Exhibit 10.12

AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

As amended effective December 1, 2005

        SECTION 1. PURPOSE. The purposes of the Agere Systems Inc. 2001 Long
Term Incentive Plan (the “Plan”) are to encourage selected employees of the
Company and its Subsidiaries to acquire a proprietary and vested interest in the
growth and performance of the Company, to generate an increased incentive to
contribute to the Company’s future success and prosperity, thus enhancing the
value of the Company for the benefit of its stockholders, and to enhance the
ability of the Company and its Subsidiaries to attract and retain individuals of
exceptional talent upon whom, in large measure, the sustained progress, growth
and profitability of the Company depend.

        SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:

        (a)     “Award” means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share, Performance Unit, Dividend Equivalent, Other
Stock Unit Award, or any other right, interest, or option relating to Shares or
other securities of the Company granted pursuant to the provisions of the Plan.

        (b)     “Award Agreement” means any written or electronic agreement,
contract, or other instrument or document evidencing any Award granted by the
Committee hereunder.

        (c)     “Board” means the Board of Directors of the Company.

        (d)     “Cause” means (i) violation of the Company’s code of conduct;
(ii) conviction (including a plea of guilty or nolo contendere) of a felony or
any crime of theft, dishonesty or moral turpitude; or (iii) gross omission or
gross dereliction of any statutory or common law duty of loyalty to the Company.

        (e)     “Change in Control” means the happening of any of the following
events:

                    (1)      

An acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (an “Entity”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common stock of the Company
(the “Outstanding Company Common Stock”) or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
excluding, however, the following: (1) any acquisition directly from the

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

                              

Company, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself acquired directly
from the Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subsection (3) of this Section 2(e); or

                    (2)      

A change in the composition of the Board during any two year period such that
the individuals who, as of the beginning of such two year period, constitute the
Board (such Board shall be hereinafter referred to as the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that for purposes of this definition, any individual who becomes a
member of the Board subsequent to the beginning of the two year period, whose
election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such individual were a
member of the Incumbent Board; and provided further, however, that any such
individual whose initial assumption of office occurs as a result of or in
connection with a solicitation subject to Rule 14a-12(c) of Regulation 14A
promulgated under the Exchange Act or other actual or threatened solicitation of
proxies or consents by or on behalf of an Entity other than the Board shall not
be so considered as a member of the Incumbent Board; or

                    (3)      

The approval by the stockholders of the Company of a merger, reorganization or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (each, a “Corporate Transaction”) or, if consummation of
such Corporate Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental agency, the
obtaining of such consent (either explicitly or implicitly by consummation);
excluding however, such a Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are the beneficial owners
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 50% of the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation or other Person which as a result of such transaction owns the
Company or all or substantially all of the Company’s

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

                               

assets either directly or through one or more subsidiaries (a “Parent Company”))
in substantially the same proportions as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, (B) no Entity (other than the Company,
any employee benefit plan (or related trust) of the Company, such corporation
resulting from such Corporate Transaction or, if reference was made to equity
ownership of any Parent Company for purposes of determining whether clause (A)
above is satisfied in connection with the applicable Corporate Transaction, such
Parent Company) will beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding voting securities of such corporation entitled to vote generally in
the election of directors unless such ownership resulted solely from ownership
of securities of the Company prior to the Corporate Transaction, and (C)
individuals who were members of the Incumbent Board will immediately after the
consummation of the Corporate Transaction constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction (or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (A) above is satisfied
in connection with the applicable Corporate Transaction, of the Parent Company);
or

                    (4)      

The approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

        (f)     “Change in Control Price” means the higher of (A) the highest
reported sales price, regular way, of a Share in any transaction reported on the
New York Stock Exchange Composite Tape or other national exchange on which
Shares are listed or on NASDAQ during the 60-day period prior to and including
the date of a Change in Control or (B) if the Change in Control is the result of
a tender or exchange offer or a Corporate Transaction, the highest price per
Share paid in such tender or exchange offer or Corporate Transaction; provided
however, that in the case of Incentive Stock Options and Stock Appreciation
Rights relating to Incentive Stock Options, the Change in Control Price shall be
in all cases the Fair Market Value of a Share on the date such Incentive Stock
Option or Stock Appreciation Right is exercised or deemed exercised. To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other noncash consideration, the value
of such securities or other noncash consideration shall be determined in the
sole discretion of the Board.

