Exhibit 10.5

 

[g191121kq01i001.jpg]

 

July 25, 2008

 

Bret W. Johnsen

5109 Meadows Del Mar

San Diego, California 92130

 

Dear Bret:

 

We are pleased to notify you (the “Grantee”) that the Compensation and
Management Development Committee of the Board of Directors of Mindspeed
Technologies, Inc. (“Mindspeed”) has granted to you the following stock option
to purchase shares of the common stock of Mindspeed (the “Option”) pursuant to
and in accordance with the Non-Qualified Stock Option Award Agreement attached
hereto as Exhibit A (the “Award Agreement”), as follows:

 

GRANT DATE:

 

July 24, 2008

 

 

 

EXERCISE PRICE:

 

$3.87 per share

 

 

 

NUMBER OF OPTION SHARES:

 

200,000 shares

 

 

 

EXPIRATION DATE:

 

8 years

 

 

 

TYPE OF OPTION:

 

Non-Qualified Option

 

VESTING SCHEDULE:  Subject to the Grantee’s continuous employment by Mindspeed,
the Option shall become exercisable for 1/4th of the Option Shares on the one
(1) year anniversary of the Grant Date, and 1/48th each month thereafter, so as
to be completely vested by the fourth (4th) anniversary of the Grant Date.

 

The Grantee acknowledges and agrees that the Option has been granted pursuant
to, and is controlled by, the Award Agreement.  The Grantee further acknowledges
and agrees that nothing in this grant letter or the Award Agreement shall confer
upon the Grantee any right with respect to future awards or continuation of the
Grantee’s employment with Mindspeed, nor shall it interfere in any way with the
Grantee’s right or the right of Mindspeed to terminate the Grantee’s employment
with Mindspeed, with or without cause, and with or without notice.

 

 

Mindspeed Technologies, Inc.

 

Acknowledged and Agreed:

 

 

 

/s/ Raouf Y. Halim

 

/s/ Bret W. Johnsen

 

 

 

Raouf Y. Halim

 

Bret W. Johnsen

Chief Executive Officer

 

Date: July 27, 2008

 

1

--------------------------------------------------------------------------------

 

EXHIBIT A

 

MINDSPEED TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

1.                                      DEFINITIONS

 

As used in this Award Agreement, the following words and phrases shall have the
respective meanings ascribed to them below unless the context in which any of
them is used clearly indicates a contrary meaning:

 

(A)                                  AWARD AGREEMENT:  THIS NON-QUALIFIED STOCK
OPTION AWARD AGREEMENT.

 

(B)                                 CAUSE:  (I) A FELONY CONVICTION OF THE
GRANTEE; (II) THE COMMISSION BY THE GRANTEE OF AN ACT OF FRAUD OR EMBEZZLEMENT
AGAINST MINDSPEED AND/OR A SUBSIDIARY; (III) WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE MATERIALLY DETRIMENTAL TO MINDSPEED AND/OR A SUBSIDIARY; (IV) THE
GRANTEE’S CONTINUED FAILURE TO IMPLEMENT REASONABLE REQUESTS OR DIRECTIONS
RECEIVED IN THE COURSE OF HIS OR HER EMPLOYMENT; (V) THE GRANTEE’S WRONGFUL
DISSEMINATION OR USE OF CONFIDENTIAL OR PROPRIETARY INFORMATION; OR (VI) THE
INTENTIONAL AND HABITUAL NEGLECT BY THE GRANTEE OF HIS OR HER DUTIES TO
MINDSPEED AND/OR A SUBSIDIARY.

 

(C)                                  COMMITTEE: THE COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE OF THE BOARD OF DIRECTORS OF MINDSPEED AS IT MAY BE
COMPRISED FROM TIME TO TIME OR ANOTHER COMMITTEE OF THE BOARD OF DIRECTORS OF
MINDSPEED DESIGNATED BY THE BOARD OF DIRECTORS OF MINDSPEED TO ADMINISTER THIS
AWARD AGREEMENT.

 

(D)                                 DISABILITY:  PERMANENT AND TOTAL DISABILITY
WITHIN THE MEANING OF MINDSPEED’S LONG-TERM DISABILITY PLAN, AS IT MAY BE
AMENDED FROM TIME TO TIME, OR, IF THERE IS NO SUCH PLAN, AS DETERMINED BY THE
COMMITTEE.

 

(E)                                  EXERCISE PRICE: THE EXERCISE PRICE SET
FORTH IN THE GRANT LETTER.

