Document:

Exhibit 10.1

 

EXCHANGE AGREEMENT

 

This
Exchange Agreement (this “Agreement”) is made and entered into as of
this      day of July, 2008, by and between                      
(the “Holder”), and Mindspeed Technologies, Inc., a Delaware
corporation (the “Company”).

 

RECITALS

 

WHEREAS, the Holder currently holds $                aggregate
principal amount of the Company’s 3.75% Convertible Senior Notes due 2009 (the “Old
Notes”);

 

WHEREAS, the Holder desires to exchange the Old Notes
for an equal principal amount of the Company’s 6.50% Convertible Senior Notes
due 2013 (the “New Notes”) on the terms and conditions set forth in this
Agreement (the “Note Exchange”);

 

WHEREAS, the Company desires to issue to the Holder $                aggregate
principal amount of New Notes in exchange for the Old Notes in the Note
Exchange; and

 

WHEREAS, the New Notes will be issued pursuant to an
indenture, to be entered into by the Company and the Trustee named therein (the
“Trustee”), dated as of the date hereof (the “Indenture”),
substantially in the form of Exhibit A hereto.

 

NOW, THEREFORE, in consideration of the premises and
the agreements set forth below, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

 

ARTICLE I

Exchange

 

Section 1.1             Exchange of the Old Notes.  Upon the terms and subject to the conditions
of this Agreement, at the Closing (as defined herein), the Company shall issue
to the Holder, and the Holder agrees to accept from the Company, $                in
aggregate principal amount of New Notes, together with all accrued and unpaid
interest paid in cash on the Old Notes to, but excluding, the Closing Date, in
exchange for $                aggregate
principal amount of Old Notes tendered to the Company by the Holder pursuant to
the terms hereof and the Letter of Transmittal (as defined herein).

 

Section 1.2             Closing. Subject to the
satisfaction (or waiver by the Holder and the Company, as applicable) of the
conditions set forth in Sections 1.3(i) and 1.3(ii) below, the
closing of the transactions contemplated by this Agreement (the “Closing”)
is anticipated to take place on or before the second (2nd) Business Day after the date
hereof at the offices of the Company, 4000 MacArthur Boulevard, East Tower,
Newport Beach, California 92660, or on such other date and at such other place
as the parties may agree in writing (the “Closing Date”).  At the Closing, (i) the Holder shall
deliver or cause to be delivered to the Company all of such

 

 

Holder’s right,
title and interest in and to all of the Old Notes, and all documentation
related thereto, and whatever documents of conveyance or transfer may be
necessary or desirable to transfer to and confirm in the Company all right,
title and interest in and to the Old Notes, and (ii) the Company shall
issue to the Holder the New Notes and pay to the Holder in cash by wire
transfer of immediately available funds an amount equal to the accrued and
unpaid interest on the Holder’s Old Notes to, but excluding, the Closing Date.

 

Section 1.3             Conditions to Closing. (i) The
obligation of the Holder hereunder to consummate the transactions contemplated
hereby at the Closing is subject to the satisfaction, at or before the Closing,
of each of the following conditions, provided that these conditions are for the
Holder’s sole benefit and may be waived by the Holder at any time in its sole
discretion by providing the Company with prior written notice thereof:

 

(a)           The
Company shall have executed and delivered this Agreement to Holder;

 

(b)           The
Company and the Trustee shall have executed and delivered the Indenture;

 

(c)           The
Company shall have executed and delivered the New Notes in the aggregate
principal amount set forth in Section 1.1;

 

(d)           The
Company shall have submitted to The NASDAQ Stock Market LLC the requisite
notification form with respect to the listing on The NASDAQ Global Market (the “Principal
Market”) of the shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), issuable upon conversion of the New Notes;

 

(e)           The
New Notes shall have been approved for trading on The PORTAL Market, subject
only to notice of issuance at or prior to the time of issuance;

 

(f)            The
Company shall have obtained a Committee on Uniform Securities Identification
Procedures number (CUSIP number) for the New Notes;

 

(g)           The
Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended, as of the Closing
Date, by the Securities and Exchange Commission (the “SEC”) or the
Principal Market from trading on the Principal Market nor shall suspension by
the SEC or the Principal Market have been threatened (and remain unresolved),
as of the Closing Date, either (A) in writing by the SEC or the Principal
Market or (B) by falling below the minimum listing maintenance
requirements of the Principal Market; and

 

(h)           The
Company shall have furnished to the Holder a certificate, dated as of the
Closing Date, of a duly authorized officer of the Company, in form and
substance reasonably satisfactory to the Holder, to the effect that (x) the
representations and warranties of the Company contained in Article III
hereof were true and correct on the date hereof and are true and correct on the
Closing Date (as though made on such date) and (y) the Company has
complied in all material respects with all of its agreements and covenants
contained herein that are required to be performed prior to the Closing.

 

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(ii)           The
obligation of the Company hereunder to consummate the transactions contemplated
hereby at the Closing is subject to the satisfaction, at or before the Closing,
of each of the following conditions, provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion by providing the Holder with prior written notice thereof:

 

(a)           The
Holder shall have executed and delivered to the Company this Agreement;

 

(b)           The
Holder shall have completed, executed and delivered to the Company a letter of
transmittal in the form attached as Exhibit B hereto (the “Letter
of Transmittal”);

 

(c)           The
Holder shall have delivered, or caused to be delivered, to the Company the Old
Notes being exchanged pursuant to this Agreement in accordance with the terms
hereof and the Letter of Transmittal; and

 

(d)           The Holder shall
have furnished to the Company a certificate, dated as of the Closing Date, of a
duly authorized officer of the Holder, in form and substance reasonably
satisfactory to the Company, to the effect that (x) the representations
and warranties of the Holder contained in Article II hereof were true and
correct on the date hereof and are true and correct on the Closing Date (as
though made on such date) and (y) the Holder has complied in all material
respects with all of its agreements and covenants contained herein that are
required to be performed prior to the Closing.

 

Section 1.4             Waivers; Compliance with
Confidentiality Agreement.  The
Holder hereby acknowledges and agrees that: (i) Deutsche Bank Securities
Inc. (“Deutsche Bank”) has acted as agent for the Company in connection
with the Note Exchange and consents to Deutsche Bank’s actions in that regard
and from and after the Closing waives any and all claims, actions, liabilities,
damages or demands the Holder may have against Deutsche Bank in connection with
any alleged conflict of interest arising from Deutsche Bank’s engagement as an
agent of the Company with respect to the exchange by the Company and the Holder
of New Notes for Old Notes; (ii) subject to Section 4.1 below, the
Company may enter into one or more transactions from time to time with other
holders (the “Other Holders”) of the Company’s 3.75% Convertible Senior
Notes due 2009 pursuant to which all or any portion of such notes are
exchanged, repurchased, retired or otherwise refinanced by the Company; and (iii) it
has complied with that certain Confidentiality Agreement, dated as of May 27,
2008, by and between Deutsche Bank and the Holder (the “Confidentiality
Agreement”).

 

ARTICLE II

Representations and Warranties of the Holder

 

The Holder hereby makes the following representations
and warranties, each of which is true and correct on the date hereof and on the
Closing Date (as though made on such date) and shall survive the Closing and
the transactions contemplated hereby to the extent set forth herein:

 

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Section 2.1            Existence
and Power.

