EXHIBIT
10.7


 


MINDSPEED TECHNOLOGIES, INC.

2003 STOCK OPTION PLAN

As Amended and Restated as of July 1, 2008


 


1.     Purpose.


 


In
connection with the Distribution, certain stock options granted pursuant to the
Conexant Stock Option Plans will be adjusted in accordance with the provisions
of the Employee Matters Agreement so that following the Distribution the
respective grantees will hold stock options to purchase Shares in addition to
stock options to purchase Conexant Shares, and the Corporation will assume Conexant’s
obligations with respect to the adjusted stock options for Shares.  The purpose of this 2003 Stock Option Plan is
(a) to provide a means for the Corporation to perform its obligations with
respect to the adjusted stock options for Shares and (b) to foster
creation of and enhance shareholder value by linking the compensation of
officers and other employees of the Corporation, whose stock options granted
pursuant to the Conexant Stock Option Plans will be adjusted so that such
officers and employees also hold stock options for Shares or who may receive
grants of stock options pursuant to the terms of the Plan, to increases in the
price of the Shares, thus providing means by which persons of outstanding
abilities can be motivated and retained. 
Subject to the rights of the Board of Directors and the Committee
provided in the Plan and any Sub-Plan, it is intended that the provisions of
the Plan and any of Sub-Plans A through K will provide the Participants with
Options that have substantially the same terms and conditions as the Conexant
Options from which such Options are derived. 
The Board of Directors or the Committee may look to the original plan or
plans from which the Plan or any of Sub-Plans A through K is derived in order
to interpret the Plan or any of Sub-Plans A through K or an Option governed by
the Plan or any of Sub-Plans A through K or to resolve any inconsistency or
error which may exist in the Plan or any of Sub-Plans A through K.


 


2.     Definitions.


 


For
purposes of the Plan, the following terms shall have the meanings set forth
below:


 


a.     Board of Directors.  The Board of Directors of the Corporation.


 


b.     Code.  The Internal Revenue Code of 1986, and any
successor statute, as it or they may be amended from time to time.


 


c.     Committee.  The Compensation and Management Development
Committee of the Board of Directors, as it may be comprised from time to time,
or another committee of the Board of Directors designated by the Board of
Directors to administer the Plan.


 


d.     Conexant.  Conexant Systems, Inc., a Delaware
corporation, and any successor thereto.


 





















 


e.     Conexant
Option.  An option to purchase
Conexant Shares granted pursuant to any of the Conexant Stock Option Plans,
other than Specified Conexant Options.


 


f.      Conexant
Shares.  Shares of common stock, par
value $.01 per share, of Conexant, or any security of Conexant issued in
substitution or exchange therefor or in lieu thereof.


 


g.     Conexant
Stock Option Plans.  As the context
requires, any or all of the following (including any sub-plans authorized
thereunder), in each case, as amended through the Distribution Date:


 


	
  1.

  	
   

  	
  Conexant
  Systems, Inc. 1998 Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Conexant
  Systems, Inc. 1999 Long-Term Incentives Plan;

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Conexant
  Systems, Inc. 2000 Non-Qualified Stock Plan;

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Conexant
  Systems, Inc. Directors Stock Plan;

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Applied
  Telecom, Inc. 2000 Non-Qualified Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  HotRail, Inc.
  1997 Equity Incentive Plan;

  
	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  HotRail, Inc.
  2000 Equity Plan;

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  HyperXS
  Communications, Inc. 2000 Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Istari
  Design, Inc. 1997 Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Maker
  Communications, Inc. 1996 Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Maker
  Communications, Inc. 1999 Stock Incentive Plan;

  
	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Microcosm
  Communications Limited Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  NetPlane
  Systems, Inc. Stock Option Plan;

  
	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Novanet
  Semiconductor Ltd. Employee Shares Option Plan;

  
	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Philsar
  Semiconductor Inc. Stock Option Plan; and

  
	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Sierra
  Imaging, Inc. 1996 Stock Option Plan.

  



 


h.     Corporation.  Mindspeed Technologies, Inc., a Delaware
corporation, and any successor thereto.


