Document:

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                                                                   Exhibit 10.5

                 DSP CEVA, INC. TECHNOLOGY TRANSFER AGREEMENT

   This DSP Ceva Technology Transfer Agreement (this "Agreement"), effective as
of November 1, 2002 (the "Effective Date"), is entered into by and between Ceva,
Inc. ("Ceva"), a Delaware corporation, and DSP Ceva, Inc. ("DSP Ceva"), a
Delaware corporation and a wholly owned subsidiary of Ceva.

                                   RECITALS

   A. Ceva has received from DSP Group, Inc. ("DSPGI") certain assets and
rights related to developing and licensing digital signal processing cores, and
has assumed certain related obligations, pursuant to the Ceva, Inc. Technology
Transfer Agreement between DSPGI and Ceva dated November 1, 2002 ("DSPGI
Agreement")

   B. Ceva desires to assign and transfer such assets, rights, and obligations
and DSP Ceva desires to and assume such assets, rights, and obligations from
Ceva, in accordance with the terms and conditions set forth herein.

                                  AGREEMENTS

   Now, therefore, in consideration of the mutual covenants and the other terms
and conditions contained herein, the parties hereby agree as follows:

                                  ARTICLE I.

                                  DEFINITIONS

   In addition to the capitalized terms defined elsewhere in this Agreement,
the following terms shall have the following meanings:

   SECTION 1.1. Party or Parties.  "Party" or "Parties" shall mean DSP Ceva
and/or Ceva, as applicable, including their respective permitted successors and
assigns.

   SECTION 1.2. Transferred Assets.  "Transferred Assets" small mean all
assets, contracts and intellectual property rights assigned and transferred to
Ceva by DSPGI under the DSPGI Agreement.

   SECTION 1.3. Other Terms.  Except as expressly defined or otherwise modified
herein, all capitalized terms in this Agreement shall have the same meanings as
set forth in the DSPGI Agreement.

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                                  ARTICLE II.

                         ASSIGNMENT OF DSPGI AGREEMENT

   SECTION 2.1. Assignment of DSPGI Agreement.  Ceva hereby assigns and
transfers the DSPGI Agreement and all rights and obligations thereunder to DSP
Ceva and DSP Ceva accepts such assignment and transfer. Ceva agrees to assume
and shall assume all of the rights and obligations of Ceva set forth in the
DSPGI Agreement, and DSP Ceva agrees to be bound and shall be bound by all the
terms and conditions of the DSPGI Agreement as if DSP Ceva were an original
party thereto. Assumption of the DSPGI Agreement by DSP Ceva will not affect
Ceva's obligations thereunder.

   SECTION 2.2. Transfer of Assets.  Ceva hereby irrevocably assigns and
transfers to DSP Ceva, all of its right, title and interest throughout the
world in and to the Transferred Assets.

   SECTION 2.3. Delivery.  Upon the Effective Date, Ceva shall deliver to DSP
Ceva (a) the tangible Other Transferable Assets, and (b) the copies of tangible
embodiments of the Transferable Licensing IP, Third Party Licenses, employment
agreements of Transferred Employees, intangible Other Transferable Assets, and
Other Contracts, in each case as received from DSPGI.

   SECTION 2.4. No Additional Delivery Obligation.  The Parties hereby
acknowledge and agree that all Transferred Assets assigned or transferred
hereunder will be transferred to DSP Ceva from Ceva and that the Transferring
Entities have no additional obligation (other than the obligation to deliver
such assets to Ceva in accordance with the DSPGI Agreement) to deliver any
Transferred Assets directly to DSP Ceva hereunder.

   SECTION 2.5. Further Assurances.  At any time and from time to time after
the Effective Date, at the request of a Party, the other Party shall execute
and deliver such written instruments and extend such other cooperation as may
be necessary in the reasonable opinion of the other Party to effect, evidence,
record or perfect any of the assignments, transfers and other rights set forth
in this Agreement, including execution and acknowledgement of assignments and
other instruments.

                                 ARTICLE III.

                                 MISCELLANEOUS

   SECTION 3.1. Relationship of Parties.  Nothing contained in this Agreement
shall be deemed to constitute either Party or any of its Affiliates the
partner, agent, or legal representative of the other Party or its Affiliates or
to create any fiduciary relationship for any purpose whatsoever. Except as
otherwise specifically provided in this Agreement, nothing in this Agreement
shall confer on either Party or any of its Affiliates any authority to act for,
bind, or create or assume any obligation or responsibility on behalf of the
other Party or its Affiliates.

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   SECTION 3.2. Notices.  All notices provided pursuant to this Agreement shall
be delivered by personal delivery, overnight courier, or facsimile, and shall
be deemed effective on the date on which delivery to the intended recipient of
the notice was accomplished. Such notices shall be delivered to the following
addresses:

   If to Ceva:                         If to DSP Ceva:

   SECTION 3.3. Choice of Law.  This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of Delaware
(other than as to its laws of arbitration which shall be governed under the
Arbitration Act (as defined in the Separation Agreement) or other applicable
federal law pursuant to Section 8.10 of the Separation Agreement), irrespective
of the choice of laws principles of the State of Delaware, as to all matters,
including matters of validity, construction, effect, enforceability,
performance and remedies. Any dispute by either Party arising out of or
relating to this Agreement be finally settled in accordance with the procedures
and terms set forth in Article VIII of the Separation Agreement.

   SECTION 3.4. Entire Agreement.  This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and
supersedes all previous communications, agreements, and understandings between
the Parties relating to the subject matter hereof. Neither Party has entered
into this Agreement in reliance upon any representation, warranty, or
undertaking of the other Party that is not set out or referred to in this
Agreement. If there is a conflict between this Agreement and the Separation and
Distribution Agreement, the terms of this Agreement will govern

   SECTION 3.5. Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be held to
be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

   SECTION 3.6. Headings.  The section or other headings herein are inserted
only for convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement. Unless
otherwise stated, references to Sections herein are references to Sections
hereof.

   SECTION 3.7. Amendments; Waivers.  This Agreement may be amended, and the
taking of any action required hereunder may be waived, by the written consent
of each Party at the time such amendment or waiver is sought. No such waiver
shall operate as a waiver of, or estoppel with respect to, any other action. No
failure to exercise, and no delay in exercising, any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall single or partial
exercise of any right, remedy, or power hereunder

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preclude any other or further exercise thereof or the exercise of any other
right, remedy, or power provided herein or by law or at equity. The waiver of
the time for performance of any act or condition hereunder does not constitute
a waiver of the act or condition itself.

