aretirement or other benefit plan of the Company or a Designated Parent or Subsidiary, participationin the Plan shall not be deemed compensation for purposes of computing benefits or contributionsunder any retirement plan of the Company or a Designated Parent or Subsidiary, and shall not affectany benefits under any other benefit plan of any kind or any benefit plan subsequently institutedunder which the availability or amount of benefits is related to level of compensation. The Planis not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of1974, as amended.
 
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26. *Effect of Plan*. The provisions of the Plan shall, in accordance with its terms, bebinding upon, and inure to the benefit of, all successors of each Participant, including, withoutlimitation, such Participant’s estate and the executors, administrators or trustees thereof, heirsand legatees, and any receiver, trustee in bankruptcy or representative of creditors of suchParticipant.27. *Governmental Regulations*. The Company’s obligation to sell and deliver Common Stock underthis Plan is subject to listing on an established stock exchange or quotation on a national marketsystem or an over the counter market (to the extent the Common Stock is then so listed or quoted)and the approval of all governmental authorities required in connection with the authorization,issuance, or sale of such stock.28. *Source of Shares*. Shares may be issued upon exercise of an option from authorized butunissued Common Stock, from shares held in the treasury of the Company, or from any other propersource.29. *Notification Upon Sale of Shares*. Each employee agrees, by participating in the Plan, topromptly give notice to the Company of any disposition of shares purchased under the Plan wheresuch disposition occurs within two years after the date of the grant of the option pursuant towhich such shares were purchased or within one year of the date of exercise of such option pursuantto which such shares were purchased.30. *Governing Law*. The Plan is to be construed in accordance with and governed by theinternal laws of the State of Delaware without giving effect to any choice of law rule that wouldcause the application of the laws of any jurisdiction other than the internal laws of the State ofDelaware to the rights and duties of the parties, except to the extent the internal laws of theState of Delaware are superseded by the laws of the United States. Should any provision of thePlan be determined by a court of law to be illegal or unenforceable, the other provisions shallnevertheless remain effective and shall remain enforceable.31. *Dispute Resolution*. The provisions of this Section 31 (and as restated in theSubscription Agreement) shall be the exclusive means of resolving disputes arising out of orrelating to the Plan. The Company and the Participant, or their respective successors (the“parties”), shall attempt in good faith to resolve any disputes arising out of or relating to thePlan by negotiation between individuals who have authority to settle the controversy. Negotiationsshall be commenced by either party by notice of a written statement of the party’s position and thename and title of the individual who will represent the party. Within thirty (30) days of thewritten notification, the parties shall meet at a mutually acceptable time and place, andthereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute hasnot been resolved by negotiation, the parties agree that any suit, action, or proceeding arisingout of or relating to the Plan shall be brought in the United States District Court for theNorthern District of California (or should such court lack jurisdiction to hear such action, suitor proceeding, in a California state court in the County of San Francisco) and that the partiesshall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullestextent permitted by law, any objection the party may have to the laying of venue for any such suit,action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVEOR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisionsof this Section 31 shall for any reasonbe held invalid or unenforceable, it is the specific intent of the parties that suchprovisions shall be modified to the minimum extent necessary to make it or its application validand enforceable.
 
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32. Plan Approval. The Plan was initially approved by the Board and the stockholdersof the Company in 2002. Effective August 1, 2004, the Board approved an amendment and restatementof the Plan, which amendment and restatement was not subject to stockholder approval. On March 29,2006, the Board approved an amendment and restatement of the Plan to increase the number of sharesreserved for issuance under the Plan from 1,000,000 to 1,500,000 Shares, which amendment wassubsequently approved by stockholders. Also on March 29, 2006, the Board approved the followingamendments: (a) for Offer Periods commencing on or after August 1, 2006, decrease the maximumpayroll withholding from 20% to 10% of Compensation, and (b) make certain other administrativechanges, which amendments were not subject to stockholder approval. In March 2009, the Boardapproved an amendment and restatement of the Plan to increase the number of shares reserved forissuance under the Plan from 1,500,000 to 2,150,000 Shares, which amendment was subsequentlyapproved by stockholders.
 
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**Exhibit A**CEVA, Inc. 2002 Employee Stock Purchase Plan