 

(a)           The
Holder is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has the power, authority and
capacity to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby.

 

(b)           The
execution of this Agreement by the Holder and the consummation by the Holder of
the transactions contemplated hereby do not and will not constitute or result
in a breach, violation, conflict or default under any note, bond, mortgage, deed,
indenture, lien, instrument, contract, agreement, lease or license to which the
Holder is a party, whether written or oral, express or implied, or any statute,
law, ordinance, decree, order, injunction, rule, directive, judgment or
regulation of any court, administrative or regulatory body, governmental
authority, arbitrator, mediator or similar body on the part of the Holder or on
the part of any other party thereto or cause the acceleration or termination of
any obligation or right of the Holder, except for such breaches, conflicts,
defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Holder to perform its obligations hereunder.

 

Section 2.2               Valid and Enforceable
Agreement; Authorization. This Agreement has been duly executed and
delivered by the Holder and constitutes a legal, valid and binding obligation
of the Holder, enforceable against the Holder in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors’ rights generally, and (b) general principles of
equity.

 

Section 2.3             Title to Old Notes. The Holder
is the sole beneficial owner of and has good and valid title to the Old Notes
being exchanged by such Holder hereby, free and clear of any mortgage, lien,
pledge, charge, security interest, encumbrance, title retention agreement,
option, equity or other adverse claim thereto. The Holder has not, in whole or
in part, (i) assigned, transferred, hypothecated, pledged or otherwise
disposed of the Old Notes or its rights in such Old Notes being exchanged or
redeemed by such Holder hereby, or (ii) given any person or entity any
transfer order, power of attorney or other authority of any nature whatsoever
with respect to such Old Notes.

 

Section 2.4             Investment Decision. The
Holder is a “qualified institutional buyer” within the meaning of Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”), and
was not organized for the purpose of acquiring the New Notes or the shares of
Common Stock into which the New Notes may be converted (the “Underlying
Common Stock”). The Holder (or its authorized representative) is familiar
with the Company’s objectives and business plan, has had the opportunity to
review the Company’s filings with the Securities and Exchange Commission (the “SEC”)
that are incorporated by reference into the confidential offering memorandum,
dated the date hereof (the “Offering Memorandum”), delivered by or on
behalf of the Company to the Holder in connection with the Note Exchange (all
of such filings with the SEC referred to, collectively, as the “SEC
Documents”).  The Holder has reviewed
copies of each of the Indenture, the Letter of Transmittal and the Offering
Memorandum, and has had an opportunity to ask questions of the Company and to
obtain from representatives of the Company such information as the Holder deems
necessary or appropriate in connection with its analysis and decision to enter
into this Agreement.  The Holder has had
such opportunity to ask questions 

 

4

 

of the Company and
its representative and to obtain from representatives of the Company such
information as is necessary to permit it to evaluate the merits and risks of
its investment in the Company and has independently, without reliance upon any
representatives of the Company and based on such information as the Holder
deemed appropriate, made its own analysis and decision to enter into this
Agreement. The Holder has had the opportunity to consult with its accounting,
tax, financial and legal advisors to be able to evaluate the risks involved in
the Note Exchange pursuant hereto and to make an informed investment decision
with respect to such Note Exchange.  The
Holder acknowledges that the Company is relying on the truth and accuracy of
the foregoing representations and warranties in the offering of the New Notes
to the Holder without having first registered the New Notes or the Underlying
Common Stock under the Securities Act.

 

Section 2.5             Acquisition Entirely for Own
Account.  The Holder is acquiring the
New Notes for its own account and not towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the Securities Act; provided, however that by
making the representations herein, the Holder does not agree to hold any of
such New Notes for any minimum or other specific term and reserves the right to
dispose of such New Notes or the Underlying Common Stock at any time.

 

Section 2.6             Restricted Securities.  The Holder understands that neither the New
Notes nor the Underlying Common Stock have been registered under the Securities
Act, and are being issued hereunder by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent and the accuracy of the
Holder’s representations as expressed herein.

 

Section 2.7             No Public Market.  The Holder understands that no public market
now exists for the New Notes, and that the Company has made no assurance that a
public market will ever exist for the New Notes.

 

Section 2.8             Affiliate Status. 
Neither the Holder nor any of its affiliates is, an officer, director or a “beneficial
owner” of more than 10% of the shares of Common Stock (as defined for purposes
of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)).  Neither Holder nor any of
its affiliates is, (a) effecting or seeking, offering or proposing
(whether publicly or otherwise) to effect, or cause or participate in or in any
way assist any other person to effect or seek, offer or propose (whether
publicly or otherwise) to effect or participate in, (i) any material
acquisition of any securities (or beneficial ownership thereof) or assets of
the Company or any of its subsidiaries out of the ordinary course of business ,
(ii) any tender or exchange offer, merger or other business combination
involving the Company or any of its subsidiaries, (iii) any
recapitalization, restructuring, liquidation, dissolution or other
extraordinary transaction with respect to the Company or any of its
subsidiaries, or (iv) any “solicitation” of “proxies” (as such terms are
used in the proxy rules of the Securities and Exchange Commission) or
consents to vote any voting securities of the Company; (b) forming,
joining or in any way participating in a “group” (as defined under the Exchange
Act) with respect to the Company with respect to the matters set forth in (a) above;
(c) otherwise acting, alone or in concert with others, to seek to control
or influence the management, Board of Directors or policies of the Company; or (d) entering
into any discussions or arrangements with any third party with respect to any
of the foregoing.  The Old Notes have
been continuously held 

 

5

 

by the Holder for a
period of at least one (1) year as of the date hereof.  The Holder is not, and has not been during
the preceding three months, a person that directly, or indirectly through one (1) or
more intermediaries, controls, or is controlled by, or is under common control
with, the Company.

 

ARTICLE III

Representations, Warranties and Covenants of the Company

 

The Company hereby makes the following
representations, warranties, and covenants each of which is true and correct on
the date hereof and on the Closing Date (as though made on such date) and shall
survive the Closing and the transactions contemplated hereby to the extent set
forth herein:

 

Section 3.1            Existence
and Power.

 

(a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power, authority and
capacity to execute and deliver this Agreement, the Indenture and the New Notes
(collectively, the “Transaction Documents”) and to perform the Company’s
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby.

 

(b)           The
execution of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby (i) does not require the consent,
approval, authorization, order, registration or qualification of, or filing
with, any governmental authority or court, or body or arbitrator having
jurisdiction over the Company other than as contemplated in applicable state
securities law, the Principal Market, The Depository Trust Company and The
PORTAL Market; (ii) does not and will not constitute or result in a breach
or violation or default under the Company’s certificate of incorporation, as
amended, or bylaws; and (iii) does not and will not constitute or result
in a breach, violation or default under any note, bond, mortgage, deed,
indenture, lien, instrument, contract, agreement, lease or license, whether
written or oral, express or implied, or any statute, law, ordinance, decree,
order, injunction, rule, directive, judgment or regulation of any court,
administrative or regulatory body, governmental authority, arbitrator, mediator
or similar body on the part of the Company or on the part of any other party
thereto or cause the acceleration or termination of any obligation or right of
the Company or any other party thereto, other than (with respect to this clause
(iii)) breaches, violations or defaults that would not reasonably be expected
to have a Material Adverse Effect.  As
used in this Agreement, the term “Material Adverse Effect” shall mean
when used in respect of any matter relating to the Company a material adverse
effect on the business, condition (financial or otherwise), properties or
results of operations of the Company and its subsidiaries, considered as one
enterprise, or would materially adversely affect the ability of the Company to
perform its obligations under this Agreement, the Indenture, or the New Notes.

