Document:

Prepared by MERRILL CORPORATION

   Exhibit 4.1  

DSP GROUP, INC.  

 2001 STOCK INCENTIVE PLAN  

 (amended and restated on July 18, 2001)  

    1.  Purposes of the Plan.  The purposes of this Stock Incentive Plan are to attract and retain the best
available personnel, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company's business. 

    2.  Definitions.  As used herein, the following definitions shall apply: 

    (a) "Administrator" means the Board or any of the Committees appointed to administer the Plan. 

    (b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act. 

    (c) "Applicable Laws" means the legal requirements relating to the administration of stock incentive plans, if any,
under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any
foreign jurisdiction applicable to Awards granted to residents therein. 

    (d) "Assumed" means that (i) pursuant to a Corporate Transaction defined in Section 2(q)(i),
2(q)(ii) or 2(q)(iii) or a Related Entity Disposition, the contractual obligations represented by the Award are assumed by the successor entity or its Parent in connection with the
Corporate Transaction or Related Entity Disposition or (ii) pursuant to a Corporate Transaction defined in Section 2(q)(iv) or 2(q)(v), the Award is affirmed by the Company. The
Award shall not be deemed "Assumed" for purposes of terminating the Award (in the case of a Corporate Transaction) and the termination of the Continuous Service of the Grantee (in the case of a
Related Entity Disposition) if pursuant to a Corporate Transaction or a Related Entity Disposition the Award is replaced with a comparable award with respect to shares of capital stock of the
successor entity of its Parent. However, for purposes of determining whether the vesting of the Award accelerates, the Award shall be deemed "Assumed" if the Award is replaced with such a comparable
stock award or the Award is replaced with a cash incentive program of the successor entity or Parent thereof which preserves the compensation element of such Award existing at the time of the
Corporate Transaction or Related Entity Disposition and provides for subsequent payout in accordance with the same vesting schedule applicable to such Award. The determination of Award comparability
shall be made by the Administrator and its determination shall be final, binding and conclusive. 

    (e) "Award" means the grant of an Option, Restricted Stock, or other right or benefit under the Plan. 

    (f)  "Award Agreement" means the written agreement evidencing the grant of an Award executed by the Company and the
Grantee, including any amendments thereto. 

    (g) "Board" means the Board of Directors of the Company. 

    (h) "Cause" means, with respect to the termination by the Company, Corage, Inc. or a Related Entity of the
Grantee's Continuous Service, that such termination is for "Cause" as such term is expressly defined in a then-effective written agreement between the Grantee and the Company,
Corage, Inc. or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the
Grantee's: 

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(i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company, Corage, Inc. or a Related Entity; (ii) dishonesty, intentional
misconduct or material breach of any agreement with the Company, Corage, Inc. or a Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or
emotional harm to any person. 

    (i)  "Change in Control" means a change in ownership or control of the Company effected through either of the following
transactions: 

     (i) the
direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee
benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of
Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a
tender or exchange offer made directly to the Company's stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders
accept, or 

    (ii) a
change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up
to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors. 

    (j)  "Code" means the Internal Revenue Code of 1986, as amended. 

    (k) "Committee" means any committee appointed by the Board to administer the Plan. 

    (l)  "Common Stock" means the common stock of the Company. 

    (m) "Company" means DSP Group, Inc., a Delaware corporation. 

    (n) "Consultant" means any person (other than an Employee or a Director, solely with respect to rendering services in
such person's capacity as a Director) who is engaged by the Company, Corage, Inc. or any Related Entity to render consulting or advisory services to the Company, Corage, Inc. or such
Related Entity. 

    (o) "Continuing Directors" means members of the Board who either (i) have been Board members continuously for a
period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election
as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board. 

    (p) "Continuous Service" means: 

     (i) that
the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or terminated. Continuous
Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. For purposes of each
Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90) days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the
Incentive Stock Option shall be treated as a Non-Qualified Stock Option on 

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the day three (3) months and one (1) day following the expiration of such ninety (90) day period; or 

    (ii) for
purposes of non-qualified stock options granted prior to July 18, 2001, that the provision of services to the Company, Corage, Inc.
or a Related Entity in any capacity of Employee, Director or Consultant, is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any approved
leave of absence, (ii) transfers among the Company, Corage, Inc., any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company, Corage, Inc. or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the
Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. 

    (q) "Corporate Transaction" means any of the following transactions: 

     (i) a
merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which
the Company is incorporated; 

    (ii) the
sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company's subsidiary
corporations); 

    (iii) the
complete liquidation or dissolution of the Company; 

    (iv) any
reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total combined voting power
of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or 

    (v) acquisition
by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities (whether
or not in a transaction also constituting a Change in Control). 

