Document:

EXHIBIT 4.4

 

Exhibit 4.4

AMENDED AND RESTATED

RIGHTS AGREEMENT

Between

AGERE SYSTEMS INC.

AND

COMPUTERSHARE INVESTOR SERVICES, LLC,

(as successor to The Bank of New York),

Rights Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION
  1. Certain Definitions
	 	 	1	 
	SECTION
  2. Appointment of Rights Agent
	 	 	5	 
	SECTION
  3. Issue of Right Certificates
	 	 	5	 
	SECTION
  4. Form of Right Certificates
	 	 	7	 
	SECTION
  5. Countersignature and Registration
	 	 	7	 
	SECTION
  6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates
	 	 	8	 
	SECTION
  7. Exercise of Rights; Purchase Price; Expiration Date of Rights
	 	 	9	 
	SECTION
  8. Cancelation and Destruction of Right Certificates
	 	 	10	 
	SECTION
  9. Availability of Preferred Shares
	 	 	10	 
	SECTION 10. Preferred Shares Record Date
	 	 	11	 
	SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights
	 	 	11	 
	SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares
	 	 	18	 
	SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power
	 	 	19	 
	SECTION 14. Fractional Rights and Fractional Shares
	 	 	22	 
	SECTION 15. Rights of Action
	 	 	23	 
	SECTION 16. Agreement of Right Holders
	 	 	23	 
	SECTION 17. Right Certificate Holder Not Deemed a Stockholder
	 	 	24	 
	SECTION 18. Concerning the Rights Agent
	 	 	24	 
	SECTION 19. Merger or Consolidation or Change of Name of Rights Agent
	 	 	24	 
	SECTION 20. Duties of Rights Agent
	 	 	25	 
	SECTION 21. Change of Rights Agent
	 	 	27	 
	SECTION 22. Issuance of New Right Certificates
	 	 	27	 
	SECTION 23. Redemption
	 	 	28	 

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	 	 	Page	 
	SECTION 24. Exchange
	 	 	28	 
	SECTION 25. Notice of Certain Events
	 	 	30	 
	SECTION 26. Notices
	 	 	30	 
	SECTION 27. Supplements and Amendments
	 	 	31	 
	SECTION 28. Successors
	 	 	32	 
	SECTION 29. Benefits of this Agreement
	 	 	32	 
	SECTION 30. Severability
	 	 	32	 
	SECTION 31. Governing Law; Jurisdiction; Waiver of Jury Trial
	 	 	32	 
	SECTION 32. Counterparts
	 	 	32	 
	SECTION 33. Descriptive Headings
	 	 	32	 

Exhibit A — Intentionally Omitted

Exhibit B — Form of Right Certificate

Exhibit C — Intentionally Omitted

Exhibit D — Summary of Rights to Purchase Preferred Shares

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          AMENDED AND RESTATED RIGHTS AGREEMENT (the “Agreement”), originally dated as of March 26,
2001 and amended and restated as of May 27, 2005, between AGERE SYSTEMS INC., a Delaware
corporation (the “Company”), and Computershare Investor Services, LLC, (the “Rights Agent”).

          WHEREAS, the Company and The Bank of New York entered into a rights agreement, dated as of
March 26, 2001 (the “Original Rights Agreement”);

          WHEREAS, the board of directors of the Company (the “Board of Directors”) authorized and
declared a dividend of one Class B Right (as hereinafter defined) for each share of Class B Common
Stock, par value $.01 per share, (the “Class B Common Stock”) of the Company outstanding on March
27, 2001 (the “Record Date”), and further authorized and directed the issuance of one Class A Right
and one Class B Right (subject to adjustment as provided herein) with respect to each share of
Class A Common Stock, par value $.01 per share, (the “Class A Common Stock”), and Class B Common
Stock, respectively, that became outstanding between the Record Date and the earlier of the
Distribution Date and the Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares (as hereinafter defined) that
shall become outstanding after the Distribution Date and prior to the Expiration Date in accordance
with Section 22;

          WHEREAS, by amendments to the Original Rights Agreement dated April 1, 2005 and April 4, 2005,
The Bank of New York resigned as rights agent, the Company appointed the Rights Agent as rights
agent and certain changes were made to the Original Agreement;

          WHEREAS, the Board of Directors and shareholders of the Company have approved (x) an amendment
to the Company’s Certificate of Incorporation to reclassify the Company’s Class A Common Stock and
Class B Common Stock into one class of Common Stock (the “Reclassification Amendment”), and (y) an
amendment to the Company’s Certificate of Incorporation to effectuate a 1 for 10 reverse stock
split of the Common Stock (the “Reverse Split Amendment”);

          WHEREAS, the Reclassification Amendment and the Reverse Split Amendment are expected to become
effective on May 27, 2005; and

          NOW THEREFORE, the Original Rights Agreement is hereby amended and restated in accordance with
Section 27 of the Original Rights Agreement, effective (the “Effective Time”) immediately following
the effective time of the Reclassification Amendment and immediately before the effective time of
the Reverse Stock Split Amendment.

          Accordingly, in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:

          SECTION 1. Certain Definitions. For purposes of this Agreement, the following terms have the
meanings indicated:

          (a) “Acquiring Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 10% or more of the Common Shares then
outstanding, but shall not include (i) the Company, any Subsidiary of the

 

 

           Company, any employee benefit or compensation plan of the Company or of any Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of any such plan (each,
an “Exempt Person”) or (ii) any such Person who has become and is the Beneficial Owner of shares of
capital stock of the Company that meet the requirements set forth above solely as a result of (A)
the acquisition by such Person or one or more of its Affiliates or Associates of Beneficial
Ownership of additional Common Shares if such acquisition was made in the good faith belief that
such acquisition would not (x) cause the Beneficial Ownership by such Person, together with its
Affiliates and Associates, to become an “Acquiring Person” (as defined pursuant to the foregoing
provisions of this paragraph (a)) at the time of such acquisition and such good faith belief was
based on the good faith reliance on information contained in publicly filed reports or documents of
the Company that are inaccurate or out-of-date or (y) otherwise cause a Distribution Date or the
adjustment provided for in Section 11(a) to occur or (B) the acquisition by such Person or one or
more of its Affiliates or Associates of Beneficial Ownership of additional Common Shares of the
Company if the Board of Directors determines that such acquisition was made in good faith without
the knowledge by such Person or Affiliates or Associates that such Person would thereby become an
Acquiring Person, which determination of the Board of Directors shall be conclusive and binding on
such Person, the Rights Agent, the holders of the Rights and all other Persons. Notwithstanding the
foregoing, if any Person that is not an Acquiring Person due to clause (ii)(A) or (ii)(B) of the
prior sentence does not reduce its percentage of Beneficial Ownership of Common Shares of the
Company to less than that which meets the requirements set forth above, by the Close of Business on
the tenth calendar day after notice from the Company (the date of notice being the first day) that
such Person’s Beneficial Ownership of Common Shares would make it an Acquiring Person, such Person
shall, at the end of such ten calendar day period, become an Acquiring Person (and such clause
(ii)(A) or (ii)(B) shall no longer apply to such Person). For purposes of this definition, the
determination whether any Person acted in “good faith” shall be conclusively determined by the
Board of Directors. Notwithstanding anything in this definition of Acquiring Person to the
contrary, no Person shall become an “Acquiring Person” as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to that which meets the
requirements set forth above; provided, however, that if a Person shall become the Beneficial Owner
of Common Shares that meet the requirements set forth above by reason of share acquisitions by the
Company and shall, after such share acquisitions by the Company, become the Beneficial owner of any
additional Common Shares of the Company (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Shares or pursuant to a split or subdivision of the
outstanding Common Shares), then such Person shall be deemed to be an “Acquiring Person” unless
upon becoming the Beneficial Owner of such additional Common Shares such Person does not
beneficially own Common Shares that meet the requirements set forth above.

          (b) “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

          (c) “Associate” shall have the meaning ascribed to such term in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

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          (d) (i) A Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:

    (A) which such Person or any of such Person’s Affiliates or Associates beneficially
owns, directly or indirectly;

    (B) which such Person or any of such Person’s Affiliates or Associates has (1) the
right to acquire (whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect to a bona
fide public offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (2) the right to vote, or the right to direct the
vote, pursuant to any agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security, if
the agreement, arrangement or understanding to vote, or direct the vote of, such security
(x) arises solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (y) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or successor report);
or

    (C) which are beneficially owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding (other than customary agreements with and between underwriters
and selling group members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to
Section 1(d)(i)(B)(2)) or disposing of such securities of the Company provided, however,
that no Person who is an officer, director or employee of an Exempt Person shall be deemed,
solely by reason of such Person’s status or authority as such, to be the “Beneficial Owner”
of, to have “Beneficial Ownership” of or to “beneficially own” any securities that are
“beneficially owned” (as defined in this Section 1(d)), including, without limitation, in a
fiduciary capacity, by an Exempt Person or by any other such officer, director or employee
of an Exempt Person.

    (ii) Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase “then outstanding”, when used with reference to a Person’s Beneficial
Ownership of securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially hereunder.

          (e) “Board of Directors” shall have the meaning set forth in the preamble hereof.

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          (f) “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which the New
York Stock Exchange is authorized or obligated by law or executive order to close.

          (g) “Book-Entry” shall mean an uncertified book-entry for the Company’s common stock.

          (h) “Class A Common Stock” shall have the meaning set forth in the preamble hereof.

          (i) “Class B Common Stock” shall have the meaning set forth in the preamble hereof.

          (j) “Close of Business” on any given date shall mean 5:00 P.M., New York time, on such date;
provided, however, that, if such date is not a Business Day, it shall mean 5:00 P.M., New York
time, on the next succeeding Business Day.

          (k) “Common Shares” when used with respect to the Company shall mean the Common Stock, par
value $.01 per share, of the Company. “Common Shares” when used with reference to any Person other
than the Company shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

          (l) “Company” shall have the meaning set forth in the preamble hereof.

          (m) “Current Per Share Market Price” shall have the meaning set forth in Section 11(d)(i)
hereof.

          (n) “Distribution Date” shall have the meaning set forth in Section 3 hereof.

          (o) “equivalent preferred shares” shall have the meaning set forth in Section 11(b) hereof.

          (p) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          (q) “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof.

          (r) “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

          (s) “Person” shall mean any individual, firm, corporation, partnership, limited liability
company, trust or other entity, and shall include any successor (by merger or otherwise) of such
entity.

          (t) “Preferred Shares” shall mean shares of Series A Junior Participating Preferred Stock, par
value $1.00 per share, of the Company.

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          (u) “Purchase Price” shall have the meaning set forth in Section 7(b) hereof.

          (v) “Record Date” shall have the meaning set forth in the preamble hereof.

          (w) “Redemption Date” shall have the meaning set forth in Section 7(a) hereof.

          (x) “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.

          (y) “Right” shall mean the right, initially, to purchase one one-thousandth of a of Preferred
Share, upon the terms and subject to the conditions of this Agreement.

          (z) “Right Certificate” shall have the meaning set forth in Section 3(d) hereof.

          (aa) “Rights Agent” shall have the meaning set forth in the preamble hereof.

          (bb) “Security” shall have the meaning set forth in Section 11(d) hereof.

          (cc) “Shares Acquisition Date” shall mean the first date of public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed pursuant to Section
13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such, or such earlier date as a majority of the Board of Directors shall become aware of the
existence of an Acquiring Person.

          (dd) “Subsidiary” of any Person shall mean any corporation or other entity of which a majority
of the voting power of the voting equity securities or equity interest is owned, directly or
indirectly, by such Person.

          (ee) “Summary of Rights” shall mean a Summary of Rights to Purchase Preferred Shares,
substantially in the form of Exhibit D hereto.