 

Section 3.2             Valid and Enforceable Agreement;
Authorization.  This Agreement has
been duly executed and delivered by the Company and constitutes a legal, valid
and binding 

 

6

 

obligation of the
Company, enforceable against the Company in accordance with its terms, except
that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors’ rights generally and (b) general principles of
equity.  When the Indenture is duly
executed and delivered by the Company, assuming due authorization, execution
and delivery of the Indenture by the Trustee, it will constitute a legally
valid and binding agreement of the Company, enforceable against it in
accordance with its terms, subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors’ rights generally and (b) general principles of
equity.

 

Section 3.3            Capitalization.
At the Closing, the authorized capital stock of the Company will consist of
100,000,000 shares of Common Stock, par value $0.01 per share, and 25,000,000
shares of Preferred Stock, par value $0.01 per share.  As of the close of business on July 25,
2008, there were 23,813,151 shares of Common Stock, and no shares of Preferred
Stock, issued and outstanding.  All such
issued and outstanding shares of have been duly authorized and validly issued,
and are fully paid and non-assessable, and were issued in compliance with all
applicable state and federal laws concerning the issuance of securities and all
applicable preemptive, participation, rights of first refusal and other similar
rights.

 

Section 3.4            Valid
Issuance of the New Notes.

 

(a)           The
New Notes, when issued and delivered in accordance with the terms and for the
consideration set forth in this Agreement and the Indenture, will constitute
legal and binding obligations of the Company, be validly issued and free of
restrictions on transfer other than restrictions on transfer under the
Indenture, applicable state and federal securities laws and liens or
encumbrances created by or imposed by the Holder, and enforceable against the
Company in accordance with their terms, except that such enforcement may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general principles of equity.

 

(b)           Assuming
the accuracy of the representations of the Holder in Section 2 of this
Agreement and subject to the filing of Form D pursuant to Regulation D
under the Securities Act and state securities laws, the New Notes will be
issued in compliance with all applicable federal and state securities laws. The
Underlying Common Stock has been duly reserved for issuance, and upon issuance
in accordance with the terms of the Company’s certificate of incorporation, as
amended, will be validly issued, fully paid and non-assessable and free of
restrictions on transfer other than restrictions on transfer under applicable
federal and state securities laws and liens or encumbrances created by or
imposed by the Holder. Based in part upon the representations of the Holder in Section 2
of this Agreement, the New Notes and the Underlying Common Stock, when issued
and delivered in accordance with the terms of the New Notes and the Indenture,
will be issued in compliance with all applicable federal and state securities
laws.

 

Section 3.5            Securities
Law Matters.  The Offering
Memorandum, including the SEC Documents, does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they are
made, not misleading.  The SEC Documents
complied in all material respects at 

 

7

 

the time of their
respective filing with the SEC, with all applicable requirements of the federal
securities laws.  The Company is subject
to and in full compliance with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act. 
The New Notes satisfy the requirements set forth in Rule 144A(d)(iii) under
the Securities Act.

 

Section 3.6             Compliance with Laws; Permits.  The Company and its subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, except where the failure to have such certificates, authorizations
and permits would not reasonably be expected to have a Material Adverse Effect,
and none of the Company and its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which would reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Effect. The Company and its
subsidiaries are and have been in compliance with all applicable laws,
statutes, ordinances, rules, regulations, orders, judgments, decisions,
decrees, standards, and requirements relating to their respective businesses, except
where any such non-compliance would not reasonably be expected to have a
Material Adverse Effect.

 

Section 3.7             No Material Adverse Effect.  Since the respective dates as of which
information is given in the SEC Documents, there has not been any event or
occurrence having a Material Adverse Effect on the Company or its subsidiaries,
except as reflected or disclosed in a subsequent SEC Document.

 

Section 3.8             Trust Indenture Act.  Assuming the accuracy of the representations
of the Holder contained in Article 2 hereof and its compliance with the
agreements set forth therein, it is not necessary in connection with the offer,
sale and delivery of the New Notes in the manner contemplated by this Agreement
to qualify the Indenture under the Trust Indenture Act of 1939, as amended.

 

Section 3.9             Shell Company Status.  The Company is not, and has never been, an
issuer identified in Rule 144(i)(1) under the Securities Act.

 

Section 3.10           Independent Registered Public
Accounting Firm.  Deloitte &
Touche LLP, who has audited the financial statements of the Company that are
included in the Company’s Annual Report on Form 10-K for the fiscal year
ended September 28, 2007, which is incorporated by reference in the
Offering Memorandum, was an independent registered public accounting firm as
required by the Securities Act during the periods covered by such financial
statements.

 

Section 3.11           Other Representations and
Warranties.  The Company represents
and warrants to the Holder as set forth in Section 1 (other than Sections
1(a), 1(b), 1(n), 1(z), 1(cc), 1(dd), 1 (ee), 1(ff), 1(gg), 1(hh), 1(ii),
1(jj), 1(mm) and 1(uu)) of that certain Purchase Agreement, by and between the
Company and Lehman Brothers Inc., dated as of December 2, 2004 (the “2004
Purchase Agreement”), as if such representations and warranties were made
as of the date hereof and set forth in their entirety in this Agreement.  Such representations and warranties to the
transactions under the 2004 Purchase Agreement and the securities issued
pursuant thereto are hereby deemed for purposes of this Agreement to be
references to the transactions under this Agreement and the issuance of the
securities issuable pursuant hereto, 

 

8

 

references in the
2004 Purchase Agreement to “Preliminary Offering Memorandum” and “Offering
Memorandum” being deemed references to the Offering Memorandum as defined in Section 2.4
above, references in the 2004 Purchase Agreement to “Indenture” being deemed
references to the Indenture as defined in the recitals above, references in the
2004 Purchase Agreement to “Notes” being deemed references to the New Notes as
defined in the recitals above, references in the 2004 Purchase Agreement to “Conversion
Shares” being deemed references to the Underlying Common Stock as defined in Section 2.4
above, references in the 2004 Purchase Agreement to “Transaction Documents”
being deemed references to the Transaction Documents as defined in Section 3.1
above, references in the 2004 Purchase Agreement to “Delivery Date” being
deemed references to the Closing Date as defined in Section 1.2 above,
references in the 2004 Purchase Agreement to “Material Adverse Effect” being
deemed references to a Material Adverse Effect as defined in Section 3.1
above, references in the 2004 Purchase Agreement to the “Initial Purchaser”
being deemed references to the Holder as defined in the recitals above,
references in the 2004 Purchase Agreement to “the date hereof” being deemed
references to the date of this Agreement, and references in the 2004 Purchase
Agreement to the “Registration Rights Agreement” being disregarded.

