Document:

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                                                                    EXHIBIT 10.3

                                 DSP GROUP, INC.

                         1993 DIRECTOR STOCK OPTION PLAN
                      (Amended and Restated July 19, 1999)
                      (Amended and Restated July 18, 2001)
                      (Amended and Restated April 4, 2002)
                    (Amended and Restated November 25, 2002)
                      (Amended and Restated March 12, 2003)

        1.      Purposes of the Plan. The purposes of this Director Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.

        All options granted hereunder shall be "nonstatutory stock options."

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

                a.      "Board" shall mean the Board of Directors of the
Company.

                b.      "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                c.      "Common Stock" shall mean the Common Stock of the
Company.

                d.      "Company" shall mean DSP Group, Inc., a Delaware
corporation.

                e.      "Continuous Status as a Director" shall mean the absence
of any interruption or termination of service as a Director.

                f.      "Director" shall mean a member of the Board or the board
of directors of ParthusCeva, Inc.

                g.      "Effective Date" shall have the meaning as set forth in
Section 6 below.

                h.      "Employee" shall mean any person, including officers and
Directors, employed by the Company, ParthusCeva, Inc. or any Parent or
Subsidiary of either company. The payment of a Director's fee by the Company,
ParthusCeva, Inc. or any Parent or Subsidiary of either company shall not be
sufficient in and of itself to constitute "employment" by the Company.

                i.      "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                j.      "First Option" shall have the meaning as set forth in
Section 4.b.ii. below.

                k.      "Option" shall mean a stock option granted pursuant to
the Plan.

                l.      "Optioned Stock" shall mean the Common Stock subject to
an Option.

                m.      "Optionee" shall mean an Outside Director who receives
an Option.

                n.      "Outside Director" shall mean a Director who is not an
Employee.

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

                p.      "Plan" shall mean this 1993 Director Stock Option Plan.

                q.      "Share" shall mean a share of the Common Stock, as
adjusted in accordance with Section 11 of the Plan.

                r.      "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.

                s.      "Subsequent Option" shall have the meaning as set forth
in Section 4.b.iii. below.

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                t.      "Subsidiary" shall mean a "Subsidiary Corporation,"
whether now or hereafter existing, as defined in Section 424(f) of the Code.

                u.      "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 126-2 promulgated under the Exchange
Act.

                v.      "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.

                w.      "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.

                x.      "Corporate Transaction" means any of the following
stockholder-approved transactions to which the Company is a party:

                        (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) in connection with the
        complete liquidation or dissolution of the Company; or

                        (iii)   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.

        3.      Stock Subject to the Plan. Subject to the provisions of Section
11 of the Plan, as of November 25, 2002 the maximum aggregate number of Shares
which may be optioned and sold under the Plan is 890,875 Shares (the "Pool") of
Common Stock. The Shares may be authorized, but unissued, or reacquired Common
Stock.

        Initially, 175,000 Shares were reserved for issuance under the Plan. In
June 1999, the Plan was amended and restated to increase the number of Shares
reserved for issuance under the Plan by 100,000 shares for a total reserve of
275,000 Shares. In March 2000, the Company effected a two-for-one split of the
Company's common stock thereby increasing the number of Shares reserved for
issuance under the Plan to 550,000 Shares. In June 2002, the Plan was amended
and restated to increase the number of Shares reserved for issuance under the
Plan by 200,000 Shares for a total reserve of 750,000 Shares. As a result of the
Company's distribution of all (or substantially all) of the shares of capital
stock of Ceva, Inc. in November 2002, the number of shares reserved for issuance
under the Plan was adjusted so that 890,875 Shares are available for issuance
under the Plan.

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        If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.

        4.      Administration of and Grants of Options under the Plan.

                a.      Administrator. Except as otherwise required herein, the
Plan shall be administered by the Board.

                b.      Procedure for Grants. All grants of Options hereunder
shall be automatic and nondiscretionary and shall be made strictly in accordance
with the following provisions:

                        i)      No person shall have any discretion to select
which Outside Directors of the Company shall be granted Options or to determine
the number of Shares to be covered by Options granted to Outside Directors of
the Company.

                        ii)     Each person who is an Outside Director of the
Company on the Effective Date of this Plan and each Outside Director who
subsequently becomes a member of the Board of Directors shall be automatically
granted an Option to purchase 30,000 Shares (the "First Option") on the date on
which the later of the following events occurs: (A) the Effective Date of this
Plan, as determined in accordance with Section 6 hereof; or (B) the date on
which such person first becomes an Outside Director of the Company, whether
through election by the stockholders of the Company or appointment by the Board
of Directors to fill a vacancy.

