**Exhibit 10.5**

** **

 

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 andManagement Development Committee of the Board of Directors of Mindspeed Technologies, Inc.(“Mindspeed”) has granted to you the following stock option to purchase sharesof the common stock of Mindspeed (the “Option”) pursuant to and in accordancewith 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 theGrantee’s continuous employment by Mindspeed, the Option shall becomeexercisable for 1/4th of the Option Shares on the one (1) year anniversaryof the Grant Date, and 1/48th each month thereafter, so as to be completelyvested by the fourth (4th) anniversary of the Grant Date.

 

The Grantee acknowledges andagrees that the Option has been granted pursuant to, and is controlled by, theAward Agreement.  The Grantee furtheracknowledges and agrees that nothing in this grant letter or the AwardAgreement shall confer upon the Grantee any right with respect to future awardsor continuation of the Grantee’s employment with Mindspeed, nor shall itinterfere in any way with the Grantee’s right or the right of Mindspeed toterminate the Grantee’s employment with Mindspeed, with or without cause, andwith 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 |

 

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** **

**EXHIBIT A**

** **

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

** **

# 1.                                      Definitions

#  

As used in this AwardAgreement, the following words and phrases shall have the respective meaningsascribed to them below unless the context in which any of them is used clearlyindicates a contrary meaning:

 

## (a)                                  **Award Agreement**:  ThisNon-Qualified Stock Option Award Agreement.

##  

## (b)                                 **Cause**:  (i) Afelony conviction of the Grantee; (ii) the commission by the Grantee of anact of fraud or embezzlement against Mindspeed and/or a Subsidiary; (iii) willfulmisconduct or gross negligence materially detrimental to Mindspeed and/or aSubsidiary; (iv) the Grantee’s continued failure to implement reasonablerequests or directions received in the course of his or her employment; (v) theGrantee’s wrongful dissemination or use of confidential or proprietaryinformation; or (vi) the intentional and habitual neglect by the Granteeof his or her duties to Mindspeed and/or a Subsidiary.

##  

## (c)                                  **Committee**: The Compensation and Management DevelopmentCommittee of the Board of Directors of Mindspeed as it may be comprised fromtime to time or another committee of the Board of Directors of Mindspeeddesignated by the Board of Directors of Mindspeed to administer this AwardAgreement.

##  

## (d)                                 **Disability**:  Permanentand total disability within the meaning of Mindspeed’s long-term disabilityplan, as it may be amended from time to time, or, if there is no such plan, asdetermined by the Committee.

##  

## (e)                                  **Exercise Price**: The exercise price set forth in the GrantLetter.

##  

## (f)                                    **FAST****:**Fidelity’s automated servicetelephone system that is used to facilitate stock option transactions.

##  

## (g)                                 **Fidelity:**  FidelityStock Plan Services, the stock option administrator whom Mindspeed has engagedto administer and process all stock option exercises.

##  

## (h)                                 **Grant Letter**:  Theletter from Mindspeed granting the Option to the Grantee.

##  

## 2

## 

##  

## (i)            **Grantee**: Bret W. Johnsen.

##  

## (j)            **Mindspeed**:  MindspeedTechnologies, Inc., a Delaware corporation.

##  

## (k)           **NASDAQ****:**  The Nasdaq Global Market.

##  

## (l)            **Options**:  The stockoption set forth in the Grant Letter.

##  

## (m)          **Option Shares**:  Theshares of Stock issuable or transferable on exercise of the Options as setforth in the Grant Letter.

##  

## (n)           **Retirement**:  Retirementat 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 ofcommon stock, par value $.01 per share, of Mindspeed, or any security ofMindspeed issued in substitution, exchange or lieu thereof.

##  

## (p)           **Subsidiary**: Any corporation or other entity in whichMindspeed, directly or indirectly, controls 50% or more of the total combinedvoting power of such corporation or other entity.

##  

## (q)           **Web**:  Fidelity’swebsite that is used to facilitate stock option transactions and is accessiblethrough Mindspeed MyNet.