 

ARTICLE IV

Additional Agreements

 

Section 4.1             Most Favored Nation.  Subject to the limitations set forth in this Section 4.1,
the Company covenants that if it consummates any transaction (or series of
related transactions) with Other Holders of Old Notes (other than one or more
affiliates of the Holder) pursuant to which Old Notes are exchanged for other
debt or equity securities of the Company (each an “Other Exchange”)
(excluding, for the avoidance of doubt, the conversion of the Old Notes
pursuant to the terms of the indenture governing the same), at any time or from
time to time, the Company will, no later than two (2) Business Days after
the Company’s disclosure on Form 8-K (or in another report filed by the
Company under the Exchange Act as permitted by the rules and regulations
thereunder) of the consummation of each and every such Other Exchange, deliver
to the Holder a written notice (an “MFN Notice”) of each and every such
Other Exchange and the publicly-disclosed terms and conditions thereof.  Following its delivery of an MFN Notice, the
Company will, upon execution and delivery to the Company by the Holder of a
confidentiality agreement no less favorable to the Company than the
Confidentiality Agreement, provide the Holder with all non-public information
disclosed by or on behalf of the Company to any Other Holders in connection
with the applicable Other Exchange (as well as any additional non-public information
as the Holder may reasonably request through the Election Deadline (as defined
below) in connection with its evaluation of the applicable Other
Exchange).  The Holder may, at its option
and in its sole discretion, elect (which election may be revoked by the Holder
at any time prior to its consummation of such Other Exchange) to participate in
any such Other Exchange (through a subsequent closing of such Other Exchange or
subject to such other procedures as may be agreed to between the Company and
the Holder, and in any event as may be permitted by applicable securities
laws), on the same terms and conditions applicable to such Other Holders that
participated therein (provided that the Holder will instead be required to
surrender its MFN Notes (as defined below) in connection with such Other
Exchange, and the Holder may only participate therein up to the aggregate
amount of MFN Notes that it holds), by delivering to the Company written notice
of such election by no later than 5:00 p.m. (California time) on the third
(3rd) Business Day after its receipt of the applicable MFN Notice (the 

 

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“Election
Deadline”).  For the purposes of this
Agreement, the term “MFN Notes” shall mean any New Notes and any other
notes, debentures or similar securities of the Company that the Holder receives
from the Company in connection with its consummation of any Other Exchange
(excluding, for the avoidance of doubt, any common stock of the Company,
including Underlying Common Stock), in each case that such Holder has acquired
directly from the Company and held continuously since the Company’s initial
issuance thereof.  Notwithstanding
anything herein to the contrary: (x) the rights and benefits of the Holder
under this Section 4.1 may not be assigned or otherwise transferred to any
third party except with the express written consent of the Company, which
consent may be delayed, conditioned or denied in the Company’s sole and
absolute discretion; (y) the Company’s obligations under this Section 4.1
(including, without limitation, its obligations to provide MFN Notices or any
other notice to or allow the participation of the Holder in any Other Exchange)
shall automatically terminate in full if and when the Holder or its permitted
assignees and transferees, as applicable, cease to hold at least $1,000,000
aggregate principal amount of MFN Notes; and (z) the Company hereby
covenants and agrees that any Other Exchange will be subject to applicable
limitations on conversion that are no less restrictive than the limitations on
conversion contained in the Indenture.

 

Section 4.2             Holding Period.  For the purposes of Rule 144 under the
Securities Act (or a successor rule thereto), the Company acknowledges
(assuming the accuracy of the representations and warranties of the Holder in
Sections 2.5 and 2.8 hereof and the compliance by the Holder with its covenants
and agreements set forth herein) that, for purposes of Rule 144(d)(3)(ii) under
the Securities Act, the New Notes (including the corresponding Underlying
Common Stock) will be deemed to have been acquired at the same time as the Old
Notes, and the Company agrees, except as may otherwise be required by
applicable law, not to take a position contrary to this Section 4.2.  The Company agrees to take all commercially
reasonable actions, including, without limitation, the issuance by its legal
counsel of any necessary legal opinions, necessary to issue shares of
Underlying Common Stock without any restrictive legend without the need for any
action by the Holder; provided, however, that as a condition precedent to the
foregoing, the Holder shall take all commercially reasonable actions,
including, without limitation, providing customary representations and
warranties reasonably requested by the Company’s legal counsel in connection
with rendering any such necessary legal opinions.

 

Section 4.3             Disclosure of Transactions and
Other Material Information.  On or
before 8:30 a.m., New York City time, on the second (2nd) Business Day following the
Closing, the Company shall file a Current Report on Form 8-K describing
the terms of the transactions contemplated by this Agreement in the form and as
may be required by the Exchange Act, attaching the material Transaction
Documents not previously filed (including, without limitation, this Agreement
and the Indenture) (including all attachments, the “8-K Filing”).  The Company shall file its Quarterly Report
on Form 10-Q for the quarter ended June 27, 2008 (the “10-Q Filing”)
on or before the deadline applicable to such 10-Q filing as set forth in the rules and
regulations of the SEC (including any extension provided under Rule 12b-25
thereunder).  The Company acknowledges
and agrees that, from and after the filing of the 10-Q Filing with the SEC, any
material, nonpublic information provided by or on behalf of the Company to the
Holder prior to such time shall no longer constitute material, nonpublic
information, whether due to information publicly disclosed by the Company in
the 10-Q Filing or otherwise.  The
Company shall not, and shall cause each of its subsidiaries and its and each of
their respective 

 

10

 

officers,
directors, employees and agents, not to, provide the Holder with any material,
nonpublic information regarding the Company or any of its subsidiaries from and
after the filing of the 10-Q Filing with the SEC without the express written
consent of the Holder.  Subject to the
foregoing, neither the Company, its subsidiaries nor the Holder shall issue any
press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of  the
Holder, to make any press release or other public disclosure with respect to
such transactions (i) in substantial conformity with the 8-K Filing and
contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) the Holder shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). 
Without the prior written consent of the Holder, neither the Company nor
any of its subsidiaries or affiliates shall disclose the name of the Holder in
any filing, announcement, release or otherwise other than in connection with
the 8-K Filing, unless such disclosure is required by law, regulation or the
Principal Market.  As used herein, “Business
Day” means any day other than Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required by law to remain
closed.

 

Section 4.4             Indemnification.

 

(a)           In consideration of the Holder’s execution and
delivery of this Agreement, in addition to all of the Company’s other obligations
under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless the Holder and all of its stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a
result of, or arising out of, or relating to any misrepresentation or breach of
any representation or warranty made by the Company in the Transaction
Documents.  To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.  As used herein, “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

 

(b)           Promptly after receipt by an Indemnitee under this Section 4.4
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such
Indemnitee shall, if a claim for indemnification in respect thereof is to be
made against any indemnifying party under this Section 4.4, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnitee; provided,
however, that an Indemnitee shall have the right to retain its own counsel 

 

11

 

with the reasonable fees and expenses of not more than one counsel for
such Indemnitee to be paid by the indemnifying party, if, in the reasonable
opinion of the Indemnitee, the representation by such counsel of the Indemnitee
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other party represented by
such counsel in such proceeding.  Legal
counsel referred to in the immediately preceding sentence shall be selected by
the Holder.  The Indemnitee shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Indemnified Liabilities by the indemnifying
party and shall furnish to the indemnifying party all information reasonably
available to the Indemnitee that relates to such action or Indemnified
Liabilities.  The indemnifying party
shall keep the Indemnitee fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnitee, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such Indemnified
Liabilities or litigation.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnitee with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnitee under this Section 4.4, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.

 

(c)           The indemnification required by this Section 4.4
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Liabilities are incurred.

