Amendment Agreement To Manufacturing Services Collaboration Agreement.

Exhibit 10.38

CONFIDENTIAL TREATMENT REQUESTED. OMITTED PORTIONS MARKED WITH [*] AND FILED SEPARATELY WITH THE SEC

Amendment Agreement

to the

Manufacturing Services Collaboration Agreement

between NXP SEMICONDUCTORS NETHERLANDS B.V.

and

DSP GROUP, INC.

and

DSP GROUP LTD.

Contents

Page Clause

1 INTERPRETATION 4

2 COMMENCEMENT DATE 6

3 AMENDMENT OF DSPG PLANS 6

4 AMENDMENT OF DSPG PURCHASE OBLIGATION 6

5 AMENDMENT TO PURCHASE ORDERS, ORDER PLACEMENT, MANAGEMENT AND BATCH RELEASES 7

6 AMENDMENT OF PRICES AND TAXES 8

7 AMENDMENT OF PENALTY FOR LATE/NON DELIVERY 9

8 WAIVER AND SETTLEMENT OF CLAIMS 10

9 CLOSURE OF FISHKILL 10

10 AMENDMENT TO SCHEDULE 12 OF THE AGREEMENT 12

11 CONTINUATION OF THE AGREEMENT 12

12 TERMINATION 12

13 GOVERNING LAW AND COURT 13

Annexes

Annex A Revised 2009 Prices

Annex B Revised 2010 Prices Annex C NXP Lead-time Catalogue in Days

Annex D A-Gate Checklist

Annex E Bridging Stock in [*] Devices Annex F End of Life Stock in [*] Devices

Annex G Finished Goods Prices and Methodology for [*] Price Adjustment


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Amendment Agreement to the Manufacturing Services Collaboration Agreement THE UNDERSIGNED:

(1) NXP SEMICONDUCTORS NETHERLANDS B.V ., a limited liability company incorporated under the laws of the Netherlands with corporate seat in Eindhoven, the Netherlands and having its address at High Tech Campus 60, 5656 AG Eindhoven, the Netherlands (" NXPBV" ), acting on behalf of itself and also acting for the benefit of its Affiliates (collectively " NXP" ), and

(2) DSP GROUP, INC. , a company incorporated under the laws of the State of Delaware, United States of America, having its address at 2580 North First Street, Suite 460, San Jose, CA 95131, United States of America (" DSPG INC" ),

and (3) DSP GROUP LTD. (" DSPG" ), a private company with limited liability incorporated under the laws of Israel, with corporate seat in Herzeliya, Israel and having its address at 5 Shenkar Street, Herzeliya, 46120, Israel, entering into this Agreement on behalf of itself and its Affiliates, the obligations of which shall be guaranteed by DSPG INC as provided for in Clause 14 of the SBSA,

NXP, DSPG INC and DSPG shall also be referred to as " Parties" or a " Party" , as the case may be,

WHEREAS:

(A) The Parties entered into a Manufacturing Services Collaboration Agreement, effective 4 September 2007, relating to the manufacturing, pre-testing, assembling and final-testing of NXP Products by NXP and/or NXP Sub-contractors (the " Agreement" ).

(B) The Parties wish to amend and supplement the Agreement.

(C) NXP and DSPG INC and DSPG wish to conclude this Amendment Agreement (as defined below).


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IT IS AGREED AS FOLLOWS: 1 INTERPRETATION

1.1 Revised Definitions

1.1.1 The definition of " Derivative" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " Derivative" shall mean any commercial successors having the same process flows fully or partially, steps and/or parameters and utilizing the identical manufacturing equipment tools fully or partially. 1.1.2 The definition of " NXP Lead-time Catalogue" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " NXP Lead-time Catalogue" means the lead-time catalogue attached to this Amendment Agreement as Annex C , as the same may be updated from time to time by NXP and approved by DSPG, which approval shall not unreasonably be withheld or delayed, to reflect any Derivatives which will be provided by NXP to DSPG. For the avoidance of doubt, notwithstanding the absence of any reference in Annex C , the Parties (i) shall mutually agree upon a reasonable NXP Order Lead-Time for any existing NXP Products or NXP Services not included in Annex C for any reason, and (ii) agree that the NXP Order Lead-Time for a Derivative shall be the [*] as further clarified in Annex G to this Amendment Agreement; it being understood that a Derivative' s lead-time is [*] , adjusted for [*] have been [*] . Annex C shall be updated accordingly based on sub (i) and sub (ii). 1.1.3 The definition of " NXP ROM-Coded Products" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " NXP ROM-Coded Products" shall mean the ROM-coded NXP Products. For the avoidance of doubt, [*] are ROM-coded NXP Products.

