Exhibit 10.1
AGERE SYSTEMS INC.
NON-EMPLOYEE DIRECTOR STOCK PLAN
As amended December 1, 2005
     SECTION 1. PURPOSES. The Agere Systems Inc. Non-Employee Director Stock
Plan (the “Plan”) is intended to promote the interests of Agere Systems Inc.
(the “Company”) and to enable the Company to attract and retain qualified
persons to serve as directors, to enhance the equity interest of directors in
the Company, and to solidify the common interests of its directors and
stockholders in enhancing the value of the Company’s common stock (“Shares”).
The Plan seeks to encourage the highest level of director performance by
providing directors with a proprietary interest in the Company’s performance and
progress. These purposes shall be achieved by the granting of options
(“Options”) to purchase Shares to members of the Board of Directors of the
Company (the “Board”) who are not employees of the Company (“Non-Employee
Directors”). Under the Plan no Options will be granted which are qualified as
incentive stock options.
     SECTION 2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Compensation Committee (the “Committee”) of the Board. The Committee shall,
subject to the provisions of the Plan, have the power, in its absolute
discretion, to make discretionary grants of Options to Non-Employee Directors in
addition to or in lieu of the automatic grants set forth in Sections 5(b) and
5(c) hereof, to set the terms for any such discretionary grants, to construe the
Plan, to determine all questions hereunder, to adopt and amend such rules and
regulations for the administration of the Plan as may be determined by the
Committee, and to make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan.
Decisions of the Committee shall be final, conclusive and binding upon all
persons, including the Company and all Option holders (each an “Optionee”).
     SECTION 3. SHARES SUBJECT TO THE PLAN. The total number of Shares which
shall be available under the Plan from and after the Original Effective Date (as
defined in Section 11) shall be 200,000 in the aggregate, subject to adjustment
as provided in Section 7. The Company shall at all times reserve such number of
Shares as will be sufficient to satisfy the requirements of the Plan and
outstanding Options. Any Shares issued hereunder may consist, in whole or in
part, of authorized and unissued Shares, treasury Shares, Shares purchased in
the open market or otherwise or any combination thereof, as the Board or the
Treasurer of the Company may from time to time determine. The underlying Shares
with respect to the unexercised portion of any expired, terminated or canceled
Option shall again be available for use under the Plan.
     SECTION 4. ELIGIBILITY. Only Non-Employee Directors are eligible to receive
Options under the Plan.
     SECTION 5. TERMS OF OPTIONS. Unless otherwise determined by the Committee,

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AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN
the following shall apply to Options granted under the Plan:

         
 
  (a)   The per share purchase price of the Shares covered by an Option granted
pursuant to the Plan shall be 100% of the Fair Market Value of one Share on the
day the Option is granted. The Option price will be subject to adjustment in
accordance with the provisions of Section 7 hereof. For purposes of the Plan,
the “Fair Market Value” of a Share means the average of the highest and lowest
reported sales prices, regular way, of Shares in transactions reported on the
New York Stock Exchange on the date of determination of Fair Market Value, or if
no sales of Shares are reported on the New York Stock Exchange for that date,
the comparable average sales price for the last previous day for which sales
were reported on the New York Stock Exchange.
 
       
 
  (b)   On the date that any person first becomes a Non-Employee Director, such
person shall automatically be granted on such date, without further action by
the Board or the Committee, an Option with respect to 10,000 Shares.
 
       
 
  (c)   Each year, on December 1, or such other date as may be determined by the
Committee, each Non-Employee Director shall be automatically granted on such
date, without further action by the Board or the Committee, an Option to
purchase 10,000 Shares.
 
       
 
  (d)   Each Option granted under subsection 5(b) or subsection 5(c) shall
become exercisable on the first anniversary of the date of grant.
 
       
 
  (e)   The last day to exercise an Option shall be the day preceding the
seventh anniversary of the date of grant, after which time the Option shall
expire.
 
       
 
  (f)   Each Option shall be exercised in accordance with procedures established
by the Company accompanied by payment in full of the purchase price for the
Shares subject to the Option. Payment for such Shares may be made (as determined
by the Committee at the time of exercise) (i) in cash, (ii) by check, acceptable
to the Company, payable to the order of the Company in the amount of such
purchase price, (iii) by delivery to the Company of Shares having an aggregate
Fair Market Value equal to such purchase price, which shares shall have been
held by the Optionee for at least six months, (iv) by irrevocable instructions
to a broker to sell the Shares to be issued upon exercise of the Option and to
deliver promptly to the Company the amount of sale proceeds necessary to pay
such purchase price and any applicable withholding taxes, or (v) by any
combination of the methods of payment described in (i) through (iv) above.
 
       
 
  (g)   An Optionee shall not have any of the rights of a stockholder with
respect to the

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AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

         
 
      Shares subject to an Option unless and until such Shares are issued to the
Optionee.
 
       
 
  (h)   Unless otherwise determined by the Committee prior to the time of
transfer, no Option shall be transferable, except by will or the laws of descent
and distribution, and any Option may be exercised during the lifetime of the
Optionee only by him or her. No Option granted under the Plan shall be subject
to execution, attachment or other process.