 

(d)           The indemnity agreements contained herein shall be
in addition to (x) any cause of action or similar right of the Indemnitee
against the indemnifying party or others, and (y) any liabilities the
indemnifying party may be subject to pursuant to applicable law.

 

ARTICLE V

Miscellaneous Provisions

 

Section 5.1             Notice.  Any notice provided for in this Agreement
shall be in writing and shall be either personally delivered, or mailed first
class mail (postage prepaid) with return receipt requested or sent by reputable
overnight courier service (charges prepaid). 
Notices will be deemed to have been given hereunder when delivered
personally, three Business Days after deposit in the U.S. mail postage prepaid
with return receipt requested and one Business Day after deposit postage
prepaid with a reputable overnight courier service for delivery on the next
Business Day.  The addresses and
facsimile numbers for any such notices shall be, unless changed by the
applicable party via notice to the other party in accordance herewith:

 

12

 

If to the Company:

 

Mindspeed Technologies, Inc.

4000 MacArthur Boulevard, East Tower

Newport Beach, CA 92660-3095

Telephone: (949) 579-3000

Facsimile: (949) 579-5289

Attention:  Chief Financial Officer

 

With a copy to
(which shall not constitute notice):

 

Morrison &
Foerster LLP

425 Market Street 

San Francisco, CA 94105-2482

Telephone: (415) 268-7000

Facsimile: (415) 268-7522

Attention:  Brandon C. Parris, Esq.

 

If to the Holder:

 

Telephone: 

Facsimile: 

Attention:

 

With a copy to (which
shall not constitute notice):

 

Telephone: 

Facsimile: 

Attention:

 

Section 5.2             Entire Agreement.  This Agreement and the other documents and
agreements executed and delivered among the parties hereto in connection with
the Note Exchange embody the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and thereof, and supersede all
prior and contemporaneous oral or written agreements, representations,
warranties, contracts, correspondence, conversations, memoranda and
understandings between or among the parties or any of their agents,
representatives or affiliates relative to such subject matter, including,
without limitation, any term sheets, emails or draft documents exchanged in
connection with the negotiation of the Note Exchange or otherwise.

 

13

 

Section 5.3             Assignment; Binding Agreement.  This Agreement and the other Transaction
Documents shall inure to the benefit of and be binding upon the parties hereto
and their successors and assigns. The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Holder.

 

Section 5.4             Counterparts.  This Agreement may be executed in multiple
counterparts, and on separate counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Any counterpart or other signature hereupon delivered by facsimile
or other electronic transmission shall be deemed for all purposes as
constituting good and valid execution and delivery of this Agreement by such
party.

 

Section 5.5             Remedies Cumulative.  Except as otherwise provided herein, all
rights and remedies of the parties under this Agreement are cumulative and
without prejudice to any other rights or remedies available at law.

 

Section 5.6             Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

Section 5.7             No Third Party Beneficiaries or
Other Rights.  Nothing herein shall
grant to or create in any person not a party hereto, or any such person’s
dependents or heirs, any right to any benefits hereunder, and no such party
shall be entitled to sue any party to this Agreement with respect thereto.

 

Section 5.8             Waiver; Consent.  This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than in accordance with
its terms), in whole or in part, except by a writing executed by the parties
hereto. No waiver of any of the provisions or conditions of this Agreement or
any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto. Except to the extent otherwise agreed in writing, no waiver
of any term, condition or other provision of this Agreement, or any breach
thereof shall be deemed to be a waiver of any other term, condition or
provision or any breach thereof, or any subsequent breach 

 

14

 

of the same term,
condition or provision, nor shall any forbearance to seek a remedy for any
noncompliance or breach be deemed to be a waiver of a party’s rights and
remedies with respect to such noncompliance or breach.

 

Section 5.9             Word Meanings.  The words such as “herein,” “hereinafter,” “hereof”
and “hereunder” refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires.  The singular shall include the
plural, and vice versa, unless the context otherwise requires.  The masculine shall include the feminine and
neuter, and vice versa, unless the context otherwise requires.

 

Section 5.10           No Broker.  Neither party has engaged any third party as
broker or finder or incurred or become obligated to pay any broker’s commission
or finder’s fee in connection with the transactions contemplated by this
Agreement, other than such commissions, fees and expenses for which such party
shall be solely responsible.

 

Section 5.11           Further Assurances.  The Holder and the Company each hereby agree
to execute and deliver, or cause to be executed and delivered, such other
documents, instruments and agreements, and take such other actions, including
giving any further assurances, as either party may reasonably request in
connection with the transactions contemplated by and in this Agreement.

 

Section 5.12           Costs and Expenses.  The Holder and the Company shall each pay
their own respective costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement,
including, but not limited to, attorneys’ fees.

 

Section 5.13           Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

Section 5.14           Severability.  If any provision of this Agreement is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Agreement so long as this Agreement as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature, invalidity
or unenforceability of the provision(s) in question does not substantially
impair the respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be conferred
upon the parties.  The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or
unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable
provision(s).

 

Section 5.15           Termination.  In the event that the Closing shall not have
occurred on or before five (5) Business Days from the date hereof due to
the Company’s or the Holder’s failure to satisfy the conditions set forth in
Sections 1.3(i) and (ii) above (and the nonbreaching party’s failure
to waive such unsatisfied condition(s)), the nonbreaching party shall have the
option to 

 

15

 

terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party.

 

[THE REMAINDER OF
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

 

16

 

IN WITNESS WHEREOF, each of the parties hereto has
caused this Agreement to be executed as of the date first above written.

 

 

	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  MINDSPEED TECHNOLOGIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Signature Page to Exchange Agreement

 

 

Exhibit A

 

Form of Indenture

 

A-1

 

Exhibit B

 

Form of Letter of Transmittal

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.  If you are in any doubt as to
the action to be taken, you should immediately consult your broker, bank
manager, lawyer, accountant, investment advisor or other professional.

 

LETTER OF TRANSMITTAL

Relating to the Exempted Exchanges 

Described in the Offering Memorandum

dated July 30, 2008

 

Each
holder of the 3.75% Convertible Senior Notes due 2009 (the “Old Notes”) of
Mindspeed Technologies, Inc. (the “Company”) participating in the exempted
exchanges (the “Exempted Exchanges”) as described in the above-referenced
Offering Memorandum (the “Offering Memorandum”) should complete, sign and
submit this Letter of Transmittal by fax to the Company, fax no. (949) 579-5289,
Attention: Chief Financial Officer, prior to or concurrently with such holder’s
execution and delivery to the Company of the Exchange Agreement (the “Exchange
Agreement”) to be entered into between such holder and the Company in
connection with the Exempted Exchanges. 
This Letter of Transmittal, the Exchange Agreement and the Indenture (as
defined below) are sometimes collectively referred to herein as the “Transaction
Documents”).

 

DELIVERY OF OLD NOTES

 

To
effect a valid delivery of Old Notes in accordance with the Transaction
Documents, the undersigned must complete the table below entitled “Description
of Old Notes Delivered,” sign the Letter of Transmittal where indicated, and
return the signed Letter of Transmittal as described above.  See Instruction 1 for information regarding
the account to which the Old Notes should be deposited upon surrender.

 

New
Notes (as defined below) will be issued by deposit in global form with the
custodian, Wells Fargo Bank, N.A. (the “Trustee”), and credited to exchanging
holders that are “qualified institutional buyers” (“QIBs”), as that term is defined in Rule l44A under the
Securities Act of 1933, as amended, through the Deposits and Withdrawal at
Custodian (“DWAC”) program of the Depository Trust Company (“DTC”).

