4. *ADMINISTRATION OF THE PLAN*.The Plan shall be administered by the Compensation and Management Development Committee(the Committee) of the Board, subject to the right of the Board, in its sole discretion, toexercise or authorize another “independent committee” to exercise some or all of theresponsibilities, powers and authority vested in the Committee under the Plan. TheCommittee (or the Board or any other independent committee authorized by the Board) shallhave authority to interpret the Plan, and to prescribe, amend and rescind rules andregulations relating to the administration of the Plan, and all such interpretations, rulesand regulations shall be conclusive and binding on all persons. For purposes of the Plan,“independent committee” shall mean a committee of the Board consisting only of directorswho are: (i) an “independent director” under applicable NASDAQ rules, (ii) a “non-employeedirector” as defined under Rule 16b-3 under the Securities Exchange Act of 1934 and (iii)an “outside director” under Section 162(m) of the Internal Revenue Code of 1986.5. *EFFECTIVE DATE OF THE PLAN*.The Plan has been approved by the Board and shall be submitted to Conexant Systems, Inc.(Conexant), the sole shareholder of Mindspeed, for approval and, if approved, shall becomeeffective on the date on which Conexant completes the pro rata distribution of alloutstanding Shares to Conexant’s shareowners (the Distribution).
 
 

 
6. *STOCK OPTIONS*.Each Non-Employee Director in office at the time of the Distribution shall be granted, onthe first trading day following the Distribution or on such later date within 60 daysthereafter as the Board may designate, an option to purchase 8,000 Shares. Each otherNon-Employee Director shall be granted an option to purchase 8,000 Shares at the meeting ofthe Board at which, or following the Annual Meeting of Shareholders at which, theNon-Employee Director is first elected a director of Mindspeed. Following the AnnualMeeting of Shareholders held in the year 2004 and each Annual Meeting of Shareholdersthereafter, each Non-Employee Director who is elected a director at, or who was previouslyelected and continues as a director after, that Annual Meeting shall be granted an optionto purchase 4,000 Shares, provided that the Board may, by action taken on or before the dayfollowing the date of any such Annual Meeting, defer the option grants in respect of suchAnnual Meeting for up to 60 days following such Annual Meeting to a date coinciding withthe date of grant of options or other incentive compensation by Mindspeed to some or all ofthe officers of Mindspeed.The exercise price per share for each option granted under the Plan shall be the closingprice per share (the Fair Market Value) of Shares on the date of grant as reported on theNasdaq Stock Market or such other national securities exchange or automated inter-dealerquotation system on which the Shares have been duly listed and approved for quotation andtrading (or on the next preceding day such stock was traded if it was not traded on thedate of grant). The purchase price of the Shares with respect to which an option orportion thereof is exercised shall be payable in full in cash, Shares valued at their FairMarket Value on the date of exercise, or a combination thereof. Each option may beexercised in whole or in part at any time after it becomes exercisable; and each optionshall become exercisable in four approximately equal installments on each of the first,second, third and fourth anniversaries of the date the option is granted. No option shallbe exercisable prior to one year nor after ten years from the date of the grant thereof;provided, however, that if the holder of an option dies, the option may be exercised fromand after the date of the optionee’s death for a period of three years (or until theexpiration date specified in the option if earlier) even if it was not exercisable at thedate of death. Moreover, if an optionee retires after attaining age 55 and completing atleast fiveyears service as a director, all options then held by such optionee shall be exercisable evenif they were not exercisable at such retirement date; provided, however, that each suchoption shall expire at the earlier of five years from the date of the optionee’s retirementor the expiration date specified in the option.
 
 