 

(F)                                    FAST: FIDELITY’S AUTOMATED SERVICE
TELEPHONE SYSTEM THAT IS USED TO FACILITATE STOCK OPTION TRANSACTIONS.

 

(G)                                 FIDELITY:  FIDELITY STOCK PLAN SERVICES, THE
STOCK OPTION ADMINISTRATOR WHOM MINDSPEED HAS ENGAGED TO ADMINISTER AND PROCESS
ALL STOCK OPTION EXERCISES.

 

(H)                                 GRANT LETTER:  THE LETTER FROM MINDSPEED
GRANTING THE OPTION TO THE GRANTEE.

 

2

--------------------------------------------------------------------------------

 

(I)            GRANTEE: BRET W. JOHNSEN.

 

(J)            MINDSPEED:  MINDSPEED TECHNOLOGIES, INC., A DELAWARE CORPORATION.

 

(K)           NASDAQ:  THE NASDAQ GLOBAL MARKET.

 

(L)            OPTIONS:  THE STOCK OPTION SET FORTH IN THE GRANT LETTER.

 

(M)          OPTION SHARES:  THE SHARES OF STOCK ISSUABLE OR TRANSFERABLE ON
EXERCISE OF THE OPTIONS AS SET FORTH IN THE GRANT LETTER.

 

(N)           RETIREMENT:  RETIREMENT AT OR AFTER AGE SIXTY TWO (62) OR, WITH
THE ADVANCE CONSENT OF THE COMMITTEE, BEFORE AGE SIXTY TWO (62) BUT AT OR AFTER
AGE FIFTY FIVE (55).

 

(O)           STOCK:  SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF
MINDSPEED, OR ANY SECURITY OF MINDSPEED ISSUED IN SUBSTITUTION, EXCHANGE OR LIEU
THEREOF.

 

(P)           SUBSIDIARY: ANY CORPORATION OR OTHER ENTITY IN WHICH MINDSPEED,
DIRECTLY OR INDIRECTLY, CONTROLS 50% OR MORE OF THE TOTAL COMBINED VOTING POWER
OF SUCH CORPORATION OR OTHER ENTITY.

 

(Q)           WEB:  FIDELITY’S WEBSITE THAT IS USED TO FACILITATE STOCK OPTION
TRANSACTIONS AND IS ACCESSIBLE THROUGH MINDSPEED MYNET.

 

2.                                      WHEN OPTIONS MAY BE EXERCISED

 

The Options are vested and may be exercised in accordance with the schedule
included in the Grant Letter, provided that:

 

(A)                                  IF THE GRANTEE DIES WHILE AN EMPLOYEE OF
MINDSPEED, THE GRANTEE’S ESTATE, OR ANY PERSON WHO ACQUIRES THE OPTIONS BY
BEQUEST OR INHERITANCE, MAY EXERCISE ALL THE OPTIONS NOT THERETOFORE EXERCISED,
WITHIN (AND ONLY WITHIN) THE PERIOD BEGINNING ON THE GRANTEE’S DATE OF DEATH
(EVEN IF THE GRANTEE DIES BEFORE THE GRANTEE HAS BECOME ENTITLED TO EXERCISE ALL
OR ANY PART OF THE OPTIONS) AND ENDING THREE (3) YEARS THEREAFTER;

 

(B)                                 IF THE GRANTEE’S EMPLOYMENT BY MINDSPEED
TERMINATES OTHER THAN BY DEATH, THEN:

 

(I)            IF THE GRANTEE’S EMPLOYMENT BY MINDSPEED IS TERMINATED FOR CAUSE,
THE OPTIONS SHALL EXPIRE FORTHWITH UPON THE GRANTEE’S TERMINATION AND MAY NOT BE
EXERCISED THEREAFTER; AND

 

3

--------------------------------------------------------------------------------

 

(II)           IF THE GRANTEE’S EMPLOYMENT BY MINDSPEED TERMINATES FOR ANY
REASON (INCLUDING RETIREMENT OR DISABILITY) NOT SPECIFIED IN SUBPARAGRAPH (A) OR
IN CLAUSE (I) OF THIS SUBPARAGRAPH (B), THE GRANTEE (OR IF THE GRANTEE DIES
AFTER THE GRANTEE’S TERMINATION DATE, THE GRANTEE’S ESTATE OR ANY PERSON WHO
ACQUIRES THE OPTIONS BY BEQUEST OR INHERITANCE) MAY THEREAFTER EXERCISE THE
OPTIONS WITHIN (AND ONLY WITHIN) THE PERIOD ENDING THREE (3) MONTHS AFTER THE
GRANTEE’S TERMINATION DATE, BUT ONLY TO THE EXTENT THEY WERE EXERCISABLE ON THE
GRANTEE’S TERMINATION DATE, IT BEING UNDERSTOOD THAT NEITHER (I) THE GRANTEE’S
TRANSFER FROM MINDSPEED TO A SUBSIDIARY OR AFFILIATE OF MINDSPEED, WHETHER OR
NOT INCORPORATED, OR VICE VERSA, OR FROM ONE SUBSIDIARY OR AFFILIATE OF
MINDSPEED TO ANOTHER, NOR (II) A LEAVE OF ABSENCE DULY AUTHORIZED IN WRITING BY
MINDSPEED, SHALL BE DEEMED A TERMINATION OF EMPLOYMENT; AND