 

The
New Notes will be issued pursuant to an indenture (the “Indenture”) to be dated
as of the Exchange Date (as defined below) between the Company and the Trustee
without registration under Securities Act of 1933, as amended (the “Act”), and
the rules and regulations of the Securities and Exchange Commission (the “Commission”)
promulgated thereunder, in reliance upon exemptions from the registration
requirements thereunder.  New Notes
issued pursuant to the Transaction Documents will be credited to the DTC account
of the undersigned or the undersigned’s custodian.  “New Notes” mean the Company’s 6.50%
Convertible Senior Notes due 2013 offered in the Exempted Exchanges.

 

For
purposes of this Letter of Transmittal, the term “Registered Holder” means a record holder or any DTC participant
to whose account the relevant Old Notes are credited.  This Letter of Transmittal will be governed
(including any claim or controversy arising out of or relating to this Letter
of Transmittal) by the law of the State of New York without regard to conflict
of law principles (other than Section 5-1401 of the General Obligations
Law).

 

B-1

 

DESCRIPTION OF OLD NOTES DELIVERED 

NOTE:  SIGNATURES MUST BE PROVIDED BELOW.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

 

	
  Name of DTC Participant and Participant’s Account

  Number in which Old Notes are held and to which the

  corresponding New Notes are to be delivered

  	
   

  	
  Aggregate Principal Amount of

  Old Notes*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

*           The principal amount of Old Notes delivered must be in denominations of
US$1,000 and whole multiples of US$1,000.

 

DELIVERY OF THE CASH AMOUNT

 

To
effect the settlement of the Cash Amount (as defined below) concurrently with
the exchange of the Old Notes, the undersigned must complete the table below
entitled “Wiring Instructions for the Cash Amount.”  The undersigned, by providing such wiring
instruction, is deemed to consent to the settlement of the Cash Amount through
wire transfer.

 

The “Cash
Amount” means a cash amount equal to the accrued and unpaid interest on such
Old Notes up to, but excluding, the settlement date for the Exempted Exchanges.

 

WIRING INSTRUCTIONS FOR THE CASH AMOUNT

 

NOTE: 
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

SEE INSTRUCTION 3.

 

	
  Bank Name:

  	
   

  
	
  Account Name:

  	
   

  
	
  Account Number:

  	
   

  
	
  ABA Number:

  	
   

  
	
  Reference:

  	
   

  

 

B-2

 

Note: 
Signatures must be provided below.

Please read the accompanying Instructions carefully.

 

Ladies and
Gentlemen:

 

The
undersigned hereby delivers to the Company the aggregate principal amount of
Old Notes indicated in the table above entitled “Description of Old Notes
Delivered.”

 

SIGN HERE

(TO BE COMPLETED BY ALL HOLDERS DELIVERING OLD NOTES)

 

By
completing, executing and delivering this Letter of Transmittal, the
undersigned hereby delivers to the Company the principal amount of the Old
Notes listed in the table labeled “Description of Old Notes Delivered.”

 

	
   

  	
   

  	
   

  
	
  Signature of Registered
  Holder(s) or Authorized Signatory

  	
   

  	
  Date

  
	
  (see guarantee
  requirement below)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Registered
  Holder(s) or Authorized Signatory

  	
   

  	
  Date

  
	
  (see guarantee
  requirement below)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Area Code and Telephone Number:

  	
   

  
				

 

This
Letter of Transmittal must be signed by the Registered Holder(s) exactly
as the name(s) appear(s) on a securities position listing of DTC or
by any person(s) authorized to become the Registered Holder(s) by
endorsements and documents transmitted herewith.  If the signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person, acting in a
fiduciary or representative capacity, please set forth at the line entitled “Capacity
(full title)” and submit evidence satisfactory to the Trustee and the Company
of such person’s authority to so act. 
See Instruction 4.

 

	
  Name(s):

  	
   

  
	
   

  	
   

  
	
   

  
	
  (Please Type or Print)

  
	
   

  	
   

  
	
  Capacity (full title):

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
  (Including Zip Code)

  
				

 

B-3

 

MEDALLION SIGNATURE GUARANTEE

(If required—See Instruction 4)

 

	
  Signature(s) Guaranteed by

  
	
  an Eligible Institution:

  	
   

  
	
  (Authorized Signature)

  
	
   

  	
   

  
	
   

  
	
  (Title)

  
	
   

  	
   

  
	
   

  
	
  (Name of Firm)

  
	
   

  	
   

  
	
   

  
	
  (Address)

  
	
   

  	
   

  
	
  Dated:                ,
  2008

  	
   

  

 

B-4

 

INSTRUCTIONS

 

1.  Delivery of Letter of Transmittal and
Procedures for Participating in the Exempted Exchanges.  To receive New Notes in connection with the
Exempted Exchanges pursuant to the Transaction Documents, a holder must deliver
a completed Letter of Transmittal as indicated on page 1 hereof and
deliver the Old Notes indicated in the table of the Letter of Transmittal
entitled “Description of Old Notes Delivered,” free of payment, via DWAC
deposit of the Old Notes as indicted in Instruction 3 below, at or prior to the
closing of the Exempted Exchanges.

 

2.  Amount of Delivery.  Old Notes delivered will be accepted only in
denominations of US$1,000 and whole multiples of US$1,000.

 

3.  Delivery of the New Notes and Cash Amount.  New
Notes to be delivered pursuant to the Exempted Exchanges will be delivered only
in book-entry form through the DWAC program of DTC.  On the settlement date, when Wells Fargo
Bank, N.A., the registrar of the New Notes, verifies the posting of a DWAC
deposit of the Old Notes by the delivering holder, the registrar will accept
the withdrawal of the Old Notes from the holder’s account (and cancel the Old
Notes), and credit the New Notes free of payment to the DTC account of the
delivering holder or the delivering holder’s custodian.  Accordingly, the appropriate DTC participant
name and number (along with any other required account information) needed to
permit such delivery must be provided in the table in the Letter of Transmittal
entitled “Description of Old Notes Delivered.” 
Failure to do so will render the delivery of the Old Notes defective,
and the Company will have the right, which it may waive, to reject such
delivery.

 

To effect a
settlement of the Cash Amount concurrently with the Exempted Exchanges, the
delivering holder must provide, in addition to the information required in the
table entitled “Description of Old Notes Delivered,” the wiring information in
the table entitled “Wiring Instructions for the Cash Amount” in the Letter of
Transmittal.

 

4.  Signatures on Letter of Transmittal; Instruments
of Transfer; Guarantee of Signatures.    Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange Medallion Program (each, a “Medallion Signature Guarantor”).  Signatures on the Letter of Transmittal need
not be guaranteed if:

 

·                  the
Letter of Transmittal is signed by a participant in DTC whose name appears on a
security position listing as the owner of the Old Notes; or

 

·                  the
Old Notes are delivered for the account of an “eligible guarantor institution.”

 

An “eligible
guarantor institution” is one of the following firms or other entities
identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended (as the terms are defined in Rule 17Ad-15):

 

(a)                                  a
bank;

 

(b)                                 a
broker, dealer, municipal securities dealer, municipal securities broker,
government securities dealer or government securities broker;

 

(c)                                  a
credit union;

 

(d)                                 a
national securities exchange, registered securities association or clearing
agency; or

 

(e)                                  a
savings institution that is a participant in a Securities Transfer Association
recognized program.