                        iii)    Additionally, beginning on January 1, 1997, each
Outside Director of the Company shall be automatically granted (i) an Option to
purchase 10,000 Shares (a "Subsequent Option"), on January 1 of each year, if on
such date, he or she shall have served on the Board for at least six (6) months
and (ii) an Option to purchase 10,000 Shares (a "Committee Option"), on January
1 of each year, for each committee of the Board on which he or she shall have
served as the chairperson for at least six (6) months on such date.

                        iv)     Notwithstanding the provisions of subsections
(ii) and (iii) hereof, in the event that a grant would cause the number of
Shares subject to outstanding Options, plus the number of shares previously
purchased upon exercise of Options to exceed the Pool, then each such automatic
grant shall be for that number of Shares determined by dividing the total number
of Shares remaining available for grant by the number of grants to be made on
the automatic grant date. Any further grants shall then be deferred until such
time, if any, as additional Shares become available for grant under the Plan
through action of the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.

                        v)      Notwithstanding the provisions of subsections
ii) and iii) hereof, any grant of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 17 hereof shall have
their exercisability conditioned upon obtaining such stockholder approval of the
Plan in accordance with Section 17 hereof.

                        vi)     The terms of any Option granted hereunder shall
be as follows:

                                a)      The Option shall be exercisable only
while the Outside Director remains a Director of the Company or ParthusCeva,
Inc., except as set forth in Section 9 hereof.

                                b)      The exercise price per Share shall be
100% of the fair market value (as defined in Section 8.b. hereunder) per Share
on the date of grant of the Option.

                                c)      The Option shall vest and become
exercisable as to one-third of the Shares subject to the Option on the first
anniversary of the date of grant of the Option, and shall vest and become
exercisable as to one-third of the Shares subject to the Option at the end of
each twelve-month period thereafter, subject to the provisions set forth in
Section 9, below.

                                d)      The Board may accelerate the unvested
portion of any Option held by any Director whose term expires prior to an Option
granted under the Plan being fully exercisable.

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                c.      Powers of the Board. Subject to the provisions and
restrictions of the Plan, the Board shall have the authority, in its discretion:
(i) to determine, upon review of relevant information and in accordance with
Section 8.b. of the Plan, the fair market value of the Common Stock; (ii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 8.a. of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

                d.      Effect of Board's Decision. All decisions,
determinations and interpretations of the Board shall be final and binding on
all Optionees and any other holders of any Options granted under the Plan.

        5.      Eligibility. Options may be granted only to Outside Directors of
the Company. All Options shall be automatically granted in accordance with the
terms set forth in Section 4.b. hereof. An Outside Director who has been granted
an Option may, if he or she is otherwise eligible, be granted an additional
Option or Options in accordance with such provisions.

        The Plan shall not confer upon an Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.

        6.      Term of Plan; Effective Date. The Plan shall become effective on
the date on which the Company's registration statement on Form S-1 (or any
successor form thereof) is declared effective by the Securities and Exchange
Commission (the "Effective Date"). It shall continue in effect for a term of
twenty (20) years, unless sooner terminated under Section 13 of the Plan,
subject to the limitations set forth in this Plan.

        7.      Term of Option. The term of each Option shall be ten (10) years
from the date of grant thereof.

        8.      Exercise Price and Consideration.

                a.      Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be 100% of the fair
market value per Share on the date of grant of the Option.

                b.      Fair Market Value. The fair market value per Share shall
be the mean of the bid and asked prices of the Common Stock in the
over-the-counter market on the date of grant, as reported in The Wall Street
Journal (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ") System) or, in
the event that the Common Stock is traded on the NASDAQ National Market System
or listed on a stock exchange, the fair market value per Share shall be the
closing price on such system or exchange on the date of grant of the Option, as
reported in The Wall Street Journal; provided, however, that if such market or
exchange is closed on the date of the grant of the Option then the fair market
value per Share shall be based on the most recent date on which such trading
occurred immediately prior to the date of the grant of the Option; provided,
further, that for purposes of First Options granted on the Effective Date, the
fair market value per share shall be the initial public offering price as set
forth in the final prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424 under the Securities Act of 1933, as amended.

                c.      Form of Consideration. The consideration to be paid for
the Share to be issued upon exercise of an Option shall consist entirely of
cash, check, other Shares having a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised (which, if acquired from the Company, shall have been held
for at least six months), delivery of a properly executed exercise notice,
together with such other documentation as the Company and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price, or
any combination of such methods of payment and/or any other consideration or
method of payment as shall be permitted under applicable corporate law.