 

(C)           THE BEGINNING EXERCISE DATE OF ANY UNEXERCISABLE OPTIONS WILL BE
DELAYED FOR THE LENGTH OF TIME DURING WHICH THE GRANTEE IS ON AN UNPAID LEAVE OF
ABSENCE DULY AUTHORIZED IN WRITING BY MINDSPEED THAT EXCEEDS SIX (6) MONTHS.

 

The Committee may, in its discretion, extend the period during which Options may
be exercised beyond the period set forth in subparagraphs (a) and (b)(ii) above,
but in no event shall the provisions of the foregoing subparagraphs (a) or
(b)(ii) extend to a date more than eight (8) years after the date of the grant,
the period during which the Options may be exercised.

 

3.             EXERCISE PROCEDURE

 

(A)           TO EXERCISE ALL OR ANY PART OF THE OPTIONS, THE GRANTEE (OR AFTER
THE GRANTEE’S DEATH, THE GRANTEE’S ESTATE OR ANY PERSON WHO HAS ACQUIRED THE
OPTIONS BY BEQUEST OR INHERITANCE) MUST:

 

(I)            CONTACT THE ADMINISTRATOR, FIDELITY, BY USING THE FAST OR WEB
SYSTEM OR BY SPEAKING TO A FIDELITY CUSTOMER SERVICE REPRESENTATIVE AND FOLLOW
THE INSTRUCTIONS PROVIDED;

 

(II)           CONFIRM THE OPTION SHARES TRANSACTION BY RECEIVING A CONFIRMATION
NUMBER THROUGH THE FAST OR WEB SYSTEM OR BY SPEAKING TO A FIDELITY CUSTOMER
SERVICE REPRESENTATIVE;

 

(III)          SUBMIT FULL PAYMENT OF THE EXERCISE PRICE FOR THE OPTION SHARES
TO BE PURCHASED ON EXERCISE OF THE OPTIONS:

 

·                              by check or cash; or

 

4

--------------------------------------------------------------------------------

 

·                              in shares of Stock; or

 

·                              in a combination of check or cash and shares of
Stock; and

 

(IV)                              PROVIDE, IN THE CASE OF ANY PERSON OTHER THAN
THE GRANTEE SEEKING TO EXERCISE THE OPTIONS, SUCH DOCUMENTS AS FIDELITY OR THE
SECRETARY OF MINDSPEED SHALL REQUIRE TO ESTABLISH TO THEIR SATISFACTION THAT THE
PERSON SEEKING TO EXERCISE THE OPTIONS IS ENTITLED TO DO SO.

 

(B)                                 AN EXERCISE OF THE WHOLE OR ANY PART OF THE
OPTIONS SHALL BE EFFECTIVE:

 

(I)            IF THE GRANTEE ELECTS (OR AFTER THE GRANTEE’S DEATH, THE PERSON
ENTITLED TO EXERCISE THE OPTIONS ELECTS) TO PAY THE EXERCISE PRICE FOR THE
OPTION SHARES ENTIRELY BY CHECK OR CASH, (1) UPON CONFIRMATION OF THE GRANTEE’S
TRANSACTION BY USING THE FAST OR WEB SYSTEM OR BY SPEAKING TO A FIDELITY
CUSTOMER SERVICE REPRESENTATIVE AND FULL PAYMENT OF THE EXERCISE PRICE AND
WITHHOLDING TAXES (IF APPLICABLE) BEING RECEIVED BY FIDELITY WITHIN THREE
(3) BUSINESS DAYS FOLLOWING THE CONFIRMATION; AND (2) RECEIPT OF ANY DOCUMENTS
REQUIRED PURSUANT TO SECTION 3(A)(IV); AND

 