          (ff) “Trading Day” shall have the meaning set forth in Section 11(d) hereof.

          SECTION 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act
as agent for the Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall, prior to the Distribution Date, also be the holders of the Common Shares) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or desirable.

          SECTION 3. Issue of Right Certificates. (a) Until the Close of Business on the earlier of
(i) the tenth day after the Shares Acquisition Date or (ii) such date, if any, as may be designated
by the Board of Directors following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit or compensation plan of the Company or of any Subsidiary of the
Company, or any Person holding Common Shares for or pursuant to the terms of any such plan) for
outstanding Common Shares, if upon consummation

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of such tender or exchange offer such Person would be the Beneficial Owner of 10% or more of
the Common Shares then outstanding (the earlier of such dates being herein referred to as the
“Distribution Date”), (x) the Rights will be evidenced by the Book-Entries representing, or
certificates for, Common Shares registered in the name of the holders of Common Shares and not by
separate Book-Entries or Rights Certificates and the record holders of the Common Shares
represented by such Book-Entries or certificates shall be the record holders of the Rights
represented thereby, and (y) the Rights will be transferable only in connection with the transfer
of Common Shares. Until the Distribution Date (or, if earlier, the Expiration Date), transfer on
the Company’s stock ownership records of any Common Shares represented by a Book-Entry or the
surrender for transfer of any certificate for Common Shares shall constitute the surrender for
transfer of the Right or Rights associated with the Common Shares evidenced thereby, whether or not
accompanied by a copy of the Summary of Rights.

          (b) [Intentionally omitted].

          (c) Rights shall be issued in respect of all Common Shares issued or disposed of (including,
without limitation, upon disposition of Common Shares out of treasury stock or issuance or
reissuance of Common Shares out of authorized but unissued shares) after the Record Date but prior
to the earlier of the Distribution Date and the Expiration Date, or in certain circumstances
provided in Section 22 hereof, after the Distribution Date. Certificates for Common Shares and
confirmations evidencing Book-Entries which become outstanding after the Record Date but prior to
the earliest of the Distribution Date, the Redemption Date or the Final Expiration Date, shall also
be deemed to be certificates for the associated Rights, and shall have impressed on, printed on,
written on or otherwise affixed to them the following legend (with appropriate modifications in the
case of confirmations):

This certificate also evidences and entitles the holder hereof to certain Rights as set
forth in a Rights Agreement between Agere Systems Inc. and Computershare Investor Services,
LLC, as successor to The Bank of New York, dated as of March 26, 2001, as amended from time
to time (the “Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of Agere Systems
Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this certificate.
Agere Systems Inc. will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights owned by or transferred to any
Person who is or becomes an Acquiring Person (as defined in the Rights Agreement) and
certain transferees thereof will become null and void and will no longer be transferable.

With respect to such certificates containing the foregoing legend, until the Distribution Date, the
Rights associated with the Common Shares represented by such certificates shall be evidenced by
such certificates alone, and the surrender for transfer of any such certificate, except as
otherwise provided herein, shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or otherwise acquires
any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated
with such Common Shares shall be deemed canceled and retired so that the Company

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shall not be entitled to exercise any Rights associated with the Common Shares which are no longer
outstanding.

Notwithstanding this paragraph (c), the omission of a legend shall not affect the enforceability of
any part of this Agreement or the rights of any holder of the Rights (other than any Acquiring
Person or any Associate or Affiliate of an Acquiring Person).

          (d) As soon as practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date (other than any Acquiring Person
or any Associate or Affiliate of an Acquiring Person), at the address of such holder shown on the
records of the Company, a Right certificate, in substantially the form of Exhibit B (the “Right
Certificate”), evidencing one Right (subject to adjustment as provided herein) for each Common
Share so held. From and after the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.

          (e) Notwithstanding Section 3(c), each Class A Right and Class B Right issued and outstanding
prior to the Effective Time and evidenced by a certificate for Class A Common Stock or Class B
Common Stock shall, as of the Effective Time, become a Right, shall remain outstanding immediately
after the Effective Time, and shall be evidenced by the certificates for the shares represented by
such certificate until such time as such certificate is presented for exchange for certificates for
Common Shares, with which Rights shall be issued in accordance with the first sentence of Section
3(c). Each Class A Right and Class B Right issued and outstanding prior to the effective time of
the Reclassification Amendment and associated with Class A Common Stock or Class B Common Stock
represented by a Book-Entry, remained outstanding immediately after such effective time, and became
a Right associated with the Common Shares into which such Class A Common Stock or Class B Common
Stock was reclassified pursuant to the Reclassification Amendment.

          SECTION 4. Form of Right Certificates. The Right Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange or automated quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of this Agreement, the Right
Certificates shall entitle the holders thereof to purchase such number of one one-thousandths of a
Preferred Share as shall be set forth therein at the Purchase Price, but the number of such one
one-thousandths of a Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.

          SECTION 5. Countersignature and Registration. The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, any
of its Vice Presidents, or its Treasurer, either manually or by facsimile signature, shall have
affixed thereto the Company’s seal or a facsimile thereof, and shall be

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attested by the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by the Rights Agent
and shall not be valid for any purpose unless countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and delivery by the Company, such Right
Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the individual who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any individual who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right Certificate although
at the date of the execution of this Agreement any such individual was not such an officer.

          Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the Right Certificates,
the number of Rights evidenced on its face by each of the Right Certificates and the date of each
of the Right Certificates.

          SECTION 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of this Agreement, at any
time after the Distribution Date, and at or prior to the Close of Business on the Expiration Date,
any Right Certificate or Right Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 11(a)(ii) hereof) may be transferred, split up, combined, or
exchanged for another Right Certificate or other Right Certificates entitling the registered holder
to purchase a like number of one one-thousandths of a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.

          Subject to the provisions of this Agreement, at any time after the Distribution Date and prior
to the Expiration Date, upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and,
at the Company’s request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and cancelation of the Right
Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor
to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

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          SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Except as
otherwise provided herein, the Rights shall become exercisable on the Distribution Date, and
thereafter the registered holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein), in whole or in part, at any time after the Distribution
Date, upon surrender of the Right Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a Preferred Share (or
other securities, cash or other assets, as the case may be) as to which the Rights are exercised,
at any time which is both after the Distribution Date and prior to the time (the “Expiration Date”)
that is the earliest of (i) the Close of Business on March 27, 2011 (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the “Redemption
Date”), or (iii) the time at which such Rights are exchanged as provided in Section 24 hereof.

          (b) The Purchase Price for each one one-thousandth of a Preferred Share purchasable pursuant
to the exercise of a Right shall initially be $100.00, and the Purchase Price and the number of one
one-thousandths of a Preferred Share or other securities or property to be acquired upon exercise
of a Right shall be subject to adjustment from time to time as provided in Section 11 or 13 hereof
and shall be payable in lawful money of the United States of America in accordance with paragraph
(c) below.

          (c) Except as otherwise provided herein, upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any applicable transfer
tax required to be paid by the holder of such Right Certificate in accordance with Section 9 hereof
by certified check, cashier’s check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i)(A) requisition from any transfer agent of the Preferred Shares,
or make available if the Rights Agent is the transfer agent for the Preferred Shares, certificates
for the number of Preferred Shares to be purchased and the Company hereby irrevocably authorizes
any such transfer agent to comply with all such requests, or (B) requisition from the depositary
agent appointed by the Company depositary receipts representing interests in such number of one
one-thousandths of a Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer agent of the
Preferred Shares with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from the Company the amount of cash
to be paid in lieu of issuance of fractional shares in accordance with Section 14 hereof; (iii)
promptly after receipt of such certificates or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right Certificate, registered in such name or
names as may be designated by such holder; and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right Certificate.

          (d) Except as otherwise provided herein, in case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the exercisable Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.

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          (e) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder of
Rights upon the occurrence of any purported transfer or exercise of Rights pursuant to Section 6
hereof or this Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such transfer or exercise and (ii) provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
thereof as the Company shall reasonably request.

          SECTION 8. Cancelation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancelation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of
the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancelation
and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and, in such case, shall deliver a
certificate of destruction thereof to the Company.

          SECTION 9. Availability of Preferred Shares. (a) The Company covenants and agrees that it
will cause to be reserved and kept available out of its authorized and unissued Preferred Shares or
any Preferred Shares held in its treasury, the number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance with Section 7.

          (b) So long as the Preferred Shares issuable upon the exercise of Rights may be listed or
admitted to trading on any national securities exchange, or quoted on NASDAQ, the Company shall use
its best efforts to cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed or admitted to trading on such exchange, or quoted on
NASDAQ, upon official notice of issuance upon such exercise.

          (c) From and after such time as the Rights become exercisable, the Company shall use its best
efforts, if then necessary to permit the issuance of Preferred Shares upon the exercise of Rights,
to register and qualify such Preferred Shares under the Securities Act and any applicable state
securities or “Blue Sky” laws (to the extent exemptions therefrom are not available), cause such
registration statement and qualifications to become effective as soon as possible after such filing
and keep such registration and qualifications effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of the date as of which the Rights are no
longer exercisable for such securities and the Expiration Date. The Company may temporarily
suspend, for a period of time not to exceed 90 days, the exercisability of the Rights in order to
prepare and file a registration statement under the Securities Act and permit it to become
effective. Upon any such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be

10

 

exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall
have been obtained and until a registration statement under the Securities Act shall have been
declared effective, unless an exemption therefrom is available.

          (d) The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such Preferred Shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.

          The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for exercise or to issue
or to deliver any certificates or depositary receipts for Preferred Shares upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by the holder of such
Right Certificate at the time of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax is due.

          SECTION 10. Preferred Shares Record Date. Each Person in whose name any certificate for
Preferred Shares is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon which the
Preferred Shares transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not
be entitled to any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

          SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights. The
Purchase Price, the number of Preferred Shares or other securities or property purchasable upon
exercise of each Right and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.

          (a) (i) In the event the Company shall at any time after March 26, 2001, (A) declare and pay a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation),

11

 

except as otherwise provided in this Section 11(a), the number and kind of shares of capital
stock issuable upon exercise of a Right at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares transfer books of the
Company were open, he would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination or reclassification; provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than the aggregate par
value of the shares of capital stock of the Company issuable upon exercise of one Right.

    (ii) Subject to Section 24 of this Agreement, in the event any Person becomes an
Acquiring Person, each holder of a Right, except as otherwise provided in this Agreement,
shall thereafter have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares of the Company as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then Current Per Share Market Price of the Common Shares
(determined pursuant to Section 11(d)(i) hereof) for which a Right is exercisable on the
date of the occurrence of such event provided, however, that the Purchase Price and the
number of Common Shares so receivable upon exercise of a Right shall, following the time a
Person becomes an Acquiring Person, be subject to further adjustment as appropriate in
accordance with Section 11(f) hereof. The Company agrees that, after the earlier of the
Distribution Date or the Shares Acquisition Date, it will not, except as permitted by
Sections 23, 24 or 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the Rights.