 
Options granted under the Plan are not transferable other than (i) by will or by the laws ofdescent and distribution; or (ii) by gift to the grantee’s spouse or natural, adopted orstep- children or grandchildren (Immediate Family Members) or to a trust for the benefit ofone or more of the grantee’s Immediate Family Members or to a family charitable trustestablished by the grantee or a member of the grantee’s family. If an optionee ceases tobe a director while holding unexercised options, such options are then void, except in thecase of (i) death, (ii) disability, (iii) retirement after attaining age 55 and completingat least five years service as a director, or (iv) resignation from the Board for reasonsof the antitrust laws, compliance with Mindspeed’s conflict of interest policies or othercircumstances that the Committee may determine as serving the best interests of Mindspeed.7. *RESTRICTED STOCK UNITS.*Following the Annual Meeting of Shareholders held in the year 2008 and each Annual Meeting ofShareholders thereafter, each Non-Employee Director who is elected a director at, or whowas previously elected and continues as a director after, that Annual Meeting shall begranted restricted stock units (Restricted Stock Units) in an amount equal to the lesser of(a) 3,000 Restricted Stock Units or (b) the number of Restricted Stock Units (rounded tothe nearest whole unit) equaling $45,000 divided by the closing price of Shares on the dateof grant as reported on the Nasdaq Stock Market or such other national securities exchangeor automated inter-dealer quotation system on which the Shares have been duly listed andapproved for quotation and trading (or on the next preceding day such stock was traded ifit was not traded on the date of grant). For the purpose of the calculation in theprevious sentence, one Restricted Stock Unit shall equal one Share.The recipient shall not have the rights of a shareholder until such time as the Sharesunderlying the Restricted Stock Units are settled by the issuance of such Shares to theNon-Employee Director.Upon receipt of the Shares underlying the Restricted Stock Units, the recipient shall havethe right to vote the Shares. One Share shall be issuable for each Restricted Stock Unitawarded.
 
 

 
Restricted Stock Units issued under this Section 7 shall not be settled, and such Shares shallnot be issued, until ten days after (i) the recipient retires from the Board afterattaining age 55 and completing at least five years service as a director or (ii) therecipient resigns from the Board or ceases to be a director by reason of the antitrustlaws, compliance with Mindspeed’s conflict of interest policies, death, disability or othercircumstances, and the Board has not determined (prior to the expiration of such ten dayperiod) that such resignation or cessation of service as a director is adverse to the bestinterests of Mindspeed.The settlement of the Restricted Stock Units as described above shall be delayed in theevent Mindspeed reasonably determines that the issuance of the Shares would constitute aviolation of federal securities laws or other applicable law. If the settlement of theRestricted Stock Units is delayed by the provisions of this paragraph, the settlement ofthe Restricted Stock Units shall occur at the earliest date at which Mindspeed reasonablydetermines that issuing the Shares will not cause a violation of federal securities laws orother applicable law. For purposes of this paragraph, the issuance of Shares that wouldcause inclusion in gross income or the application of any penalty provision or otherprovision of the Internal Revenue Code of 1986, as amended (the Code), is not considered aviolation of applicable law.8. *SHARES OR RESTRICTED STOCK UNITS IN LIEU OF CASH COMPENSATION.*Each Non-Employee Director may elect each year, not later than December 31 of the yearpreceding the year as to which an election is to be applicable, to receive all or anyportion of the cash retainer to be paid for board, committee or other service in thefollowing calendar year through the issuance or transfer of Shares, valued at the closingprice as reported on the Nasdaq Stock Market or such other national securities exchange orautomated inter-dealer quotation system on which the Shares have been duly listed andapproved for quotation and trading, on the date when each payment of such retainer amountwould otherwise be made in cash (or on the next preceding day such stock was traded if itwas not traded on that date). Each Non-Employee Director making such an election mayalso elect at the same time to receive the value of those Shares in the form of RestrictedStock Units. The recipient shall not have the rights of a shareholder until such time as theShares underlying the Restricted Stock Units are settled by the issuance of such Shares tothe Non-Employee Director. Upon receipt of the Shares underlying the Restricted Stock Units,the recipient shall have the right to vote the Shares. One Share shall be issuable for eachRestricted Stock Unit awarded.
 
 

 
Restricted Stock Units issued under this Section 8 shall not be settled, and such Shares shallnot be issued, until ten days after (i) the recipient retires from the Board afterattaining age 55 and completing at least five years service as a director or (ii) therecipient resigns from the Board or ceases to be a director by reason of the antitrustlaws, compliance with Mindspeed’s conflict of interest policies, death, disability or othercircumstances, and the Board has not determined (prior to the expiration of such ten dayperiod) that such resignation or cessation of service as a director is adverse to the bestinterests of Mindspeed.The settlement of the Restricted Stock Units as described above shall be delayed in theevent Mindspeed reasonably determines that the issuance of the Shares would constitute aviolation of federal securities laws or other applicable law. If the settlement of theRestricted Stock Units is delayed by the provisions of this paragraph, the settlement ofthe Restricted Stock Units shall occur at the earliest date at which Mindspeed reasonablydetermines that issuing the Shares will not cause a violation of federal securities laws orother applicable law. For purposes of this paragraph, the issuance of Shares that wouldcause inclusion in gross income or the application of any penalty provision or otherprovision of the Code is not considered a violation of applicable law.9. *RESTRICTED STOCK*.The Board or the Committee may, from time to time, as and when either thereof deems itappropriate, provide one or more Non-Employee Directors with a grant of Restricted Stock,subject to the terms, conditions and restrictions established by the Board or the Committeeat the time of grant.
 