(II)           IF THE GRANTEE ELECTS (OR AFTER THE GRANTEE’S DEATH, THE PERSON
ENTITLED TO EXERCISE THE OPTIONS ELECTS) TO PAY THE EXERCISE PRICE OF THE OPTION
SHARES IN SHARES OF STOCK OR IN A COMBINATION OF SHARES OF STOCK AND CHECK OR
CASH, (1) UPON CONFIRMATION OF THE GRANTEE’S TRANSACTION BY USING THE FAST OR
WEB SYSTEM OR BY SPEAKING TO A FIDELITY CUSTOMER SERVICE REPRESENTATIVE AND FULL
PAYMENT OF THE EXERCISE PRICE (AS DEFINED IN SECTION 3(D)(I)) AND WITHHOLDING
TAXES (IF APPLICABLE) BEING RECEIVED BY FIDELITY WITHIN THREE (3) BUSINESS DAYS
FOLLOWING THE CONFIRMATION; AND (2) RECEIPT OF ANY DOCUMENTS REQUIRED PURSUANT
TO SECTION 3(A)(IV).

 

(C)                                  IF THE GRANTEE CHOOSES (OR AFTER THE
GRANTEE’S DEATH, THE PERSON ENTITLED TO EXERCISE THE OPTIONS CHOOSES) TO PAY THE
EXERCISE PRICE FOR THE OPTION SHARES TO BE PURCHASED ON EXERCISE OF ANY OF THE
OPTIONS ENTIRELY BY CHECK OR CASH, PAYMENT MUST BE MADE BY:

 

·                                          delivering to Fidelity a check or
cash in the full amount of the exercise price for those Option Shares; or

 

·                                          arranging with a stockbroker, bank or
other financial institution to deliver to Fidelity full payment, by check, cash
or (if prior arrangements are made with Fidelity) by wire transfer, of the
exercise price of those Option Shares.

 

5

--------------------------------------------------------------------------------

 

In either event, in accordance with Section 3(e), full payment of the exercise
price for the Option Shares purchased must be made within three (3) business
days after the exercise has been conducted and confirmed through the FAST or Web
system or by speaking to a Fidelity customer service representative.

 

(D)         (I)              IF THE GRANTEE CHOOSES (OR AFTER THE GRANTEE’S
DEATH, THE PERSON ENTITLED TO EXERCISE THE OPTIONS CHOOSES) TO USE ALREADY-OWNED
STOCK TO PAY ALL OR PART OF THE EXERCISE PRICE FOR THE OPTION SHARES TO BE
PURCHASED ON EXERCISE OF ANY OF THE OPTIONS, THE GRANTEE (OR AFTER THE GRANTEE’S
DEATH, THE PERSON ENTITLED TO EXERCISE THE OPTIONS) MUST DELIVER TO FIDELITY ONE
OR MORE CERTIFICATES (AND EXECUTED STOCK POWERS), OR AUTHORIZE THE BOOK-ENTRY
TRANSFER TO MINDSPEED OF SHARES OF STOCK, REPRESENTING:

 

·                                          at least the number of shares of
Stock whose value, based on the closing price of the Stock reported on NASDAQ on
the day the Grantee exercised the Options through the FAST or Web system or by
speaking to a Fidelity customer service representative, equals the exercise
price for those Option Shares; or

 

·                                          any lesser number of shares of Stock
the Grantee desires (or after the Grantee’s death, the person entitled to
exercise the Options desires) to use to pay the exercise price for those Option
Shares and a check or cash in the amount of such exercise price less the value
of the Stock delivered, based on the closing price of the Stock reported on
NASDAQ on the day the Grantee exercised the Options through the FAST or Web
system or by speaking to a Fidelity customer service representative.

 

In the event the Grantee is using shares of Stock acquired from a Mindspeed
benefit plan, including but not limited to a stock option plan, restricted stock
plan, performance share plan and employee stock purchase plan, these shares of
Stock must have been held for a minimum of six (6) months from the date of
acquisition. The Grantee will be required to provide proper documentation
attesting to the fact that the shares of Stock used to pay all or part of the
exercise price for the Option Shares are mature shares of Stock.  In the event
the Grantee is using shares of Stock purchased on the open market, there is no
required holding period.

 

(ii)           Fidelity will advise the Grantee (or any other person who, being
entitled to do so, exercises the Options) of the exact number of shares of
Stock, valued at the closing price reported on NASDAQ on the effective date of
exercise under Section 3(a)(ii), and any funds required to pay in full the
exercise price

 

6

--------------------------------------------------------------------------------

 

for the Option Shares purchased.  In accordance with Section 3(e), the Grantee
(or such other person) must pay, by check or cash, in shares of Stock or in a
combination of check or cash and shares of Stock, any balance required to pay in
full the exercise price of the Option Shares purchased within three (3) business
days following the confirmation of such exercise of the Options under
Section 3(a)(ii).