   SECTION 3.8. Successors; No Assignment.  Each Party agrees that it will not
assign, sell, delegate, or otherwise transfer, whether voluntarily or
involuntarily, any right or obligation under this Agreement, provided, however,
that either Party ("Assigning Party") may assign, sell, delegate and otherwise
transfer this Agreement, together with all of the Assigning Party's rights and
obligations hereunder without such approval in connection with a merger,
reorganization, reincorporation into another state, or sale of all, or
substantially all, of such Party's business and assets relating to this
Agreement, if the assignee agrees to be bound by all of the terms and
conditions of this Agreement to the same extent as the Assigning Party. Any
purported assignment, sale, delegation or other transfer in violation of this
Section 3.8 shall be null and void. Subject to the foregoing limits on
assignment and delegation, this Agreement shall be binding upon and shall inure
to the benefit of the Parties and their respective successors and assigns.

   SECTION 3.9. Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.

   SECTION 3.10. Recovery of Costs and Attorney's Fees.  In any legal action,
or other proceeding brought to enforce or interpret the terms of this
Agreement, the substantially prevailing Party shall be entitled to reasonable
attorney's fees and any other costs incurred in that proceeding in addition to
any other relief to which it is entitled.

   SECTION 3.11. Third Party Beneficiaries.  The provisions of this Agreement
are solely for the benefit of the Parties (including their permitted successors
and assigns), and not for the benefit of any Third Party, except that DSPGI
shall be a beneficiary of DSP Ceva's agreement to be bound by the terms and
conditions of the DSPGI Agreement.

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   IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized Representatives as of the day and year first written
above.

CEVA, INC.                              DSP CEVA, INC.

By: /s/ Yaniv Arieli                    By: /s/ Gideon Wertheizer
   --------------------------------        ----------------------------------
   Yaniv Arieli                            Gideon Wertheizer
   Chief Financial Officer                 Chief Executive Officer

Date  _____________________________     Date  _______________________________

Consent of DSP Group, Inc.

   DSP Group, Inc. hereby consents and agrees to this Agreement and all
assignments and transfers contemplated hereunder.

Acknowledged and agreed:

DSP GROUP, INC.

By: /s/ Eliyahu Ayalon
   --------------------------------
   Eliyahu Ayalon
   Chief Executive Officer

Date_______________________________

                                        5<PAGE>

                                                                  Exhibit 10.12

                             EMPLOYMENT AGREEMENT

   THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 1st day of November,
2002, is entered into by ParthusCeva, Ltd. with its principal place of business
at 5 Shenkar Street, Herzelia, Israel 46120 (the "Company"), and Eliyahu
Ayalon, residing at            (the "Employee").

   The Company desires to employ the Employee, and the Employee desires to
perform certain services for the Company and for its parent, ParthusCeva, Inc.
("Parent"). In consideration of the mutual covenants and promises contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties to this Agreement,
the parties agree as follows:

   1. Term of Service.  The Company hereby agrees to employ the Employee, and
the Employee hereby accepts employment with the Company, upon the terms set
forth in this Agreement, for the period commencing on the date hereof and until
terminated in accordance with the provisions of Section 4 (such period, the
"Employment Period").

   For purposes of determining Employee's eligibility for benefits, Employee
shall be treated as if he had been continuously employed with employer
commencing with employee's date of hire with DSP Group.

   The Company reserves the right to pay the Employee's salary in lieu of any
period of notice required to be given hereunder and both parties may waive
their right to such notice period.

   2. Title; Capacity.  The Employee shall serve as Chairman of the Board of
Directors of Parent. The Employee shall be based at the Company's offices in
Herzliya, Israel. The Employee shall have the duties specified in the Parent's
Bylaws and such additional authority as is delegated to the Employee by the
Company's or Parent's Board of Directors.

   The Employee hereby accepts such employment and agrees to undertake the
duties and responsibilities inherent in such position. The parties acknowledge
that Employee will have other responsibilities and employment obligations,
other than to the Company. The Employee agrees to devote such time, attention
and energies to the business and interests of the Company and Parent as may be
reasonably required for Employee's position during the Employment Period. The
Employee agrees to abide by the rules, regulations, instructions, personnel
practices and policies applicable to directors of the Company and/or the Parent
and any changes therein which may be adopted from time to time.

   3. Compensation and Benefits.

      3.1 Salary.  The Company shall pay the Employee, in periodic installments
   in accordance with the Company's customary payroll practices, an annual base
   salary of $170,000 commencing on the Commencement Date. Such salary shall be
   subject to increase but not decrease thereafter as determined by the
   Compensation Committee of Parent, at any time. Compensation shall be
   reviewed no less frequently than annually, but the Compensation Committee
   shall have no obligation to make any adjustment in any such review.

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      3.2 Provisions Applicable Only if Employee's Primary Place of Employment
   is Israel.  The customary working hours at the Company are 43 hours a week
   and the customary working days are Sunday through Thursday. Although
   Employee's position with the Company is not a full-time position, since
   Employee's job is one requiring personal trust, as defined in the Hours of
   Work and Rest Law, 5711 - 1951, the provisions of this law shall not apply
   to Employee. From time to time, according to the requirements of Employee's
   job, Employee may be requested to work in excess of the customary working
   hours and on Fridays. In such cases Employee will not be paid an increment
   for overtime. Employee must inform the Company immediately upon Employee's
   receipt of notice for active reserve duty. Employee's salary for the reserve
   duty period will be paid to Employee in full as provided herein for the
   duration of the Agreement, subject to confirmation of Employee's active
   reserve duty.

      3.3 Fringe Benefits.  The Employee shall be entitled to participate in
   the bonus and benefit programs that the Company establishes, including, but
   not limited to, benefits as required by the laws of Israel or currently
   offered to the Employee by the Company as indicated on Schedule A to this
   Agreement.

      3.4 Reimbursement of Expenses.  The Company shall reimburse the Employee
   for all reasonable travel, entertainment and other expenses incurred or paid
   by the Employee in connection with, or related to, the performance of his
   duties, responsibilities or services under this Agreement, in accordance
   with policies and procedures, and subject to limitations, adopted by the
   Company from time to time.