 

 
10. *ADDITIONAL COMPENSATION*.The Board or the Committee may, from time to time, as and when either thereof deems itappropriate, provide one or more Non-Employee Directors with additional compensation underthe Plan. Such additional compensation may be in the form of a grant of Shares, RestrictedStock, Restricted Stock Units, options to purchase Shares or a combination thereof, subjectto the terms, conditions and restrictions established by the Board or the Committee at thetime of grant.11. *ADJUSTMENTS UPON CHANGES IN CAPITALIZATION*.If there shall be any change in or affecting Shares on account of any merger,consolidation, reorganization, recapitalization, reclassification, stock dividend, stocksplit or combination, or other distribution to holders of Shares (other than a cashdividend), there shall be made or taken such amendments to the Plan and such adjustmentsand actions thereunder as the Board may deem appropriate under the circumstances.12. *GOVERNMENT AND OTHER REGULATIONS*.The obligations of Mindspeed to deliver Shares upon exercise of options granted underSection 6 of the Plan, upon vesting and settlement of Restricted Stock Units pursuant toSection 7 or an election made under Section 8 or the delivery of Shares pursuant to anelection made under Section 8 of the Plan or grants made under Section 9 or Section 10 ofthe Plan, shall be subject to (i) all applicable laws, rules and regulations and suchapprovals by any governmental agencies as may be required, including, without limitation,compliance with the Securities Act of 1933, as amended, and (ii) the condition that suchShares shall have been duly listed and approved for quotation and trading on the NasdaqStock Market, or such other national securities exchange or automated inter-dealerquotation system as shall be approved by the Board.13. *AMENDMENT AND TERMINATION OF THE PLAN*.The Plan may be amended by the Board in any respect, provided that, without shareholderapproval, no amendment shall (i) materially increase the maximum number of Shares availablefor delivery under the Plan (other than adjustments pursuant to Section 11 hereof), (ii)materially increase the benefitsaccruing to participants under the Plan, or (iii) materially modify the requirements as toeligibility for participation in the Plan. The Plan may also be terminated at any time bythe Board.
 
 

 
The Plan was amended and restated effective July 1, 2008 to adjust (in accordance withSection 11 of the Plan) the number of Shares available for issuance under the Plan, as wellas the number of Shares subject to automatic stock option and Restricted Stock Unit grantsafter giving effect to a 1-for-5 reverse stock split of the Company’s common stock, whichbecame effective at 11:59 p.m. EDT on June 30, 2008. Such amendment and restatement wasnot subject to the approval of the Company’s shareholders.14. *MISCELLANEOUS.* (a) If a Change of Control as defined in Article III, Section 14(I)(1) of Mindspeed’sBylaws shall occur, all options then outstanding pursuant to the Plan shall forthwithbecome fully exercisable whether or not then exercisable, all Restricted Stock Units shallbecome fully vested and settled by the issuance of Shares, and the restrictions on allShares granted as Restricted Stock under the Plan shall forthwith lapse; provided, however,that each such option shall expire at the earlier of five years from the date of the Changeof Control or the expiration date specified in the option; provided, also, that if theevent constituting a Change of Control is not also a “change in the ownership or effectivecontrol” of Mindspeed, or a “change in the ownership of a substantial portion of theassets” of Mindspeed, as those terms are defined under Code Section 409A, then RestrictedStock Units shall be settled upon the Non-Employee Director’s “separation from service”within the meaning under Code Section 409A coincident with or subsequent to such Change ofControl.  (b) Nothing contained in the Plan shall be deemed to confer upon any person any right tocontinue as a director of or to be associated in any other way with Mindspeed.  (c) To the extent that Federal laws do not otherwise control, the Plan and alldeterminations made and actions taken pursuant hereto shall be governed by the law of theState of Delaware.