 

(iii)          Notwithstanding any other provision of the Award Agreement, the
Secretary of Mindspeed may limit the number, frequency or volume of successive
exercises of any of the Options in which payment is made, in whole or in part,
by delivery of shares of Stock pursuant to this subparagraph (d) to prevent
unreasonable pyramiding of such exercises.

 

(E)                                  AN EXERCISE CONDUCTED AND CONFIRMED THROUGH
THE FAST OR WEB SYSTEM OR BY SPEAKING TO A FIDELITY CUSTOMER SERVICE
REPRESENTATIVE, WHETHER OR NOT FULL PAYMENT OF THE EXERCISE PRICE FOR THE OPTION
SHARES IS RECEIVED BY FIDELITY, SHALL CONSTITUTE A BINDING CONTRACTUAL
OBLIGATION BY THE GRANTEE (OR THE OTHER PERSON ENTITLED TO EXERCISE THE OPTIONS)
TO PROCEED WITH AND COMPLETE THAT EXERCISE OF THE OPTIONS (BUT ONLY SO LONG AS
THE GRANTEE CONTINUES, OR THE OTHER PERSON ENTITLED TO EXERCISE THE OPTIONS
CONTINUES, TO BE ENTITLED TO EXERCISE THE OPTIONS ON THAT DATE).  BY THE
GRANTEE’S ACCEPTANCE OF THIS AWARD AGREEMENT, THE GRANTEE AGREES (FOR THE
GRANTEE AND ON BEHALF OF ANY OTHER PERSON WHO BECOMES ENTITLED TO EXERCISE THE
OPTIONS) TO DELIVER OR CAUSE TO BE DELIVERED TO FIDELITY ANY BALANCE OF THE
EXERCISE PRICE FOR THE OPTION SHARES TO BE PURCHASED UPON THE EXERCISE PURSUANT
TO THE TRANSACTION CONDUCTED THROUGH THE FAST OR WEB SYSTEM OR BY SPEAKING TO A
FIDELITY CUSTOMER SERVICE REPRESENTATIVE REQUIRED TO PAY IN FULL THE EXERCISE
PRICE FOR THOSE OPTION SHARES, THAT PAYMENT BEING BY CHECK, CASH, WIRE TRANSFER,
IN SHARES OF STOCK OR IN A COMBINATION OF CHECK OR CASH AND SHARES OF STOCK, ON
OR BEFORE THE THIRD (3RD) BUSINESS DAY AFTER THE DATE ON WHICH THE GRANTEE
CONFIRMS THE TRANSACTION THROUGH THE FAST OR WEB SYSTEM OR BY SPEAKING TO A
FIDELITY CUSTOMER SERVICE REPRESENTATIVE.  IF SUCH PAYMENT IS NOT MADE, THE
GRANTEE (FOR THE GRANTEE AND ON BEHALF OF ANY OTHER PERSON WHO BECOMES ENTITLED
TO EXERCISE THE OPTIONS) AUTHORIZE MINDSPEED, IN ITS DISCRETION, TO SET OFF
AGAINST SALARY PAYMENTS OR OTHER AMOUNTS DUE OR WHICH MAY BECOME DUE THE GRANTEE
(OR THE OTHER PERSON ENTITLED TO EXERCISE THE OPTIONS) ANY BALANCE OF THE
EXERCISE PRICE FOR THOSE OPTION SHARES REMAINING UNPAID THEREAFTER.

 

(F)                                    A BOOK-ENTRY STATEMENT REPRESENTING THE
NUMBER OF OPTION SHARES PURCHASED WILL BE ISSUED AS SOON AS PRACTICABLE
(I) AFTER FIDELITY HAS RECEIVED FULL PAYMENT THEREFOR OR (II) AT MINDSPEED’S OR
FIDELITY’S ELECTION IN THEIR SOLE DISCRETION, AFTER MINDSPEED OR FIDELITY HAS
RECEIVED (X) FULL PAYMENT OF THE EXERCISE PRICE OF THOSE OPTION SHARES AND
(Y) ANY REIMBURSEMENT IN RESPECT OF WITHHOLDING TAXES DUE PURSUANT TO SECTION 5.