        9.      Exercise of Option.

                a.      Procedure for Exercise: Rights as a Stockholder. An
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4.b. hereof; provided, however, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 17 hereof has
been obtained.

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        An option may not be exercised for a fraction of a Share.

        An Option 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
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8.c. of the Plan. 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 the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. 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 11 of the Plan.

        Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

                b.      Termination of Status as a Director. If an Outside
Director ceases to serve as a Director, he or she may, but only within three (3)
months after the date he or she ceases to be a Director, exercise his or her
Option to the extent that he or she was entitled to exercise it at the date of
such termination Option's expiration date. Notwithstanding the foregoing, in no
event may the Option be exercised after its term set forth in Section 7 has
expired. The Board may extend the exercise period of an Option held by a
Director whose term is expiring to any date prior to the Option's expiration
date. To the extent that such Outside Director was not entitled to exercise an
Option at the date of such termination, or does not exercise such Option (which
he or she was entitled to exercise) within the time specified herein, the Option
shall terminate.

                c.      Disability of Optionee. Notwithstanding the provisions
of Section 9.b. above, in the event a Director is unable to continue his or her
service as a Director as a result of his or her total and permanent disability
(as defined in Section 22(e)(3) of the Internal Revenue Code), he or she may,
but only within six (6) months from the date of such termination, exercise his
or her Option to the extent he or she was entitled to exercise it at the date of
such termination. Notwithstanding the foregoing, in no event may the Option be
exercised after its term set forth in Section 7 has expired. To the extent that
he or she was not entitled to exercise the Option at the date of termination, or
if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

                d.      Death of Optionee. In the event of the death of an
Optionee:

                        i)      during the term of the Option who is, at the
time of his or her death, a Director and who shall have been in Continuous
Status as a Director since the date of grant of the Option, the Option may be
exercised, at any time within twelve (12) months following the date of death, by
the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise that would have accrued had the Optionee continued living and remained
in Continuous Status as Director for six (6) months after the date of death.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired.

                        ii)     within three (3) months after the termination of
Continuous Status as a Director, the Option may be exercised, at any time within
twelve (12) months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
termination. Notwithstanding the foregoing, in no event may the option be
exercised after its term set forth in Section 7 has expired.

        10.     Nontransferability of Options. The Option 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. The designation of a
beneficiary by an Optionee does not constitute a transfer. An Option may be
exercised during the lifetime of an Optionee only by the Optionee or a
transferee permitted under this Section.

        11.     Adjustments Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.

                a.      Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option and the number of Shares which have

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been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per Share covered by each such
outstanding Option, shall be proportionately adjusted for an increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares effected
without receipt of consideration by the Company; 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 Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, 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 thereof shall be made
with respect to, the number or prices of Shares subject to an Option.
Notwithstanding any terms of the Plan to the contrary, in the event of a
Spin-off Transaction, the Board may in its discretion and without stockholder
approval make such adjustments and take such other action as it deems
appropriate with respect to outstanding Options 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 Options or the substitution, exchange or
grant of Options to purchase securities of the Subsidiary; provided that the
Board shall not be obligated to make any such adjustments or take any such
action hereunder.

                b.      Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.

                c.      Merger or Asset Sale. In the event of a Corporate
Transaction, each Option which is at the time outstanding under the Plan
automatically shall become fully vested and exercisable and be released from any
restrictions on transfer and repurchase or forfeiture rights, immediately prior
to the specified effective date of such Corporate Transaction, for all of the
Shares at the time represented by such Option. Effective upon the consummation
of the Corporate Transaction, all outstanding Options under the Plan shall
terminate unless assumed by the successor company or its Parent. In the event of
a Change in Control (other than a Change in Control which also is a Corporate
Transaction), each Option which is at the time outstanding under the Plan
automatically shall become fully vested and exercisable and be released from any
restrictions on transfer and repurchase or forfeiture rights, immediately prior
to the specified effective date of such Change in Control, for all of the Shares
at the time represented by such Options. Each such Option shall remain
exercisable until the expiration or sooner termination of the applicable Option
term.