 


i.      Director.  A member of the Board of Directors.


 


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j.      Distribution.  The pro rata distribution of outstanding
Shares owned by Conexant to Conexant’s shareowners.


 


k.     Distribution
Date.  The date on which Conexant
distributes Shares to Conexant’s shareowners.


 


l.      Employee
Matters Agreement.  The Employee
Matters Agreement dated as of June 27, 2003 by and between Conexant and
the Corporation.


 


m.    Exchange
Act.  The Securities Exchange Act of
1934, as amended.


 


n.     Fair
Market Value.  The closing price of
the Shares as reported on the American Stock Exchange or such other national
securities exchange or automated inter-dealer quotation system on which the
Shares have been duly listed and approved for quotation and trading on the date
of a determination (or on the next preceding day such stock was traded if it
was not traded on the date of a determination).


 


o.     Option.  An option to purchase Shares derived from
adjustments to a Conexant Option, other than Specified Conexant Options, in
connection with the Distribution and in accordance with the Employee Matters
Agreement or an option granted in connection with an offer to exchange
outstanding Options for new Options pursuant to Section 4(c) and
Sub-Plan L.


 


p.     Participant.  Any person who as of the close of business on
the Distribution Date held one or more outstanding Conexant Options under one
or more of the Conexant Stock Option Plans and who, for purposes of a
particular Sub-Plan, also satisfies the additional requirements set forth in
the definition of “Participant” in that Sub-Plan.


 


q.     Plan.  This Mindspeed Technologies, Inc. 2003
Stock Option Plan.


 


r.      Securities
Act.  The Securities Act of 1933, as
amended.


 


s.     Shares.  Shares of common stock, par value $.01 per
share, of the Corporation, or any security of the Corporation issued in
substitution, exchange or in lieu thereof.


 


t.      Specified
Conexant Options.  Conexant Options (i) granted
to certain executive officers of Conexant’s Broadband Communications business
which pursuant to their terms shall remain solely options to purchase Conexant
Shares or (ii) held by persons in certain foreign locations as shall be
designated by Conexant.


 


u.     Sub-Plans.  Sub-Plans A through L  of the Plan.


 


3.     Plan Administration.


 


a.     The Committee shall exercise all
responsibilities, powers and authority relating to the administration of the
Plan not reserved by the Board of Directors.


 


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b.     The
Board of Directors reserves the right, in its sole discretion, to exercise or
authorize another committee or person to exercise some of or all the
responsibilities, powers and authority vested in the Committee under the Plan.


 


c.     None
of the Corporation or any of its Subsidiaries, any member of the Board of
Directors or of the Committee, or any other person participating in any
determination of any question under the Plan, or in the interpretation,
administration or application of the Plan, shall have any liability to any
party for any action taken, or not taken, in good faith under the Plan.


 


4.     Options.


 


a.     The outstanding Options entitle the holders
thereof to purchase such numbers of Shares at such exercise prices as shall be
determined pursuant to resolutions to be adopted by Conexant’s Board of
Directors before the Distribution Date in accordance with the Employee Matters
Agreement and otherwise have the same terms and conditions as the Conexant
Options from which they are derived; provided, however, that
references to the “Corporation” shall mean the Corporation instead of Conexant;
provided, further, that the purchase price of the Shares shall be
payable as provided in Section 5.


 


b.     Options
granted pursuant to Section 4(c) will entitle the holders thereof to
purchase such numbers of Shares at such exercise prices as shall be determined
by the Committee pursuant to the terms and conditions of Sub-Plan L.


 


c.     Shares
subject to the unexercised portion of any terminated, forfeited or cancelled
Option shall be available for future grants of Options solely in connection
with offers to exchange outstanding Options for new Options made to Employees
and Non-Employees (as defined in Sub-Plan L), which new Options shall be
subject to the terms and conditions set forth in Sub-Plan L.  Notwithstanding anything in the Plan to the
contrary, the specific provisions of Sub-Plan L shall govern any Options
granted pursuant to this Section 4(c).