 

7

--------------------------------------------------------------------------------

 

4.                                      TRANSFERABILITY

 

No Options or portion thereof shall be transferable by the Grantee otherwise
than (i) by will or by laws of descent and distribution, (ii) by gift to members
of the Grantee’s immediate family, (iii) to a trust established for the benefit
of the Grantee’s immediate family members only, (iv) to a partnership in which
the Grantee’s immediate family members are the only partners or (v) as otherwise
determined by the Committee.  For purposes of this Award Agreement, “immediate
family” shall mean the Grantee’s spouse and natural, adopted or step-children
and grandchildren.  Notwithstanding any transfer of the Options or portion
thereof, the transferred Options shall continue to be subject to this Award
Agreement as were applicable to the Grantee immediately prior to the transfer,
as if the Options had not been transferred.

 

5.                                      WITHHOLDING

 

Mindspeed or Fidelity shall have the right, in connection with the exercise of
the Options in whole or in part, to deduct from any payment to be made by
Mindspeed or Fidelity under this Award Agreement an amount equal to the taxes
required to be withheld by law with respect to such exercise or to require the
Grantee (or any other person entitled to exercise the Options) to pay to it an
amount sufficient to provide for any such taxes so required to be withheld.  By
the Grantee’s acceptance of this Award Agreement, the Grantee agree (for the
Grantee and on behalf of any other person who becomes entitled to exercise the
Options) that if Mindspeed or Fidelity elects to require the Grantee (or such
other person) to remit an amount sufficient to pay such withholding taxes, the
Grantee (or such other person) must remit that amount within three (3) business
days after the confirmation of the Option Shares exercise (Section 3(a)(ii)). 
If such payment is not made, Mindspeed, in its discretion, shall have the same
right of set-off with respect to payment of the withholding taxes in connection
with the exercise of the Option Shares as provided under Section 3(e) with
respect to payment of the exercise price.

 

6.                                      RIGHTS AS STOCKHOLDER

 

The Grantee will not have any rights as a stockholder with respect to any Option
Shares unless and until the Grantee becomes the holder of such Option Shares on
the books and records of Mindspeed.

 

7.                                      HEADINGS

 

The section headings contained in this Award Agreement are solely for the
purpose of reference, are not part of the agreement of the parties and shall in
no way affect the meaning or interpretation of this Award Agreement.

 

8

--------------------------------------------------------------------------------

 

8.                                      REFERENCES

 

All references in this Award Agreement to sections, paragraphs, subparagraphs or
clauses shall be deemed to be references to sections, paragraphs, subparagraphs
and clauses of this Award Agreement unless otherwise specifically provided.

 

9.                                      AMENDMENT AND TERMINATION

 

(A)           THE GRANTEE UNDERSTANDS THAT MINDSPEED HAS RESERVED THE RIGHT TO
AMEND OR TERMINATE THIS AWARD AGREEMENT AT ANY TIME, SUBJECT TO THE LIMITATIONS
OF SECTION 9(B), AND THAT THE GRANT OF AN OPTION IN ONE YEAR OR AT ONE TIME DOES
NOT IN ANY WAY OBLIGATE MINDSPEED OR ITS AFFILIATES TO MAKE A GRANT IN ANY
FUTURE YEAR OR IN ANY GIVEN AMOUNT.  THE GRANTEE ACKNOWLEDGES AND UNDERSTANDS
THAT THE GRANT IS WHOLLY DISCRETIONARY IN NATURE AND IS NOT TO BE CONSIDERED
PART OF ANY NORMAL OR EXPECTED COMPENSATION THAT IS OR WOULD BE SUBJECT TO
SEVERANCE, RESIGNATION, REDUNDANCY OR SIMILAR PAY, OTHER THAN TO THE EXTENT
REQUIRED BY LOCAL LAW.

 

(B)           THE COMMITTEE MAY AT ANY TIME ALTER OR AMEND THIS AWARD AGREEMENT
TO THE EXTENT PERMITTED BY LAW, EXCEPT THAT, SUBJECT TO THE PROVISIONS OF
SECTION 10, NO SUCH ALTERATION OR AMENDMENT SHALL IMPAIR THE RIGHTS OF THE
GRANTEE WITHOUT THE GRANTEE’S CONSENT.

 

(C)                                 THE OPTION IS INTENDED TO BE EXEMPT FROM THE
PROVISIONS OF INTERNAL REVENUE SERVICE CODE SECTION 409A.  HOWEVER, MINDSPEED
MAKES NO REPRESENTATIONS THAT THE OPTION WILL BE SO EXEMPT AND MAKES NO
UNDERTAKING TO PREVENT CODE SECTION 409A FROM APPLYING TO THE AMOUNTS PAYABLE
UNDER THIS AWARD AGREEMENT OR TO MITIGATE ITS EFFECTS ON ANY PAYMENTS MADE UNDER
THIS AWARD AGREEMENT.  MINDSPEED AND THE GRANTEE AGREE TO AMEND THIS AWARD
AGREEMENT TO THE EXTENT NECESSARY TO MAKE THE OPTION EXEMPT FROM, OR COMPLY
WITH, CODE SECTION 409A.