        12.     Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date determined in accordance with Section 4.b. hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.

        13.     Amendment and Termination of the Plan.

                a.      Amendment and Termination. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable; provided that, to the extent necessary and desirable to comply with
Rule 16b-3 under the Exchange Act (or any other applicable law or regulation),
the Company shall obtain approval of the stockholders of the Company to Plan
amendments to the extent and in the manner required by such law or regulation.
In addition, the approval of the stockholders is required for any Plan amendment
which would permit decreasing the exercise price of any Option outstanding under
the Plan, subject to Section 11(a). Further, the approval of the Company's
stockholders is required for any Plan amendment which would 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 Law, 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.

                b.      Effect of Amendment or Termination. Any such amendment
or termination of the Plan that would impair the rights of any Optionee shall
not affect Options already granted to such Optionee and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless

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mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

        14.     Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

        As a condition to the exercise of an Option, the Company may require the
person exercising such Option 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 of the
aforementioned relevant provisions of law.

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

        16.     Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

        17.     Plan Approval. The Plan was adopted by the Board on November 29,
1993 and adopted by the stockholders of the Company in January 10, 1994. The
Plan was subsequently amended and restated, as approved by the Company's
stockholders in May 1996. In June 1999, the Board adopted and approved an
amendment and restatement of the Plan to increase the number of shares of common
stock reserved for issuance under the Plan, which amendment was approved by the
Company's stockholders. In July 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 Ceva, Inc., a Delaware corporation and a wholly-owned
subsidiary, held by the Company to the stockholders of the Company. In April
2002, the Board adopted and approved an amendment and restatement of the Plan to
increase the number of shares of common stock reserved for issuance under the
Plan and the term of the Plan, which amendments were approved by the Company's
stockholders. In November 2002, the Board adopted and approved an amendment and
restatement of the Plan to include an appendix to the Plan designed to comply
with changes in Israeli tax law effective January 1, 2003, which amendment did
not require approval by the Company's stockholders. In March 2003, the Board
adopted and approved an amendment and restatement of the Plan to amend the
appendix to the Plan in order to comply with further changes in Israeli tax law
which amendment did not require approval by the Company's stockholders.

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                 DSP GROUP, INC. 1993 DIRECTOR STOCK OPTION PLAN

                               APPENDIX A - ISRAEL

1.      GENERAL

        1.1.    This appendix (the "Appendix") shall apply only to Grantees who
                are residents of the state of Israel or those who are deemed to
                be residents of the state of Israel for the payment of tax. The
                provisions specified hereunder shall form an integral part of
                the 1993 Director Stock Option Plan (hereinafter: the "Plan"),
                which applies to the issuance of options to purchase Common
                Stock of DSP Group Inc. (hereinafter: the "Company").

        1.2     This Appendix is effective with respect to Options granted as of
                January 1, 2003 and shall comply with Amendment no. 132 of the
                Israeli Tax Ordinance.

        1.3.    This Appendix is to be read as a continuation of the Plan and
                only modifies Options granted to Israeli Grantees so that they
                comply with the requirements set by the Israeli law in general,
                and in particular with the provisions of Section 102 (as
                specified herein), as may be amended or replaced from time to
                time. For the avoidance of doubt, this Appendix does not add to
                or modify the Plan in respect of any other category of Grantees.

        1.4.    The Plan and this Appendix are complimentary to each other and
                shall be deemed as one. In any case of contradiction, whether
                explicit or implied, between the provisions of this Appendix and
                the Plan, the provisions set out in the Appendix shall prevail.

        1.5.    Any capitalized term not specifically defined in this Appendix
                shall be construed according to the defined meaning given to it
                in the Plan.

                                       -A1

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2.      DEFINITIONS

        2.1     "Affiliate" means any "employing company" within the meaning of
                Section 102(a) of the Ordinance.

        2.2     "Approved 102 Option" means an Option granted pursuant to
                Section 102(b) of the Ordinance and held in trust by a Trustee
                for the benefit of the Grantee.

        2.3     "Capital Gain Option (CGO)" means an Approved 102 Option elected
                and designated by the Company to qualify under the capital gain
                tax treatment in accordance with the provisions of Section
                102(b)(2) of the Ordinance.

        2.4     "Controlling Stockholder" shall have the meaning ascribed to it
                in Section 32(9) of the Ordinance.