 


5.     Payment.  To
the extent that the right to purchase Shares has accrued and is in effect, the
Option may be exercised in full at one time or in part from time to time by
giving notice of exercise pursuant to such procedures and according to such
terms and conditions as may be adopted by the Committee from time to time.  Options granted under the Plan may provide
for the payment of the exercise price, as provided in the terms and conditions
applicable to the Conexant Options from which the Options are derived, by
delivery of (a) cash or a check payable to the order of the Corporation in
an amount equal to the exercise price of such Options, (b) Shares owned by
the Participant having a Fair Market Value equal in amount to the exercise
price of the Options being exercised, or (c) any combination of (a) and
(b); provided, however, that payment of the exercise price by
delivery of Shares owned by the Participant may be made only if the payment
does not result in a charge to earnings for financial accounting purposes as
determined by the Board of Directors or the Committee; provided, further,  that the purchase price of the Shares
with respect to which an Option or portion thereof is exercised cannot be paid
by delivery of Conexant Shares but shall be payable in full in cash or in
Shares or in a combination of cash and Shares; provided, further,
that to the extent that the exercise price of an Option is denominated in
foreign currency and is not converted (with the consent of the Option 


 


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holder) into U.S. dollars, only payment
by cash or check may be made.  In
addition, Participants may, either on a selective or aggregate basis,
simultaneously exercise options and sell the Shares thereby acquired, pursuant
to a brokerage or similar arrangement approved in advance by the Committee, and
use the proceeds from such sale as payment of the purchase price of such Shares
and any applicable withholding taxes.


 


6.     Book-Entry Statements.  Upon
exercise and full payment for the Option, a book-entry statement representing
the number of Shares purchased will be issued as soon as practicable (i) after
the stock option administrator (the “Administrator”) whom the
Corporation has engaged to administer and process stock option exercises has
received full payment therefor or (ii) at the Corporation’s or the
Administrator’s election in their sole discretion, after the Corporation or the
Administrator has received (x) full payment of the exercise price of the
Shares subject to the Options and (y) any reimbursement in respect of
withholding taxes due.


 


7.     Shares Available.  The
total number of Shares which may be delivered upon exercise of Options shall
not exceed the number (estimated to be approximately 6 million Shares as of July 1,
2008) necessary to provide for the exercise of Options outstanding on the
Distribution Date as provided in the Employee Matters Agreement, subject to any
further adjustments provided for herein; provided, however, that,
subject to the provisions of Section 8, without the approval of shareholders
of the Corporation, the Committee may not amend the Plan to increase the number
of Shares which may be delivered under the Plan.  Shares which may be delivered upon exercise
of Options may consist in whole or in part of unissued or reacquired Shares.  The Corporation will at all times reserve a
sufficient number of authorized and unissued Shares to satisfy outstanding
Options in full.


 


8.     Adjustments.  If there shall be any
change in or affecting Shares on account of any merger, consolidation, reorganization,
recapitalization, reclassification, stock dividend, stock split or combination,
or other distribution to holders of Shares (other than a cash dividend), there
shall be made or taken such amendments to the Plan and such adjustments and
actions thereunder as the Board of Directors may deem appropriate under the
circumstances; provided, however, that the foregoing is subject
to the specific provisions of each individual Sub-Plan regarding adjustments.


 


9.     Miscellaneous.


 


a.     No award or portion thereof shall be
transferable by the Participant otherwise than (i) by will or by laws of
descent and distribution, (ii) by gift to members of a Participant’s
immediate family, (iii) to a trust established for the benefit of a
Participant’s immediate family members only, (iv) to a partnership in
which a Participant’s immediate family members are the only partners or (v) as
otherwise determined by the Committee. For purposes of this plan, “immediate
family” shall mean the Participant’s spouse and natural, adopted or
step-children and grandchildren. 
Notwithstanding any transfer of an award or portion thereof, the
transferred award shall continue to be subject to the same plan and grant
agreement terms and conditions as were applicable to the Participant immediately
prior to the transfer, as if the Option had not been transferred.  Except as otherwise provided under Sub-Plan L
and any award agreement thereunder, each Option shall be exercisable during the
lifetime of the Participant to whom the Conexant Option from which it is
derived was granted only by the Participant unless the Option has been
transferred in accordance with the provisions of the Plan, in which case it
shall be exercisable only by the transferee (or by the legal representative of
the estate or the heirs or legatees of the transferee).