    (r) "Covered Employee" means an Employee who is a "covered employee" under Section 162(m)(3) of the Code. 

    (s) "Director" means a member of the Board or the board of directors of Corage, Inc. or any Related Entity. 

    (t)  "Disability" means as defined under the long-term disability policy of the Company, Corage, Inc.
or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company, Corage, Inc. or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place, "Disability" means that a Grantee is unable to carry out the responsibilities and functions of the position held by the
Grantee by reason of any medically determinable physical or mental impairment. A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment
sufficient to satisfy the Administrator in its discretion. 

    (u) "Employee" means any person, including an Officer or Director, who is an employee of the Company,
Corage, Inc. or any Related Entity. The payment of a director's fee by the Company, Corage, Inc. or a Related Entity shall not be sufficient to constitute "employment" by the Company. 

    (v) "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

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    (w) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: 

     (i) Where
there exists a public market for the Common Stock, the Fair Market Value shall be (A) the closing price for a Share on the date of the determination
(or, if no closing price was reported on that date, on the last trading date on which a closing price was reported) on the stock exchange determined by the Administrator to be the primary market for
the Common Stock or the Nasdaq National Market, whichever is applicable or (B) if the Common Stock is not traded on any such exchange or national market system, the average of the closing bid
and asked prices of a Share on the Nasdaq Small Cap Market on the date of the determination (or, if no such prices were reported on that date, on the last date on which such prices were reported), in
each case, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or 

    (ii) In
the absence of an established market for the Common Stock of the type described in (i), above, the Fair Market Value thereof shall be determined by the
Administrator in good faith. 

    (x) "Grantee" means an Employee, Director or Consultant who receives an Award under the Plan. 

    (y) "Immediate Family" means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee's household (other than a tenant or employee), a
trust in which these persons (or the Grantee) have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and
any other entity in which these persons (or the Grantee) own more than fifty percent (50%) of the voting interests. 

    (z) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code 

    (aa) "Non-Qualified Stock Option" means an Option not intended to qualify as an Incentive Stock Option. 

    (bb) "Officer" means a person who is an officer of the Company or a Related Entity within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. 

    (cc) "Option" means an option to purchase Shares pursuant to an Award Agreement granted under the Plan. 

    (dd) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of
the Code. 

    (ee) "Performance-Based Compensation" means compensation qualifying as "performance-based compensation" under
Section 162(m) of the Code. 

    (ff) "Plan" means this 2001 Stock Incentive Plan. 

    (gg) "Related Entity" means any Parent or Subsidiary of the Company or Corage, Inc. and any business,
corporation, partnership, limited liability company or other entity in which the Company, Corage, Inc. or a Parent or a Subsidiary of the Company or Corage, Inc. holds a substantial
ownership interest, directly or indirectly. 

    (hh) "Related Entity Disposition" means the sale, distribution or other disposition by the Company, Corage, Inc.
or a Parent or a Subsidiary of either company of all or substantially all of the interests of the Company, Corage, Inc. or a Parent or a Subsidiary of either company in any 

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Related Entity effected by a sale, merger or consolidation or other transaction involving that Related Entity or the sale of all or substantially all of the assets of that Related Entity, other than
any Related Entity Disposition to the Company, Corage, Inc. or a Parent or a Subsidiary of either company. 

    (ii) "Restricted Stock" means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to
such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator. 

    (jj) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto. 

    (kk) "Share" means a share of the Common Stock. 

    (ll) "Spin-off Transaction" means a distribution by the Company to its stockholders of all or any portion of
the securities of any Subsidiary of the Company. 

    (mm)"Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(f) of the Code. 

    3.  Stock Subject to the Plan.  

    (a) Subject
to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards is 1,000,000 Shares,
increased by (i) any Shares available for future Awards under the Company's 1991 Employee and Consultant Stock Plan as of May 15, 2001 and (ii) any Shares that are represented by
Awards under the Company's 1991 Employee and Consultant Stock Plan that are forfeited, expire or are cancelled without delivery of the Shares or which result in forfeiture of the Shares back to the
Company on or after May 15, 2001. Notwithstanding the foregoing, subject to the provisions of Section 10, below, of the number of Shares specified above, the maximum aggregate number of
Shares available for grant of Incentive Stock Options shall be 1,000,000 Shares and the maximum aggregate number of Shares which may be issued pursuant to all Awards of Restricted Stock is 1,000,000
Shares. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock. 