      3.5 Withholding.  All salary, bonus and other compensation payable to the
   Employee shall be subject to applicable withholding taxes.

   4. Termination of Employment Period.  The employment of the Employee by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of the following:

      4.1 At the election of the Company, for Cause as defined in clause (a)
   below, upon twenty-four (24) months written notice by the Company to the
   Employee, which notice shall identify the Cause upon which the termination
   is based, and opportunity for the Employee to be heard. No notice shall be
   required for termination for Cause as defined in clauses (b), (c), (d), or
   (e) below, except to the extent that notice is required by law in the
   jurisdiction in which the Employee is employed. For the purposes of this
   Section 4.1, "Cause" shall mean (a) a good faith finding by the Board of
   Directors of the Parent (other than the Employee) (the "Board") that the
   Employee has failed to perform his reasonably assigned duties for the
   Company or Parent and has failed to remedy such failure within 15 days
   following written notice from the Company to the Employee notifying him of
   such failure, (b) the Employee has willfully engaged in illegal conduct or
   gross misconduct which is materially and demonstrably injurious to the
   Company and/or Parent, (c) the conviction of the Employee of, or the entry
   of a pleading of guilty or nolo contendere (or any analogous proceeding) by
   the Employee to, any crime involving moral turpitude or any felony; (d) the
   Employee is adjudicated bankrupt or makes any arrangement or composition
   with the Employee's creditors; or (e) the Employee becomes of unsound mind
   or is committed as patient for the purposes of any legislation relating to
   mental

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   health. The parties acknowledge that although the Employee may be removed as
   Chairman of the Board pursuant to this Section 4.1, nothing in this
   Agreement shall permit removal of Employee as a director of the Parent
   except pursuant to the procedures set forth in the Delaware general
   corporation law;

      4.2 At the election of the Employee, for Good Reason (as defined below),
   immediately upon written notice by the Employee to the Company, which notice
   shall identify the Good Reason upon which the termination is based. For the
   purposes of this Section 4.2, "Good Reason" for termination shall mean the
   occurrence, without the Employee's written consent, of any of the events or
   circumstances set forth in clauses (a) through (e) below. Notwithstanding
   the occurrence of any such event or circumstance, such occurrence shall not
   be deemed to constitute Good Reason if such event or circumstance has been
   fully corrected and the Employee has been reasonably compensated for any
   losses or damages resulting therefrom (provided that such right of
   correction by the Company shall only apply to the first notice of
   termination for Good Reason given by the Employee) within 15 days following
   written notice from the Employee to the Company notifying the Company of
   such event.

      (a) the assignment to the Employee of duties inconsistent in any material
   respect with the Employee's position (including status, offices, titles and
   reporting requirements), authority or responsibilities, or any other action
   or omission by the Company or Parent which results in a material diminution
   in such position, authority or responsibilities;

      (b) a reduction in the Employee's annual base salary as set forth in
   Section 3.1 or as may be increased from time to time in accordance with
   Section 3.1, except for a comparable reduction in salary affecting all
   similarly situated employees;

      (c) the failure by the Company to (i) continue in effect any material
   compensation or benefit plan or program (including without limitation any
   life insurance, medical, health and accident or disability plan and any
   vacation or automobile program or policy) (a "Benefit Plan") in which the
   Employee participates or which is applicable to the Employee, unless an
   equitable arrangement (embodied in an ongoing substitute or alternative
   plan) has been made with respect to such plan or program, (ii) continue the
   Employee's participation therein (or in such substitute or alternative
   plan), or in any option plan of the Company or Parent, on a basis not
   materially less favorable, both in terms of the amount of benefits provided
   and the level of the Employee's participation relative to other
   participants, than the basis existing on the date hereof or as may be agreed
   from time to time by the Company and the Employee or (iii) award cash
   bonuses to the Employee in amounts and in a manner substantially consistent
   with awards to other members of the senior management team in light of the
   Employee's title and responsibilities;

      (d) a change by the Company in the location at which the Employee
   performs his principal duties for the Company to a new location that is both
   (i) more than 35 kilometers further from the Employee's principal residence
   than the location at which the Employee currently performs his principal
   duties for the Company and (ii) more than 35 kilometers from the location at
   which the Employee performs his principal duties for the Company; or

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      (e) any material breach by the Company of this Agreement.

   For purposes of this Agreement, the Employee's right to terminate his
employment for Good Reason shall not be affected by his incapacity due to
physical or mental illness;

      4.3 Upon the death of the Employee;

      4.4 At the election of the Company upon determination by the Board, with
   not less than 30 days prior written notice, or at the election of the
   Employee, with not less than twelve (12) months prior written notice.

      4.5 For purposes of this Agreement, employment shall include service as a
   director of Parent or consultant to the Company or Parent

   5. Effect of Termination.

      5.1 Change in Control.  Notwithstanding any provisions hereof to the
   contrary, in the event that the at-will employment relationship is
   terminated by the Employee for Good Reason (as defined in Section 4.2) or by
   the Company, or any acquiring or succeeding corporation, without Cause (as
   defined in Section 4.1) within 12 months after a Change in Control (as
   defined below), the provisions of Section 5.2(b) shall apply.

      "Change in Control" shall mean the consummation of a merger,
   consolidation, reorganization, recapitalization or share exchange involving
   the Parent, a transaction involving the sale of the voting stock of the
   Parent or a sale or other disposition of all or substantially all of the
   assets of the Parent in one or a series of transactions (a "Business
   Combination"), unless, immediately following such Business Combination, all
   or substantially all of the individuals and entities who were the beneficial
   owners of the Common Stock of the Parent immediately prior to such Business
   Combination beneficially own, directly or indirectly, more than 50% of the
   combined voting power of the then-outstanding securities entitled to vote
   generally in the election of directors of the resulting or acquiring
   corporation in such Business Combination in substantially the same
   proportions as their ownership of the Common Stock of the Parent immediately
   prior to such Business Combination.