        2.5     "Director" means a member of the Board, but excluding any
                Controlling Stockholder.

        2.6     "ITA" means the Israeli Tax Authorities.

        2.7     "Ordinary Income Option (OIO)" means an Approved 102 Option
                elected and designated by the Company to qualify under the
                ordinary income tax treatment in accordance with the provisions
                of Section 102(b)(1) of the Ordinance.

        2.8     "Option" means an option to purchase one or more shares of
                Common Stock of the Company pursuant to the Plan.

        2.9     "102 Option" means any Option granted to Directors pursuant to
                Section 102 of the Ordinance.

        2.10    "3(i) Option" means an Option granted pursuant to Section 3(i)
                of the Ordinance to any person who is a Non-Employee.

        2.11    "Ordinance" means the 1961 Israeli Income Tax Ordinance [New
                Version] 1961 as now in effect or as hereafter amended.

        2.12    "Section 102" means section 102 of the Ordinance and any
                regulations, rules, orders or procedures promulgated thereunder
                as now in effect or as hereafter amended.

        2.13    "Trustee" means any individual appointed by the Company to serve
                as a trustee and approved by the ITA, all in accordance with the
                provisions of Section 102(a) of the Ordinance.

                                       -A2

<PAGE>

        2.14    "Unapproved 102 Option" means an Option granted pursuant to
                Section 102(c) of the Ordinance and not held in trust by a
                Trustee.

3.      ISSUANCE OF OPTIONS

        3.1     The persons eligible for participation in the Plan as Grantees
                shall be Directors of the Company or of any Affiliate; provided,
                however, that (i) Directors who are not Controlling Stockholders
                may only be granted 102 Options; and (ii) Directors who are
                Controlling Stockholders may only be granted 3(i) Options

        3.2     The Company may designate Options granted to Directors pursuant
                to Section 102 as Unapproved 102 Options or Approved 102
                Options.

        3.3     The grant of Approved 102 Options shall be made under this
                Appendix adopted by the Board, and shall be conditioned upon the
                approval of this Appendix by the ITA.

        3.4     Approved 102 Options may either be classified as Capital Gain
                Options ("CGOs") or Ordinary Income Options ("OIOs").

        3.5     No Approved 102 Options may be granted under this Appendix to
                any eligible Director, unless and until, the Company's election
                of the type of Approved 102 Options as CGI or OIO granted to
                Directors (the "Election"), is appropriately filed with the ITA.
                Such Election shall become effective beginning the first grant
                date of an Approved 102 Option under this Appendix and shall
                remain in effect until the end of the year following the year
                during which the Company first granted Approved 102 Options. The
                Election shall obligate the Company to grant only the type of
                Approved 102 Option it has elected, and shall apply to all
                Grantees who were granted Approved 102 Options during the period
                indicated herein, all in accordance with the provisions of
                Section 102(g) of the Ordinance. For the avoidance of doubt,
                such Election shall not prevent the Company from granting
                Unapproved 102 Options simultaneously.

        3.6     All Approved 102 Options must be held in trust by a Trustee, as
                described in Section 4 below.

        3.7     For the avoidance of doubt, the designation of Unapproved 102
                Options and Approved 102 Options shall be subject to the terms
                and conditions set forth in Section 102.

        3.8     With respect to Unapproved 102 Option, if the Optionee ceases to
                be employed by the Company or any Affiliate, the Optionee shall
                extend to the Company and/or its Affiliate a security or
                guarantee for the payment of tax due at the time of sale of
                Shares, all in accordance with the provisions of Section 102 and
                the rules, regulation or orders promulgated thereunder.

                                       -A3

<PAGE>

4.      TRUSTEE

        4.1     Approved 102 Options which shall be granted under this Appendix
                and/or any Common Stock allocated or issued upon exercise of
                such Approved 102 Options and/or other Common Stock received
                subsequently following any realization of rights, including
                bonus shares, shall be allocated or issued to the Trustee and
                held for the benefit of the Grantees for such period of time as
                required by Section 102 or any regulations, rules or orders or
                procedures promulgated thereunder (the "Holding Period"). In the
                case the requirements for Approved 102 Options are not met, then
                the Approved 102 Options shall be regarded as Unapproved 102
                Options, all in accordance with the provisions of Section 102.