    (b) Any
Shares covered by an Award (or portion of an Award) which is forfeited or canceled, expires or is settled in cash, shall be deemed not to have been issued for
purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to
the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at their original purchase price, such Shares
shall become available for future grant under the Plan. 

    4.  Administration of the Plan.  

    (a) Plan Administrator.

     (i) Administration with Respect to Directors and Officers.  With respect to grants of Awards to Directors
or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in
accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. 

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    (ii) Administration With Respect to Consultants and Other Employees.  With respect to grants of Awards to
Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the
Board. The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time. 

    (iii) Administration With Respect to Covered Employees.  Notwithstanding the foregoing, grants of Awards
to any Covered Employee intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to Covered Employees, references to the "Administrator" or to a
"Committee" shall be deemed to be references to such Committee or subcommittee. 

    (iv) Administration Errors.  In the event an Award is granted in a manner inconsistent with the
provisions of this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws. 

    (b)  Powers of the Administrator.  Subject to Applicable Laws and the provisions of the Plan (including
any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion: 

     (i) to
select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder; 

    (ii) to
determine whether and to what extent Awards are granted hereunder; 

    (iii) to
determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder; 

    (iv) to
approve forms of Award Agreements for use under the Plan; 

    (v) to
determine the terms and conditions of any Award granted hereunder; 

    (vi) to
amend the terms of any outstanding Award granted under the Plan, provided that any amendment that would adversely affect the Grantee's rights under an
outstanding Award shall not be made without the Grantee's written consent and the reduction of the exercise price of any Option awarded under the Plan shall be subject to stockholder approval which
shall mean approval by the holders of a majority of the Shares of Common Stock of the Company present or represented by proxy (and entitled to vote) at a meeting of the Company's stockholders except
as otherwise provided by Applicable Laws and subject to Section 10; 

   (vii) to
construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan; 

   (viii) to
establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable foreign jurisdictions and to afford Grantees
favorable treatment under such rules or laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and 

    (ix) to
take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate. 

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    5.  Eligibility.  Awards other than Incentive Stock Options may be granted to Employees, Directors and
Consultants. Incentive Stock Options may be granted only to Employees of the Company, a Parent or a Subsidiary. An Employee, Director or Consultant who has been granted an Award may, if otherwise
eligible, be granted additional Awards. Awards may be granted to such Employees, Directors or Consultants who are residing in foreign jurisdictions as the Administrator may determine from time to
time. 

    6.  Terms and Conditions of Awards.  

    (a)  Type of Awards.  The Administrator is authorized under the Plan to award any type of arrangement to
an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) an Option or
similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more
events, or the
satisfaction of performance criteria or other conditions, or (iii) any other security with the value derived from the value of the Shares. Such awards include, without limitation, Options or
sales or bonuses of Restricted Stock, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative. 

    (b)  Designation of Award.  Each Award shall be designated in the Award Agreement. In the case of an
Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair
Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any
Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock
Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date
of the relevant Option. 

    (c)  Conditions of Award.  Subject to the terms of the Plan, the Administrator shall determine the
provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash,
Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be
based on any one of, or combination of, increase in share price, earnings per share, total stockholder return, return on equity, return on assets, return on investment, net operating income, cash
flow, revenue, economic value added, personal management objectives, or other measure of performance selected by the Administrator. Partial achievement of the specified criteria may result in a
payment or vesting corresponding to the degree of achievement as specified in the Award Agreement. 

    (d)  Acquisitions and Other Transactions.  The Administrator may issue Awards under the Plan in
settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction. 

    (e)  Deferral of Award Payment.  The Administrator may establish one or more programs under the Plan to
permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would
entitle the Grantee to payment or receipt of Shares or other consideration under an Award (but only to the extent that such deferral programs would not result in an accounting compensation charge
unless otherwise determined by the Administrator). The 

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Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other
consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program. 

    (f)  Separate Programs.  The Administrator may establish one or more separate programs under the Plan for
the purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time. 

    (g)  Individual Option Limit.  The maximum number of Shares with respect to which Options may be granted
to any Grantee in any fiscal year of the Company shall be seven hundred and fifty thousand (750,000) Shares. In connection with a Grantee's commencement of Continuous Service, a Grantee may be granted
Options for up to an additional seven hundred and fifty thousand (750,000) Shares which shall not count against the limit set forth in the previous sentence. The foregoing limitations shall be
adjusted proportionately in connection with any change in the Company's capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code or the
regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if any Option is canceled, the canceled Option shall continue to count against the maximum number of Shares
with respect to which Options may be granted to the Grantee. For this purpose, the repricing of an Option shall be treated as the cancellation of the existing Option and the grant of a new Option. 