      5.2 Payments Upon Termination.

      (a) In the event the Employee's employment is terminated by the Company
   pursuant to Section 4.1 or Section 4.3, the Company shall pay to the
   Employee the compensation and benefits otherwise payable to him under
   Section 3 through the last day of his actual employment by the Company,
   including, but not limited to, any bonus awarded prior to the date of
   termination that is attributable to the period of employment, even if such
   bonus is payable after the date of termination. In addition, in the event
   that the Employee's employment is terminated by the Company pursuant to
   Section 4.3, the vesting of any options granted to the Employee by the
   Parent shall accelerate in full.

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      (b) In the event the Employee's employment is terminated by the Employee
   pursuant to Section 4.2 or 4.4 or by the Company (including by an acquiring
   or succeeding corporation following a Change in Control) pursuant to Section
   4.4, (i) the Company shall pay to the Employee an amount equal to the
   compensation to which the Employee would otherwise have been entitled had
   the Employee remained employed by the Company for 2 years after such
   termination (based on the Employee's salary as in effect on the date of
   termination), (ii) the Company shall continue to provide to the Employee
   medical and pension benefits for two years after such termination and any
   other benefits as the Company is required to do so by the laws of the
   jurisdiction in which the Employee is employed (to the extent such benefits
   can be provided to non-employees, or to the extent such benefits cannot be
   provided to non-employees, then the cash equivalent thereof), and (iii) the
   vesting of any options granted to the Employee by Parent shall accelerate in
   full. The payment to the Employee of the amounts payable under this Section
   5.2(b) shall (i) be contingent upon the execution by the Employee of a
   release in a form reasonably acceptable to the Company and (ii) constitute
   the sole remedy of the Employee in the event of a termination of the
   Employee's employment in the circumstances set forth in this Section 5.2(b).

      5.3 Survival.  The provisions of Sections 5.1, 5.2(b) and 6 shall survive
   the termination of this Agreement.

   6. Non-Competition and Non-Solicitation; Proprietary Information and
Developments.

   The Employee shall execute, simultaneously with the execution of this
Agreement, or otherwise upon the request of the Company, the Company's
customary form of non-disclosure and assignment of inventions agreement and
non-competition and non-solicitation agreement.

   7. Other Agreements.  The Employee represents that his performance of all
the terms of this Agreement and the performance of his duties as an employee of
the Company do not and will not breach any agreement with any current or prior
employer or other party to which the Employee is a party (including without
limitation any nondisclosure or non-competition agreement). Any agreement to
which the Employee is a party relating to nondisclosure, non-competition or
non-solicitation of employees or customers is listed on Schedule B attached
hereto.

   8. Miscellaneous.

      8.1 Notices.  Any notices delivered under this Agreement shall be deemed
   duly delivered: (i) upon being hand delivered; (ii) six business days after
   it is sent by registered or certified mail, return receipt requested,
   postage prepaid; or (iii) one business day after it is sent for
   next-business day delivery via a reputable international overnight courier
   service, in each case to the address of the recipient set forth in the
   introductory paragraph hereto. Either party may change the address to which
   notices are to be delivered by giving notice of such change to the other
   party in the manner set forth in this Section 8.1.

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      8.2 Pronouns.  Whenever the context may require, any pronouns used in
   this Agreement shall include the corresponding masculine, feminine or neuter
   forms, and the singular forms of nouns and pronouns shall include the
   plural, and vice versa.

      8.3 Entire Agreement.  The Company acknowledges that Employee and Parent
   have entered into a Stock Option Award Agreement, dated as of July 19, 2000
   and attached hereto as Schedule C (the "Option Agreement"). The Company
   acknowledges that the Option Agreement will remain in effect after the
   signing of this Agreement. If there is any discrepancy between the terms of
   the Option Agreement and this Agreement, the terms more favorable to
   Employee contained in either of the Agreements shall govern. This Agreement
   constitutes the entire agreement between the parties and supersedes all
   prior agreements and understandings, whether written or oral, relating to
   the subject matter of this Agreement, except for those agreements expressly
   referenced in this Agreement (including the Option Agreement and the
   Company's non-disclosure and assignment of inventions agreement and
   non-competition and non-solicitation agreement referenced in Section 6).

      8.4 Amendment.  This Agreement may be amended or modified only by a
   written instrument executed by both the Company and the Employee.

      8.5 Governing Law.  This Agreement shall be governed by and construed in
   accordance with the laws of the State of Israel (without reference to the
   conflicts of laws provisions thereof). Any action, suit or other legal
   proceeding arising under or relating to any provision of this Agreement
   shall be commenced only in a court of the State of Israel, and the Company
   and the Employee each consents to the jurisdiction of such a court. The
   Company and the Employee each hereby irrevocably waive any right to a trial
   by jury in any action, suit or other legal proceeding arising under or
   relating to any provision of this Agreement.

      8.6 Successors and Assigns.  This Agreement shall be binding upon and
   inure to the benefit of both parties and their respective successors and
   assigns, including any corporation with which, or into which, the Company
   may be merged or which may succeed to the Company's assets or business,
   provided, however, that the obligations of the Employee are personal and
   shall not be assigned by him or her.

      8.7 Waivers.  No delay or omission by the Company in exercising any right
   under this Agreement shall operate as a waiver of that or any other right. A
   waiver or consent given by the Company on any one occasion shall be
   effective only in that instance and shall not be construed as a bar or
   waiver of any right on any other occasion.

      8.8 Captions.  The captions of the sections of this Agreement are for
   convenience of reference only and in no way define, limit or affect the
   scope or substance of any section of this Agreement.

      8.9 Severability.  In case any provision of this Agreement shall be
   invalid, illegal or otherwise unenforceable, the validity, legality and
   enforceability of the remaining provisions shall in no way be affected or
   impaired thereby.

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      8.10 Collective Agreements.  There are no collective agreements affecting
   the terms and conditions of employment of the Employee.

   THE EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

                           [SIGNATURE PAGE FOLLOWS]

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   IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.

                                     PARTHUSCEVA, LTD.

                                     By:    /s/ Moshe Zelnik
                                         ---------------------------------------

                                     Title: Moshe Zelnik, Vice President Finance
                                           -------------------------------------

                                     EMPLOYEE

                                     /s/ Eliyahu Ayalon
                                     -------------------------------------------
                                     Eliyahu Ayalon

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                                  SCHEDULE A

                                Fringe Benefits

Holidays and Vacation:......  In addition to all public holidays, Employee will
                              be entitled to 30 days annual leave during each
                              twelve (12) months of employment, which includes
                              any shut-down period that may occur at Christmas
                              or Easter, holidays to be taken by
                              pre-arrangement with the Company. Employee may
                              not accrue vacation days for more than thirty-six
                              (36) months of employment.