1.1.4 The definition of " Grace Period" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " Grace Period" shall mean in respect of NXP Non-ROM-Coded Products and NXP ROM-Coded Products:

(i) with regard to Purchase Order Type A: [*] ;

(ii) with regard to Purchase Order Type B: [*] ; and

(iii) with regard to Purchase Order Type C: [*] .

1.1.5 The definition of " Systematic Late Delivery" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " Systematic Late Delivery" shall mean delivery by NXP of [*] or more of the aggregate of all individual Line-Items in (Adjusted) Binding Purchase Orders in a [*] beyond the applicable NXP Order Lead-time. 1.1.6 The definition of " Systematic Non-Delivery" in Clause 1.1 of the Agreement is deleted in its entirety and replaced with the following: " Systematic Non-delivery" shall mean delivery by NXP of:

(a) [*] or more of the aggregate of all individual Line-Items in (Adjusted) Binding Purchase Orders in a [*] after expiration of [*] beyond the applicable NXP Order Lead-times in respect of NXP ROM-Coded Products (the " Quarterly ROM-Coded Systematic Non-Delivery" );


4 / 22 (b) [*] or more of the aggregate of all individual Line-Items in (Adjusted) Binding Purchase Orders in a [*] after expiration of [*] beyond the applicable NXP Order Lead-times in respect of NXP Non-ROM-Coded Products (the " Quarterly Non-ROM-Coded Systematic Non-Delivery" );

(c) [*] or more of the aggregate of all individual Line-Items in (Adjusted) Binding Purchase Orders in a [*] after expiration of [*] beyond the applicable NXP Order Lead-times in respect of NXP ROM-Coded Products (the " Annual ROM-Coded Systematic Non-Delivery" ); or

(d) [*] or more of the aggregate of all individual Line-Items in (Adjusted) Binding Purchase Orders in a [*] after expiration of [*] beyond the applicable NXP Order Lead-times in respect of NXP Non-ROM-Coded Products (the " Annual Non-ROM-Coded Systematic Non-Delivery" ).

1.2 New Definitions

Capitalized words in this Amendment Agreement (including the preamble and recitals), shall have the same meaning as set out in the Agreement, except if defined otherwise herein and unless the subject or context otherwise requires, and the following definitions are added as follows:

" A - Gate checklist" means the checklist attached hereto as Annex D . " Amendment Agreement" means this amendment agreement including the annexes thereto. " Backend Transfer Plan" means the plan related to the qualification of certain back-end services for [*] products; it being agreed that the qualification of these services will be done simultaneously with the qualification of the Wafer products from the Nijmegen Facility for those relevant [*] products. " Fishkill Facility" has the meaning set out in Clause 9.1.1 of this Amendment Agreement. " MCM Product" means any NXP Product in which multiple integrated circuits, each fabricated on a separate semiconductor die, are packaged together for use as a single Device.

" Nijmegen Facility" means the NXP facility in Nijmegen, the Netherlands.

" Obsolete" means NXP Products for which no Purchase Order has been issued by DSPG for a period of [*] . " Product Transfer Engineers" has the meaning set out in Clause 9.4.1 of this Amendment Agreement. " Revised 2009 Prices" means Annex A to this Amendment Agreement, subject to any adjustments provided in Annex G to this Amendment Agreement. For the avoidance of doubt, notwithstanding the absence of any reference in Annex A , the Parties shall mutually agree upon the prices for any Derivatives in accordance with Clause 10.2 of the Agreement (as amended pursuant to this Amendment Agreement) and update Annex A accordingly.