          Notwithstanding anything in this Agreement to the contrary, from and after the occurrence of
such event, any Rights that are or were acquired or beneficially owned by (x) any Acquiring Person
(or any Associate or Affiliate of such Acquiring Person), (y) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who becomes a transferee after a Person becomes an Acquiring
Person or (z) a transferee of any Acquiring Person (or any such Affiliate or Associate) who became
a transferee prior to or concurrently with a Person becoming an Acquiring Person pursuant to either
(I) a transfer from the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding regarding the transferred Rights
or (II) a transfer which the Board of Directors has determined is part of a plan, arrangement or
understanding which has the purpose or effect of avoiding the provisions of this paragraph, and
subsequent transferees of such Persons, shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this Agreement. The
Company shall use all reasonable efforts to ensure that the provisions of this Section 11(a)(ii)
are complied with, but shall have no liability to any holder of Right Certificates or other Person
as a result of its failure to make any determinations with

12

 

respect to an Acquiring Person or its Affiliates, Associates or transferees hereunder. From
and after the time a Person becomes an Acquiring Person, no Right Certificate shall be issued
pursuant to Section 3 or Section 6 hereof that represents Rights that are or have become void
pursuant to the provisions of this paragraph, and any Right Certificate delivered to the Rights
Agent that represents Rights that are or have become void pursuant to the provisions of this
paragraph shall be canceled. From and after the occurrence of an event specified in Section 13(a)
hereof, any Rights that theretofore have not been exercised pursuant to this Section 11(a)(ii)
shall thereafter be exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).

    (iii) The Company may at its option substitute for a Common Share issuable upon the
exercise of Rights in accordance with the foregoing subparagraph (ii) a number of Preferred
Shares or fraction thereof such that the current per share market price of one Preferred
Share multiplied by such number or fraction is equal to the Current Per Share Market Price
of such Common Share. In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii), the Board of Directors shall, with
respect to such deficiency, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, (A) determine the excess (such
excess, the “Spread”) of (1) the value of the Common Shares issuable upon the exercise of a
Right in accordance with the foregoing subparagraph (ii) (the “Current Value”) over (2) the
Purchase Price (as adjusted in accordance with the foregoing subparagraph (ii)), and (B)
with respect to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the Common Shares
issuable in accordance with the foregoing subparagraph (ii) upon exercise of the Right and
payment of the Purchase Price (as adjusted in accordance therewith), (1) cash, (2) a
reduction in such Purchase Price, (3) Preferred Shares or other equity securities of the
Company (including, without limitation, shares or fractions of shares of preferred stock
which, by virtue of having dividend, voting and liquidation rights substantially comparable
to those of the Common Shares are deemed in good faith by the Board of Directors to have
substantially the same value as the Common Shares (such Preferred Shares and shares or
fractions of shares of preferred stock are hereinafter referred to as “Common Stock
Equivalents”)), (4) debt securities of the Company, (5) other assets, or (6) any combination
of the foregoing, having a value which, when added to the value of the Common Shares issued
upon exercise of such Right, shall have an aggregate value equal to the Current Value (less
the amount of any reduction in such Purchase Price), where such aggregate value has been
determined by the Board of Directors upon the advice of a nationally recognized investment
banking firm selected in good faith by the Board of Directors; provided, however, that if
the Company shall not make adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the time a Person becomes an Acquiring Person (the time a
Person becomes an Acquiring Person being the “Section 11(a)(ii) Trigger Date”), then the
Company shall be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the surrender for
exercise of a Right and without requiring payment of such Purchase Price, Common Shares (to
the extent available), and then, if necessary, such number or fractions of Preferred Shares
(to the extent available) and then,

13

 

if necessary, cash, which shares (of Common Shares and/or Preferred Shares) and/or cash
have an aggregate value equal to the Spread. If, upon the occurrence of a Person becoming
an Acquiring Person, the Board of Directors shall determine in good faith that it is likely
that sufficient additional Common Shares could be authorized for issuance upon exercise in
full of the Rights, then, if the Board of Directors so elects, the thirty (30) day period
set forth above may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares (such thirty (30) day period, as it
may be extended, is herein called the “Substitution Period”). To the extent that the
Company determines that some action needs to be taken pursuant to the second and/or third
sentence of this Section 11(a)(iii), the Company (x) shall provide, subject to Section
11(a)(ii) hereof and the last sentence of this Section 11(a)(iii) hereof, that such action
shall apply uniformly to all outstanding Rights and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of distribution to
be made pursuant to such second sentence and to determine the value thereof. In the event
of any such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of Common Shares shall be the Current Per Share Market Price
(as determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date and the
per share or fractional value of any “Common Stock Equivalent” shall be deemed to equal the
current per share market price of the Common Shares. The Board of Directors of the Company
may, but shall not be required to, establish procedures to allocate the right to receive
Common Shares upon the exercise of the Rights among holders of Rights pursuant to this
Section 11(a)(iii).

          (b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Shares (or shares
having the same rights, privileges and preferences as the Preferred Shares (“equivalent preferred
shares”)) or securities convertible into Preferred Shares or equivalent preferred shares at a price
per Preferred Share or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less than the then
Current Per Share Market Price of the Preferred Shares on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of
Preferred Shares and equivalent preferred shares outstanding on such record date plus the number of
Preferred Shares and equivalent preferred shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of Preferred Shares
and equivalent preferred shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the

14

 

Company issuable upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and holders of the Rights. Preferred Shares and equivalent preferred shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record date had not been
fixed.

          (c) In case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash dividend or a dividend
payable in Preferred Shares) or subscription rights or warrants (excluding those referred to in
Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Per Share Market Price of the Preferred
Shares on such record date, less the fair market value (as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such Current Per Share
Market Price of the Preferred Shares; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.

          (d) (i) For the purpose of any computation hereunder, the “Current Per Share Market Price” of
any security (a “Security” for the purpose of this Section 11(d)(i)) on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in the event that the Current
Per Share Market Price of the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per Share Market Price
shall be appropriately adjusted to reflect the current market price per share equivalent of such
Security. The closing price for each day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked prices, regular way, in
either case, as reported in the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as

15

 

reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the counter market, as reported on the Nasdaq National Market or such other
system then in use, or, if on any such date the Security is not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors. The term “Trading Day” shall mean a
day on which the principal national securities exchange on which the Security is listed or admitted
to trading is open for the transaction of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.

    (ii) For the purpose of any computation hereunder, the “Current Per Share Market Price”
of the Preferred Shares shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Shares are not publicly traded, the “Current Per Share
Market Price” of the Preferred Shares shall be conclusively deemed to be the Current Per
Share Market Price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one thousand. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, “Current Per Share Market
Price” shall mean the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the Rights Agent
and shall be binding on the Rights Agent and the holders of the Rights.

          (e) No adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations under this Section
11 shall be made to the nearest cent or to the nearest one one-millionth of a Preferred Share or
one ten-thousandth of any other share or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which requires such adjustment
or (ii) the Expiration Date.

          (f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, 11(h), 11(i) and 11(m) and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like
terms to any such other shares.

          (g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-thousandths of a Preferred Share purchasable from time

16

 

to time hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein.

          (h) Unless the Company shall have exercised its election as provided in Section 11(i), upon
each adjustment of the Purchase Price as a result of the calculations made in Sections 11(b) and
(c), each Right outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of one one-thousandths
of a Preferred Share (calculated to the nearest one one-millionth of a Preferred Share) obtained by
(A) multiplying (x) the number of one one-thousandths of a share covered by a Right immediately
prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price and (B) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.

          (i) The Company may elect on or after the date of any adjustment of the Purchase Price
pursuant to Sections 11(b) or 11(c) hereof to adjust the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-thousandths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights (calculated to the nearest
one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the date of adjustment,
and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided for herein and shall
be registered in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.

          (j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-thousandths of a Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price and the
number of one one-thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.

          (k) Before taking any action that would cause an adjustment reducing the Purchase Price below
the then par value, if any, of the fractional Preferred Share or other shares

17

 

of capital stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preferred Shares or such other shares at such
adjusted Purchase Price.

          (l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s right to receive such
additional shares upon the occurrence of the event requiring such adjustment.

          (m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled
to make such adjustments in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it, in its sole discretion, shall determine to be
advisable in order that any consolidation or subdivision of the Preferred Shares, issuance wholly
for cash of any Preferred Shares at less than the current market price, issuance wholly for cash of
Preferred Shares or securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such stockholders.

          (n) Anything in this Agreement to the contrary notwithstanding, in the event that at any time
after March 26, 2001 and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares, or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by reclassification or otherwise than by payment of
dividends in Common Shares) into a greater or lesser number of Common Shares, then in each such
case (A) the number of one one-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of one one-thousandths
of a Preferred Share so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Shares outstanding immediately before such event and the denominator
of which is the number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with respect to it that
number of Rights which each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination or consolidation is
effected.

          SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Section 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares or
the Preferred Shares a copy of such certificate and (c) mail a brief

18

 

summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof).

          SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the
event, directly or indirectly, at any time after a Person has become an Acquiring Person, (i) the
Company shall consolidate with, or merge with and into, any other Person, (ii) any Person shall
consolidate with the Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such merger, all or part
of the Common Shares shall be changed into or exchanged for stock or other securities of any other
Person (or the Company) or cash or any other property, or (iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person other than the Company or one
or more of its wholly owned Subsidiaries, then, and upon the first occurrence of such event, proper
provision shall be made so that (A) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares or Common Shares of the Company, such number of Common Shares of such other Person
(including the Company as successor thereto or as the surviving corporation) as shall equal the
result obtained by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and dividing that
product by (2) 50% of the then Current Per Share Market Price of the Common Shares of such other
Person (determined pursuant to Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer, provided, however, that the Purchase Price (as theretofore
adjusted) and the number of Common Shares of such other Person so receivable upon exercise of a
Right shall be subject to further adjustment as appropriate in accordance with Section 11(f) hereof
to reflect any events occurring in respect of the Common Shares of such other Person after the
occurrence of such consolidation, merger, sale or transfer; (B) the issuer of such Common Shares
shall thereafter be liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Agreement; (C) the term
“Company” shall thereafter be deemed to refer to such issuer; and (D) such issuer shall take such
steps (including, but not limited to, the reservation of a sufficient number of its Common Shares
in accordance with Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be,
in relation to the Common Shares thereafter deliverable upon the exercise of the Rights; provided
that, upon the subsequent occurrence of any consolidation, merger, sale or transfer of assets or
other extraordinary transaction in respect of such other Person, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the Purchase Price as
provided in this Section 13(a), such cash, shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder, at the time of such transaction, owned
the Common Shares of the other Person receivable upon the exercise of a Right pursuant to this
Section 13(a), and such other Person shall take such steps (
including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent exercise of the Rights
in accordance with the terms hereof for such cash, shares, rights, warrants and other property.

19

 

          (b) The other Person referred to in Section 13(a) (the “Principal Party”) shall mean:

    (i) in the case of any transaction described in (i) or (ii) of the first sentence of
Section 13(a) hereof: (A) the Person that is the issuer of the securities into which the
Common Shares are converted in such merger or consolidation, or, if there is more than one
such issuer, the issuer the Common Shares of which have the greatest aggregate market value
of shares outstanding, or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, if such Person survives said merger, or, if there is more than
one such Person, the Person the Common Shares of which have the greatest aggregate market
value of shares outstanding or (y) if the Person that is the other party to the merger does
not survive the merger, the Person that does survive the merger (including the Company if it
survives) or (z) the Person resulting from the consolidation; and

    (ii) in the case of any transaction described in (iii) of the first sentence of Section
13(a) hereof, the Person that is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or transactions, or, if each Person
that is a party to such transaction or transactions receives the same portion of the assets
or earning power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons is the issuer of
Common Shares having the greatest aggregate market value of shares outstanding;

provided, however, that in any such case described in the foregoing clause (b)(i) or (b)(ii), if
the Common Shares of such Person are not at such time or have not been continuously over the
preceding 12-month period registered under Section 12 of the Exchange Act, then (1) if such Person
is a direct or indirect Subsidiary of another Person the Common Shares of which are and have been
so registered, the term “Principal Party” shall refer to such other Person, or (2) if such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common Shares of all of which
are and have been so registered, the term “Principal Party” shall refer to whichever of such
Persons is the issuer of Common Shares having the greatest aggregate market value of shares
outstanding, or (3) if such Person is owned, directly or indirectly, by a joint venture formed by
two or more Persons that are not owned, directly or indirectly, by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners having an interest in the
venture as if the Person owned by the joint venture was a Subsidiary of both or all of such joint
venturers, and the Principal Party in each such case shall bear the obligations set forth in this
Section 13 in the same ratio as its interest in such Person bears to the total of such interests.