        4.2     Notwithstanding anything to the contrary, the Trustee shall not
                release any Common Stock allocated or issued upon exercise of
                Approved 102 Options prior to the full payment of the Grantee 's
                tax liabilities arising from Approved 102 Options which were
                granted to him and/or any Common Stock allocated or issued upon
                exercise of such Options.

        4.3     Upon receipt of Approved 102 Options, the Grantee will sign an
                undertaking to release the Trustee from any liability in respect
                of any action or decision duly taken and bona fide executed in
                relation with this Appendix, or any Approved 102 Option or
                Ordinary Common Stock granted to him thereunder.

        4.4     With respect to any Approved 102 Option, subject to the
                provisions of Section 102 and any rules or regulation or orders
                or procedures promulgated thereunder, an Optionee shall not sell
                or release from trust any Share received upon the exercise of an
                Approved 102 Option and/or any share received subsequently
                following any realization of rights, including without
                limitation, bonus shares, until the lapse of the Holding Period
                required under Section 102 of the Ordinance. Notwithstanding the
                above, if any such sale or release occurs during the Holding
                Period, the sanctions under Section 102 of the Ordinance and
                under any rules or regulation or orders or procedures
                promulgated thereunder shall apply to and shall be borne by such
                Optionee.

5.      THE OPTIONS

        The terms and conditions upon which the Options shall be issued and
        exercised, shall be as specified in the Award Agreement to be executed
        pursuant to the Plan and to this Appendix. Each Award Agreement shall
        state, inter alia, the number of Common Stock to which the Option
        relates, the type of Option granted thereunder (whether a CGI, OIO,
        Unapproved 102 Option or a 3(i) Option), the vesting provisions and the
        exercise price.

                                       -A4

<PAGE>

6.      FAIR MARKET VALUE FOR TAX PURPOSES

        Solely for the purpose of determining the tax liability pursuant to
        Section 102(b)(3) of the Ordinance, if at the date of grant the
        Company's Common Stock is listed on any established stock exchange or a
        national market system or if the Company's Common Stock will be
        registered for trading within ninety (90) days following the date of
        grant of the CGOs, the fair market value of the Common Stock at the date
        of grant shall be determined in accordance with the average value of the
        Company's common stock on the thirty (30) trading days preceding the
        date of grant or on the thirty (30) trading days following the date of
        registration for trading, as the case may be.

7.      EXERCISE OF OPTIONS

        Options shall be exercised in accordance with the provisions of Section
        9 of the Plan and when applicable, in accordance with the requirements
        of Section 102.

8.      ASSIGNABILITY AND SALE OF OPTIONS

        8.1.    Notwithstanding any other provision of the Plan, no Option or
                any right with respect thereto, purchasable hereunder, whether
                fully paid or not, shall be assignable, transferable or given as
                collateral or any right with respect to them given to any third
                party whatsoever, and during the lifetime of the Grantee each
                and all of such Grantee 's rights to purchase Common Stock
                hereunder shall be exercisable only by the Grantee.

                Any such action made directly or indirectly, for an immediate
                validation or for a future one, shall be void.

        8.2     As long as Options or Common Stock purchased pursuant to thereto
                are held by the Trustee on behalf of the Grantee, all rights of
                the Grantee over the common stock are personal, can not be
                transferred, assigned, pledged or mortgaged, other than by will
                or laws of descent and distribution.

9.      INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER'S PERMIT

        9.1.    With regards to Approved 102 Options, the provisions of the Plan
                and/or the Appendix and/or the Award Agreement shall be subject
                to the provisions of Section 102 and the Tax Assessing Officer's
                permit, and the said provisions and permit shall be deemed an
                integral part of the Plan and of the Appendix and of the Award
                Agreement.

                                       -A5

<PAGE>

        9.2.    Any provision of Section 102 and/or the said permit which is
                necessary in order to receive and/or to keep any tax benefit
                pursuant to Section 102, which is not expressly specified in the
                Plan or the Appendix or the Award Agreement, shall be considered
                binding upon the Company and the Grantees.

10.     DIVIDEND

        With respect to all Shares (but excluding, for avoidance of any doubt,
        any unexercised Options) allocated or issued upon the exercise of
        Options purchased by the Optionee and held by the Optionee or by the
        Trustee, as the case may be, the Optionee shall be entitled to receive
        dividends in accordance with the quantity of such Shares, subject to the
        provisions of the Company's Incorporation Documents (and all amendments
        thereto) and subject to any applicable taxation on distribution of
        dividends, and when applicable subject to the provisions of Section 102
        and the rules, regulations or orders promulgated thereunder.