 

10.                                ADMINISTRATION

 

(A)                                  SUBJECT TO THE EXPRESS PROVISIONS OF THIS
AWARD AGREEMENT, THE COMMITTEE SHALL HAVE THE POWER (I) TO IMPLEMENT (INCLUDING
THE POWER TO DELEGATE SUCH IMPLEMENTATION TO APPROPRIATE OFFICERS OF MINDSPEED),
INTERPRET AND CONSTRUE THIS AWARD AGREEMENT OR OTHER DOCUMENTS DEFINING THE
RIGHTS AND OBLIGATIONS OF MINDSPEED AND THE GRANTEE HEREUNDER, (II) TO DETERMINE
ALL QUESTIONS ARISING HEREUNDER, AND (III) TO ADOPT AND AMEND SUCH RULES AND
REGULATIONS FOR THE ADMINISTRATION HEREOF AND THEREOF AS IT MAY DEEM DESIRABLE. 
THE INTERPRETATION AND CONSTRUCTION BY THE COMMITTEE OF ANY PROVISIONS OF THIS
AWARD AGREEMENT SHALL BE CONCLUSIVE AND BINDING.  ANY ACTION TAKEN BY, OR
INACTION OF, THE COMMITTEE RELATING TO THIS AWARD AGREEMENT SHALL BE WITHIN THE
DISCRETION OF THE COMMITTEE AND SHALL BE CONCLUSIVE AND BINDING.  SUBJECT ONLY
TO COMPLIANCE WITH THE EXPRESS PROVISIONS HEREOF, THE COMMITTEE MAY ACT IN ITS
DISCRETION IN MATTERS RELATED TO THIS AWARD AGREEMENT.

 

9

--------------------------------------------------------------------------------

 

(B)                                IT IS THE INTENT OF MINDSPEED THAT THIS AWARD
AGREEMENT SATISFIES, AND IS INTERPRETED IN A MANNER THAT SATISFIES, THE
APPLICABLE REQUIREMENTS OF RULE 16B-3 UNDER THE EXCHANGE ACT, SO THAT THE
GRANTEE WILL BE ENTITLED TO THE BENEFITS OF RULE 16B-3, OR OTHER EXEMPTIVE
RULES UNDER SECTION 16 OF THE EXCHANGE ACT, AND WILL NOT BE SUBJECTED TO
AVOIDABLE LIABILITY UNDER SECTION 16(B) OF THE EXCHANGE ACT.

 

11.                                ADJUSTMENT PROVISIONS

 

(A)                                 IN THE EVENT OF ANY CHANGE IN OR AFFECTING
THE OUTSTANDING SHARES OF STOCK BY REASON OF A STOCK DIVIDEND OR SPLIT,
RECAPITALIZATION, RECLASSIFICATION, MERGER OR CONSOLIDATION (WHETHER OR NOT
MINDSPEED IS A SURVIVING CORPORATION), REORGANIZATION, COMBINATION OR EXCHANGE
OF SHARES OR OTHER SIMILAR CORPORATE CHANGES OR AN EXTRAORDINARY DIVIDEND IN
CASH, SECURITIES OR OTHER PROPERTY, THE BOARD OF DIRECTORS OF MINDSPEED SHALL
MAKE OR TAKE SUCH AMENDMENTS TO THIS AWARD AGREEMENT AND SUCH ADJUSTMENTS AND
ACTIONS HEREUNDER AS IT DEEMS APPROPRIATE, IN ITS SOLE DISCRETION, UNDER THE
CIRCUMSTANCES, AND ITS DETERMINATION IN THAT RESPECT SHALL BE FINAL AND
BINDING.  SUCH AMENDMENTS, ADJUSTMENTS AND ACTIONS MAY INCLUDE, BUT ARE NOT
LIMITED TO, CHANGES IN THE NUMBER OF SHARES OF STOCK (OR OTHER SECURITIES) THEN
REMAINING SUBJECT TO THIS AWARD AGREEMENT, AND THE MAXIMUM NUMBER OF SHARES THAT
MAY BE DELIVERED TO THE GRANTEE PURSUANT TO THIS AWARD AGREEMENT.  NO FRACTIONAL
INTERESTS WILL BE ISSUED UNDER THIS AWARD AGREEMENT RESULTING FROM ANY
ADJUSTMENTS.