Accumulated Vacation
and Sick Days:

Performance Bonus:..........  Employee will be entitled to such bonuses as may
                              be awarded by the Compensation Committee of the
                              Board of Directors of the Company in its sole
                              discretion.

Pension Fund:...............  The Company will allocate to the pension fund, a
                              provident fund or to Manager's Insurance, as
                              Employee shall choose, out of the salary as
                              specified in Section 3 of the Agreement, in
                              accordance with the following breakdown:

                              (i) 8.33% of the salary on account of severance
                              pay--at the Company's expense;
                              (ii) 5% of the salary on account of benefits--at
                              the Company's expense;
                              (iii) 5% of the salary on account of benefits--at
                              Employee's expense;
                              (iv) Inability to work insurance at the Company's
                              expense and in accordance with the Company's
                              procedures;

                              The Company's allocations to Manager's Insurance
                              are made in lieu of any other obligation to pay
                              severance or make allocations to a pension fund.
                              Payments are to be made to the pension fund up to
                              the maximum tax-free amount allowed. Any payments
                              that are to be made by the Company, but which are
                              in excess of the maximum tax-free amounts, shall
                              be paid to Employee as additional base salary.
                              Employee's agreement to the allocation made in
                              this section absolves the Company from the need
                              to contact the Minister of Labor in order to
                              obtain his approval in accordance with clause 14
                              of the Severance Pay Law. However, should the
                              need arise to contact the Minister of Labor and
                              obtain a suitable permit, Employee's signature on
                              this Agreement shall constitute Employee's
                              consent allowing the Company to contact the
                              Minister of Labor in Employee's name in order to
                              obtain a permit. If, in the future, the Company
                              is compelled by law and/or by an order of
                              expansion that applies to the entire economy, to
                              allocate funds to an arrangement or to a
                              comprehensive or other pension fund, this
                              allocation will be made to the new arrangement or
                              fund that will

                                      9

<PAGE>

                              be in force instead of the arrangement in this
                              agreement, unless subject to the regulations of
                              the appropriate fund.

Sick Leave:.................  Employee shall be entitled to 30 days of sick
                              leave per year, with a maximum accumulation of 90
                              days of sick leave. Employee's entitlement to
                              sick leave is conditioned upon proper medical
                              certification of an illness. Employee shall not
                              be entitled to receive pay in lieu of taking sick
                              leave.

Study Fund:.................  During the period of Employee's employment at the
                              Company, the Company will make allocations to a
                              Study Fund in the amount of 7.5% of Employee's
                              salary, at the Company's expense, and 2.5% of
                              Employee's salary up to the maximum tax-free
                              amount allowed, at the Employee's expense.
                              Payments are to be made to the Study Fund up to
                              the maximum tax-free amount allowed. Any payments
                              that are to be made by the Company, but which are
                              in excess of the maximum tax-free amounts, shall
                              be paid to Employee as additional base salary.

                                      10

<PAGE>

                                  SCHEDULE B

                          Current / Prior Agreements

Employment Agreement, dated April, 1996, between Eli Ayalon and DSP
Semiconductors Ltd., as amended

DSP Semiconductor Ltd. Employee Proprietary Information and Inventions
Undertaking, dated April 30, 1996 between DSP Semiconductor and Eli Ayalon.

Both agreements are currently in effect

                                      11

<PAGE>

                                  SCHEDULE C

                        Option Agreement of Eli Ayalon

                                      12

<PAGE>

                   DSP CORES, INC. 2000 STOCK INCENTIVE PLAN

                          NOTICE OF STOCK OPTION AWARD

     Grantee's Name and Address:     Eli Ayalon _____________________________

                                     ________________________________________

                                     ________________________________________

     You have been granted an option to purchase shares of Common Stock of the
Company, US $0.001 par value each (following the 1/1000 split) subject to the
terms and conditions of this Notice of Stock Option Award (the "Notice"), the
DSP Cores, Inc. 2000 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                  July 19, 2000____________________________

     Vesting Commencement Date      July 19,2000_____________________________

     Exercise Price Per share       $107.40__________________________________

     Total Number of Shares
     Subject to the Option (the
     "Shares")                      40,000___________________________________

     Total Exercise Price           $4,296,000_______________________________

     Type of Option:                ______    Incentive Stock Option

                                    ______    Non-Qualified Stock Option

     Expiration Date:               July 18, 2010

     Post-Termination Exercise
     Period:                        2 Years

Vesting Schedule:

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

     25% of the Shares subject to the Option shall vest on date of grant, and
1/4 of the Shares subject to the Option shall vest each anniversary thereafter.

                                        1

<PAGE>

     Notwithstanding anything to the contrary herein contained, the Option may
not be exercised unless and until the distribution of all or substantially all
of the shares of capital stock of the Company held by DSP Group, Inc., to its
stockholders (the "Spin-Off"), is consummated.

     During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease. 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.

     In the event of termination of Grantee's Continuous Service as Chairman of
the Board of the Company, the vesting of Grantee's options shall be fully
accelerated as of the effective date of termination.

     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 CORES, INC.,
                                           a Delaware corporation

                                           By:    /s/ Moshe Zelnik
                                               ------------------------------

                                           Name: MOSHE ZELNIK

                                           Title: VP FINANCE & CFO

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) AND ONLY FOLLOWING CONSUMMATION OF THE SPIN-OFF. 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 COMPANY'S RIGHT 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 agreesto accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions

                                        2

<PAGE>

arising under this Notice, the Plan or the Option Agreement. The Grantee further
agrees to notify the Company upon any change in the residence address indicated
in this Notice.