     SECTION 6. TERMINATION OF OPTION RIGHTS.
     (a)     In the event an Optionee ceases to be a member of the Board for any
reason other than death, any portion of any Option granted to such Optionee,
which at the time of such cessation is then exercisable, shall remain
exercisable during the remainder of the term of the Option, and any portion of
any Option which is not then exercisable shall terminate.
     (b)     In the event that an Optionee ceases to be a member of the Board by
reason of his or her death, each unexercised Option granted to such Optionee
shall immediately become exercisable and all outstanding, unexercised Options
granted to such Optionee may be exercised by the Optionee’s personal
representative, heir or legatee for the remainder of the term of the Option.
     SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, reverse stock split, spin-off or similar
transaction or other change in corporate structure affecting the Shares, such
adjustments and other substitutions shall be made to the Plan and to Options as
the Committee in its sole discretion deems equitable or appropriate, including
without limitation such adjustments in the aggregate number, class and kind of
shares which may be delivered under the Plan, in the number, class, kind and
option or exercise price of shares subject to outstanding Options (including, if
the Committee deems appropriate, the substitution of similar options to purchase
the shares of, or other awards denominated in the shares of, another company) as
the Committee may determine to be appropriate in its sole discretion, provided
that the number of Shares or other securities subject to any Option shall always
be a whole number.
     SECTION 8. FURTHER CONDITIONS OF EXERCISE.

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AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN
     (a)     Unless prior to the exercise of an Option the offer and sale of the
Shares issuable upon such exercise are the subject of an effective registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), and a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act has been
distributed to the Optionees, the Company shall be under no obligation to honor
any such exercise unless the Committee determines otherwise in which case the
notice of exercise with respect to such Option shall be accompanied by a
representation or agreement of the Optionee to the Company to the effect that
such shares are being acquired for investment only and not with a view to the
resale or distribution thereof in violation of the Securities Act, or such other
documentation as may be required by the Company, unless, in the opinion of
counsel to the Company, such representation, agreement or documentation is not
necessary to comply with the Securities Act.
     (b)     Anything in subsection (a) of this Section 8 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell any Shares
until they have been listed on each securities exchange on which the Shares may
then be listed and until and unless, in the opinion of counsel to the Company,
the Company may issue such shares pursuant to a qualification or an effective
registration statement, or an exemption from registration, under such state and
federal laws, rules or regulations as such counsel may deem applicable. The
Company shall use reasonable efforts to effect such listing, qualification and
registration, as the case may be.
     SECTION 9. TERMINATION AND AMENDMENT OF PLAN. The Board may at any time
terminate the Plan or make such modification or amendment thereof as it deems
advisable; provided, however, that the Board may not, without approval by a
majority of the Shares present in person or by proxy and entitled to vote
thereon increase the maximum number of Shares available for use under the Plan.
Termination or any modification or amendment of the Plan shall not, without
consent of an Optionee, negatively affect his rights under an Option previously
granted to him.
     SECTION 10. CHANGE IN CONTROL. In the event of a Change in Control, as
defined below, all outstanding Options which are not then exercisable shall
become immediately exercisable. A “Change in Control” of the Company shall be
deemed to occur upon:

         
 
  (a)   An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act of 1934, as amended (the
“Exchange Act”)) (an “Entity”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); excluding, however, the
following: (1) any acquisition directly from the Company, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Company,
(2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation

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AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

         
 
      controlled by the Company, or (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (c) of this Section 10; or
 
       
 
  (b)   A change in the composition of the Board during any two year period such
that the individuals who, as of the beginning of such two year period,
constitute the Board (such Board shall be hereinafter referred to as the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the beginning of the two year
period, whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; and provided further,
however, that any such individual whose initial assumption of office occurs as a
result of or in connection with a solicitation subject to Rule 14a-12(c) of
Regulation 14A promulgated under the Exchange Act or other actual or threatened
solicitation of proxies or consents by or on behalf of an Entity other than the
Board shall not be so considered as a member of the Incumbent Board; or
 
       
 
  (c)   The approval by the stockholders of the Company of a merger,
reorganization or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (each, a “Corporate Transaction”)
or, if consummation of such Corporate Transaction is subject, at the time of
such approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding however, such a Corporate Transaction pursuant to which
(A) all or substantially all of the individuals and entities who are the
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 50% of the outstanding
shares of common stock, and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation or other Person which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries (a “Parent Company”)) in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, (B) no Entity (other than the Company, any employee
benefit plan (or related trust) of the Company, such corporation resulting from
such Corporate Transaction or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (A) above is satisfied
in connection with the applicable Corporate Transaction, such Parent Company)
will beneficially own, directly or indirectly, 20% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or

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AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

         
 
      the combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of directors unless such
ownership resulted solely from ownership of securities of the Company prior to
the Corporate Transaction, and (C) individuals who were members of the Incumbent
Board will immediately after the consummation of the Corporate Transaction
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction (or, if reference was made
to equity ownership of any Parent Company for purposes of determining whether
clause (A) above is satisfied in connection with the applicable Corporate
Transaction, of the Parent Company); or
 
       
 
  (d)   The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

     SECTION 11. EFFECTIVE DATE; TERM OF PLAN. The Plan originally became
effective as of March 26, 2001 (the “Original Effective Date”). The Plan was
last amended on December 1, 2005 (the “Effective Date”). For purposes of
computing compliance with the limit on Shares available under the Plan in
Section 3, appropriate adjustments shall be made to Options granted on or before
May 27, 2005, to reflect the Company’s 1-for-10 reverse stock split on May 27,
2005. The Plan shall terminate and no further Options shall be granted hereunder
after the date that is ten (10) years from the Effective Date (the “Termination
Date”); provided, however, that the terms of the Plan shall continue in
operation to the extent necessary with respect to Options outstanding as of the
Termination Date.

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