20

 

          (c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to the Rights Agent an
agreement confirming that the requirements of Sections 13(a) and (b) hereof shall promptly be
performed in accordance with their terms and that such consolidation, merger, sale or transfer of
assets shall not result in a default by the Principal Party under this Agreement as the same shall
have been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof and providing
that, as soon as practicable after executing such agreement pursuant to this Section 13, the
Principal Party will:

    (i) prepare and file a registration statement under the Securities Act, if necessary,
with respect to the Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date and similarly comply with
applicable state securities laws;

    (ii) use its best efforts, if the Common Shares of the Principal Party shall be listed
or admitted to trading on the New York Stock Exchange or on another national securities
exchange, to list or admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the New York Stock Exchange or such
securities exchange, or, if the Common Shares of the Principal Party shall not be listed or
admitted to trading on the New York Stock Exchange or a national securities exchange, to
cause the Rights and the securities receivable upon exercise of the Rights to be authorized
for quotation on NASDAQ or on such other system then in use;

    (iii) deliver to holders of the Rights historical financial statements for the
Principal Party which comply in all respects with the requirements for registration on Form
10 (or any successor form) under the Exchange Act; and

    (iv) obtain waivers of any rights of first refusal or preemptive rights in respect of
the Common Shares of the Principal Party subject to purchase upon exercise of outstanding
Rights.

          (d) In case the Principal Party has a provision in any of its authorized securities or in its
certificate of incorporation or by-laws or other instrument governing its affairs, which provision
would have the effect of (i) causing such Principal Party to issue (other than to holders of Rights
pursuant to this Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, Common Shares or Common Stock Equivalents of such
Principal Party at less than the then current market price per share thereof (determined pursuant
to Section 11(d) hereof) or securities exercisable for, or convertible into, Common Shares or
Common Stock Equivalents of such Principal Party at less than such then current market price, or
(ii) providing for any special payment, tax or similar provision in connection with the issuance of
the Common Shares of such Principal Party pursuant to the provisions of Section 13, then, in such
event, the Company hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental

21

 

agreement providing that the provision in question of such Principal Party shall have been
canceled, waived or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction. The Company shall not enter into any transaction of the
kind referred to in this Section 13 if (A) at the time of or immediately after such transaction
there are any rights, warrants, instruments or other instruments or securities outstanding or any
agreements or arrangements which would eliminate or substantially diminish the benefits intended to
be afforded by the Rights, (B) prior to, simultaneously with or immediately after such
consolidation, merger, sale, transfer or other transaction, the stockholders of the Person who
constitutes, or would constitute, the Principal Party for purposes of Section 13(b) hereof shall
have received a distribution of Rights previously owned by such Person or any of its Affiliates or
Associates or (C) the form or nature of organization of the Principal Party would preclude or limit
the exercisability of the Rights. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

          SECTION 14. Fractional Rights and Fractional Shares. (a) The Company shall not be required to
issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights, for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case, as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on the Nasdaq National Market or such other
system then in use or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional market maker making a
market in the Rights selected by the Board of Directors. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors shall be used.

          (b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred Share) upon exercise or
exchange of the Rights or to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one one-thousandth of a Preferred Share).
Interests in fractions of Preferred Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Company, be evidenced by depositary receipts, pursuant
to an appropriate agreement between the Company and a depositary selected by it; provided that such
agreement shall provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as

22

 

beneficial owners of the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one one-thousandth of a Preferred
Share, the Company shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of this Section 14(b), the current market
value of a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant
to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise or exchange.

          (c) The Company shall not be required to issue fractional Common Shares or to distribute
certificates which evidence fractional Common Shares upon the exercise or exchange of Rights. In
lieu of such fractional Common Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole Common Share (as
determined in accordance with Section 14(a) hereof) for the Trading Day immediately prior to the
date of such exercise or exchange.

          (d) The holder of a Right by the acceptance of the Right expressly waives his right to receive
any fractional Rights or any fractional shares upon exercise or exchange of a Right (except as
provided above).

          SECTION 15. Rights of Action. All rights of action in respect of this Agreement, excepting
the rights of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or
of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common
Shares), may, in his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate (or, prior to the Distribution
Date, such Common Shares) in the manner provided therein and in this Agreement. Without limiting
the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any breach of this
Agreement and will be entitled to specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the obligations of any Person subject to, this
Agreement.

          SECTION 16. Agreement of Right Holders. Every holder of Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:

          (a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the Common Shares;

          (b) after the Distribution Date, the Right Certificates are transferable only on the registry
books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and

23

 

          (c) the Company and the Rights Agent may deem and treat the person in whose name the Right
Certificate is (or, prior to the Distribution Date, the associated Common Shares are) registered as
the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate, the associated Common Shares certificate or any
Book-Entry confirmation made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, subject to Section 7(e) hereof, shall be
affected by any notice to the contrary.

          SECTION 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company which may at any time be
issuable on the exercise or exchange of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any meeting thereof, or
to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised or exchanged in accordance with the provisions hereof.

          SECTION 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The provisions of this
Section shall survive the termination of this Agreement.

          The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

          SECTION 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into
which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto;

24

 

provided that such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so countersigned; and, in case at
that time any of the Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.

          In case at any time the name of the Rights Agent shall be changed and at such time any of the
Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in the Right Certificates and
in this Agreement.

          SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof, shall be bound:

          (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with
such opinion.

          (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such
certificate.

          (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own negligence, bad faith or willful misconduct; provided, however, that the Rights Agent shall
in no event be liable or responsible for any indirect, consequential, special or punitive damages.

          (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except its

25

 

countersignature thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.

          (e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining
of the existence of facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares will, when issued, be
validly authorized and issued, fully paid and nonassessable.

          (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.

          (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for those instructions.

          (h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.

          (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents, and the
Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection and continued
employment thereof.

          (j) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of assignment or the form of election

26

 

to purchase set forth on the reverse thereof, as the case may be, has not been completed to
certify the holder is not an Acquiring Person (or an Affiliate or Associate thereof) or a
transferee thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

          SECTION 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign
and be discharged from its duties under this Agreement upon 30 days’ notice in writing mailed to
the Company and to each transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and, following the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30
days’ notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent of the Common Shares or Preferred Shares by registered or certified
mail, and, following the Distribution Date, to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to
make such appointment within a period of 30 days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the registered holder of any Right Certificate may
apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court, shall be: (a) a
corporation, limited liability company or trust company (or similar form of entity under the laws
of any state of the United States or a foreign jurisdiction) authorized to conduct business under
the laws of the United States or any state of the United States, which is authorized under such
laws to exercise corporate trust, fiduciary or stockholder services powers and is subject
supervision or examination by a federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $25,000,000; or (b) an
Affiliate controlled by a corporation, limited liability company or entity described in clause (a)
of this sentence. After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing with the predecessor
Rights Agent and each transfer agent of the Common Shares or Preferred Shares, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

          SECTION 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance

27

 

or sale of Common Shares following the Distribution Date and prior to the Expiration Date, the
Company may with respect to Common Shares so issued or sold pursuant to (i) the exercise of stock
options, (ii) under any employee plan or arrangement, (iii) upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, or (iv) a contractual obligation
of the Company, in each case existing prior to the Distribution Date, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Right Certificate would be issued, (ii)
no such Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof and (iii) no such Right Certificate shall
be issued in respect of Rights that have become void pursuant to the terms hereof.

          SECTION 23. Redemption. (a) The Board of Directors may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring in respect of the Common Shares after
the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”).
The redemption of the Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors, in its sole discretion, may establish. The Redemption Price
shall be payable, at the option of the Company, in cash, Common Shares, or such other form of
consideration as the Board of Directors shall determine.

          (b) Immediately upon the action of the Board of Directors ordering the redemption of the
Rights pursuant to paragraph (a) of this Section 23 (or at such later time as the Board of
Directors may establish for the effectiveness of such redemption), and without any further action
and without any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption. Within 10 days
after such action of the Board of Directors ordering the redemption of the Rights (or at such later
time as the Board of Directors may establish for the effectiveness of such redemption), the Company
shall mail a notice of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 or in Section 24 hereof, and other than in connection
with the acquisition of Common Shares prior to the Distribution Date.

          SECTION 24. Exchange. (a) The Board of Directors may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common

28

 

Share per Right (such exchange ratio being hereinafter referred to as the “Exchange Ratio”).
Notwithstanding the foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding. From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 24(a) shall thereafter be
exercisable only in accordance with Section 13 and may not be exchanged pursuant to this Section
24(a). The exchange of the Rights by the Board of Directors may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole discretion may establish.

          (b) Immediately upon the effectiveness of the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and without any further action
and without any notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of Rights which will
be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.

          (c) The Company may at its option substitute and, in the event that there shall not be
sufficient Common Shares issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the Company shall substitute
to the extent of such insufficiency, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction thereof (or equivalent preferred
shares) such that the Current Per Share Market Price of one Preferred Share (or equivalent
preferred share) multiplied by such number or fraction is equal to the Current Per Share Market
Price of one Common Share date of issuance of such Preferred Shares (or equivalent preferred share)
or fraction thereof.

          (d) The Company shall not be required to issue fractions of Common Shares or to distribute
certificates which evidence fractional Common Shares. In lieu of such fractional Common Shares, the
Company shall pay to the registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this paragraph (d), the
current market value of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section

29

 

11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to
this Section 24.

          SECTION 25. Notice of Certain Events. (a) In case the Company shall at any time after the
earlier of the Distribution Date or the Shares Acquisition Date propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of
50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or
(vi) to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock dividend, or
distribution of rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, subdivision or winding up is to take place and
the date of participation therein by the holders of the Common Shares and/or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of
the Preferred Shares for purposes of such action, and in the case of any such other action, at
least 10 days prior to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, whichever shall be the
earlier; provided, that, prior to the Distribution Date, any notice in regard to a declaration or
payment of any dividend on the Common Shares payable in Common Shares or to effect a subdivision,
combination or consolidation of the Common Shares (by reclassification or otherwise than by payment
of dividends in Common Shares) shall be adequately given if given within a reasonable time after
the issuance date for such stock dividend or effective date of such subdivision, combination or
consolidation.

          (b) In case the event set forth in Section 11(a)(ii) or Section 13 hereof shall occur, then
the Company shall as soon as practicable thereafter give to each holder of a Right Certificate (or
if occurring prior to the Distribution Date, the holders of the Common Shares), in accordance with
Section 26 hereof, a notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii) and Section 13
hereof.