Dated: _________________                   Signed:    /s/ Eliyahu Ayalon
                                                   --------------------------
                                                          Grantee

                                        3

<PAGE>
                                                               Award Number: 53

                    DSP CORES, INC. 2000 STOCK INCENTIVE PLAN

                          STOCK OPTION AWARD AGREEMENT

1.   Grant of Option. DSP Cores, 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 2000 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
     grated, 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. No partial exercise
             of the Option may be for less than the lesser of five percent (5%)
             of the total number of Shares subject to the option or the
             remaining number of Shares subject to the Option. 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

                                        1

<PAGE>

             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 4(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, obligations 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.   Grantee's Representations. The Grantee understands that neither the Option
     nor the Shares exercisable pursuant to the Option have been registered
     under the Securities Act of 1933, as amended or any United States
     securities laws. In the event the Shares purchasable pursuant to the
     exercise of the Option have not been registered under the Securities Act of
     1933, as amended, at the time the Option is exercised, the Grantee shall,
     if requested by the Company, concurrently with the exercise of all or any
     portion of the Option, deliver to the Company his or her Investment
     Representation Statement in the form attached hereto as Exhibit B.

4.   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)     if the exercise occurs on or after the Registration Date, 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

                                        2

<PAGE>

             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);

     (d)     if the exercise occurs on or after the Registration Date, 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; or

     (e)     if the exercise occurs in connection with a Corporate Transaction
             and provided that the aggregate Exercise Price for the number of
             Shares being purchased exceeds three thousand dollars ($3,000),
             payment pursuant to a promissory note as described below.

             (i)     The promissory note shall have a term of thirty (30) days
                     with principal and interest payable at the end of the term;

             (ii)    The promissory note shall bear interest at the minimum rate
                     required by the federal tax laws to avoid the imputation of
                     interest income to the Company and compensation income to
                     the Grantee;

             (iii)   The Grantee shall be personally liable for payment of the
                     promissory note and the promissory note shall be secured by
                     the Shares purchased upon delivery of the promissory note,
                     or such other collateral of equal or greater value, in a
                     manner satisfactory to the Administrator with such
                     documentation as the Administrator may request; and

     (f)     The promissory note shall become due and payable upon the
             occurrence of the sale or transfer of the Shares purchased with the
             promissory note.

5.   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. In addition, the Option may not be
     exercised until such time as the Plan has been approved by the shareholders
     of the Company.

6.   Termination or Change of Continuous Service. In the event the Grantee's
     Continuous Service terminates, for any reason other than Disability or
     Death, the Grantee may, to the extent otherwise so entitled at the date of
     such termination.

                                        3

<PAGE>

     (the "Termination Date"), exercise the Option during the Post-Termination
     Exercise Period. 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 Chairman of the Board of Directors to any other
     status, the Option shall remain in effect shall become fully vested;
     provided, however, with respect to any Incentive Stock Option that shall
     remain in effect after such change in status, 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, subject to provisions of applicable law.
     Except as provided in Sections 7 and 8 below, to the extent that the
     Grantee does not exercise the Option within the Post-Termination Exercise
     Period, the Option shall terminate.

7.   Disability of Grantee. In the event the Grantee's Continuous Service
     terminates as a result of his or her Disability, all options shall
     accelerate and immediately vest, 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, subject to any applicable law. To
     the extent that the Grantee does not exercise the Option to the extent so
     entitled within the time specified herein, the Option shall terminate.

8.   Death of Grantee. In the event of the termination of the Grantee's
     Continuous Service as Chairman of the Board 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 Options
     that shall accelerate and immediately vest. 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.

8A.  Corporate Transaction. In the event of a Corporate Transaction the Option
     shall automatically become fully vested and exercisable and be released
     from any restrictions on transfer (other than transfer restrictions
     applicable to Options) and repurchase or forfeiture rights, immediately
     prior to the specified effective date of such Corporate Transaction, for
     all of the Shares whether or not the Award is assumed by the successor
     corporation or the Parent thereof in connection with the Corporate
     Transaction. The Option shall be exercisable at any time during 2 year
     period following the effective date of the Corporate Transaction.

9.   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

                                        4

<PAGE>

     Grantee. The Option, if a Non-Qualified Stock Option may be transferred by
     will, by the laws of descent and distribution, and to the extent and in the
     manner authorized by the Administrator, to members of the Grantee's
     Immediate Family. The terms of the Option shall be binding upon the
     executors, administrators, heirs and successors of the Grantee.

10.  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.

11.  Company's Right of First Refusal.

     (a)     Transfer Notice. Neither the Grantee nor a transferee (either being
             sometimes referred to herein as the "Holder") shall sell,
             hypothecate, encumber or otherwise transfer any Shares or any right
             or interest therein without first complying with the provisions of
             this Section 11 or obtaining the prior written consent of the
             Company. In the event the Holder desires to accept a bona fide
             third-party offer for any or all the Shares, the Holder shall
             provide the Company with written notice (the "Transfer Notice") of:

             (i)     The Holder's intention to transfer;

             (ii)    The name of the proposed transferee;

             (iii)   The number of Shares to be transferred; and

             (iv)    The proposed transfer price or value and terms thereof.

     (b)     First Refusal Exercise Notice. The company shall have the right to
             purchase (the "Right of First Refusal") all but not less than all,
             of the Shares which are described in the Transfer Notice (the
             "Offered Shares") at any time during the period commencing upon
             receipt of the Transfer Notice and ending forty-five (45) days
             after the first date on which the Company determines that the Right
             of First Refusal may be exercised without incurring an accounting
             expense with respect to such exercise (the "Option Period") at the
             per share price or value and in accordance with the terms stated in
             the Transfer Notice, which Right of First Refusal shall be
             exercised by written notice (the "First Refusal Exercise Notice")
             to the Holder. During the Option Period and the 120-day period
             following the expiration of the Option Period, the Company also may
             exercise its Repurchase Right in lieu or in addition to its Right
             of First Refusal if the Repurchase Right is or becomes exercisable
             during the Option Period or such 120-day period.

     (c)     Payments Terms. The Company shall consummate the purchase of the
             Offered Shares on the terms set forth in the Transfer Notice within
             15 days after delivery of the First Refusal Exercise Notice;
             provided, however, that

                                        5

<PAGE>

             in the event the Transfer Notice provides for the payment for the
             Offered Shares other than in cash, the Company and/or its assigns
             shall have the right to pay for the Offered Shares by the
             discounted cash equivalent of the consideration described in the
             Transfer Notice as reasonably determined by the Administrator. Upon
             payment for the Offered Shares to the Holder or into escrow for the
             benefit of the Holder, the Company or its assigns shall become the
             legal and beneficial owner of the Offered Shares and all rights and
             interest therein or related thereto, and the Company shall have the
             right to transfer the Offered Shares to its own name or its assigns
             without further action by the Holder.