    (h)  Early Exercise.  The Award Agreement may, but need not, include a provision whereby the Grantee may
elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be
subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate. 

    (i)  Term of Award.  The term of each Award shall be the term stated in the Award Agreement, provided,
however, that the term of an Award shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time
the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement. 

    (j)  Transferability of Awards.  Incentive Stock Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee;
provided, however, that the Grantee may designate a beneficiary of the Grantee's Incentive Stock Option in the event of the Grantee's death on a beneficiary designation form provided by the
Administrator. Other Awards shall be transferred by will and by the laws of descent and distribution, and during the lifetime of the Grantee, by gift and or pursuant to a domestic relations order to
members of the Grantee's Immediate Family to the extent and in the manner determined by the Administrator. 

    (k)  Time of Granting Awards.  The date of grant of an Award shall for all purposes be the date on which
the Administrator makes the determination to grant such Award, or such other date as is determined by the Administrator. Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the date of such grant. 

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    7.  Award Exercise or Purchase Price, Consideration and Taxes.  

    (a)  Exercise or Purchase Price.  The exercise or purchase price, if any, for an Award shall be as
follows: 

     (i) In
the case of an Incentive Stock Option: 

    (A) granted
to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant;
or 

    (B) granted
to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%)
of the Fair Market Value per Share on the date of grant. 

    (ii) In
the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant. 

    (iii) In
the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be not less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant. 

    (iv) In
the case of other Awards, such price as is determined by the Administrator. 

    (v) Notwithstanding
the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d), above, the exercise or
purchase price for the Award shall be determined in accordance with the principles of Section 424(a) of the Code. 

    (b)  Consideration.  Subject to Applicable Laws, the consideration to be paid for the Shares to be issued
upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following,
provided that the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law: 

     (i) cash;

    (ii) check; 

    (iii) delivery
of Grantee's promissory note with such recourse, interest, security, and redemption provisions as the Administrator determines as appropriate; 

    (iv) surrender
of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares
otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award
shall be exercised (but only to the extent that such exercise of the Award would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price unless
otherwise determined by the Administrator); 

    (v) with
respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares 

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and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall
provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or 

    (vi) any
combination of the foregoing methods of payment. 

    (c)  Taxes.  No Shares shall be delivered under the Plan to any Grantee or other person until such
Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any foreign, federal, state, or local income and employment tax withholding obligations,
including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon exercise of an Award the
Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations. 

    8.  Exercise of Award.  

    (a)  Procedure for Exercise; Rights as a Stockholder.  

     (i) Any
Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and
specified in the Award Agreement. 

    (ii) An
Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person
entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure
to pay the purchase price as provided in Section 7(b)(v). Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Company shall issue (or cause to be issued) such stock certificate promptly upon exercise of the Award. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in the Award Agreement or Section 10, below. 

    (b)  Exercise of Award Following Termination of Continuous Service.  

     (i) An
Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a
Grantee's Continuous Service only to the extent provided in the Award Agreement. 

    (ii) Where
the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee's Continuous Service for a specified period, the Award
shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first. 

    (iii) Any
Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options
following the termination of a Grantee's Continuous Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent
exercisable by its terms for the period specified in the Award Agreement. 

10

 

    9.  Conditions Upon Issuance of Shares.  

    (a) Shares
shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto
shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

    (b) As
a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required
by any Applicable Laws. 

    10.  Adjustments Upon Changes in Capitalization.  Subject to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Options may be granted to any Grantee in any
fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other
increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other
transaction with respect to Common Stock to which Section 424(a) of the Code applies or a similar transaction; provided, however that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. Except as
the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof
shall be made with respect to, the number or price of Shares subject to an Award. Notwithstanding any terms of the Plan to the contrary, in the event of a Spin-off Transaction, the
Administrator may in its discretion and without approval of the stockholders make such adjustments and take such other action as it deems appropriate with respect to outstanding Awards under the Plan,
including but not limited to adjustments to the number and kind of shares, the price
per share and the vesting periods of outstanding Awards or the substitution, exchange or grant of Awards to purchase securities of the Subsidiary; provided that the Administrator shall not be
obligated to make any such adjustments or take any such action hereunder. 

    11.  Corporate Transactions/Changes in Control/Related Entity Dispositions.  

    (a)  Termination of Award to Extent Not Assumed.  

     (i) Corporate Transaction.  Effective upon the consummation of a Corporate Transaction, all outstanding
Awards under the Plan shall terminate. However, all such Awards shall not terminate to the extent they are Assumed in connection with the Corporate Transaction. 