          SECTION 26. Notices. Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class, postage-prepaid mail, addressed (until another
address is filed in writing with the Rights Agent) as follows:

30

 

Agere Systems

1110 American Parkway, NE

Allentown, Pennsylvania 18109

Attention: Corporate Secretary

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right Certificate to or on the Rights
Agent shall be sufficiently given or made if sent by first-class, postage-prepaid mail, addressed
(until another address is filed in writing with the Company) as follows:

Computershare Investor Services, LLC

Two North LaSalle Street

Chicago, Illinois 60602

Attention: Cindy Nisley

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
first-class, postage-prepaid mail,, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

          SECTION 27. Supplements and Amendments. At any time prior to the time any person becomes an
Acquiring Person, and subject to the last sentence of this Section 27, the Company may, and the
Rights Agent shall if the Company so directs, supplement or amend any provision of this Agreement
in any manner which the Company may deem necessary or desirable (including the date on which the
Expiration Date or the Distribution Date shall occur, the amount of the Purchase Price, the
definition of “Acquiring Person” or the time during which the Rights may be redeemed pursuant to
Section 23) without the approval of any holder of Rights. From and after the time any Person
becomes an Acquiring Person, and subject to applicable law and the last sentence of this Section
27, the Company may, and the Rights Agent shall if the Company so directs, amend this Agreement
without the approval of any holders of Rights (a) to cure any ambiguity or to correct or supplement
any provision contained herein which may be defective or inconsistent with any other provision of
this Agreement or (b) to otherwise change or supplement any other provisions in this Agreement in
any matter which the Company may deem necessary or desirable and which in each such case shall not
(i) adversely affect the interests of the holders of Rights as such (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person), (ii) cause this Agreement again to become
amendable other than in accordance with this sentence or (iii) cause the Rights again to become
redeemable. Any supplement or amendment to this Agreement duly approved by the Company that does
not amend Section 19, 20 or 21 in a manner adverse to the Rights Agent shall become effective
immediately upon execution by the Company, whether or not also executed by the Rights Agent. In
addition, notwithstanding anything to the contrary contained in this Agreement, no supplement or
amendment to this Agreement shall be made which reduces the Redemption Price (except as required by
Section 11(a)(i)). In connection with any supplement or amendment to this Agreement, the Company
shall deliver to the Rights Agent a certificate certifying that such supplement or amendment
complies with the terms of the preceding sentence.

31

 

          SECTION 28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

          SECTION 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares).

          SECTION 30. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

          SECTION 31. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such State; provided,
however, that the rights, duties and obligations of the Rights Agent shall be governed and
construed in accordance with the laws of the State of New York. The parties agree that all actions
and proceedings arising out of this Agreement or any of the transactions contemplated hereby, shall
be brought in the United States District Court for the Southern District of New York or in a New
York State Court in the County of New York and that in connection with any such action or
proceeding, submit to the jurisdiction of and venue in, such court. Each of the parties hereto
also irrevocably waives all right to trial by jury in any action, proceeding or counter claim
arising out of this Agreement or the transactions contemplated hereby.

          SECTION 32. Counterparts. This Agreement may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

          SECTION 33. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

32

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
attested, all as of the day and year first above written.

	 	 	 	 	 	 
	 	 	AGERE SYSTEMS INC.
	 
	 	 	 	 
	

	 	By
	 	/s/ Gary A. Henningsen, Jr.
	

	 	 	 	 
	

	 	 	 	Name: Gary A. Henningsen, Jr.
	

	 	 	 	Title: Vice President-Tax and Treasurer

	 	 	 	 
	Attest:
	 
	 	 
	By

	 	/s/ Jonathan Gilbert
	

	 	 
	

	 	Name: Jonathan Gilbert
	

	 	Title: Assistant Secretary

	 	 	 	 	 	 
	 	 	COMPUTERSHARE INVESTOR SERVICES, LLC
	 
	 	 	 	 
	

	 	By
	 	/s/ Keith Bradley
	

	 	 	 	 
	

	 	 	 	Name: Keith Bradley
	

	 	 	 	Title: Vice President

	 	 	 	 
	Attest:
	 
	 	 
	By

	 	/s/ Robert A. Buckley Jr.
	

	 	 
	

	 	Name: Robert A. Buckley Jr.
	

	 	Title: VP Business Development

33

 

EXHIBIT A

[Intentionally omitted]

A-1

 

EXHIBIT B

[Form of Rights Certificate]

	 	 	 
	Certificate No. R-	 	______ Rights

          NOT EXERCISABLE AFTER MARCH 27, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS
ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.

          UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

Right Certificate

AGERE SYSTEMS INC.

          This
certifies that ___________, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of March 26, 2001, as the same may be
amended from time to time (the “Rights Agreement”), between Agere Systems Inc., a Delaware
corporation (the “Company”), and Computershare Investor Services, LLC (the “Rights Agent”), as
successor to The Bank of New York, as amended from time to time, to purchase from the Company at
any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., New York time, on March 27, 2011 at the principal office of the Rights Agent, or at the
office of its successor as Rights Agent, one one-thousandth of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock, par value $1.00 per share, of the Company (the
“Preferred Shares”), at a purchase price of $100.00 per one one-thousandth of a Preferred Share
(the “Purchase Price”), upon presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-thousandths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and Purchase Price as of
March 27, 2001, based on the Preferred Shares as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number of one one-thousandths of a Preferred Share or
other securities or property which may be purchased upon the exercise of the Rights and the number
of Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the
happening of certain events.

          This Rights Certificate is subject to all of the terms, provisions and conditions of the
Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and immunities hereunder

B-1

 

of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the
Rights Agreement are on file at the principal executive offices of the Company and the offices of
the Rights Agent. The Company will mail to the holder of this Right Certificate a copy of the
Rights Agreement without charge after receipt of a written request therefor.

          This Right Certificate, with or without other Right Certificates, upon surrender at the
principal office of the Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Rights Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not exercised.

          Subject to the provisions of the Rights Agreement, the Rights evidenced by this Right
Certificate (i) may be redeemed by the Company at a redemption price of $0.01 per Right or (ii) may
be exchanged in whole or in part for Preferred Shares or shares of the Company’s Common Stock, par
value $0.01 per share.

          The Company shall not be required to issue fractional Preferred Shares upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but, in lieu thereof, a cash payment may be made, as provided in the Rights
Agreement.

          No holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable on the exercise or exchange hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised or exchanged as provided in the Rights Agreement.

          This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.

B-2

 

          WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of ___.

	 	 	 
	

	 	AGERE SYSTEMS INC.,
	 
	 	 
	

	 	By:
	

	 	Name:
	

	 	Title:

ATTEST:

By:

Name:

Title:

Countersigned:

COMPUTERSHARE INVESTOR SERVICES, LLC

By

Name:

Title:

B-3

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Right

Certificate.)

          FOR VALUE RECEIVED _____________hereby sells, assigns and transfers unto

(Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint _____________Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of substitution.

Dated: ___________, ____

	 	 	 	 
	

	 	 
	

	 	Signature

Signature Guaranteed:

          Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States or by another eligible guarantor
institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.

          The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by, were not acquired by the undersigned from, and are not being assigned to an
Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).

	 	 	 	 
	

	 	 
	

	 	Signature

B-4

 

Form of Reverse Side of Right Certificate – continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights represented by the Right Certificate.)

To: AGERE SYSTEMS INC.

          The undersigned hereby irrevocably elects to exercise ___Rights represented by
this Right Certificate to purchase the Preferred Shares (or other securities or property) issuable
upon the exercise of such Rights and requests that certificates for such Preferred Shares (or other
securities or property) be issued in the name of:

	 	 	 
	 
	 	 
	Please insert social security

or other identifying number
	 	 

	 	 	 
	 
	 	 
	(Please print name and address)
	 	 
	 
	 	 
	 
	 	 

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:

Please insert social security
or other identifying number

	 	 	 
	 
	 	 
	(Please print name and address)
	 	 
	 
	 	 
	 
	 	 

Dated: ___________, ____

	 	 	 	 
	

	 	 
	

	 	Signature

Signature Guaranteed:

          Signatures must be guaranteed by a member firm of a registered national securities exchange, a
member of the National Association of Securities Dealers, Inc., or a commercial bank or trust
company having an office or correspondent in the United States or by another eligible guarantor
institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of 1934.

B-5

 

Form of Reverse Side of Right Certificate – continued

          The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by, and were not acquired by the undersigned from, an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

	 	 	 	 
	

	 	 
	

	 	Signature

NOTICE

          The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.

          In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

B-6

 

EXHIBIT C

[Intentionally omitted]

C-1

 

EXHIBIT D

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,

RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN

ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN

TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE

TRANSFERABLE.

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED SHARES

          On March 27, 2001 (the “Record Date”), the Board of Directors of Agere Systems Inc. (the
“Company”) declared a dividend of one Class B Right for each outstanding share of Class B Common
Stock, par value $0.01 per share, (the “Class B Common Stock”) of the Company to the stockholders
of record on March 27, 2001 (the “Record Date”) and authorized the issuance of one Class A Right
and one Class B Right (the Class A Rights and Class B Rights together, the “Rights”) for each share
of Class A Common Stock, par value $0.01 per share, (the “Class A Common Stock”) and Class B Common
Stock, respectively (the Class A Common Stock and Class B Common Stock together, the “Common
Shares”), issued after the Record Date. The dividend is payable on March 27, 2001 to the
stockholders of record on that date. Each Right entitles the registered holder to purchase from
the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, par
value $1.00 per share, of the Company (the “Preferred Shares”) at a price of $100.00 per one
one-thousandth of a Preferred Share (the “Purchase Price”), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the “Rights Agreement”) between the
Company and The Bank of New York, as Rights Agent (the “Rights Agent”).

          Until the earlier to occur of (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (with certain exceptions, an “Acquiring Person”) have
acquired beneficial ownership of (A) 10% or more of the shares of Class A Common Stock then
outstanding, (B) 10% or more of the shares of Class B Common Stock then outstanding, or (C) shares
of Common Stock which have the right to cast 10% or more of the votes that may be cast by all
outstanding shares for the election of directors of the Company or (ii) such date, if any, as may
be designated by the Board of Directors of the Company following the commencement of, or first
public disclosure of an intention to commence, a tender or exchange offer for outstanding Common
Shares which could result in such person or group becoming the beneficial owner of (A) 10% or more
of the shares of Class A Common Stock then outstanding, (B) 10% or more of the shares of Class B
Common Stock then outstanding, or (C) shares of Common Shares which have the right to cast 10% or
more of the votes that may be cast by all outstanding shares for the election of directors of the
Company (the earlier of such dates being the “Distribution Date”), the Rights will not be
represented by a separate certificate, and will not be transferable apart from the Common Stock,
but will instead be evidenced, (i) with respect to any of the shares of Common Stock held in
uncertificated book-entry form (a “Book-Entry”) outstanding as of the Record Date, by such
Book-Entry and (ii) with respect to the shares of Common Stock evidenced by Common Stock
certificates outstanding as of the

D-1

 

Record Date, by such Common Stock certificates, together with a copy of this Summary of
Rights. The Rights Agreement contains exceptions from its operating provision for Lucent and its
affiliates and associates prior to the time it effects the distribution of all of its shares in the
Company to its stockholders.

          The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates
for Common Shares outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. Until the Distribution Date (or
earlier redemption or expiration of the Rights), transfer on the Company’s stock ownership records
of Common Stock represented by a Book-Entry or a certificate outstanding as the Record Date, and,
in each case, with or without a copy of this Summary of Rights attached thereto, will also
constitute the transfer of the Rights associated with the Common Stock represented by such
Book-Entry or certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (“Right Certificates”) will be mailed to holders of record of
the Common Shares as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.

          The Rights are not exercisable until the Distribution Date. The Rights will expire on March
27, 2011 (the “Final Expiration Date”), unless the Final Expiration Date is advanced or extended or
unless the Rights are earlier redeemed or exchanged by the Company, in each case, as described
below.

          The Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification
of, the Preferred Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price less than the then-current market price of the
Preferred Shares; or (iii) upon the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of earnings or retained
earnings or dividends payable in Preferred Shares) or of subscription rights or warrants (other
than those referred to above).