     (d)     Assignment. Whenever the Company shall have the right to purchase
             Shares under this Right of First Refusal, the Company may designate
             and assign one or more employees, officers, directors or
             stockholders of the Company or other persons or organizations, to
             exercise all or a part of the Company's Right of First Refusal.

     (e)     Non-Exercise. If the Company and/or assigns do not collectively
             elect to exercise the Right of First Refusal within the Option
             Period or such earlier time if the Company and/or its assigns
             notifies the Holder that it will not exercise the Right of First
             Refusal, then the Holder may transfer the Shares upon the terms and
             conditions stated in the Transfer Notice, provided that:

             (i)     The transfer is made within 120 days of the expiration of
                     the Option Period; and

             (ii)    The transferee agrees in writing that such Shares shall be
                     held subject to the provisions of this Option Agreement.

     (f)     Expiration of Transfer Period. Following such 120-day period, no
             transfer of the Offered Shares and no change in the terms of the
             transfer as stated in the Transfer Notice (including the name of
             the proposed transferee) shall be permitted without a new written
             Transfer Notice prepared and submitted in accordance with the
             requirements of this Right of First Refusal.

     (g)     Exception for Certain Family Transfers. Anything to the contrary
             contained in this section notwithstanding, the transfer of any or
             all of the Shares during the Grantee's lifetime or on the Grantee's
             death by will or intestacy to the Grantee's Immediate Family or a
             trust for the benefit of the Grantee or the Grantee's Immediate
             Family shall be exempt from the provisions of this Right of First
             Refusal (a "Permitted Transfer"); provided, however, that (i) the
             transferee or other recipient shall receive and hold the Shares to
             transferred subject to the provisions of this Option Agreement, and
             there shall be no further transfer of such Shares except in
             accordance

                                        6

<PAGE>

             with the terms of this Option Agreement and (ii) prior to any such
             transfer, each transferee shall execute an agreement pursuant to
             which such transferee shall agree to receive and hold such Shares
             subject to the provisions of this Option Agreement.

     (h)     Termination of Right of First Refusal. The provisions of this
             Right of First Refusal shall terminate as to all Shares upon the
             Registration Date.

     (i)     Additional Shares or Substituted Securities. In the event of any
             transaction described in Section 11(i) of the Plan, any new,
             substituted or additional securities or other property which is by
             reason of any such transaction distributed with respect to the
             Shares shall be immediately subject to the Right of First Refusal,
             but only to the extent the Shares are at the time covered by such
             right.

     (j)     Corporate Transaction. Immediately prior to the consummation of a
             Corporation Transaction described in Section 2(xii) of the Plan,
             the Right of First Refusal shall automatically lapse in its
             entirety, except to the extent this Option Agreement is assumed by
             the successor corporation (or its Parent) in connection with such
             Corporate Transaction, in which case the Right of First Refusal
             shall apply to the new capital stock or other property received in
             exchange for the Shares in consummation of the Corporate
             Transaction, but only to the extent the Shares are at the time
             covered by such right.

12.  Company's Repurchase Right.

     (a)     Grant of Repurchase Right. The Company is hereby granted the right
             (the "Repurchase Right"), exercisable at any time (i) during the
             ninety (90) day period following the Termination Date, or (ii)
             during the ninety (90) day period following an exercise of the
             Option that occurs after the Termination Date to repurchase all or
             any portion of the Shares (the "Share Repurchase Period").

     (b)     Exercise of the Repurchase Right. The Repurchase Right shall be
             exercisable by written notice delivered to each Holder of the
             Shares prior to the expiration of the Share Repurchase Period. The
             notice shall indicate the number of Shares to be repurchased and
             the date on which the repurchase is to be effected, such date to be
             not later than the last day of the Share Repurchase Period. On the
             date on which the repurchase is to be effected, the Company and/or
             its assigns shall pay to the Holder in cash or cash equivalents
             (including the cancellation of any purchase-money indebtedness) an
             amount equal to the Fair Market Value on the date immediately prior
             to the day on which the repurchase is to be effected, of the Shares
             which are to be repurchased from the Holder. Upon such payment or
             deposit into escrow for the benefit of the Holder, the Company

                                        7

<PAGE>

             and/or its assigns shall become the legal and beneficial owner of
             the Shares being repurchased and all rights and interest thereon
             or related thereto, and the Company shall have the right to
             transfer to its own name or its assigns the number of Shares
             being repurchased, without further action by the Holder.

     (c)     Assignment. Whenever the Company shall have the right to purchase
             Shares under this Repurchase Right, the Company may designate and
             assign one or more employees, officers, directors or stockholders
             of the Company or other persons or organizations, to exercise all
             or a part of the Company's Repurchase Right.

     (d)     Termination of the Repurchase Right. The Repurchase Right shall
             terminate with respect to any Shares for which it is not timely
             exercised. In addition, the Repurchase Right shall terminate and
             cease to be exercisable with respect to all Shares upon the
             Registration Date.

     (e)     Additional Shares or Substituted Securities. In the event of any
             transaction described in Section 11(i) of the Plan, any new,
             substituted or additional securities or other property which is by
             reason of any such transaction distributed with respect to the
             Shares shall be immediately subject to the Repurchase Right, but
             only to the extent the Shares are at the time covered by such
             right. Appropriate adjustments to reflect the distribution of such
             securities or property shall be made to the price per share to be
             paid upon the exercise of the Repurchase Right in order to reflect
             the effect of any such transaction upon the Company's capital
             structure.

     (f)     Corporate Transaction. Immediately prior to the consummation of a
             Corporate Transaction described in Section 2(xii) of the Plan, the
             Repurchase Right to the extent it has not been exercised shall
             automatically lapse in its entirety, except to the extent this
             Option Agreement is assumed by the successor corporation (or its
             Parent) in connection with such Corporate Transaction, in which
             case the Repurchase Right shall apply to the new capital stock or
             other property received in exchange for the Shares in consummation
             of the Corporate Transaction, but only to the extent the Shares are
             at the time covered by such right. Appropriate adjustments shall be
             made to the price per share payable upon exercise of the Repurchase
             Right to reflect the effect of the Corporate Transaction upon the
             Company's capital structure.