    (ii) Related Entity Disposition.  Effective upon the consummation of a Related Entity Disposition, for
purposes of the Plan and all Awards, there shall be a deemed termination of Continuous Service of each Grantee who is at the time engaged primarily in service to the Related Entity involved in such
Related Entity Disposition and each Award of such Grantee which is at the time outstanding under the Plan shall be exercisable in accordance with the terms of the Award Agreement evidencing such
Award. However, such Continuous Service shall not be deemed to terminate as to the portion of any such award that is Assumed. 

11

 

    (b)  Acceleration of Award Upon Corporate Transaction/Change in Control/Related Entity Disposition.  

     (i) Corporate Transaction.  Except as provided otherwise in an individual Award Agreement, in the event
of a Corporate Transaction, for the portion of each Award that is not Assumed, such portion of the Award shall automatically become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified
effective date of such Corporate Transaction. 

    (ii) Change in Control.  Except as provided otherwise in an individual Award Agreement, in the event of a
Change in Control (other than a Change in Control which also is a Corporate Transaction), each Award which is at the time outstanding under the Plan automatically shall become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value), immediately prior to the specified effective date of such Change
in Control, for all of the Shares at the time represented by such Award. 

    (iii) Related Entity Disposition.  Except as provided otherwise in an individual Award Agreement,
effective upon the consummation of a Related Entity Disposition, for the portion of each Award of a Grantee who is at the time engaged primarily in service to the Related Entity involved in such
Related Entity Disposition that is not Assumed, such portion of the Award of such Grantee automatically shall become fully vested and exercisable and be released from any repurchase or forfeiture
rights (other than repurchase rights exercisable at fair market value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified effective date of
such Related Entity Disposition. 

    (c)  Effect of Acceleration on Incentive Stock Options.  The portion of any Incentive Stock Option
accelerated under this Section 11 in connection with a Corporate Transaction, Change in Control or Related Entity Disposition shall remain exercisable as an Incentive Stock Option under the
Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the extent such dollar limitation is exceeded, the accelerated excess portion of such
Option shall be exercisable as a Non-Qualified Stock Option. 

    12.  Effective Date and Term of Plan.  The Plan shall become effective upon the earlier to occur of its
adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 17, below,
and Applicable Laws, Awards may be granted under the Plan upon its becoming effective. 

    13.  Amendment, Suspension or Termination of the Plan.  

    (a) The
Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without stockholder approval to the extent
such approval is required by Applicable Laws, or if such amendment would: 

     (i) increase
the number of Shares authorized for issuance under Section 3(a) of the Plan excluding such increases pursuant to Section 10 of the Plan; 

    (ii) permit
decreasing the exercise price of any Option outstanding under the Plan; or 

    (iii) change
any of the provisions of this Section 13(a). 

    For
purposes of this Section, approval of the stockholders means, except as provided by Applicable Laws, approval by the holders of a majority of the Shares of Common Stock of the
Company present or represented by proxy (and entitled to vote) at a meeting of the Company's stockholders. 

12

 

    (b) No
Award may be granted during any suspension of the Plan or after termination of the Plan. 

    (c) Any
amendment, suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall not affect Awards already granted, and
such Awards shall remain in full force and effect as if the Plan had not been amended, suspended or terminated, unless mutually agreed otherwise between the Grantee and the Administrator, which
agreement must be in writing and signed by the Grantee and the Company. 

    14.  Reservation of Shares.  

    (a) The
Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of
the Plan. 

    (b) The
inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not
have been obtained. 

    15.  No Effect on Terms of Employment/Consulting Relationship.  The Plan shall not confer upon any
Grantee any right with respect to the Grantee's Continuous Service, nor shall it interfere in any way with his or her right or the Company's right to terminate the Grantee's Continuous Service at any
time, with or without Cause, and with or without notice. The Company's ability to terminate the employment of a Grantee who is employed at will is in no way affected by its determination that the
Grantee's Continuous Service has been terminated for Cause for the purposes of this Plan. 

    16.  No Effect on Retirement and Other Benefit Plans.  Except as specifically provided in a retirement or
other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related
Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of
compensation. The Plan is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement Income Security Act of 1974, as amended. 

    17.  Plan Approval.  The Plan was adopted by the Board in March of 2001 and adopted by the stockholders
of the Company in May 2001. On July 18, 2001, the Board adopted and approved an amendment and restatement of the Plan to amend various terms of the Plan in anticipation of the
distribution of all (or substantially all) of the shares of capital stock of Corage, Inc. held by the Company to the stockholders of the Company. 