 


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b.     No
person shall have the rights or privileges of a shareholder of the Corporation
with respect to Shares subject to an Option until such person has received such
Shares following exercise of such Option.


 


c.     No
fractional Shares shall be issued or transferred pursuant to the Plan.  If any Option shall be exercisable for a
fractional Share, the person entitled thereto shall be paid an amount equal to
the excess of the Fair Market Value as of the date of exercise over the
exercise price for any fractional Share deliverable in respect of exercise of
that Option.


 


d.     The
Corporation shall have the right in connection with the delivery of any Shares
upon exercise of an Option to require as a condition of such delivery that the
recipient represent that such Shares are being acquired for investment and not
with a view to the distribution thereof and that he or she will make no
transfer of the same except in compliance with any rules and regulations
in force at the time of such transfer under the Securities Act or any other
applicable law.


 


e.     The
Corporation shall have the right in connection with any exercise of an Option,
to deduct from any amount otherwise payable by the Corporation, an amount equal
to any taxes required by law to be withheld with respect to exercise of that
Option or to require the Participant or other person effecting such exercise,
as a condition of and prior to delivery of Shares upon such exercise, to pay to
the Corporation an amount sufficient to provide for any such taxes so required
to be withheld, provided that such amount shall not exceed the statutory
maximum.


 


f.      The
Corporation shall bear all expenses and costs in connection with the operation
of the Plan, including costs related to the purchase, issue or transfer of
Shares, but excluding taxes imposed on any person receiving a payment or
delivery of Shares under the Plan.


 


g.     No
employee of the Corporation shall have any right as a Participant to continue
in the employ of the Corporation for any period of time or to a continuation of
any particular rate of compensation, and the Corporation expressly reserves the
right to discharge or change the assignment of any of its employees who are
Participants at any time.  There is no
obligation for uniformity of treatment of Participants under the Plan.


 


10.   Interpretations and Determinations.  The
Committee shall have the power from time to time to interpret the Plan and any
Sub-Plan, to adopt, amend and rescind rules, regulations and procedures
relating to the Plan and any Sub-Plan, to make, amend and rescind
determinations under the Plan and any Sub-Plan and to take all other actions
that the Committee shall deem necessary or appropriate for the implementation
and administration of the Plan and any Sub-Plan.  All interpretations, determinations and other
actions by the Committee not revoked or modified by the Board of Directors
shall be final, conclusive and binding upon all parties.  In the event of any conflict between the Plan
and any Sub-Plan, the terms of the Sub-Plan shall govern and, with respect to
Sub-Plans A-K, in a manner consistent with Section 1 of the Plan; provided,
however, that Section 9(a) of the Plan shall control over any
inconsistent provision in any of Sub-Plans A-K or an award agreement related to
any of Sub-Plans A-K.


 


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11.   Section Headings.  The
section headings contained herein are for the purpose of convenience only, and
in the event of any conflict, the text of the Plan, rather than the section
headings, shall control.


 


12.   Gender, Etc.  In interpreting the
Plan and any Sub-Plan, the masculine gender shall include the feminine, the
neutral gender shall include the masculine or feminine, and the singular shall
include the plural unless the context clearly indicates otherwise.


 


13.   Invalidity.  If any term or
provision contained herein or in any award agreement evidencing an Option shall
to any extent be invalid or unenforceable, such term or provision will be
re-formed so that it is valid, and such invalidity or unenforceability shall
not affect any other provision or part thereof.


 


14.   Effective Date.  Upon
approval by the sole shareholder of the Corporation, the Plan shall become effective
as of the Distribution Date.


 


15.   Applicable Law.  The
Plan, any Sub-Plan, any award agreement related to any Sub-Plan and all actions
taken hereunder or thereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware without regard to the conflict of law
principles thereof.


 


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