        (g)    “Code” means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

        (h)     “Committee” means the Compensation Committee of the Board (or
any successor committee).

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

        (i)     “Company” means Agere Systems Inc., a Delaware corporation.

        (j)     “Company Action” means

                    (1)       a Company or Subsidiary declared force management
program,

                    (2)       the sale of a unit or portion of a unit,

                    (3)      

a Company or Subsidiary initiated transfer of a Participant to a corporation,
partnership, limited liability company or other business entity in which the
Company has an equity interest and which does not constitute a Subsidiary, or

                    (4)      

the placement of the job function of a Participant with an outsourcing
contractor.

        (k)     “Covered Employee” means a “covered employee” within the meaning
of Section 162(m)(3) of the Code.

        (l)     “Dividend Equivalent” means any right granted pursuant to
Section 14(g) hereof.

        (m)     “Effective Date” means the most recent date on which the Plan
was, or amendments to the Plan were, approved by the stockholders of the
Company.

        (n)     “Employee” means any employee of the Company or of any
Subsidiary. Unless otherwise determined by the Committee in its sole discretion,
for purposes of the Plan, an Employee shall be considered to have terminated
employment and to have ceased to be an Employee if his or her employer ceases to
be a Subsidiary, even if he or she continues to be employed by such employer.

        (o)     “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

        (p)     “Fair Market Value” means:

                     (i)      

with respect to Shares, the average of the highest and lowest reported sales
prices, regular way, of Shares in transactions reported on the New York Stock
Exchange on the date of determination of Fair Market Value, or if no sales of
Shares are reported on the New York Stock Exchange for that date, the comparable
average sales price for the last previous day for which sales were reported on
the New York Stock Exchange, and

                     (ii)      

with respect to any other property, the fair market value of such property
determined by such methods or procedures as shall be established from time to
time by the Committee.

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

        (q)     “Good Reason” means, with respect to a Participant, (i) the
assignment to the Participant by the Board or another representative of the
Company of duties which represent a material decrease in responsibility and are
materially inconsistent with the duties associated with the Participant’s
position, any reduction in the Participant’s job title, or a material negative
change in the level of employee to whom the Participant reports, or (ii) a
material negative change in the terms and conditions of the Participant’s
employment, including a reduction by the Company of the Participant’s annual
base salary or a material decrease in the Participant’s target opportunity for a
short term incentive award.

         (r)     “Incentive Stock Option” means an Option granted under Section
6 hereof that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.

        (s)     “Net Income” means the net income before taxes of the Company as
determined under generally accepted accounting principles, excluding (a)
extraordinary items; (b) cumulative effects of changes in accounting principles;
(c) securities gains and losses; (d) amortization or write-off of goodwill,
acquired intangibles, and purchased in-process research and development; and (e)
nonrecurring items including, but not limited to, gains or losses on asset
dispositions and sales of divisions, business units or subsidiaries,
restructuring and separation charges and gains and losses from qualified benefit
plan curtailments and settlements.

        (t)     “Nonstatutory Stock Option” means an Option granted under
Section 6 hereof that is not intended to be an Incentive Stock Option.

        (u)    “Officer” means any manager of the Company or any Subsidiary
holding a position above the executive level (E band) or any future salary grade
that is the equivalent thereof.

        (v)     “Option” means any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.

        (w)     “Other Stock Unit Award” means any right granted to a
Participant by the Committee pursuant to Section 10 hereof.

        (x)     “Participant” means an Employee who is selected by the Committee
to receive an Award under the Plan.

        (y)    “Performance Award” means any Award of Performance Shares or
Performance Units pursuant to Section 9 hereof.

        (z)     “Performance Period” means that period, established by the
Committee at the time any Performance Award is granted or at any time
thereafter, during which any performance goals specified by the Committee with
respect to such Award are to be measured.

        (aa)     “Performance Share” means any grant pursuant to Section 9
hereof of a unit valued by reference to a designated number of Shares, which
value may be paid to the Participant

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

by delivery of such property as the Committee shall determine, including,
without limitation, cash, Shares, or any combination thereof, upon achievement
of such performance goals during the Performance Period as the Committee shall
establish at the time of such grant or thereafter.