13Prepared by MERRILL CORPORATION

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Exhibit 4.2  

 
 

DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN
  
    NOTICE OF STOCK OPTION AWARD

	          Grantee's Name and Address:	 	

	

 	
 	

	

 	
 	

    You
have been granted an option to purchase shares of Common Stock, subject to the terms and conditions of this Notice of Stock Option Award (the "Notice"), the DSP Group, Inc.
2001 Stock Incentive Plan, as amended from time to time (the "Plan") and the Stock Option Award Agreement (the "Option Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice. 

	          Award Number	 	 	

	

          Date of Award	
 	
 	

	

          Vesting Commencement Date	
 	
 	

	

          Exercise Price per Share	
 	
$	

 	

	

          Total Number of Shares Subject

          to the Option (the "Shares")	
 	
 	

	

          Total Exercise Price	
 	
$	

 	

	

          Type of Option:	
 	
 	

	
 	

Incentive Stock Option
	

 	
 	
 	

	
 	

Non-Qualified Stock Option
	

          Expiration Date:	
 	
 	

	

          Post-Termination Exercise Period:	
 	
 	

Three (3) Months

Vesting Schedule:  

    Subject to Grantee's Continuous Service (as defined below) and other limitations set forth in this Notice, the Plan and the Option Agreement, the Option may be
exercised, in whole or in part, in accordance with the following schedule: 

    [INSERT
VESTING SCHEDULE] 

    During
any authorized leave of absence, the vesting of the Option as provided in this schedule shall be suspended after the leave of absence exceeds a period of ninety
(90) days. Vesting of the Option shall resume upon the Grantee's termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option
shall be extended by the length of the suspension. 

    In
the event of the Grantee's change in status from Employee to Consultant or from an Employee whose customary employment is 20 hours or more per week to an Employee whose
customary employment is fewer than 20 hours per week, vesting of the Option shall continue only to the extent determined by the Administrator as of such change in status. 

1

 

    In the event of termination of the Grantee's Continuous Service for Cause, the Grantee's right to exercise the Option shall terminate concurrently with the termination of the
Grantee's Continuous Service, except as otherwise determined by the Administrator. 

    IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Option is to be governed by the terms and conditions of this Notice, the Plan, and the
Option Agreement. 

	 	 	DSP Group, Inc.,

a Delaware corporation
	

 	
 	

By:	
 	

	

 	
 	

Title:	
 	

    THE
GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE
GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT OF THE GRANTEE'S EMPLOYER TO
TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE
CONTRARY, GRANTEE'S STATUS IS AT WILL. 

    The
Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts
the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Notice, and fully understands all provisions of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all disputes arising out of
or relating to this Notice, the Plan and the Option Agreement shall be resolved in accordance with Section 13 of the Option Agreement. The Grantee further agrees to notify the Company upon any
change in the residence address indicated in this Notice. 

	Dated:	 	
	 	Signed:	 	

	 	 	 	 	 	 	Grantee

2

 
Award Number:               

 
 

DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN
  
    STOCK OPTION AWARD AGREEMENT    
  

    1.  Grant of Option. DSP Group, Inc., a Delaware corporation (the "Company"), hereby grants to the Grantee (the
"Grantee") named in the Notice of Stock Option Award (the "Notice"), an option (the "Option") to purchase the Total Number of Shares of Common Stock subject to the Option (the "Shares") set forth in
the Notice, at the Exercise Price per Share set forth in the Notice (the "Exercise Price") subject to the terms and provisions of the Notice, this Stock Option Award Agreement (the "Option Agreement")
and the Company's 2001 Stock Incentive Plan, as amended from time to time (the "Plan"), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement. 

    If
designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by
the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the
foregoing limitation, shall be treated as Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the date the Option with respect to such Shares is awarded. 

    2.  Exercise of Option.

    (a) Right to Exercise. The Option shall be exercisable during its term in accordance with the Vesting Schedule set out
in the Notice and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan relating to the exercisability or
termination of the Option in the event of a Corporate Transaction, Change in Control or Related Entity Disposition. The Grantee shall be subject to reasonable limitations on the number of
requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares. 

    (b) Method of Exercise. The Option shall be exercisable only by delivery of an Exercise Notice (attached as
Exhibit A) which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by
the Administrator. The Exercise Notice shall be signed by the Grantee and shall be delivered in person, by certified mail, or by such other method as determined from time to time by the Administrator
to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by the Exercise Price, which, to
the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(d), below. 

    (c) Taxes. No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the
Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax, employment tax, and social security tax withholding obligations, including,
without limitation, such other tax obligations of the Grantee incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option. Upon
exercise of the Option, the Company or the Grantee's employer may offset or withhold (from any amount owed by the Company or the Grantee's employer to the Grantee) or collect from the Grantee or other
person an amount sufficient to satisfy such tax obligations and/or the employer's withholding obligations. 

