EX-10.III.A.5



 





Exhibit
10(iii)(A)5








LUCENT TECHNOLOGIES INC. 2003 LONG TERM INCENTIVE PROGRAM (“PLAN”)

NONSTATUTORY STOCK OPTION AGREEMENT



These terms and conditions apply to certain option grants (“Options”) authorized under the Plan
by the Long Term Incentive Awards Committee to eligible Employees whose Options are properly on
record with the plan’s current record keeper. Such Options are to purchase from Lucent
Technologies Inc. (“Lucent”) a number of common shares, par value US$.01 of Lucent (“Shares”). The
grant date (“Grant Date”), the number of Shares and the grant price are specified in the plan’s
records and are subject to the terms and conditions of the Plan and this agreement.



Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.





	1.	 	Exercisability of Option. This Option may be exercised at any time prior to its Expiration
Date or cancellation as follows:






	 	(a)	 	Except as provided below, 25% of the Shares covered by this Option shall become
exercisable on the first anniversary of the Grant Date. 25% of the Shares covered by this Option
shall become exercisable every year thereafter. Any fraction of a Share that becomes exercisable
on any date will be rounded down to the next lowest whole number, and any fraction of a Share shall
be added to the portion of the Option becoming exercisable on the following vesting date.
	 
	 	(b)	 	Except as provided below, the last day you can exercise this Option is the day preceding
the seventh anniversary of the Grant Date (the “Expiration Date”).
	 
	 	(c)	 	In the event you are placed on a company initiated leave of absence as defined in the
Officer Severance Program, this Option will continue to vest in accordance with the Officer
Severance Program.
	 
	 	(d)	 	Upon the termination of your employment by reason of death, Disability or Retirement,
any portion of this Option that is then exercisable shall remain exercisable until the earlier of
(i) two years from the date of termination or (ii) the Expiration Date, and the Applicable Vesting
Portion shall not be forfeited and canceled and shall become immediately exercisable until the
earlier of two years from the date of termination or the Expiration Date. Any portion of this
Option which is not then exercisable will be cancelled. “Applicable Vesting Portion” is determined
as of the date of termination of employment and shall be the portion of the Option computed as
follows (but not less than zero):




          Applicable
Vesting Portion = N x M/D - E




	 	 	 	where:





	 	 	 
	N =

	 	the number of Shares originally subject to the Option,
	M =

	 	the number of complete months elapsed since the Grant Date,
	D =

	 	the number of complete months between the Grant Date and the date on which the Option was
originally scheduled to become completely exercisable, and
	E =

	 	the number of Shares covered by the Option for which the Option has already become exercisable
(regardless of whether the Option has been exercised with respect to such Shares).







	 	(e)	 	Upon the termination of your employment for Cause, this Option will be canceled.
	 
	 	(f)	 	Upon the termination of your employment as a result of a Company Action, any portion of
this Option that is then exercisable shall remain exercisable until the earlier of the ninetieth
day from the date of termination or the Expiration Date. Any portion of this Option which is not
then exercisable will be canceled. If your employment terminates under circumstances constituting
both a Company Action and Retirement, this Option will follow the provisions under paragraph (c)
above for termination of employment by reason of Retirement.
	 
	 	(g)	 	Upon the termination of your employment for any reason other than Retirement, death,
Disability, Cause or Company Action, any portion of this Option which is then exercisable will
remain exercisable until the earlier of the ninetieth day after termination of employment or the
Expiration Date and any portion of this Option which is not then exercisable will be canceled.
	 
	 	(h)	 	It will not be considered a termination of your employment if you (i) transfer to or
from Lucent and any Affiliate or (ii) are placed on an approved leave of absence. Unless otherwise
determined by the Committee, it will be considered a termination of employment if your employer
ceases to be Lucent or a Subsidiary.






	2.	 	Definitions.






	 	(a)	 	Retirement. “Retirement” means termination of employment with Lucent or any of its
Affiliates under any of the following circumstances or entitlements:






	 	(i)	 	Service Pension under the Lucent Retirement Income Plan as defined in such plan;
	 
	 	(ii)	 	Similar pension under any comparable plan or arrangement with Lucent or a Subsidiary;
or
	 
	 	(iii)	 	You are at least age 50 with a minimum of 15 years service with Lucent.





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	 	(b)	 	Disability. “Disability” means termination of employment under circumstances where you
qualify for and receive payments under a long-term disability pay plan maintained by Lucent or any
Subsidiary or as required by or available under applicable local law.
	 
	 	(c)	 	Cause. “Cause” means:






	 	(i)	 	violation of Lucent’s code of conduct, Business Guideposts;
	 
	 	(ii)	 	conviction (including a plea of guilty or nolo contendere) of a felony or any crime of
theft, dishonesty or moral turpitude; or
	 
	 	(iii)	 	gross omission or gross dereliction of any statutory or common law duty of loyalty to
Lucent.






	 	(d)	 	Good Reason. “Good Reason” means:






	 	(i)	 	the assignment to you by the Board of Directors or another representative of the
Company of duties which represent a material decrease in responsibility and are materially inconsistent with the duties associated
with your position, any reduction in your job title, or a material negative change in the level of
Officer to whom you report, or
	 
	 	(ii)	 	a material negative change in the terms and conditions of your employment, including a
reduction by the Company of your annual base salary or a material decrease in your target
opportunity for an Annual Incentive Award, or
	 
	 	(iii)	 	the requirement to change your work location to one in a different country, even for a
comparable or superior position.