13.  Stop-Transfer Notices. In order to ensure compliance with the restrictions
     on transfer set forth in this Option Agreement, the Notice or the Plan, the
     Company may issue appropriate "stop transfer" instructions to its transfer
     agent, if any, and, if the Company transfers its own securities, it may
     make appropriate notations to the same effect in its own records.

                                        8

<PAGE>

14.  Refusal to Transfer. The Company shall not be required (i) to transfer on
     its books any Shares that have been sold or otherwise transferred in
     violation of any of the provision of this Option Agreement or (ii) to treat
     as owner of such Shares or to accord the right to vote or pay dividends to
     any purchaser or other transferee to whom such Shares shall have been so
     transferred.

15.  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

                                        9

<PAGE>

             more than two years after the Date of 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.

16.  Lock-Up Agreement.

     (a)     Agreement. The Grantee, if requested by the Company and the lead
             underwriter of any public offering of the Common Stock or other
             securities of the Company (the "Lead Underwriter"), hereby
             irrevocably agrees not to sell, contract to sell, grant any option
             to purchase, transfer the economic risk of ownership in, make any
             short sale of, pledge or otherwise transfer or dispose of any
             interest in any Common Stock or any securities convertible into or
             exchangeable or exercisable for or any other rights to purchase or
             acquire Common Stock (except Common Stock included in such public
             offering or acquired on the public market after such offering)
             during the 180-day period following the effective date of a
             registration statement of the Company filed under the Securities
             Act of 1933, as amended, or such shorter period of time as the Lead
             Underwriter shall specify. The Grantee further agrees to sign such
             documents as may be requested by the Lead Underwriter to effect the
             foregoing and agrees that the Company may impose stop-transfer
             instructions with respect to such Common Stock subject until the
             end of such period. The Company and the Grantee acknowledge that
             each Lead Underwriter of a public offering of the Company's stock,
             during the period of such offering and for the 180-day period
             thereafter, is an intended beneficiary of this Section 16.

     (b)     No Amendment Without Consent of Underwriter. During the period from
             identification as a Lead Underwriter in connection with any public
             offering of the Company's Common Stock until the earlier of (i) the
             expiration of the lock-up period specified in Section 16(a) in
             connection with such offering or (ii) the abandonment of such
             offering by the Company and the Lead Underwriter, the provisions of
             this Section 16 may not be amended or waived except with the
             consent of the Lead Underwriter.

17.  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

                                       10

<PAGE>

     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 Notices, the Plan and this Option Agreement are to be
     construed in accordance with and governed by the internal laws of the State
     of California (as permitted by Section 1646.5 of the California Civil Code,
     or any similar successor provision) 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.

18   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.

19   Interpretation. Any dispute regarding the interpretation of the Notice, the
     Plan, or this Option Agreement shall be submitted by the Grantee or by the
     Company forthwith to the Administrator, which shall review such dispute at
     its next regular meeting. The resolution of such dispute by the
     Administrator shall be final and binding on all persons.

20   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.

                                       11

<PAGE>

                                    EXHIBIT A

                    DSP CORES, INC. 2000 STOCK INCENTIVE PLAN

                                 EXERCISE NOTICE

DSP Cores Inc.
3120 Scott Boulevard
Santa Clara, CA 95054

Attention: Secretary

     1.      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 Cores, Inc. (the
"Company") under and pursuant to the Company's 2000 Stock Incentive Plan, as
amended from time to time (the "Plan") and the 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 11 of the Plan.

     The Grantee shall enjoy rights as a stockholder until such time as the
Grantee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal or the Repurchase Right. Upon such exercise, the
Grantee shall have no further rights as a holder of the Share so purchased
except the right to receive payment for the Shares so purchased in accordance
with the provisions of the Option Agreement, and the Grantee shall forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.

     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 4(d) of the Option Agreement.

                                        1

<PAGE>

     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 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 Award Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any 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.      Restrictive Legends. The Grantee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the Company
or by state or federal securities laws:

             THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
             THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS
             AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
             HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
             OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
             SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
             COMPLIANCE THEREWITH.

             THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
             RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A REPURCHASE
             RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
             OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
             THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
             OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST
             REFUSAL AND REPRUCHASE RIGHT ARE BINDING ON TRANSFEREES OF THESE
             SHARES.

                                        2

<PAGE>

     8.      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. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon the Grantee and his or her heirs, executors, administrators,
successors and assigns.

     9.      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.

     10.     Interpretation. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by the Grantee or by the Company forthwith to
the Administrator, which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all persons.

     11.     Governing Law; Severability. This Exercise Notice is to be
construed in accordance with and governed by the internal laws of the State of
California (as permitted by Section 1646.5 of the California Civil Code, or any
similar successor provision) 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.

     12.     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.

     13.     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.

     14.     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.

                                        3

<PAGE>

Submitted by:                                  Accepted by:

GRANTEE:                                       DSP Cores, Inc.

                                               By:

                                               Title:

                (Signature)

Address:                                       Address:

                                               DSP Cores
                                               3120 Scott Boulevard

                                               Santa Clara, CA 95054

                                        4

<PAGE>

                                    EXHIBIT B

                    DSP CORES, INC. 2000 STOCK INCENTIVE PLAN

                       INVESTMENT REPRESENTATION STATEMENT

GRANTEE:
COMPANY:                DSP Cores Inc.
SECURITY:               COMMON STOCK
AMOUNT:
DATE:

In connection with the purchase of the above-listed Securities, the undersigned
Grantee represents to the Company the following:

     (a)     Grantee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Grantee is
acquiring these Securities for investment for Grantee's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

     (b)     Grantee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon among other things, the bona fide nature of Grantee's
investment intent as expressed herein. Grantee further understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Grantee further acknowledges and understands that the Company is under no
obligation to register the Securities. Grantee understands that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.

     (c)     Grantee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the satisfaction of
certain conditions. Rule 701 provides that if the issuer qualifies under Rule
701 at the time of the grant of the Option to the Grantee, the exercise will be
exempt from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer
period as any market stand-off agreement may require) the Securities exempt
under Rule 701 may be resold, subject to the satisfaction of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the

                                        1

<PAGE>

availability of certain public information about the Company, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.

     In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

     (d)     Grantee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Grantee understands that no assurances can be given that any
such other registration exemption will be available in such event.

     (e)     Grantee represents that he is a resident of the state of
______________________.

                                             Signature of Grantee:

                                             Date:

                                        2

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