3

 

    3.  Method of Payment. Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at
the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law and, provided further, that the portion of the Exercise Price equal to the par value
of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law: 

    (a) cash;

    (b) check;

    (c) surrender
of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is
being exercised (but only to the extent
that such exercise of the Option would not result in an accounting compensation charge with respect to the Shares used to pay the exercise price); or 

    (d) payment
through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated
brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction. 

    4.  Restrictions on Exercise. The Option may not be exercised if the issuance of the Shares subject to the Option upon
such exercise would constitute a violation of any Applicable Laws. 

    5.  Termination or Change of Continuous Service. In the event the Grantee's Continuous Service terminates, other than
for Cause, the Grantee may, to the extent otherwise so entitled at the date of such termination (the "Termination Date"), exercise the Option during the Post-Termination Exercise Period.
In the event of termination of the Grantee's Continuous Service for Cause, the Grantee's right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently
with the termination of the Grantee's Continuous Service. In no event shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of the Grantee's change in
status from Employee, Director or Consultant to any other status of Employee, Director or Consultant, the Option shall remain in effect and, except to the extent otherwise determined by the
Administrator, continue to vest; provided, however, that with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director or Consultant, such
Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day
following such change in status. Except as provided in Sections 6 and 7 below, to the extent that the Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not
exercise the Option within the Post-Termination Exercise Period, the Option shall terminate. 

    6.  Disability of Grantee. In the event the Grantee's Continuous Service terminates as a result of his or her
Disability, the Grantee may, but only within twelve (12) months from the Termination Date (and in no event later than the Expiration Date), exercise the Option to the extent he or she was
otherwise entitled to exercise it on the Termination Date; provided, however, that if such Disability is not a "disability" as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day
three (3) months and one (1) day following the Termination Date. To the extent that the Grantee is not entitled to exercise the Option on the Termination Date, or if the Grantee does not
exercise the Option to the extent so entitled within the time specified herein, the Option shall terminate. 

4

 

    7.  Death of Grantee. In the event of the termination of the Grantee's Continuous Service as a result of his or her
death, or in the event of the Grantee's death during the Post-Termination Exercise Period or during the twelve (12) month period following the Grantee's termination of Continuous
Service as a result of his or her Disability, the Grantee's estate, or a person who acquired the right to exercise the Option by bequest or inheritance, may exercise the Option, but only to the extent
the Grantee could exercise the Option at the date of termination, within twelve (12) months from the date of death (but in no event later than the Expiration Date). To the extent that the
Grantee is not entitled to exercise the Option on the date of death, or if the Option is not exercised to the extent so entitled within the time specified herein, the Option shall terminate. 

    8.  Transferability of Option. The Option, if an Incentive Stock Option, may not be transferred in any manner other than
by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee; provided, however, that the Grantee may designate a beneficiary of the
Grantee's Incentive Stock Option in the event of the Grantee's death on a beneficiary designation form provided by the Administrator. The Option, if a Non-Qualified Stock Option, may be
transferred to any person by will and by the laws of descent and distribution. Non-Qualified Stock Options also may be transferred during the lifetime of the Grantee by gift and pursuant
to a domestic relations order to members of the Grantee's Immediate Family to the extent and in the manner determined by the Administrator. The terms of the Option shall be binding upon the executors,
administrators, heirs, successors and transferees of the Grantee. 

    9.  Term of Option. The Option may be exercised no later than the Expiration Date set forth in the Notice or such
earlier date as otherwise provided herein. 

    10. Tax Consequences. Set forth below is a brief summary as of the date of this Option Agreement of some of the federal
tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES. 

    (a) Exercise of Incentive Stock Option. If the Option qualifies as an Incentive Stock Option, there will be no regular
federal income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as
income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise. 

    (b) Exercise of Incentive Stock Option Following Disability. If the Grantee's Continuous Service terminates as a result
of Disability that is not total and permanent disability as defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive
Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. 

    (c) Exercise of Non-Qualified Stock Option. On exercise of a Non-Qualified Stock Option, the
Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over
the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantee's compensation or collect from the Grantee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding
amounts are not delivered at the time of exercise. 

    (d) Disposition of Shares. In the case of a Non-Qualified Stock Option, if Shares are held for more than one
year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one year after receipt of the Shares and are disposed more than two years after the Date of 

5

 

Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and holding periods that apply to Shares
acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or
two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price
and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares. 