11.     TAX CONSEQUENCES

        11.1    Any tax consequences arising from the grant or exercise of any
                Option, from the payment for Common Stock covered thereby or
                from any other event or act (of the Company, and/or its
                Affiliates, and the Trustee or the Grantee), hereunder, shall be
                borne solely by the Grantee. The Company and/or its Affiliates,
                and/or the Trustee shall withhold taxes according to the
                requirements under the applicable laws, rules, and regulations,
                including withholding taxes at source. Furthermore, the Grantee
                shall agree to indemnify the Company and/or its Affiliates
                and/or the Trustee and hold them harmless against and from any
                and all liability for any such tax or interest or penalty
                thereon, including without limitation, liabilities relating to
                the necessity to withhold, or to have withheld, any such tax
                from any payment made to the Grantee.

        11.2    The Company and/or, when applicable, the Trustee shall not be
                required to release any common stock certificate to an Grantee
                until all required payments have been fully made.

12.     GOVERNING LAW & JURISDICTION

        This Appendix shall be governed by and construed and enforced in
        accordance with the laws of the State of Israel applicable to contracts
        made and to be performed therein, without giving effect to the
        principles of conflict of laws. The competent courts of Tel-Aviv, Israel
        shall have sole jurisdiction in any matters pertaining to this Appendix.

                                       -A6<PAGE>

                                                                   EXHIBIT 10.19

                                 DSP GROUP, INC.

                   1998 NON-OFFICER EMPLOYEE STOCK OPTION PLAN

                     (amended and restated on July 18, 2001)

                   (amended and restated on November 25, 2002)

        1.      Purposes of the Plan. The purposes of this Non-Officer Employee
Stock Option Plan are to attract and retain the best available personnel, to
provide additional incentive to Employees (excluding Officers) 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 option 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) "Award" means the grant of an Non-Qualified Stock Option
or other right or benefit under the Plan.

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

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

                  (g) "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

                                        1

<PAGE>

                        (ii)    a change in the composition of the Board over a
period of twenty-four (24) 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.

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

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

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

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

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

                  (m) "Continuing Directors" means members of the Board who
either (i) have been Board members continuously for a period of at least
twenty-four (24) months or (ii) have been Board members for less than
twenty-four (24) 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.

                  (n) "Continuous Service" means that the provision of services
to the Company, ParthusCeva, 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 between locations of the Company or among the
Company, ParthusCeva, 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, ParthusCeva, 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.

                  (o) "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) in connection with the complete
liquidation or dissolution of the Company;

                        (iii)   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

                                        2

<PAGE>

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

                        (iv)    an 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), but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.

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

                  (q) "Disability" means that a Grantee would qualify for
benefit payments under the long-term disability policy of the Company,
ParthusCeva, Inc. or the Related Entity to which the Grantee provides services
regardless of whether the Grantee is covered by such policy.

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

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

                  (t) "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.

                  (u) "Grantee" means an Employee who receives an Award pursuant
to an Award Agreement under the Plan.

                  (v) "Non-Qualified Stock Option" means an Option not intended
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.

                                        3

<PAGE>

                  (w) "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.

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

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

                  (z) "Plan" means this 1998 Non-Officer Employee Stock Option
Plan.

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

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

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

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

                  (ee) "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.

                  (ff) "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, as of
November 25, 2002 the maximum aggregate number of Shares which may be issued
pursuant to all Awards is five million five hundred seven thousand eight hundred
seventy-three (5,507,873) Shares. The Shares to be issued pursuant to Awards may
be authorized, but unissued, or reacquired Common Stock.

                  Initially, nine hundred fifty thousand (950,000) Shares were
reserved for issuance under the Plan. In January 2000, the Plan was amended to
increase the number of Shares reserved for issuance under the Plan by six
hundred thousand (600,000) Shares for a total reserve of one million five
hundred fifty thousand (1,550,000) Shares. In March 2000, the Company

                                        4

<PAGE>

effected a two-for-one split of the Company's common stock thereby increasing
the number of Shares reserved for issuance under the Plan to three million one
hundred thousand (3,100,000) Shares. In October 2000, the Plan was amended to
increase the number of Shares reserved for issuance under the Plan by five
hundred thousand (500,000) Shares for a total reserve of three million six
hundred thousand (3,600,000) Shares. In May 2001, the Plan was amended to
increase the number of Shares reserved for issuance under the Plan by one
million (1,000,000) Shares for a total reserve of four million six hundred
thousand (4,600,000) Shares. As a result of the Company's distribution of all
(or substantially all) of the shares of capital stock of Ceva, Inc. in November
2002, the number of shares reserved for issuance under the Plan was adjusted so
that 5,507,873 Shares are available for issuance under the Plan.

