EXHIBIT 10.5
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MINDSPEED TECHNOLOGIES, INC.
2003 LONG-TERM INCENTIVES PLAN
AWARD AGREEMENT FOR U.S. EMPLOYEES
STOCK OPTION TERMS AND CONDITIONS
1. Definitions
Capitalized terms used and not defined herein shall have the respective
meanings assigned to such terms in the Plan. As used in these Stock Option
Terms and Conditions, the following words and phrases shall have the
respective meanings ascribed to them below unless the context in which any
of them is used clearly indicates a contrary meaning:
(a) AWARD AGREEMENT: These Stock Option Terms and Conditions together
with the Grant Letter.
(b) CAUSE: (i) A felony conviction of a Participant; (ii) the commission
by a Participant of an act of fraud or embezzlement against the
Company and/or a Subsidiary; (iii) willful misconduct or gross
negligence materially detrimental to the Company and/or a
Subsidiary; (iv) the Participant's continued failure to implement
reasonable requests or directions received in the course of his or
her employment; (v) the Participant's wrongful dissemination or use
of confidential or proprietary information; or (vi) the intentional
and habitual neglect by the Participant of his or her duties to the
Company and/or a Subsidiary.
(c) DISABILITY: Permanent and total disability within the meaning of the
Company's long-term disability plan, as it may be amended from time
to time, or, if there is no such plan, as determined by the
Committee.
(d) FAST: Fidelity's automated service telephone system that is used to
facilitate stock option transactions.
(e) FIDELITY: Fidelity Stock Plan Services, the stock option
administrator whom the Company has engaged to administer and process
all stock option exercises.
(f) GRANT LETTER: The letter from the Company granting the stock option
or stock options to the Employee or Non-Employee.
(g) MINDSPEED: Mindspeed Technologies, Inc., a Delaware corporation.
(h) NASDAQ: The Nasdaq National Market.
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(i) OPTIONS: The stock option or stock options listed in the first
paragraph of the Grant Letter and which together with these Stock
Option Terms and Conditions constitutes the Award Agreement.
(j) OPTION SHARES: The shares of Mindspeed Common Stock issuable or
transferable on exercise of the Options.
(k) PLAN: Mindspeed's 2003 Long-Term Incentives Plan, as such Plan may
be amended and in effect at the relevant time.
(l) RETIREMENT: Retirement at or after age sixty two (62) or, with the
advance consent of the Committee, before age sixty two (62) but at
or after age fifty five (55).
(m) WEB: Fidelity's website that is used to facilitate stock option
transactions and is accessible through Mindspeed MyNet.
2. When Options May be Exercised
The Options are vested and may be exercised in accordance with the
schedule included in the Grant Letter, provided that:
(a) if you die while an employee of Mindspeed, your estate, or any
person who acquires the Options by bequest or inheritance, may
exercise all the Options not theretofore exercised, within (and only
within) the period beginning on your date of death (even if you die
before you have become entitled to exercise all or any part of the
Options) and ending three (3) years thereafter;
(b) if your employment by Mindspeed terminates other than by death,
then:
(i) if your employment by Mindspeed is terminated for Cause, the
Options shall expire forthwith upon your termination and may
not be exercised thereafter; and
(ii) if your employment by Mindspeed terminates for any reason
(including Retirement or Disability) not specified in
subparagraph (a) or in clause (i) of this subparagraph (b),
you (or if you die after your termination date, your estate or
any person who acquires the Options by bequest or inheritance)
may thereafter exercise the Options within (and only within)
the period ending three (3) months after your termination
date, but only to the extent they were exercisable on your
termination date, it being understood that neither (i) your
transfer from Mindspeed to a Subsidiary or affiliate of
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Mindspeed, whether or not incorporated, or vice versa, or from
one Subsidiary or affiliate of Mindspeed to another, nor (ii)
a leave of absence duly authorized in writing by Mindspeed,
shall be deemed a termination of employment; and
(c) the beginning exercise date of any unexercisable Options will be
delayed for the length of time during which you are on an unpaid
leave of absence duly authorized in writing by Mindspeed that
exceeds six (6) months.
The Committee may, in its discretion, extend the period during which
Options may be exercised beyond the period set forth in subparagraphs (a)
and (b)(ii) above, but in no event shall the provisions of the foregoing
subparagraphs (a) or (b)(ii) extend to a date more than eight (8) years
after the date of the grant, the period during which the Options may be
exercised.