          The number of outstanding Rights and the number of one one-thousandths of a Preferred Share
issuable upon exercise of each Right are also subject to adjustment in the event of a stock split
of the Common Shares or a stock dividend on the Common Shares payable in Common Shares or
subdivisions, consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

          Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly dividend payment of

D-2

 

$1 per share but will be entitled to an aggregate dividend of 1,000 times the dividend
declared per Common Share. In the event of liquidation, the holders of the Preferred Shares will
be entitled to a minimum preferential liquidation payment of $1,000 per share but will be entitled
to an aggregate payment of 1,000 times the payment made per Common Share. Each Preferred Share
will have 1,000 votes, voting together with the Common Shares. Finally, in the event of any
merger, consolidation or other transaction in which Common Shares are exchanged, each Preferred
Share will be entitled to receive 1,000 times the amount received per Common Share. These rights
are protected by customary antidilution provisions.

          Because of the nature of the Preferred Shares’ dividend, liquidation and voting rights, the
value of the one one-thousandth interest in a Preferred Share purchasable upon exercise of each
Right should approximate the value of one Common Share.

          In the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then current exercise
price of the Right, that number of shares of common stock of the acquiring company (or its parent)
which at the time of such transaction will have a market value of two times the exercise price of
the Right. In the event that any person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter be void), will thereupon have the right to receive upon exercise that
number of Common Shares having a market value of two times the exercise price of the Right.

          At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding Common Shares, the Board of Directors of
the Company may exchange the Rights (other than Rights owned by such person or group which will
have become void), in whole or in part, for shares of Common Shares or Preferred Shares (or a
series of the Company’s preferred stock having equivalent rights, preferences and privileges), at
an exchange ratio of one share of Class A Common Stock or one share of Class B Common Stock, or a
fractional Preferred Share (or other preferred stock) equivalent in value thereto, per Class A
Right or Class B Right, as the case may be.

          With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred
Shares will be issued (other than fractions which are integral multiples of —one one-thousandth
of a Preferred Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.

          At any time prior to the time an Acquiring Person becomes such, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
“Redemption Price”) payable, at the option of the Company, in cash, Common Shares or such other
form of consideration as the Board of Directors of the Company shall determine. The redemption of
the Rights may be made effective at such time on such basis with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any

D-3

 

redemption of the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.

          At any time prior to such time as there shall be an Acquiring Person, the Company may, without
the approval of any holder of the Rights, supplement or amend any provision of the Rights Agreement
(including the date on which the Expiration Date or the Distribution Date shall occur, the amount
of the Purchase Price or the definition of “Acquiring Person”), except that no supplement or
amendment shall be made that reduces the Redemption Price of the Rights. From and after such time
as any person or group of affiliated or associated persons becomes an Acquiring Person, and subject
to applicable law, the Company may, and the Rights Agent shall if the Company so directs, amend
this Rights Agreement without the approval of any holders of Rights (a) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or inconsistent with
any other provision of this Rights Agreement or (b) to otherwise change or supplement any other
provisions in this Agreement in any matter which the Company may deem necessary or desirable and
which in each such case shall not (i) adversely affect the interests of the holders of Rights as
such (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person), (ii)
cause the Rights Agreement again to become otherwise amendable or (iii) cause the Rights again to
become redeemable.

          Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or to receive
dividends.

          A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form S-1 (Registration No. 333-51594). A copy of the
Rights Agreement is available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by reference to the Rights
Agreement, as the same may be amended from time to time, which is hereby incorporated herein by
reference.

D-4EX-4.5

 

Exhibit 4.5

AGERE SYSTEMS INC.,

as Issuer

THE BANK OF NEW YORK,

as Trustee

$410,000,000 6.5% Convertible Subordinated Notes due 2009

SUPPLEMENTAL INDENTURE NO. 1

Dated as of May 27, 2005

 

 

THIS SUPPLEMENTAL INDENTURE NO. 1, dated as of May 27, 2005 (the “Supplement”), hereby supplements
that certain Indenture, dated as of June 19, 2002 (the “Indenture”), by and between Agere Systems
Inc., a Delaware corporation (the “Company”), and The Bank of New York, a New York banking
corporation, as trustee (the “Trustee”).

WHEREAS, the Company has certain 6.5% Convertible Subordinated Notes due 2009 (the “Notes”) issued
and outstanding pursuant to the terms and conditions of the Indenture;

WHEREAS, the Board of Directors and shareholders of the Company have approved (x) an amendment to
the Company’s Certificate of Incorporation to reclassify the Company’s Class A Common Stock and
Class B Common Stock into one class of Common Stock (the “Reclassification”) and (y) an amendment
to the Company’s Certificate of Incorporation to effectuate a reverse stock split with respect to
the Common Stock (the “Reverse Stock Split”);

WHEREAS, the Company and Trustee desire to amend the Indenture in accordance with Section 9.1 of
the Indenture to reflect the Reclassification and Reverse Stock Split;

NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein and in the
Indenture, the parties hereby agree as follows:

          Section 1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to such terms in the Indenture.

          Section 2. Supplements to the Indenture. The Indenture is hereby amended as follows:

     (a) Each reference to “Class A Common Stock” shall now be deemed to be a reference to
“Common Stock”.

     (b) The definition of “Class B Common Stock” is Section 1.1 of the Indenture is deleted
in its entirety.

     (c) Section 12.5(e) of the Indenture is deleted in its entirety and replaced with the
following:

(e) If the Company shall, by dividend or otherwise, distribute cash to all holders of its Common
Stock (excluding any cash that is distributed upon a merger or consolidation to which Section
12.6 applies or as part of a distribution referred to in Section 12.5(d)) in an
aggregate amount that, when combined together with (1) the aggregate amount of any other such
all-cash distributions to all holders of its Common Stock within the 12 months preceding the date
of payment of such distribution, and in respect of which no adjustment pursuant to this Section
12.5(e) has been made, and (2) the aggregate of any cash plus the fair market value (as
determined by the Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) of consideration payable in respect of any tender offer by
the Company or any of its subsidiaries for all or any portion of the Common Stock concluded within
the 12 months preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to Section 12.5(f) has been made, exceeds 10% of the product of (x) the

 

 

Current Market Price (determined as provided in Section 12.5(g)) of the Common Stock on the
Record Date with respect to such distribution times (y) the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the close of business on
such date, the Conversion Price shall be reduced so that it shall equal the price determined by
multiplying the Conversion Price in effect at the opening of business on the date after such Record
Date by a fraction (i) the numerator of which shall be equal to the Current Market Price
(determined as provided in Section 12.5(g)) of the Common Stock on the Record Date less an
amount equal to the quotient of (x) the excess of such combined amount over such 10% (as determined
by the Board of Directors, whose determination shall be conclusive and set forth in a resolution of
the Board of Directors) and (y) the number of shares of Common Stock outstanding on the Record Date
and (ii) the denominator of which shall be equal to the Current Market Price of the Common Stock on
such Record Date; provided, however, that if the portion of the cash so distributed applicable to
one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock
on the Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that
each holder of Notes shall have the right to receive upon conversion of a Note (or any portion
thereof) the amount of cash such holder would have received had such holder converted such Note (or
portion thereof) immediately prior to such Record Date. If such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not been declared.

     (d) Section 12.5(f) of the Indenture is deleted in its entirety and replaced with the
following:

(f) If a tender offer made by the Company or any of its subsidiaries for all or any portion of the
Common Stock expires and such tender offer (as amended upon the expiration thereof) requires the
payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the
tender offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall be conclusive and
described in a resolution of the Board of Directors) that, when combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of Directors), as of
the expiration of such tender offer, of consideration payable in respect of any other tender
offers, by the Company or any of its subsidiaries for all or any portion of the Common Stock,
expiring within the 12 months preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to this Section 12.5(f) has been made and (2) the aggregate amount
of any such all-cash distributions to all holders of Common Stock within 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant to Section
12.5(e) has been made, exceeds 10% of the sum of (i) the product of (x) the Current Market
Price (determined as provided in Section 12.5(g)) of the Common Stock as of the last time
(the “Expiration Time”) tenders could have been made pursuant to such tender offer (as it may be
amended) times (y) the number of shares of Common Stock outstanding (including any tendered shares)
on the date of the Expiration Time, then, and in each such case, immediately prior to the opening
of business on the day after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to close of business on the date of the Expiration Time by a fraction of
which the numerator shall be the number of

2

 

shares of Common Stock outstanding (including any tendered shares) as of the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock based on the
acceptance (up to any maximum specified in the terms of the tender offer) of all shares of Common
Stock validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted,
up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) on the date of the
Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, such reduction (if any) to become effective immediately prior to the opening
of business on the day following the Expiration Time. If the Company is obligated to purchase
shares pursuant to any such tender offer, but the Company is permanently prevented by applicable
law from effecting any such purchases or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect if such tender
offer had not been made. If the application of this Section 12.5(f) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be made for such tender
offer under this Section 12.5(f).

     (e) Section 12.5(g) of the Indenture is deleted in its entirety and replaced with the
following:

	(g)  	For purposes of this Section 12.5, the following terms shall have the meaning
indicated:

(1) “closing price” with respect to any securities on any day means the closing price on
such day or, if no such sale takes place on such day, the average of the reported high and
low prices on such day, in each case on the Nasdaq National Market or New York Stock
Exchange, as applicable, or, if such security is not listed or admitted to trading on such
national market or exchange, on the principal national securities exchange or quotation
system on which such security is quoted or listed or admitted to trading, or, if not quoted
or listed or admitted to trading on any national securities exchange or quotation system,
the average of the high and low prices of such security on the over-the-counter market on
the day in question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available, in such manner as furnished
by any New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the Board of
Directors.

(2) “Current Market Price” means the average of the daily closing prices per share of Common
Stock for the 10 consecutive Trading Days preceding the earlier of the day preceding the day
preceding the day in question and the day before the “ex date”; provided, however, that if
another event occurs that would require an adjustment pursuant to this Section 12.5,
the Board of Directors may make such adjustment to the closing prices during such ten
Trading Day period as it deems appropriate to effectuate the intent of the adjustments in
this Section 12.5, in which case any such determination by the Board of Directors
shall be set forth in a Board Resolution and shall be conclusive. For purposes of any
computation under Section 12.5(f), the Current Market Price on any date

3

 

shall be deemed to be the average of the daily closing prices per share of Common Stock for
such day and the next two succeeding Trading Days; provided, however, that if another event
occurs that would require an adjustment pursuant to this Section 12.5, the Board of
Directors may make such adjustment to the closing prices during such ten Trading Day period
as it deems appropriate to effectuate the intent of the adjustments in this Section
12.5, in which case any such determination by the Board of Directors shall be set forth
in a Board Resolution and shall be conclusive. For purposes of this paragraph, the term “ex”
date, (1) when used with respect to any issuance or distribution, means the first date on
which the shares of Common Stock, trade regular way on the relevant exchange or in the
relevant market from which the closing price was obtained without the right to receive such
issuance or distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock means the first date on which the shares of Common Stock trade
regular way on such exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any tender or exchange
offer means the first date on which the shares of Common Stock trade regular way on such
exchange or in such market after the Expiration Time of such offer. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Price are called for pursuant
to this Section 12.5, such adjustments shall be made to the applicable Current
Market Price as may be necessary or appropriate to effectuate the intent of this Section
12.5 and to avoid unjust or inequitable results as determined in good faith by the Board
of Directors.

(3) “fair market value” shall mean the amount which a willing buyer would pay a willing
seller in an arm’s length transaction.

(4) “Record Date” shall mean, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock have the right to receive any
cash, securities or other property or in which the shares of Common Stock (or other
applicable security) are exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders entitled to receive such
cash, securities or other property (whether such date is fixed by the Board of Directors or
by statute, contract or otherwise).