    11. Entire Agreement: Governing Law. The Notice, the Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof,
and may not be modified adversely to the Grantee's interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan and this Option Agreement (except as
expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Notice, the Plan and this Option Agreement are to be construed in accordance with
and governed by the internal laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should any provision of the Notice, the Plan or this Option Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. 

    12. Headings. The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be
deemed a part of the Option for construction or interpretation. 

    13. Dispute Resolution The provisions of this Section 13 shall be the exclusive means of resolving disputes
arising out of or relating to the Notice, the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by negotiation between individuals who have authority to settle the controversy. Negotiations shall be commenced by either
party by notice of a written statement of the party's position and the name and title of the individual who will represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to resolve the dispute. If the dispute has not been resolved by negotiation, the
parties agree that any suit, action, or proceeding arising out of or relating to the Notice, the Plan or this Option Agreement shall be brought in the United States District Court for the Northern
District of California (or should such court lack jurisdiction to hear such action, suit or proceeding, in a California state court in the County of San Francisco) and that the parties shall submit to
the jurisdiction of such court. The parties irrevocably waive, to the fullest extent 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 HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 13
shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application
valid and enforceable. 

    14. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit in the United States mail by certified mail (if the parties are within the United States) or upon deposit for delivery by an internationally recognized express
mail courier service (for international delivery of notice), with postage and fees prepaid, addressed to the other party at its address as shown beneath its signature in the Notice, or to such other
address as such party may designate in writing from time to time to the other party. 

6

 
 
 

EXHIBIT A
  
    DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN
  
    EXERCISE NOTICE

DSP
Group, Inc.

3120 Scott Boulevard

Santa Clara, CA 95054

Attention: Secretary 

    1.  Exercise of Option. Effective as of today,            ,   the undersigned (the
"Grantee") hereby elects to exercise the Grantee's option to purchase            shares of the Common Stock (the "Shares") of DSP Group, Inc. (the "Company") under and pursuant to the
Company's 2001 Stock Incentive Plan, as amended from time to time (the "Plan") and the [  ] Incentive [  ]
Non-Qualified Stock Option Award Agreement (the "Option Agreement") and Notice of Stock Option Award (the "Notice") dated            ,       . Unless
otherwise
defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice. 

    2.  Representations of the Grantee. The Grantee acknowledges that the Grantee has received, read and understood the
Notice, the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. 

    3.  Rights as Stockholder. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. 

    4.  Delivery of Payment. The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to
the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 3(d) of the Option Agreement. 

    5.  Tax Consultation. The Grantee understands that the Grantee may suffer adverse tax consequences as a result of the
Grantee's purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for any tax advice. 

    6.  Taxes. The Grantee agrees to satisfy all applicable foreign, federal, state and local income and employment tax
withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In the case of an
Incentive Stock Option, the Grantee also agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty
(30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from
the date the Shares were transferred to the Grantee. If the Company is required to satisfy any foreign, federal, state or local income or employment tax withholding obligations as a result of such an
early disposition, the Grantee agrees to satisfy the amount of such withholding in a manner that the Administrator prescribes. 

    7.  Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple
assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. This Exercise Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns. 

7

 

    8.  Headings. The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of
this agreement for construction or interpretation. 

    9.  Dispute Resolution. The provisions of Section 13 of the Option Agreement shall be the exclusive means of
resolving disputes arising out of or relating to this Exercise Notice. 

    10. Governing Law; Severability. This Exercise Notice is to be construed in accordance with and governed by the internal
laws of the State of California without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California
to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest
extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable. 

    11. Notices. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit in the United States mail by certified mail (if the parties are within the United States) or upon deposit for delivery by an internationally recognized express
mail courier service (for international delivery of notice), with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address
as such party may designate in writing from time to time to the other party. 

    12. Further Instruments. The parties agree to execute such further instruments and to take such further action as may be
reasonably necessary to carry out the purposes and intent of this agreement. 

    13. Entire Agreement. The Notice, the Plan and the Option Agreement are incorporated herein by reference and together
with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company
and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantee's interest except by means of a writing signed by the Company and the Grantee. Nothing in
the Notice, the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. 

	Submitted by:	 	Accepted by:
	

GRANTEE:	
 	
DSP GROUP, INC.
	

 	
 	

By:	
 	

	

	
 	

Title:	
 	

	(Signature)	 	 	 	 
	

Address:	
 	

Address:
	

	
 	

3120 Scott Boulevard
	
	 	Santa Clara, CA 95054

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QuickLinks

DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN NOTICE OF STOCK OPTION AWARD

DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN STOCK OPTION AWARD AGREEMENT

EXHIBIT A DSP GROUP, INC. 2001 STOCK INCENTIVE PLAN EXERCISE NOTICE

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