##  

# 2.                                      When Options May beExercised

#  

The Options are vestedand may be exercised in accordance with the schedule included in the GrantLetter, provided that:

 

## (a)                                  if the Granteedies while an employee of Mindspeed, the Grantee’s estate, or any person whoacquires the Options by bequest or inheritance, may exercise all the Optionsnot theretofore exercised, within (and only within) the period beginning on theGrantee’s date of death (even if the Grantee dies before the Grantee has becomeentitled to exercise all or any part of the Options) and ending three (3) yearsthereafter;

##  

## (b)                                 if the Grantee’semployment by Mindspeed terminates other than by death, then:

##  

### (i)            if the Grantee’semployment by Mindspeed is terminated for Cause, the Options shall expireforthwith upon the Grantee’s termination and may not be exercised thereafter;and

###  

### 3

### 

###  

### (ii)           if the Grantee’semployment by Mindspeed terminates for any reason (including Retirement orDisability) not specified in subparagraph (a) or in clause (i) ofthis subparagraph (b), the Grantee (or if the Grantee dies after the Grantee’stermination date, the Grantee’s estate or any person who acquires the Optionsby bequest or inheritance) may thereafter exercise the Options within (and onlywithin) the period ending three (3) months after the Grantee’s terminationdate, but only to the extent they were exercisable on the Grantee’s terminationdate, it being understood that neither (i) the Grantee’s transfer fromMindspeed to a Subsidiary or affiliate of Mindspeed, whether or notincorporated, or vice versa, or from one Subsidiary or affiliate of Mindspeedto another, nor (ii) a leave of absence duly authorized in writing byMindspeed, shall be deemed a termination of employment; and

###  

## (c)           the beginningexercise date of any unexercisable Options will be delayed for the length oftime during which the Grantee is on an unpaid leave of absence duly authorizedin writing by Mindspeed that exceeds six (6) months.

##  

The Committee may, in itsdiscretion, extend the period during which Options may be exercised beyond theperiod set forth in subparagraphs (a) and (b)(ii) above, but in noevent shall the provisions of the foregoing subparagraphs (a) or (b)(ii) extendto a date more than eight (8) years after the date of the grant, theperiod during which the Options may be exercised.

 

# 3.             Exercise Procedure

#  

## (a)           To exercise allor any part of the Options, the Grantee (or after the Grantee’s death, theGrantee’s estate or any person who has acquired the Options by bequest orinheritance) must:

##  

### (i)            contact theadministrator, Fidelity, by using the FAST or Web system or by speaking to aFidelity customer service representative and follow the instructions provided;

###  

### (ii)           confirm theOption Shares transaction by receiving a confirmation number through the FASTor Web system or by speaking to a Fidelity customer service representative;

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### (iii)          submit fullpayment of the exercise price for the Option Shares to be purchased on exerciseof the Options:

###  

·                              by check or cash; or

 

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·                              inshares of Stock; or

 

·                              in acombination of check or cash and shares of Stock; and

 

### (iv)                              provide, in thecase of any person other than the Grantee seeking to exercise the Options, suchdocuments as Fidelity or the Secretary of Mindspeed shall require to establishto their satisfaction that the person seeking to exercise the Options isentitled to do so.

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## (b)                                 An exercise ofthe whole or any part of the Options shall be effective:

##  

### (i)            if the Granteeelects (or after the Grantee’s death, the person entitled to exercise theOptions elects) to pay the exercise price for the Option Shares entirely bycheck or cash, (1) upon confirmation of the Grantee’s transaction by usingthe FAST or Web system or by speaking to a Fidelity customer servicerepresentative and full payment of the exercise price and withholding taxes (ifapplicable) being received by Fidelity within three (3) business daysfollowing the confirmation; and (2) receipt of any documents requiredpursuant to Section 3(a)(iv); and

###  

### (ii)           if the Granteeelects (or after the Grantee’s death, the person entitled to exercise theOptions elects) to pay the exercise price of the Option Shares in shares ofStock or in a combination of shares of Stock and check or cash, (1) uponconfirmation of the Grantee’s transaction by using the FAST or Web system or byspeaking to a Fidelity customer service representative and full payment of theexercise price (as defined in Section 3(d)(i)) and withholding taxes (ifapplicable) being received by Fidelity within three (3) business days followingthe confirmation; and (2) receipt of any documents required pursuant to Section 3(a)(iv).