 

If any
of the Old Notes delivered are held by two or more Registered Holders, all of
the Registered Holders must sign the Letter of Transmittal.

 

B-5

 

If this
Letter of Transmittal or instruments of transfer are signed by trustees,
executors, administrators, guardians or attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and, unless waived by the Company,
evidence satisfactory to the Company of their authority to so act must be
submitted with this Letter of Transmittal.

 

5.  Important Tax
Information.  Under U.S. federal income tax law, a
holder (other than certain exempt holders, including corporations and certain
foreign holders) who tenders Old Notes and receives New Notes in the exchange
may be subject to backup withholding at the current applicable rate on payments
with respect to the New Notes received by such holder in the exchange unless
such U.S. holder provides an IRS Form W-9 to the appropriate withholding
agent and (i) is a corporation or comes within certain other exempt
categories and demonstrates this fact, or (ii) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules.

 

For a foreign
holder to qualify as an exempt recipient, such holder must submit to the
appropriate withholding agent a properly completed IRS Form W-8BEN, signed
under penalty of perjury, attesting to the holder’s exempt status.  IRS forms are available at the website of the
Internal Revenue Service at www.irs.gov.

 

B-6Exhibit 10.2

 

CONFIDENTIAL
TREATMENT

 

SECOND AMENDMENT TO DEVELOPMENT AND SUPPLY AGREEMENT

 

THIS
SECOND AMENDMENT TO DEVELOPMENT AND SUPPLY AGREEMENT (this “Second Amendment”)
is entered into as of the 26th day of June, 2008 (“Second Amendment Effective
Date”) by and between Cubist Pharmaceuticals, Inc., a Delaware corporation
(“Cubist”) and Hospira Worldwide, Inc., a Delaware corporation (“Hospira”)
to amend the terms of that certain Development and Supply Agreement, as
amended, between Abbott Laboratories, predecessor in interest to Hospira, and
Cubist (the “Agreement”).

 

Whereas, the parties desire to
amend the terms of the Agreement to reflect, among other items, the validation
of Hospira’s facility in Liscate, Italy, the manufacture of Product at such site,
changes to minimum purchases of Product and applicable pricing.

 

Now,
therefore in consideration of the mutual promises and
agreements contained herein, the parties agree to amend the Agreement as
follows:

 

1.               Incorporation
of the Agreement.     All capitalized terms which are not
defined herein shall have the same meanings as set forth in the Agreement, and
the Agreement is incorporated herein by this reference as though the same was
set forth in its entirety.  Except as
specifically set forth herein, the Agreement shall remain in full force and
effect and its provisions shall be binding on the parties hereto.

 

2.               Definitions.

 

a.               As
used herein Product shall refer to both the []* and D500 configurations of
CUBICIN® (daptomycin for injection)

 

b.              “[]*”
shall mean CUBICIN in a []* configuration

 

c.               “D500”
shall mean CUBICIN in a 500mg configuration.

 

d.              As
used in the Agreement, the term “Affiliate” shall mean any corporation or
non-corporate business entity which controls, is controlled by, or is under common
control with a party to this Agreement; A corporation or non-corporate business
entity shall be regarded as in control of another corporation or non-corporate
business entity if it owns, or directly or indirectly controls, in excess of
fifty percent (50%) of the voting stock of the other corporation, or (a) in
the absence of the ownership of in excess of fifty percent (50%) of the voting
stock of a corporation or (b) in the case of a non-corporate business
entity, if it possesses, directly or indirectly, the power to direct or cause
the direction of the management.

 

3.               Validation
of the Liscate, Italy Facility.

 

a.               D500
is currently manufactured at Hospira’s facility in McPherson, Kansas (“McPherson”).  The parties shall work jointly and in good
faith to complete the Feasibility Document and Plant Certification Protocol,
outlines of which are attached hereto at Exhibit A, in accordance with the
Technology Transfer Documents that were emailed by []* of Cubist to []* of Hospira on August 9, 2007 (the Feasibility Document,
Plant Certification Protocol and Technology Transfer Document, each a “Document”
and collectively the “Documents”).  For

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Securities and Exchange Commission. (the “Commission”).

 

 

the avoidance of
doubt, the Feasibility Document and Plant Certification Protocol shall each be
considered “complete” when both parties have agreed in writing to the content
of such Document, such agreement not to be unreasonably withheld, delayed or
conditioned.  The parties shall use the
Feasibility Document to determine if there are any major obstacles to Hospira
validating the Liscate, Italy site (“Liscate”) as a manufacturing site for the []*
and D500 Products in accordance with the Technology Transfer Document and as
further set forth in Section 3.b. and on Exhibit B (the “Liscate
Validation Program”).  The parties shall
complete the Feasibility Document and the Plant Certification Protocol and
perform the activities in the Plant Certification Protocol prior to Hospira’s
initiation of the Liscate Validation Program. 
If (a) the Feasibility Document is not completed and signed on or
before []* after the Second Amendment Effective Date; (b) the Plant
Certification Protocol is not completed and signed on or before []* after
completion of the Feasibility Document; or (c) Cubist reasonably
determines that the Liscate Validation Program is not technically feasible,
Sections 4 through 8 of this Amendment shall become null and void and, from
that date forward, the minimums and pricing shall revert to those detailed in
the June 1, 2006 First Amendment to Development and Supply Agreement (the “Amendment
One”); such minimums and pricing shall be referred to as the “Existing Terms”;
provided that Hospira shall continue to package and label Product at []* if
McPherson has already been qualified for packaging and labeling pursuant to the
Labeling and Packaging Program.

 

b.              Upon
completion of the Documents, Hospira shall complete the Liscate Validation
Program in accordance with the Documents and Exhibit B.  Hospira shall be responsible for all
reasonable costs associated with the validation of the []* and D500 Products at
Liscate as outlined in the Documents and Exhibit B, provided that Cubist
shall supply all Bulk Drug necessary for such validation activities, and (ii) Cubist
shall issue Purchase Orders in accordance with the Agreement for all lots of
Product manufactured under the Liscate Validation Program.

 

4.               Labeling
and Packaging.

 

a.               Hospira
currently supplies Product to Cubist in bulk packaging.  The parties intend to qualify both McPherson
and Liscate to label and package Product as outlined in the June 3, 2008
letter from []* (the “Labeling and Packaging Program”, attached hereto as Exhibit C).

 

5.               Location
of Manufacture.

 

a.               Upon
successful completion of the Liscate Validation Program, Hospira shall begin to
manufacture Product at Liscate.  Hospira
shall determine in its reasonable judgment the location of the manufacture of
the Products; provided that if Cubist’s []* Product requirements are less than []*,
Hospira shall manufacture all []* Product requirements at Liscate and shall use
[]* to manufacture at least []* of Product total in each Contract Year at
Liscate ([]* Product and D500 Product).  If
Cubist desires to have Hospira manufacture additional units of Product in
Europe that Hospira is unable to manufacture at Liscate, the parties shall meet
to discuss in good faith the possibility of []* for the manufacture of Product,
provided that should the parties agree to proceed with []*, any such []* shall
be subject to Hospira and Cubist agreeing upon payment to Hospira for such []*
activities.