                  (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. If any unissued Shares are
retained by the Company upon exercise of an Award in order to satisfy the
exercise price for such Award or any withholding taxes due with respect to such
Award, such retained Shares subject to such Award shall become available for
future issuance under the Plan (unless the Plan has terminated). 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. 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.

                        (ii)    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 to whom Awards may be
granted from time to time hereunder;

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

                                        5

<PAGE>

                        (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;

                        (vii)   to construe and interpret the terms of the Plan
and Awards granted pursuant to the Plan, 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 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.

                  (c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.

        5.      Eligibility. Awards may be granted to Employees, excluding
Officers. An Employee who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees (excluding
Officers) who are residing in foreign jurisdictions as the Administrator may
determine from time to time.

        6.      Terms and Conditions of Awards.

                  (a) 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.

                                        6

<PAGE>

                  (b) 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.

                  (c) 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. The 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.

                  (d) 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.

                  (e) Early Exercise. The Award Agreement may, but need not,
include a provision whereby the Grantee may elect at any time while in
Continuous Service 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.

                  (f) Term of Award. The term of each Award shall be the term
stated in the Award Agreement.

                  (g) Transferability of Awards. Awards shall be transferable to
the extent provided in the Award Agreement.

                  (h) 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
to whom an Award is so granted within a reasonable time after the date of such
grant.

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

                  (a) Exercise or Purchase Price. The exercise price for an
Award shall be determined by the Administrator.

                  (b) Consideration. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise of an Award
including the method of payment, shall be determined by the Administrator. In
addition to any other types of consideration the

                                        7

<PAGE>

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 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. 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

                                        8

<PAGE>

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.

                  (c) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Award previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Grantee at the time that such offer is made.

        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, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in

                                        9

<PAGE>

the number of issued Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of 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; 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. In the event of a Spin-off
Transaction, the Administrator may in its discretion 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. The Administrator shall have the authority, exercisable either in
advance of any actual or anticipated Corporate Transaction, Change in Control or
Related Entity Disposition or at the time of an actual Corporate Transaction,
Change in Control or Related Entity Disposition and exercisable at the time of
the grant of an Award under the Plan or any time while an Award remains
outstanding, to provide for the full automatic vesting and exercisability of one
or more outstanding unvested Awards under the Plan and the release from
restrictions on transfer and repurchase or forfeiture rights of such Awards in
connection with a Corporate Transaction, Change in Control or Related Entity
Disposition, on such terms and conditions as the Administrator may specify. The
Administrator also shall have the authority to condition any such Award vesting
and exercisability or release from such limitations upon the subsequent
termination of the Continuous Service of the Grantee within a specified period
following the effective date of the Corporate Transaction, Change in Control or
Related Entity Disposition. The Administrator may provide that any Awards so
vested or released from such limitations in connection with a Change in Control
or Related Entity Disposition, shall remain fully exercisable until the
expiration or sooner termination of the Award. Effective upon the consummation
of a Corporate Transaction, all outstanding Awards under the Plan shall
terminate unless assumed by the successor company or its Parent.

        12.     Effective Date and Term of Plan. The Plan shall become effective
upon its adoption by the Board and shall continue in effect until terminated by
the Board. Subject to Section 16, below, and Applicable Laws, Awards may be
granted under the Plan upon its becoming effective.

        13.     Amendment, Suspension or Termination of the Plan.

                        (i)     The Board may at any time amend, suspend or
terminate the Plan. To the extent necessary to comply with Applicable Laws, the
Company shall obtain stockholder approval of any Plan amendment in such a manner
and to such a degree as required.

                                       10

<PAGE>

                  (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 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.

        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 on November 8,
1998. 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
Ceva, Inc. held by the Company to the stockholders of the Company. On November
25, 2002, the Board adopted and approved an amendment and restatement of the
Plan to provide that the Plan shall continue in effect until terminated by the
Board.

                                       11

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