###  

## (c)                                  If the Granteechooses (or after the Grantee’s death, the person entitled to exercise theOptions chooses) to pay the exercise price for the Option Shares to bepurchased on exercise of any of the Options entirely by check or cash, paymentmust be made by:

##  

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

 

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

 

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

 

## (d)         (i)              If the Granteechooses (or after the Grantee’s death, the person entitled to exercise theOptions chooses) to use already-owned Stock to pay all or part of the exerciseprice 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 theOptions) must deliver to Fidelity one or more certificates (and executed stockpowers), or authorize the book-entry transfer to Mindspeed of shares of Stock,representing:

##  

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

 

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

 

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

 

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

 

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

 

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

 

## (e)                                  An exerciseconducted and confirmed through the FAST or Web system or by speaking to aFidelity customer service representative, whether or not full payment of theexercise price for the Option Shares is received by Fidelity, shall constitutea binding contractual obligation by the Grantee (or the other person entitledto exercise the Options) to proceed with and complete that exercise of theOptions (but only so long as the Grantee continues, or the other personentitled to exercise the Options continues, to be entitled to exercise theOptions on that date).  By the Grantee’sacceptance of this Award Agreement, the Grantee agrees (for the Grantee and onbehalf of any other person who becomes entitled to exercise the Options) todeliver or cause to be delivered to Fidelity any balance of the exercise pricefor the Option Shares to be purchased upon the exercise pursuant to thetransaction conducted through the FAST or Web system or by speaking to a Fidelitycustomer service representative required to pay in full the exercise price forthose Option Shares, that payment being by check, cash, wire transfer, inshares of Stock or in a combination of check or cash and shares of Stock, on orbefore the third (3rd) business day after the date on which the Granteeconfirms the transaction through the FAST or Web system or by speaking to aFidelity customer service representative. If such payment is not made, the Grantee (for the Grantee and on behalfof any other person who becomes entitled to exercise the Options) authorizeMindspeed, in its discretion, to set off against salary payments or otheramounts due or which may become due the Grantee (or the other person entitledto exercise the Options) any balance of the exercise price for those OptionShares remaining unpaid thereafter.

##  

## (f)                                    A book-entrystatement representing the number of Option Shares purchased will be issued assoon as practicable (i) after Fidelity has received full payment thereforor (ii) at Mindspeed’s or Fidelity’s election in their sole discretion,after Mindspeed or Fidelity has received (x) full payment of the exerciseprice of those Option Shares and (y) any reimbursement in respect ofwithholding taxes due pursuant to Section 5.

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#  

# 4.                                      Transferability

#  

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

 

# 5.                                      Withholding

#  

Mindspeed or Fidelityshall have the right, in connection with the exercise of the Options in wholeor in part, to deduct from any payment to be made by Mindspeed or Fidelityunder this Award Agreement an amount equal to the taxes required to be withheldby law with respect to such exercise or to require the Grantee (or any otherperson entitled to exercise the Options) to pay to it an amount sufficient toprovide for any such taxes so required to be withheld.  By the Grantee’s acceptance of this AwardAgreement, the Grantee agree (for the Grantee and on behalf of any other personwho becomes entitled to exercise the Options) that if Mindspeed or Fidelityelects to require the Grantee (or such other person) to remit an amountsufficient to pay such withholding taxes, the Grantee (or such other person)must remit that amount within three (3) business days after the confirmationof the Option Shares exercise (Section 3(a)(ii)).  If such payment is not made, Mindspeed, inits discretion, shall have the same right of set-off with respect to payment ofthe withholding taxes in connection with the exercise of the Option Shares asprovided under Section 3(e) with respect to payment of the exerciseprice.

 

# 6.                                      Rights asStockholder

#  

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

 

# 7.                                      Headings

#  

The section headingscontained in this Award Agreement are solely for the purpose of reference, arenot part of the agreement of the parties and shall in no way affect the meaningor interpretation of this Award Agreement.

 

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#  

# 8.                                      References

#  

All references in thisAward Agreement to sections, paragraphs, subparagraphs or clauses shall bedeemed to be references to sections, paragraphs, subparagraphs and clauses ofthis Award Agreement unless otherwise specifically provided.

 

# 9.                                      Amendment andTermination

#  

## (a)           The Granteeunderstands that Mindspeed has reserved the right to amend or terminate thisAward 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 wayobligate Mindspeed or its affiliates to make a grant in any future year or inany given amount.  The Granteeacknowledges and understands that the grant is wholly discretionary in natureand is not to be considered part of any normal or expected compensation that isor would be subject to severance, resignation, redundancy or similar pay, otherthan to the extent required by local law.

##  

## (b)           The Committeemay at any time alter or amend this Award Agreement to the extent permitted bylaw, except that, subject to the provisions of Section 10, no suchalteration or amendment shall impair the rights of the Grantee without theGrantee’s consent.