3. Exercise Procedure
(a) To exercise all or any part of the Options, you (or after your
death, your estate or any person who has acquired the Options by
bequest or inheritance) must:
(i) contact the administrator, Fidelity, by using the FAST or Web
system or by speaking to a Fidelity customer service
representative and follow the instructions provided;
(ii) confirm the Option transaction by receiving a confirmation
number through the FAST or Web system or by speaking to a
Fidelity customer service representative;
(iii) submit full payment of the exercise price for the Option
Shares to be purchased on exercise of the Options:
- by check or cash; or
- in shares of Stock; or
- in a combination of check or cash and shares of Stock;
and
(iv) provide, in the case of any person other than you seeking to
exercise the Options, such documents as Fidelity or the
Secretary of Mindspeed shall require to establish to their
satisfaction that the person seeking to exercise the Options
is entitled to do so.
(b) An exercise of the whole or any part of the Options shall be
effective:
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(i) if you elect (or after your death, the person entitled to
exercise the Options elects) to pay the exercise price for the
Option Shares entirely by check or cash, (1) upon confirmation
of your transaction by using the FAST or Web system or by
speaking to a Fidelity customer service representative and
full payment of the exercise price and withholding taxes (if
applicable) being received by Fidelity within three (3)
business days following the confirmation; and (2) receipt of
any documents required pursuant to Section 3(a)(iv); and
(ii) if you elect (or after your death, the person entitled to
exercise the Options elects) to pay the exercise price of the
Option Shares in shares of Stock or in a combination of shares
of Stock and check or cash, (1) upon confirmation of your
transaction by using the FAST or Web system or by speaking to
a Fidelity customer service representative and full payment of
the exercise price (as defined in Section 3(d)(i)) and
withholding taxes (if applicable) being received by Fidelity
within three (3) business days following the confirmation; and
(2) receipt of any documents required pursuant to Section
3(a)(iv).
(c) If you choose (or after your death, the person entitled to exercise
the Options chooses) to pay the exercise price for the Option Shares
to be purchased on exercise of any of the Options entirely by check
or cash, payment must be made by:
- delivering to Fidelity a check or cash in the full
amount of the exercise price for those Option Shares; or
- arranging with a stockbroker, bank or other financial
institution to deliver to Fidelity full payment, by
check, cash or (if prior arrangements are made with
Fidelity) by wire transfer, of the exercise price of
those Option Shares.
In either event, in accordance with Section 3(e), full payment of
the exercise price for the Option Shares purchased must be made
within three (3) business days after the exercise has been conducted
and confirmed through the FAST or Web system or by speaking to a
Fidelity customer service representative.
(d) (i) If you choose (or after your death, the person entitled to
exercise the Options chooses) to use already-owned Stock to
pay all or part of the exercise price for the Option Shares to
be purchased on exercise of any of the Options, you (or after
your death, the person entitled to exercise the Options) must
deliver to Fidelity one or more certificates (and executed
stock powers), or authorize the book-entry transfer to
Mindspeed of shares of Stock, representing:
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- at least the number of shares of Stock whose value,
based on the closing price of the Stock reported on
NASDAQ on the day you exercised your Options through the
FAST or Web system or by speaking to a Fidelity customer
service representative, equals the exercise price for
those Option Shares; or
- any lesser number of shares of Stock you desire (or
after your death, the person entitled to exercise the
Options desires) to use to pay the exercise price for
those Option Shares and a check or cash in the amount of
such exercise price less the value of the Stock
delivered, based on the closing price of the Stock
reported on NASDAQ on the day you exercised your Options
through the FAST or Web system or by speaking to a
Fidelity customer service representative.
In the event you are using shares of Stock acquired from a
Mindspeed benefit plan, including but not limited to a stock
option plan, restricted stock plan, performance share plan and
employee stock purchase plan, these shares of Stock must have
been held for a minimum of six (6) months from the date of
acquisition. You will be required to provide proper
documentation attesting to the fact that the shares of Stock
used to pay all or part of the exercise price for the Option
Shares are mature shares of Stock. In the event you are using
shares of Stock purchased on the open market, there is no
required holding period.
(ii) Fidelity will advise you (or any other person who, being
entitled to do so, exercises the Options) of the exact number
of shares of Stock, valued in accordance with Section 4 of the
Plan at the closing price reported on NASDAQ on the effective
date of exercise under Section 3(a)(ii), and any funds
required to pay in full the exercise price for the Option
Shares purchased. In accordance with Section 3(e), you (or
such other person) must pay, by check or cash, in shares of
Stock or in a combination of check or cash and shares of
Stock, any balance required to pay in full the exercise price
of the Option Shares purchased within three (3) business days
following the confirmation of such exercise of the Options
under Section 3(a)(ii).
(iii) Notwithstanding any other provision of the Award Agreement,
the Secretary of Mindspeed may limit the number, frequency or
volume of successive exercises of any of the Options in which
payment is made, in whole or in part, by delivery of shares of
Stock pursuant to this subparagraph (d) to prevent
unreasonable pyramiding of such exercises.
