EX-10.1



 






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,



-1-









 




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






-2-









 





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.



-3-









 






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






-4-









 






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






-5-









 






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.




-6-