##  

## (c)                                 The Option isintended to be exempt from the provisions of Internal Revenue Service Code Section 409A.  However, Mindspeed makes no representationsthat the Option will be so exempt and makes no undertaking to prevent Code Section 409Afrom applying to the amounts payable under this Award Agreement or to mitigateits effects on any payments made under this Award Agreement.  Mindspeed and the Grantee agree to amend thisAward Agreement to the extent necessary to make the Option exempt from, orcomply with, Code Section 409A.

##  

# 10.                                Administration

#  

## (a)                                  Subject to theexpress provisions of this Award Agreement, the Committee shall have the power (i) toimplement (including the power to delegate such implementation to appropriateofficers of Mindspeed), interpret and construe this Award Agreement or otherdocuments defining the rights and obligations of Mindspeed and the Granteehereunder, (ii) to determine all questions arising hereunder, and (iii) toadopt and amend such rules and regulations for the administration hereofand thereof as it may deem desirable. The interpretation and construction by the Committee of any provisionsof this Award Agreement shall be conclusive and binding.  Any action taken by, or inaction of, theCommittee relating to this Award Agreement shall be within the discretion ofthe Committee and shall be conclusive and binding.  Subject only to compliance with the expressprovisions hereof, the Committee may act in its discretion in matters relatedto this Award Agreement.

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## (b)                                It is theintent of Mindspeed that this Award Agreement satisfies, and is interpreted ina manner that satisfies, the applicable requirements of Rule 16b-3 underthe 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, andwill not be subjected to avoidable liability under Section 16(b) ofthe Exchange Act.

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# 11.                                AdjustmentProvisions

#  

## (a)                                 In the event ofany change in or affecting the outstanding shares of Stock by reason of a stockdividend 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 anextraordinary dividend in cash, securities or other property, the Board ofDirectors of Mindspeed shall make or take such amendments to this AwardAgreement and such adjustments and actions hereunder as it deems appropriate,in its sole discretion, under the circumstances, and its determination in thatrespect shall be final and binding.  Suchamendments, adjustments and actions may include, but are not limited to,changes in the number of shares of Stock (or other securities) then remainingsubject to this Award Agreement, and the maximum number of shares that may bedelivered to the Grantee pursuant to this Award Agreement.  No fractional interests will be issued underthis Award Agreement resulting from any adjustments.

##  

## (b)                                The Committeeshall make any further adjustments as it deems necessary to ensure equitabletreatment of the Grantee as the result of any transaction affecting thesecurities subject to this Award Agreement or the Grant Letter not described inSection 11(a), or as is required or authorized under the terms of thisAward Agreement.

##  

## (c)                                 The existenceof the Option Shares granted hereunder shall not affect or restrict in any waythe right or power of the Board of Directors of Mindspeed or the stockholdersof Mindspeed to make or authorize any adjustment, recapitalization,reorganization or other change in its capital structure or its business, anymerger or consolidation of Mindspeed, any issue of bonds, debentures, preferredor prior preference stock or other securities ahead of or affecting the Stockor the rights thereof, the dissolution or liquidation of Mindspeed or any saleor transfer of all or any part of its assets or business, or any othercorporate act or proceeding.

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# 12.                                Limits ofLiability

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## Any liability of Mindspeedor a Subsidiary to the Grantee with respect to this Award Agreement shall bebased solely upon contractual obligations created herein.  Neither Mindspeed or its Subsidiaries, norany member of the Board of Directors of Mindspeed or of the Committee, nor anyother person participating in any determination of any question under thisAward Agreement, or in the interpretation, administration or application ofthis Award Agreement, shall have any liability to any party for any actiontaken, or not taken, in good faith****underthis Award Agreement.

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# 13.                                Compliance withLaws

#  

## Notwithstanding anythingcontained herein to the contrary, Mindspeed shall not be required to sell ordeliver shares of Stock or other securities hereunder if the sale or deliverythereof would constitute a violation by the Grantee or Mindspeed of anyprovisions of any law or regulation of any governmental authority or anynational securities exchange or interdealer quotation system, and as a conditionof any sale or delivery Mindspeed may require such agreements or undertakings,if any, as Mindspeed may deem necessary or advisable in its discretion toassure compliance with any such law or regulation.

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# 14.                                EntireAgreement

#  

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

 

# 15.                                Applicable Lawsand Regulations

#  

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

 

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