     (f) The words “or Class B Common Stock” in Section 12.9 of the Indenture are deleted in
their entirety.

     (g) Section 12.10 of the Indenture is deleted in its entirety and replaced with the
following:

SECTION 12.10 Notice to Holders Prior to Certain Actions.

If:

(a) the Company declares a dividend (or any other distribution) on its Common Stock (other than in
cash out of retained earnings or other than a dividend that results in an adjustment in the
Conversion Price pursuant to Section 12.5 as to which the Company has made an election in
accordance with Section 12.5(m)); or

4

 

(b) the Company authorizes the granting to all or substantially all of the holders of its Common
Stock of rights or warrants to subscribe for or purchase any share of Common Stock or any other
rights or warrants (other than rights or warrants referred to in the second paragraph of
Section 12.5(d)); or

(c) there is any reclassification of the Common Stock (other than a subdivision or combination of
outstanding shares of Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or any consolidation or merger to which the Company is a party and
for which approval of any stockholders of the Company is required, or the sale or transfer of all
or substantially all of the assets of the Company; or

(d) there is any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

then the Company shall cause to be filed with the Trustee and to be mailed to each holder of Notes
at his or her address appearing on the Register maintained for that purpose as promptly as possible
but in any event at least 15 days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution or rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be
determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or
winding-up.

     (h) Each reference to “Class A Common Stock” in the Form of 6.5% Convertible
Subordinated Note Due 2009 attached to the Indenture shall now be deemed to refer to “Common
Stock” and the conversion price of “$3.3075” found in Section 16 thereof shall now be deemed
to be “$33.075”. Exhibit A to the Indenture is hereby replaced by Exhibit A attached to
this Supplement.

     (i) Each reference to “Class A Common Stock” in the Form of Conversion Notice attached
to the Indenture shall now be deemed to refer to “Common Stock”.

     Section 3. Miscellaneous.

     (a) The term “Indenture” as used in the Indenture shall be deemed to refer to the
Indenture as supplemented hereby.

     (b) This Supplement and all provisions hereof shall be binding upon, inure to the
benefit of, and be enforceable by the Company, the Trustee and any holder of the Notes.

5

 

     (c) Except as set forth herein, the Indenture shall remain in full force and effect and
shall be otherwise unaffected hereby.

     (d) This Supplement may be executed in two or more counterparts, each of which shall be
deemed to be an original, but all for which together shall constitute one and the same
instrument.

     (e) This Supplement shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely within such
State.

     (f) The recitals contained herein shall be taken as the statements of the
Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this Supplement.

[SIGNATURE PAGE FOLLOWS]

6

 

     IN WITNESS WHEREOF, the parties have caused this Supplement to be duly executed and attested,
all as of the date first above written, signifying their agreements contained in this Supplement.

	 	 	 	 	 	 	 
	 	 	AGERE SYSTEMS INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Jean F. Rankin
	 	 	 	 	 
	

	 	 	 	Name:
	 	Jean F. Rankin
	

	 	 	 	Title:
	 	Senior Vice President,
	

	 	 	 	 	 	General Counsel and
	

	 	 	 	 	 	Secretary
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK, as Trustee
	 
	 	 	 	 	 	 
	

	 	By:	 	/s/ Joseph Lloret
	 	 	 	 	 
	

	 	 	 	Name:	 	Joseph Lloret
	

	 	 	 	Title:	 	Assistant Treasurer

 

 

EXHIBIT A

(Face of Note)

[Global Securities Legend]

     [The following legend shall appear on the face of each Global Security:

     THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY
THE COMPANY, THE TRUSTEE AND ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS NOTE FOR ALL PURPOSES.]

     [The following legend shall appear on the face of each Global Security for which The
Depository Trust Company is to be the Depositary:

     UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY THE AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED NOTES IN DEFINITIVE
REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OR SUCH SUCCESSOR
DEPOSITARY.]

A-1

 

	 	 	 
	No.                     
                     
                             
	 	$          
        
          
           
	

	 	CUSIP: 00845VAA8

AGERE SYSTEMS INC.

6.5% CONVERTIBLE SUBORDINATED NOTE DUE 2009

     Agere Systems Inc., a Delaware corporation (the “Company,” which term includes any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to ___, or its registered assigns, the principal sum of ___U.S.
Dollars ($___), or such other principal amount as shall be set forth on the Schedule of
Increases or Decreases attached hereto, on December 15, 2009.

     Interest Payment Dates: June 15 and December 15, commencing December 15, 2002

     Regular Record Dates: June 1 and December 1.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

A-2

 

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed manually or by
facsimile by its duly authorized Officer.

	 	 	 	 	 
	 	 	AGERE SYSTEMS INC.
	Dated: June 19, 2002
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Title:

Trustee’s Certificate of Authentication

This is one of the 6.5% Convertible Subordinated Notes due 2009 described in the within-mentioned
Indenture.

	 	 	 	 	 
	 	 	THE BANK OF NEW YORK,

as Trustee
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Authorized Signatory
	Dated: June 19, 2002
	 	 	 	 

A-3

 

(Back of Security)

AGERE SYSTEMS INC.

6.5% CONVERTIBLE SUBORDINATED NOTE DUE 2009

     Capitalized terms used herein but not defined shall have the meaning assigned to them in the
Indenture referred to below unless otherwise indicated.

	 	1.  	Interest. Agere Systems Inc., a Delaware corporation (the “Company”),
promises to pay interest on the principal amount of this Note at the rate per annum
shown above. The Company will pay interest semi-annually in arrears on June 15 and
December 15 of each year, beginning December 15, 2002. Interest on the Notes will
accrue from the most recent interest payment date to which interest has been paid or,
if no interest has been paid, from June 19, 2002. Interest will be computed on the
basis of a 360-day year composed of twelve 30-day months.
	 
	 	2.  	Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) to the person in whose name each Note is registered at the close of
business on the June 1 or December 1 immediately preceding the relevant interest
payment date (each a “Regular Record Date”) (other than with respect to a Note or
portion thereof called for redemption on a Redemption Date, or repurchased in
connection with a Fundamental Change on a Fundamental Change Payment Date, during the
period from the close of business on a Regular Record Date to (but excluding) the next
succeeding Interest Payment Date, in which case accrued interest shall be payable
(unless such Note or portion thereof is converted) to the holder of the Note or portion
thereof redeemed or repurchased in accordance with the applicable redemption or
repurchase provisions of the Indenture). The holder must surrender Notes to a Paying
Agent to collect principal payments. The Company will pay the principal of, and
premium, if any, and interest on, the Notes at the office or agency of the Company
maintained for such purpose, in money of the United States that at the time of payment
is legal tender for payment of public and private debts. Until otherwise designated by
the Company, the Company’s office or agency maintained for such purpose will be the
principal Corporate Trust Office of the Trustee (as defined below). However, the
Company may pay principal, premium, if any, and interest by check payable in such
money, and may mail such check to the holders of the Notes at their respective
addresses as set forth in the Register of holders of Notes.
	 
	 	3.  	Paying Agent and Registrar. The Bank of New York (together with any
successor Trustee under the Indenture referred to below, the “Trustee”), will act as
Paying Agent and Registrar. The Company may change the Paying Agent, Registrar or
co-registrar without prior notice. Subject to certain limitations in the Indenture, the
Company or any of its subsidiaries may act in any such capacity.
	 
	 	4.  	Indenture. The Company issued the Notes under an Indenture dated as of
June 19, 2002 (the “Indenture”) by and between the Company and the Trustee. The terms
of the Notes include those stated in the Indenture and those made part of the Indenture

A-4

 

	 	   	by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§77aaa-77bbbb) (the
“TIA”) as in effect on the date of the Indenture. The Notes are subject to, and
qualified by, all such terms, certain of which are summarized hereon, and holders are
referred to the Indenture and the TIA for a statement of such terms. The Notes are
general unsecured subordinated obligations of the Company limited to (except as
otherwise provided in the Indenture) $410,000,000 in aggregate principal amount, unless
an election has been made as set forth in Article 2 of the Indenture to increase such
aggregate principal amount to an amount not to exceed $450,812,000. Capitalized terms
not defined below have the same meaning as is given them in the Indenture.
	 
	 	5.  	Optional Redemption. On or after June 20, 2007, the Company may redeem
the Notes at its option in cash, in whole or from time to time in part during the
following periods at the following Redemption Prices expressed as percentages of the
principal amount:

	 	 	 	 	 	 
	 	Period	 	Redemption Price	 
	 	Beginning on June 20, 2007 and ending on June 14, 2008	 	 	102.17%	 
	 	Beginning on June 15, 2008 and ending on June 14, 2009	 	 	101.30%	 
	 	Beginning on June 15, 2009 and thereafter	 	 	100.43%	 

Notice of redemption will be mailed by first-class mail at least 30 days but
not more than 60 days before the Redemption Date to each holder of Notes to be
redeemed at his or her registered address. Notes in denominations larger than
$1,000 may be redeemed in part but only in integral multiples of $1,000. If less
than all Notes are to be redeemed, the Trustee shall select the Notes to be redeemed
by a method that complies with the requirements of the principal national securities
exchange, if any, on which the Notes are listed or quoted, or, if the Notes are not
so listed, on a pro rata basis, by lot or by any other method that the Trustee
considers fair and appropriate. On and after the Redemption Date, interest ceases
to accrue on Notes or portions thereof called for redemption (unless the Company
defaults in the payment of the Redemption Price). If this Note is redeemed on a
date which is also an Interest Payment Date, the interest payment due on such date
will be paid to the person in whose name this Note is registered at the close of
business on the relevant Regular Record Date.

	 	6.  	Fundamental Change. Upon the occurrence of a Fundamental Change, the
Company shall make a Fundamental Change Offer to repurchase in cash all outstanding
Notes at a price equal to 100% of the aggregate principal amount of the Notes, plus
accrued and unpaid interest up to, but not including, the Fundamental Change Payment
Date, such offer to be made as provided in the Indenture. To accept the Fundamental
Change Offer, the holder hereof must comply with the terms thereof, including
surrendering this Note, with the “Option of Holder to Elect Repurchase” portion hereof
completed, to the Company, a depositary, if appointed by the Company, or a Paying
Agent, at the address specified in the notice of the Fundamental Change Offer

A-5

 

	 	   	mailed to holders as provided in the Indenture, prior to termination of the Fundamental
Change Offer.
 
	 	7.  	Subordination. The Company’s payment of the principal of, or premium,
if any, and interest on, the Notes is subordinated to the prior payment in full of the
Company’s Senior Indebtedness as set forth in the Indenture. Each holder of Notes by
his or her acceptance hereof covenants and agrees that all payments of the principal
of, or premium, if any, and interest on the Notes by the Company shall be subordinated
in accordance with the provisions of Article 11 of the Indenture, and each holder of
Notes accepts and agrees to be bound by such provisions.
	 
	 	8.  	Denominations, Transfer and Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in the
Indenture. As a condition of transfer, the Registrar and the Trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer documents,
and the Company and the Registrar may require a holder to pay any taxes and fees
required by law or permitted by the Indenture. The Company or the Registrar need not
exchange or register the transfer of any Note or portion of a Note submitted for
redemption or repurchase. Also the Company or the Registrar need not exchange or
register the transfer of any Note for a period of 15 days before a selection of Notes
to be redeemed or repurchased.
	 
	 	9.  	Persons Deemed Owners. The registered holder of a Note may be treated
as its owner for all purposes.
	 
	 	10.  	Amendments and Waivers. Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented with the consent of the holders of at least
a majority in principal amount of the then outstanding Notes, and any existing default
may be waived with the consent of the holders of a majority in principal amount of the
then outstanding Notes.