        (bb)    “Performance Unit” means any grant pursuant to Section 9 hereof
of a unit valued by reference to a designated amount of property other than
Shares, which value may be paid to the Participant by delivery of such property
as the Committee shall determine, including, without limitation, cash, Shares,
or any combination thereof, upon achievement of such performance goals during
the Performance Period as the Committee shall establish at the time of such
grant or thereafter.

        (cc)    “Person” means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, limited
liability company, other entity or government or political subdivision thereof.

        (dd)     “Restricted Stock” means any Share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such Share and with
such other restrictions as the Committee, in its sole discretion, may impose
(including, without limitation, any restriction on the right to vote such Share,
and the right to receive any cash dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.

        (ee)    “Restricted Stock Award” means an award of Restricted Stock
under Section 8 hereof.

        (ff)     “Shares” means shares of common stock of the Company.

        (gg)     “Stock Appreciation Right” means any right granted to a
Participant pursuant to Section 7 hereof to receive, upon exercise by the
Participant, the excess of (i) the Fair Market Value of one Share on the date of
exercise or, if the Committee shall so determine in the case of any such right
other than one related to any Incentive Stock Option, at any time during a
specified period before the date of exercise over (ii) the grant price of the
right on the date of grant, or if granted in connection with an outstanding
Option on the date of grant of the related Option, as specified by the Committee
in its sole discretion, which shall not be less than the Fair Market Value of
one Share on such date of grant of the right or the related Option, as the case
may be. Any payment by the Company in respect of such right may be made in cash,
Shares, other property, or any combination thereof, as the Committee, in its
sole discretion, shall determine.

        (hh)    “Subsidiary” means a “subsidiary corporation” of the Company as
defined in Section 424(f) of the Code, an entity in which the Company directly
or indirectly owns 50% or more of the voting interests or an entity in which the
Company has a significant equity interest, as determined by the Board or the
Committee.

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

        SECTION 3. ADMINISTRATION. The Plan shall be administered by the
Committee. The Committee shall have full power and authority, subject to such
resolutions not inconsistent with the provisions of the Plan as may from time to
time be adopted by the Board, to: (i) select the Employees of the Company and
its Subsidiaries to whom Awards may from time to time be granted hereunder; (ii)
determine the type or types of Award to be granted to each Participant
hereunder; (iii) determine the number of Shares to be covered by each Award
granted hereunder; (iv) determine the terms and conditions, not inconsistent
with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in
cash, Shares or other property or canceled or suspended; (vi) determine whether,
to what extent and under what circumstances cash, Shares and other property and
other amounts payable with respect to an Award under this Plan shall be deferred
either automatically or at the election of the Participant; (vii) interpret and
administer the Plan and any instrument or agreement entered into under the Plan;
(viii) establish such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for administration of the Plan. Decisions of the Committee shall be
final, conclusive and binding upon all Persons, including the Company, any
Participant, any stockholder, and any employee of the Company or of any
Subsidiary.

      SECTION 4. SHARES SUBJECT TO THE PLAN.

        (a)     Subject to adjustment as provided in Section 4(c), the total
number of Shares available for Awards granted under the Plan after the Effective
Date shall be 18 million Shares plus the number of Shares remaining available
for Awards under the Plan immediately prior to the Effective Date. The number of
Shares subject to Awards that are granted in substitution or replacement of
options or other awards issued by an entity acquired by (or whose assets are
acquired by) the Company shall not reduce the number of Shares available under
the Plan. To the extent that Shares subject to an Award granted hereunder
(including any Award granted prior to the Effective Date) are not issued or
delivered by reason of the (A) expiration, termination, cancellation, settlement
in cash or forfeiture of such Award, or (B) withholding of Shares to satisfy all
or part of the tax withholding obligations related to the Award, then those
Shares shall again be available for Awards under the Plan. Any Shares issued or
delivered hereunder may consist, in whole or in part, of authorized and unissued
Shares, treasury Shares, Shares purchased in the open market or otherwise or any
combination thereof, as the Board or the Treasurer of the Company may from time
to time determine.