	 	(e)	 	Company Action. “Company Action” means a Company or Subsidiary declared force management
program, sale of a unit or portion of a unit, Company or Subsidiary initiated transfer of a
Participant to a corporation, partnership, limited liability company or other business entity in
which the Company has an equity interest and which does not constitute a Subsidiary or placement of
the job function of a Participant with an outsourcing contractor.






	3.	 	Exercise Procedure. This Option shall be exercised by delivering a notice to Lucent’s agent
using the method prescribed by Lucent for this purpose. Your exercise will become effective only
after you have followed the agent’s exercise procedures and paid to the agent, or made arrangements
acceptable to Lucent for the payment to the record keeper of, the exercise price for the Option and
applicable withholding, other taxes or fees. All payments must be in US dollars by check or other
method acceptable to Lucent or in Shares or a combination of cash and Shares such that the total of
the cash plus the Fair Market Value, as determined in accordance with procedures established by the
Committee, of the Shares on the date of exercise at least equals the aggregate exercise price of
the Shares as to which the Option is being exercised; provided, however, that any Shares
surrendered as payment must have been owned by you at least six months prior to the date of
exercise.
	 
	4.	 	Issuance of Lucent Shares. Following exercise of any portion of this Option, Lucent will
issue the number of Shares purchased under this Option. Neither you nor anyone else shall be, or
have any of the rights and privileges of, a shareholder of Lucent in respect of any Shares
purchasable upon the exercise of this Option, in whole or in part, unless and until such Shares
shall have been issued.
	 
	5.	 	Transferability.






	 	(a)	 	Except as provided in Section 5(b), this Option is not transferable by you other than by will
or the laws of descent and distribution, and during your lifetime the Option may be exercised only
by you or your guardian or legal representative.
	 
	 	(b)	 	This Option may be transferred by you, in accordance with rules established by the Company,
to one or more members of your immediate family, to a partnership of which the only partners are
you and/or members of your immediate family or a trust established by you for the benefit of you
and/or one or more members of your immediate family (each such transferee a “Permitted
Transferee”). For purposes of this Section 5(b), your immediate family means your spouse, parents,
children, grandchildren and the spouses of children and grandchildren. A Permitted Transferee may
not further transfer the Option. An Option transferred pursuant to this Section shall
remain subject to all of the provisions of the Plan and this agreement, including, but not limited
to, the provisions of Sections 1 and 2 relating to the exercise of the Option under termination of
your employment.
	 
	 	(c)	 	You may, in accordance with procedures established by the Committee, designate one or more
beneficiaries to receive all or part of the Option in case of your death, and you may change or
revoke such designation at any time. Such designation shall not be effective unless and until the
Senior Vice President—Human Resources or the Vice President of Compensation and Benefits shall
determine, on advice of counsel, that exercise of the Option by your beneficiary(ies) does not
require any registration, qualification, consent or approval of any securities exchange or
governmental or regulatory agency or authority. In the event of your death, any portion of this
Option that is subject to such a designation (to the extent such designation is valid, effective
and enforceable under this agreement and applicable law) shall be distributed to such beneficiary
or beneficiaries in accordance with this agreement. Any other portion of this Option shall be
distributable to your estate. If there shall be any question as to the legal right of any
beneficiary to receive a distribution hereunder, or to the extent your designation is not
effective, such portion may be exercised by your estate, in which event neither Lucent nor any
Affiliate shall have any further liability to anyone with respect to such Option.






	6.	 	No Right of Employment. Neither the Plan nor this agreement shall be construed as giving you
the right to be retained in the employ of Lucent or any Affiliate.
	 
	7.	 	Regulatory Approvals. If the Senior Vice President — Human Resources or the Vice President
of Compensation and Benefits of Lucent, or their successor, determines, on advice of counsel, that
the listing, registration or qualification of the Shares upon any securities exchange or under any
law, or the consent or approval of any governmental or regulatory agency or authority, is necessary
or desirable as a condition of, or in connection with, the exercise of the Option, no portion of
the Option may be exercised until or unless such listing, registration, qualification, consent or
approval shall have been effected or obtained. The foregoing shall not be construed as requiring
any such listing, registration, qualification, consent or approval.





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	8.	 	Determinations of the Committee. Any determinations or decisions made or actions taken
arising out of or in connection with the interpretation and administration of this agreement and
the Plan by the Committee shall be final and conclusive.
	 
	9.	 	Amendments. This agreement may be amended by the Committee provided that no such amendment
shall impair your rights hereunder without your consent.
	 
	10.	 	Taxes. Lucent may withhold or require payment of taxes or social insurance payments due upon
the exercise of this Option. Payments may be paid in cash or a combination of cash and Shares if
permitted by the Administrator.
	 
	11.	 	Governing Law. The validity, construction and effect of this agreement and the Plan shall be
determined in accordance with the laws of the State of Delaware in the United States without giving
effect to principles of conflicts of laws.
	 
	12.	 	Other Terms.






	 	(a)	 	Lucent makes no representation as to the value of this Option or whether you will be
able to realize any profit out of it.
	 
	 	(b)	 	You understand that should you die owning shares of Lucent stock or rights to acquire such
stock, the stock or rights may subject your estate to United States federal estate taxes. You
understand that you should seek your own tax advice regarding this potential tax.
	 
	 	(c)	 	By accepting this Option or exercising any portion of it, you signify your understanding
of its terms and conditions.






	13.	 	Black Out Periods. In connection with significant corporate transactions or developments such
as spin-offs or stock splits, Lucent reserves the right to designate periods during which you may
not exercise this Option.






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