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(e) An exercise conducted and confirmed through the FAST or Web system
or by speaking to a Fidelity customer service representative,
whether or not full payment of the exercise price for the Option
Shares is received by Fidelity, shall constitute a binding
contractual obligation by you (or the other person entitled to
exercise the Options) to proceed with and complete that exercise of
the Options (but only so long as you continue, or the other person
entitled to exercise the Options continues, to be entitled to
exercise the Options on that date). By your acceptance of this Award
Agreement, you agree (for yourself and on behalf of any other person
who becomes entitled to exercise the Options) to deliver or cause to
be delivered to Fidelity any balance of the exercise price for the
Option Shares to be purchased upon the exercise pursuant to the
transaction conducted through the FAST or Web system or by speaking
to a Fidelity customer service representative required to pay in
full the exercise price for those Option Shares, that payment being
by check, cash, wire transfer, in shares of Stock or in a
combination of check or cash and shares of Stock, on or before the
third (3rd) business day after the date on which you confirm the
transaction through the FAST or Web system or by speaking to a
Fidelity customer service representative. If such payment is not
made, you (for yourself and on behalf of any other person who
becomes entitled to exercise the Options) authorize Mindspeed, in
its discretion, to set off against salary payments or other amounts
due or which may become due you (or the other person entitled to
exercise the Options) any balance of the exercise price for those
Option Shares remaining unpaid thereafter.
(f) A book-entry statement representing the number of Option Shares
purchased will be issued as soon as practicable (i) after Fidelity
has received full payment therefor or (ii) at Mindspeed's or
Fidelity's election in their sole discretion, after Mindspeed or
Fidelity has received (x) full payment of the exercise price of
those Option Shares and (y) any reimbursement in respect of
withholding taxes due pursuant to Section 5.
4. Transferability
No Options or portion thereof shall be transferable by you otherwise than
(i) by will or by laws of descent and distribution, (ii) by gift to
members of your immediate family, (iii) to a trust established for the
benefit of your immediate family members only, (iv) to a partnership in
which your immediate family members are the only partners or (v) as
otherwise determined by the Committee. For purposes of the Plan,
"immediate family" shall mean your spouse and natural, adopted or
step-children and grandchildren. Notwithstanding any transfer of an Option
or portion thereof, the transferred Option shall continue to be subject to
the Plan and Award Agreement as were applicable to you immediately prior
to the transfer, as if the Option had not been transferred.
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5. Withholding
Mindspeed or Fidelity shall have the right, in connection with the
exercise of the Options in whole or in part, to deduct from any payment to
be made by Mindspeed or Fidelity under the Plan an amount equal to the
taxes required to be withheld by law with respect to such exercise or to
require you (or any other person entitled to exercise the Options) to pay
to it an amount sufficient to provide for any such taxes so required to be
withheld. By your acceptance of this Award Agreement, you agree (for
yourself and on behalf of any other person who becomes entitled to
exercise the Options) that if Mindspeed or Fidelity elects to require you
(or such other person) to remit an amount sufficient to pay such
withholding taxes, you (or such other person) must remit that amount
within three (3) business days after the confirmation of the Option
exercise (Section 3(a)(ii)). If such payment is not made, Mindspeed, in
its discretion, shall have the same right of set-off with respect to
payment of the withholding taxes in connection with the exercise of the
Option as provided under Section 3(e) with respect to payment of the
exercise price.
6. Rights as Shareholder
You will not have any rights as a shareholder with respect to any Option
Shares unless and until you become the holder of such Option Shares on the
books and records of Mindspeed.
7. Headings
The section headings contained in these Stock Option Terms and Conditions
are solely for the purpose of reference, are not part of the agreement of
the parties and shall in no way affect the meaning or interpretation of
this Award Agreement.
8. References
All references in these Stock Option Terms and Conditions to sections,
paragraphs, subparagraphs or clauses shall be deemed to be references to
sections, paragraphs, subparagraphs and clauses of these Stock Option
Terms and Conditions unless otherwise specifically provided.
9. Amendment and Termination
I understand that Mindspeed has reserved the right to amend or terminate
the Plan at any time, and that the grant of an Option in one year or at
one time does not in any way obligate Mindspeed or its affiliates to make
a grant in any future year or in any given amount. I acknowledge and
understand that the grant is wholly discretionary in nature and is not to
be considered part of any normal or expected compensation that is or would
be subject to
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severance, resignation, redundancy or similar pay, other than to the
extent required by local law.
10. Entire Agreement
This Award Agreement and the Plan embody the entire agreement and
understanding between Mindspeed and you with respect to the Options, and
there are no representations, promises, covenants, agreements or
understandings with respect to the Options other than those expressly set
forth in this Award Agreement and the Plan.
11. Applicable Laws and Regulations
This Award Agreement and Mindspeed's obligation to issue Option Shares
hereunder are governed by the laws of the State of Delaware, without
regard to its conflicts of laws principles, and the Federal law of the
United States.
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