 

b.              Within
thirty (30) days after Hospira’s receipt of Cubist’s firm purchase orders
pursuant to Section 8.7.4 of the Agreement which firm orders shall be
broken down by D500 Product and []* Product, Hospira will provide Cubist with a
detailed production schedule for the McPherson and Liscate plants in accordance
with this Section 5.

 

*Confidential Treatment Requested.  Omitted portions filed with the Commission.

 

2

 

c.               Upon
successful completion of the Liscate Validation Program with respect to the
D500 Product, Hospira shall manufacture D500 Product at Liscate []*, as
necessary to maintain its competency in the manufacture of the D500 Product at
Liscate; provided that Hospira continues to manufacture all []* Product at
Liscate and that Hospira’s obligations as set forth in 5.a. above shall
continue to apply.

 

6.               Schedule
and Prices.  Section 8.1.1 is hereby deleted in its
entirety and replaced with the following:

 

8.1.1        Purchase and Sale of Product.

 

Cubist
shall place Purchase Orders with Hospira and Hospira shall manufacture Product
for Cubist in accordance with the volume schedule outlined in Exhibit 8.5.1,
as set forth in Section 7 of Amendment 2. 
The initial minimum volume schedule is defined under the column labeled “Minimum
Volume (1)”.  Hospira shall deliver such
Product to Cubist in accordance with Section 8.6.

 

Cubist
shall pay the applicable price as set forth in Exhibit 8.5.1 as set forth
in Section 7 of Amendment 2 based on the applicable Contract Year and
whether or not the Product is unfinished (bulk packaging only) or finished
(final Product includes Product labeling and packaging), which shall be at
Cubist’s discretion as specified on the applicable Purchase Order.

 

7.               Pricing
Table.  Exhibit 8.5.1 of the Agreement is hereby
deleted in its entirety and replaced with the following:

 

Minimums
and Prices

 

	
  Contract

  Year

  	
   

  	
  Minimum

  Volume (1)

  in units

  	
   

  	
  Minimum

  Volume (2)

  in units

  	
   

  	
  Unfinished

  Price In US$ 

  McPherson

  	
   

  	
  Unfinished

  Price In US$

  Liscate

  	
   

  	
  Finished

  Price In US$ 

  McPherson

  	
   

  	
  Finished

  Price In US$ 

  Liscate

  
	
  2008

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  
	
  2009

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  
	
  2010

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  
	
  2011

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  
	
  2012

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  
	
  2013

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  	
   

  	
  []*

  

 

a.               This
pricing is effective as of []*.  As set
forth in the chart, annual price increases shall be []*.  Annual price increases will not exceed the
lesser of []*.

 

b.              “Minimum
Volume (1)” and “Minimum Volume (2)” columns apply to total volume of D500
Product and []* Product.

 

c.               If
during the Term of this
Agreement, []*,
then Cubist shall have the right to
reduce the minimum purchase volume for that year and subsequent years, provided
that, unless both parties agree in writing, such revised minimums shall not be
lower than []*; and, provided 

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

3

 

further,
that Cubist shall have no right to cancel any previously issued purchase orders
unless Cubist receives Hospira’s written agreement to cancel such purchase orders.

 

d.              Cubist
shall pay to Hospira all VAT due on any Product, if applicable, on the receipt
by Cubist of Hospira’s invoice.  Such
invoice shall set forth the purchase price and itemize the applicable VAT.

 

e.               Cubist’s
Affiliates may purchase Products directly from Hospira hereunder, as directed
by Cubist, provided that Cubist shall be responsible for all such Affiliates’
compliance with the terms of this Agreement, including prompt payment for such
Products in accordance with the terms hereof. 
Any such purchases by Cubist’s Affiliates shall apply to the minimum
volumes required by Section 8.1.1 and detailed in Exhibit 8.5.1.

 

8.               Section 8.2. 
The revised Section 8.2 as set forth in Amendment One shall
continue to apply provided that the reference to Exhibit 8.5.1 shall refer
to the Exhibit 8.5.1 as revised pursuant to Section 6 above;
provided, however, that notwithstanding anything to the contrary in this
Amendment Two or the Agreement, Section 8.2 shall no longer be of any
effect and no minimums shall apply to Cubist under this Agreement []*.

 

9.               Section 8.6.  Section 8.6
of the Agreement is hereby replaced with the following:

 

                        Hospira
shall deliver Product to Cubist, F.C.A. (Incoterms 2000), Hospira’s
manufacturing plant in McPherson, KS, USA or E.X.W. (Incoterms 2000),
Hospira’s manufacturing plant in Liscate, Italy; provided
that Hospira shall prepare any documentation necessary for
exportation.  Shipment shall be by a carrier designated by
Cubist.  Title shall pass to
Cubist upon placement of Product on carrier.

 

10.         Section 8.7.4.  Section 8.7.4
of the Agreement is hereby amended such that the language, “the first []*”
shall be changed to “the first []*” and the language, “the remaining []*” shall
be changed to “the remaining []*.”

 

11.         Section 8.8.2.  Section 8.8.2 of the Agreement is hereby
amended to add the following at the end of such Section:

 

                        Neither
Hospira nor any of its Affiliates (as defined above) []* shall no longer be of any effect and []*
to Cubist under this Agreement; provided that,
Cubist shall have no right to cancel any previously issued purchase orders
unless Cubist receives Hospira’s written agreement to cancel such purchase
orders.

 

12.         Effective
Date.  The amendment to the Agreement contemplated
by this Second Amendment shall be deemed effective as of the date first written
above upon the full execution of this Second Amendment and without any further
action required by the parties hereto. 
There are no conditions precedent or subsequent to the effectiveness of
this Second Amendment.

 

13.         Counterparts.  This Second Amendment may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.  One or more counterparts of this Second
Amendment may be delivered by facsimile, with the intention that delivery by
such means shall have the same effect as delivery of an original counterpart
thereof.

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

4

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this Second Amendment as
of the date first above written.

 

 

	
  HOSPIRA WORLDWIDE, INC.

  	
   

  	
  CUBIST PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
       /s/
  Anthony N. Cacich

  	
   

  	
  By

  	
       /s/
  Michael W. Bonney

  
	
   

  	
   

  	
   

  
	
  Name

  	
    Anthony N.
  Cacich

  	
   

  	
  Name

  	
     Michael
  W. Bonney

  
	
   

  	
  (type or print)

  	
   

  	
   

  	
  (type or print)

  
	
   

  	
   

  	
   

  
	
  Title

  	
  Vice President and
  General Manager,

  	
   

  	
  Title

  	
    President
  and CEO

  
	
   

  	
  Contract Manufacturing
  Services

  	
   

  	
   

  	
   

  
									

 

*Confidential Treatment Requested.  Omitted portions filed with the Commission.

 

5

 

Exhibit A

 

Outlines of

Feasibility Document and Plant Certification Protocol

 

[SEE ATTACHMENTS]

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

 

Feasibility Report
Outline

 

[]*

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

 

Plant Certification Outline

 

[]*

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

 

Exhibit B

 

Liscate Validation
Program

Project Plan

 

[]*

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

 

Exhibit C

 

Labeling and Packaging Program

 

[SEE
ATTACHMENT]

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

 

 

3 June 2008

 

[]*

 

Dear []*:

 

[]*

 

*Confidential Treatment
Requested.  Omitted portions filed with
the Commission.

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