 

(B)                                THE COMMITTEE SHALL MAKE ANY FURTHER
ADJUSTMENTS AS IT DEEMS NECESSARY TO ENSURE EQUITABLE TREATMENT OF THE GRANTEE
AS THE RESULT OF ANY TRANSACTION AFFECTING THE SECURITIES SUBJECT TO THIS AWARD
AGREEMENT OR THE GRANT LETTER NOT DESCRIBED IN SECTION 11(A), OR AS IS REQUIRED
OR AUTHORIZED UNDER THE TERMS OF THIS AWARD AGREEMENT.

 

(C)                                 THE EXISTENCE OF THE OPTION SHARES GRANTED
HEREUNDER SHALL NOT AFFECT OR RESTRICT IN ANY WAY THE RIGHT OR POWER OF THE
BOARD OF DIRECTORS OF MINDSPEED OR THE STOCKHOLDERS OF MINDSPEED TO MAKE OR
AUTHORIZE ANY ADJUSTMENT, RECAPITALIZATION, REORGANIZATION OR OTHER CHANGE IN
ITS CAPITAL STRUCTURE OR ITS BUSINESS, ANY MERGER OR CONSOLIDATION OF MINDSPEED,
ANY ISSUE OF BONDS, DEBENTURES, PREFERRED OR PRIOR PREFERENCE STOCK OR OTHER
SECURITIES AHEAD OF OR AFFECTING THE STOCK OR THE RIGHTS THEREOF, THE
DISSOLUTION OR LIQUIDATION OF MINDSPEED OR ANY SALE OR TRANSFER OF ALL OR ANY
PART OF ITS ASSETS OR BUSINESS, OR ANY OTHER CORPORATE ACT OR PROCEEDING.

 

10

--------------------------------------------------------------------------------

 

12.                                LIMITS OF LIABILITY

 

ANY LIABILITY OF MINDSPEED OR A SUBSIDIARY TO THE GRANTEE WITH RESPECT TO THIS
AWARD AGREEMENT SHALL BE BASED SOLELY UPON CONTRACTUAL OBLIGATIONS CREATED
HEREIN.  NEITHER MINDSPEED OR ITS SUBSIDIARIES, NOR ANY MEMBER OF THE BOARD OF
DIRECTORS OF MINDSPEED OR OF THE COMMITTEE, NOR ANY OTHER PERSON PARTICIPATING
IN ANY DETERMINATION OF ANY QUESTION UNDER THIS AWARD AGREEMENT, OR IN THE
INTERPRETATION, ADMINISTRATION OR APPLICATION OF THIS AWARD AGREEMENT, SHALL
HAVE ANY LIABILITY TO ANY PARTY FOR ANY ACTION TAKEN, OR NOT TAKEN, IN GOOD
FAITH UNDER THIS AWARD AGREEMENT.

 

13.                                COMPLIANCE WITH LAWS

 

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, MINDSPEED SHALL NOT
BE REQUIRED TO SELL OR DELIVER SHARES OF STOCK OR OTHER SECURITIES HEREUNDER IF
THE SALE OR DELIVERY THEREOF WOULD CONSTITUTE A VIOLATION BY THE GRANTEE OR
MINDSPEED OF ANY PROVISIONS OF ANY LAW OR REGULATION OF ANY GOVERNMENTAL
AUTHORITY OR ANY NATIONAL SECURITIES EXCHANGE OR INTERDEALER QUOTATION SYSTEM,
AND AS A CONDITION OF ANY SALE OR DELIVERY MINDSPEED MAY REQUIRE SUCH AGREEMENTS
OR UNDERTAKINGS, IF ANY, AS MINDSPEED MAY DEEM NECESSARY OR ADVISABLE IN ITS
DISCRETION TO ASSURE COMPLIANCE WITH ANY SUCH LAW OR REGULATION.

 

14.                                ENTIRE AGREEMENT

 

This Award Agreement and the Grant Letter embody the entire agreement and
understanding between Mindspeed and the Grantee with respect to the Options, and
there are no representations, promises, covenants, agreements or understandings
with respect to the Options other than those expressly set forth in this Award
Agreement and the Grant Letter.

 

15.                                APPLICABLE LAWS AND REGULATIONS

 

This Award Agreement and Mindspeed’s obligation to issue Option Shares hereunder
are governed by the laws of the State of Delaware, without regard to its
conflicts of laws principles, and the Federal law of the United States.

 

11

--------------------------------------------------------------------------------