" Revised 2010 Prices" means Annex B to this Amendment Agreement, subject to any adjustments provided in Annex G to this Amendment Agreement. For the avoidance of doubt, notwithstanding the absence of any reference in Annex B , the Parties shall mutually agree upon the prices for any Derivatives in accordance with Clause 10.2 of the Agreement (as amended pursuant to this Amendment Agreement) and update Annex B accordingly.


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" Revised Price Plans" means Annex A and Annex B to this Amendment Agreement, subject to any adjustments provided in Annex G to this Amendment Agreement.

" Shaded Table of Schedule 1" has the meaning set out in Clause 6 of this Amendment Agreement.

" Storage Plan" has the meaning set out in Clause 9.1.1 of this Amendment Agreement.

1.3 Clauses and schedules

References to clauses and schedules are to clauses of and schedules to the Agreement unless the context otherwise requires.

2 COMMENCEMENT DATE

This Amendment Agreement will take effect as from the date of signing of this Amendment Agreement by the Parties thereto, except that as set forth in Clause 10.1.1 of the Agreement (as amended pursuant to this Amendment Agreement), Annex A , and to the extent relevant, Annex G , to this Amendment Agreement will [*] .

3 AMENDMENT OF DSPG PLANS

3.1 Clause 5.2.2 of the Agreement shall be amended such that the entire sub-clause reads as follows: The MTP will describe DSPG' s projected NXP Product and NXP Service needs on a [*] basis (total quantity and quantity in each Main Capacity Bucket). The quantities for any [*] shall not [*] and shall not [*] of the quantities for [*] including that [*] ; provided, however, the quantity limitations for [*] in the MTP shall be disregarded to the extent NXP confirms such MTP pursuant to Clause 5.2.3.

3.2 New Clause 5.3.6 : Notwithstanding anything to the contrary contained in Clause 5.3, the quantity limitations applicable to STPs shall be disregarded to the extent NXP confirms such STP pursuant to Clause 5.3.3.

4 AMENDMENT OF DSPG PURCHASE OBLIGATION

Clause 6 of the Agreement (DSPG Purchase Obligation) shall be amended such that the entire clause reads as follows:

6.1 For NXP Non-ROM-Coded Products, DSPG shall be obliged to purchase for [*] of the aggregate NXP Non-ROM-Coded Product quantities for such [*] included in [*] applicable to such [*] . For the avoidance of doubt, DSPG shall have no obligation to purchase any quantities of NXP Non-ROM-Coded Products [*] , and with consideration of Clause 6.5 below, DSPG' s purchase obligations shall be satisfied to the extent NXP [*] .

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6.2 For NXP ROM-Coded Products, DSPG shall be obliged to purchase for [*] of the relevant Confirmed STP [*] of the aggregate NXP ROM-Coded Product quantities for such [*] calculated as an [*] applicable to such [*] . For the avoidance of doubt, DSPG shall have no obligation to purchase any quantities of NXP ROM-Coded Products [*] , and with consideration of Clause 6.5 below, DSPG' s purchase obligations shall be satisfied to the extent NXP [*] . The Parties agree that with respect to [*] . 6.3 In [*] of any calendar year, DSPG and NXP will determine on an [*] basis whether DSPG purchased less than the obligated quantities of NXP Non-ROM-Coded Products and/or NXP ROM-Coded Products set out in Clauses 6.1 and 6.2 above, respectively. For purposes of the above determination, DSPG shall have the right to [*] . In the event that based on the [*] determination that DSPG purchased less than the obligated quantities of NXP Non-ROM-Coded Products and/or NXP ROM-Coded Products set out in Clauses 6.1 and 6.2 above, respectively, and NXP satisfied the NXP Order Lead-times with respect to DSPG' s obligated quantities of NXP Non-ROM-Coded Products and/or NXP ROM-Coded Products, as applicable, that have not been purchased, DSPG shall pay to NXP a compensation of [*] , that DSPG was obligated to purchase in accordance with Clauses 6.1 and 6.2 ab ...