Without the consent of any holder affected thereby, the Indenture or the Notes may
be amended or supplemented to: (a) cure any ambiguity, defect or inconsistency or
make any other changes in the provisions of the Indenture which the Company and the
Trustee may deem necessary or desirable, provided such amendment does not materially
and adversely affect the Notes; (b) provide for uncertificated Notes in addition to
or in place of certificated Notes; (c) provide for the assumption of the Company’s
obligations to holders of Notes in the circumstances required under the Indenture as
described under Article 5 thereof; (d) provide for conversion rights of holders of
Notes in the event of consolidation, merger or sale of all or substantially all of
the assets of the Company as required to comply with Section 5.1 of the Indenture;
(e) reduce the Conversion Price; (f) evidence and provide for the acceptance of the
appointment under the Indenture of a successor Trustee; (g) make any change that
would provide any additional rights or benefits to the holders of Notes or that does
not adversely affect the legal rights under the Indenture of any such holder; or (h)
comply with requirements of

A-6

 

the Commission in order to maintain the qualification of the Indenture under the
TIA.

Without the consent of each holder (in addition to the consent of the holders of at
least a majority in aggregate principal amount of the then outstanding Notes), an
amendment, supplement or waiver may not: (a) reduce the percentage of aggregate
principal amount of Notes whose holders must consent to an amendment, supplement or
waiver; (b) reduce the rate of, or change the time for payment of, interest,
including defaulted interest, on any Note; (c) reduce the principal of or change the
stated maturity of any Note; (d) except as permitted pursuant to Section 9.1(a),
(d), (g) or (h) of the Indenture, alter the redemption or repurchase provisions of
any Note; (e) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on, the Notes (except a rescission of acceleration of
the Notes by the holders of at least a majority in aggregate principal amount of the
Notes then outstanding and a waiver of the payment default that resulted from such
acceleration); (f) make the principal of or premium or interest on, any Note payable
in money other than as provided for in the Indenture and in the Notes; (g) make any
change in the provisions of the Indenture relating to waivers of past Defaults or
Events of Default or the rights of holders of Notes to receive payments of principal
of or premium, interest on, the Notes; (h) waive a payment of the Redemption Price
or a Fundamental Change Payment with respect to any Notes; (i)except as permitted by
the Indenture (including Section 9.1(a)), increase the Conversion Price or modify
the provisions contained herein relating to conversion of the Notes in a manner
adverse to the holders thereof; or (j) make any change to the abilities of holders
of Notes to enforce their rights hereunder or the provisions of clauses (a) through
(i) above.

	 	11.  	Defaults and Remedies. An Event of Default with respect to any Notes
occurs if: (a) default in payment (whether or not such payment is prohibited by the
subordination provisions of the Indenture) of the principal of, or premium, if any, or
Fundamental Change Payment or Redemption Price with respect to the Notes, when due at
maturity, upon repurchase or redemption, upon acceleration or otherwise; (b) default
for 30 days or more in payment (whether or not such payment is prohibited by the
subordination provisions of the Indenture) of any installment of interest on the Notes;
(c) failure to provide timely notice of a Fundamental Change; (d) default by the
Company for 60 days or more after notice in the observance or performance of any other
covenants in the Indenture; (e) one or more defaults in the payment of principal of or
premium, if any, on any Indebtedness within any applicable grace period after the final
scheduled maturity thereof or the acceleration of any such Indebtedness by the holders
thereof because of a default if the total amount of such Indebtedness unpaid or
accelerated exceeds $100.0 million or its foreign currency equivalent and such failure
continues for 30 days; provided, that this clause (e) shall not apply to (A) any notice
of wind-down or any comparable notice to be given in connection with a Qualified
Securitization Transaction or (B) any wind-down, or comparable event, with respect to a
Qualified Securitization Transaction; (f) the Company or any of its Significant
Subsidiaries or group of subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its subsidiaries),

A-7

 

	 	   	would constitute a Significant Subsidiary fail to pay final judgments aggregating in
excess of $100.0 million (net of any amounts for which a reputable and creditworthy
insurance company is liable, unless such insurance company has disclaimed such liability
in writing), which judgments are not paid, discharged or stayed for a period of 60 days
following such judgments and none of such judgments has been discharged, waived or
stayed; or (g) certain events involving bankruptcy, insolvency or reorganization of the
Company. If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in aggregate principal amount of the then outstanding Notes may declare the
unpaid principal of, premium, if any, and accrued and unpaid interest on, all Notes then
outstanding to be due and payable immediately, except that in the case of an Event of
Default arising from certain events of bankruptcy, insolvency, or reorganization with
respect to the Company, all outstanding Notes become due and payable without further
action or notice. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may require security or indemnity satisfactory
to it before it enforces the Indenture or the Notes. Subject to certain limitations,
holders of at least a majority in aggregate principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from holders notice of any continuing Default (except a Default in payment of
principal, premium, if any, or interest) if it determines that withholding notice is in
their interests. The Company must furnish annual compliance certificates to the
Trustee.
	 
	 	12.  	Trustee Dealings with the Company. The Trustee or any of its
Affiliates, in their individual or any other capacities, may make or continue loans to,
accept deposits from and perform services for the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates as if it were not Trustee.
	 
	 	13.  	No Recourse Against Others. No director, officer, employee,
stockholder or Affiliate, as such, of the Company shall have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim based on,
in respect of or by reason of such obligations or their creation. Each holder by
accepting a Note waives and releases all such liability. The waiver and release are
part of the consideration for the Notes.
	 
	 	14.  	Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
	 
	 	15.  	Abbreviations. Customary abbreviations may be used in the name of a
holder or an assignee, such as: TEN CO = tenants in common, TEN ENT = tenants by the
entireties, JT TEN = joint tenants with right of survivorship and not as tenants in
common, CUST = Custodian and U/G/M/A = Uniform Gifts to Minors Act.
	 
	 	16.  	Conversion. Subject to and upon compliance with the provisions of the
Indenture, the registered holder of this Note has the right at any time on or before
the close of business on the last Trading Day prior to the Maturity Date (or in case
this Note or any portion hereof (a) is called for redemption before the close of
business on the last Trading Day prior to the Redemption Date (unless the Company
Defaults in payment

A-8

 

	 	  	of the Redemption Price in which case the conversion right will terminate at the close
of business on the date such Default is cured) or (b) is subject to a duly completed
election for repurchase, on or before 5:00 p.m., New York City time, on the last Trading
Day prior to the Fundamental Change Payment Date (unless the Company defaults in payment
due upon repurchase or such holder elects to withdraw the submission of such election to
repurchase) to convert the principal amount hereof, or any portion of such principal
amount which is $1,000 or integral multiples thereof, into that number of fully paid and
non-assessable shares of Common Stock obtained by dividing the principal amount of the
Note or portion thereof to be converted by the conversion price of $33.075 per share, as
adjusted from time to time as provided in the Indenture (the “Conversion Price”), upon
surrender of this Note to the Company at the office or agency maintained for such
purpose (and at such other offices or agencies designated for such purpose by the
Company), accompanied by written notice of conversion duly executed (and if the shares
of Common Stock to be issued on conversion are to be issued in any name other than that
of the registered holder of this Note by instruments of transfer, in form satisfactory
to the Company, duly executed by the registered holder or its duly authorized attorney)
and, in case such surrender shall be made during the period from the close of business
on the Regular Record Date immediately preceding any Interest Payment Date through the
close of business on the last Trading Day immediately preceding such Interest Payment
Date, also accompanied by payment, in funds acceptable to the Company, of an amount
equal to the interest otherwise payable on such Interest Payment Date on the principal
amount of this Note then being converted. Subject to the aforesaid requirement for a
payment in the event of conversion after the close of business on a Regular Record Date
immediately preceding an Interest Payment Date, no adjustment shall be made on
conversion for interest accrued hereon or for dividends on shares of Common Stock
delivered on conversion. The right to convert this Note is subject to the provisions of
the Indenture relating to conversion rights in the case of certain consolidations,
mergers or sales or transfers of substantially all the Company’s assets.

The Company
shall not issue fractional shares or scrip representing fractions of shares of Common Stock upon any such conversion, but shall pay cash in lieu of such
fractional shares in the manner described in the Indenture.

	 	17.  	Governing Law. The Indenture and the Notes will be governed by, and
construed in accordance with, the laws of the state of New York.

A-9

 

SCHEDULE OF INCREASES OR DECREASES

     The initial principal amount of this Global Security shall be $___. The following increases
or decreases in the principal amount of this Global Security have been made:

	 	 	 
	 	 	 	 	 	 	 	 	Principal Amount of	 	 	 
	 	 	Amount of increase	 	 	Amount of decrease	 	 	this Global	 	 	 
	 	 	in Principal Amount	 	 	in Principal Amount	 	 	Security following	 	 	Signature of
	 	 	of this Global	 	 	of this Global	 	 	such increase or	 	 	authorized officer
	Date of Exchange	 	Security	 	 	Security	 	 	decrease	 	 	of Trustee

A-10

 

FORM OF CONVERSION NOTICE

To: AGERE SYSTEMS INC.

     The undersigned beneficial owner of the Note hereby irrevocably exercises the option to
convert this Note, or portion hereof (which is $1,000 or integral multiples thereof) below
designated, into shares of Common Stock of Agere Systems Inc. in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and deliverable upon the
conversion, together with any check in payment for fractional shares and Notes representing any
unconverted principal amount hereof, be issued and delivered to the beneficial owner hereof unless
a different name has been indicated below. If shares or any portion of this Note not converted are
to be issued in the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. Any amount required to be paid by the undersigned on
account of interest and taxes accompanies this Note.

	 	 	 
	Dated:
	 	 
	Fill in for registration of shares if

	 	 
	to be delivered, and Notes if to be

	 	 
	issued, other than to and in the name

	 	 
	of the beneficial owner (Please Print):

	 	Signature(s)
	 	 	Principal amount to be converted
	(Name)	 	(if less than all):
	 	 	$___,000
	(Street Address)

	 	 
	 

	 	 
	 	 	Social Security or other Taxpayer
	(City, State and Zip Code)

	 	Identification Number
	Signature Guarantee:
	 	 
	 
	 	 

Signatures must be guaranteed by an eligible Guarantor Institution (banks, brokers, dealers,
savings and loan associations and credit unions) with membership in an approved signature guarantee
medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares are to be
issued, or Notes are to be delivered, other than to and in the name of the registered holder(s).

A-11

 

ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to

_______________________________________________________________________________________________________

(Insert assignee’s social security or tax I.D. no.)

_______________________________________________________________________________________________________

_______________________________________________________________________________________________________

_______________________________________________________________________________________________________

(Print or type assignee’s name, address and zip code)

and irrevocably appoint ____________________________________ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.

     Your
Signature:                    
                         
                         
                         
                         

          
                         (Sign exactly as your name appears on the other side of this Note)

     Date:
                    
          
                         

     Medallion
Signature Guarantee:                  
                         
                         
                         
                    

Your Signature:                      
                         
                         
                              
                              

                         
          (Sign exactly as your name appears on the other side of this Note)

Date: __________________________

Medallion Signature Guarantee: _________________________________

A-12

 

OPTION OF HOLDER TO ELECT REPURCHASE

     If you wish to have this Note repurchased by the Company pursuant to Section 4.6 of the
Indenture, check the Box:  ̈

     If you wish to have a portion of this Note purchased by the Company pursuant to Section 4.6 of
the Indenture, state the amount (in multiples of $1,000): $___.

Date: ________
           
Your
Signature:_________________________________________________________

(Sign
exactly as your name appears on the other side of 

this
Convertible Subordinated Note)

Medallion Signature Guarantee:________________________________________________

A-13

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