        (b)    No more than 4 million Shares shall be available for the grant of
Incentive Stock Options under the Plan after the Effective Date and no Incentive
Stock Option may be granted under the Plan more than 10 years after the
Effective Date. No more than 4 million Shares shall be available for the grant
of Awards in the form of Stock Appreciation Rights pursuant to Section 7
(excluding for this purpose any Stock Appreciation Right granted in relation to
an Incentive Stock Option or a Nonstatutory Stock Option), Restricted Stock
pursuant to Section 8, Performance Shares pursuant to Section 9, and Other Stock
Unit Awards pursuant to Section 10 that are valued by reference to Shares after
the Effective Date. No Participant may be granted

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

Awards with respect to more than 1 million Shares in the aggregate in any
three-year period after the Effective Date.

        (c)     In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, reverse stock split, spin-off or
similar transaction or other change in corporate structure affecting the Shares,
such adjustments and other substitutions shall be made to the Plan and to Awards
as the Committee in its sole discretion deems equitable or appropriate,
including without limitation such adjustments (i) in the aggregate number, class
and kind of shares which may be delivered under the Plan, in the aggregate or to
any one Participant, (ii) in the number, class, kind and option or exercise
price of shares subject to outstanding Options, Stock Appreciation Rights or
other Awards granted under the Plan, (iii) in the number, class and kind of
shares subject to Awards granted under the Plan (including, if the Committee
deems appropriate, the substitution of similar options to purchase the shares
of, or other awards denominated in the shares of, another company) and (iv) to
the limitations in Section 4(b), as the Committee may determine to be
appropriate in its sole discretion, provided that the number of Shares or other
securities subject to any Award shall always be a whole number.

        SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the
Committee) shall be eligible to be selected as a Participant.

        SECTION 6. STOCK OPTIONS. Options may be granted hereunder to
Participants either alone or in addition to other Awards granted under the Plan.
Options may be granted for no consideration or for such consideration as the
Committee may determine. Any Option granted under the Plan shall be evidenced by
an Award Agreement in such form as the Committee may from time to time approve.
Options shall be subject to the following terms and conditions and to such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall deem desirable:

        (a)    OPTION PRICE. The exercise price per Share under an Option shall
be determined by the Committee in its sole discretion; provided that such
purchase price shall not be less than the Fair Market Value of a Share on the
date of the grant of the Option.

        (b)    OPTION PERIOD. The term of each Option shall be fixed by the
Committee in its sole discretion; provided that no Option shall be exercisable
after the expiration of ten years from the date the Option is granted.

        (c)    EXERCISABILITY. Options shall be exercisable at such time or
times as determined by the Committee at or subsequent to grant. Unless otherwise
determined by the Committee at or subsequent to grant, no Incentive Stock Option
shall be exercisable during the year ending on the day before the first
anniversary of the date the Incentive Stock Option is granted.

        (d)    METHOD OF EXERCISE. Subject to the other provisions of the Plan
and any applicable Award Agreement, any Option may be exercised by the
Participant in whole or in part at such time or times, and the Participant may
make payment of the option price in such form or

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

forms, including, without limitation, payment by delivery of cash, Shares or
other consideration having a Fair Market Value on the exercise date equal to the
total option price, or by any combination of cash, Shares and other
consideration as the Committee may specify in the applicable Award Agreement.

        (e)    INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
established by the Committee, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options
held by any Participant which are exercisable for the first time by such
Participant during any calendar year under the Plan (and under any other benefit
plans of the Company or of any parent or subsidiary corporation of the Company)
shall not exceed $100,000 or, if different, the maximum limitation in effect at
the time of grant under Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. The terms of any Incentive Stock Option
granted hereunder shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision, and any regulations promulgated
thereunder.

        (f)    FORM OF SETTLEMENT. In its sole discretion, the Committee may
provide, at the time of grant, that the shares to be issued upon an Option’s
exercise shall be in the form of Restricted Stock or other similar securities,
or may reserve the right so to provide after the time of grant.

        (g)     COMPANY ACTION. Unless otherwise provided in the applicable
Award Agreement, if a Participant’s employment terminates by reason of a Company
Action, then the Company Action Vesting Portion of any Option held by that
Participant shall not be forfeited and canceled and instead shall become
immediately exercisable upon termination until the earlier of ninety days
following termination of employment and the original expiration date of the
Option. “Company Action Vesting Portion” is determined as of the date of
termination of employment and shall be the portion of the Option computed as
follows (but not less than zero):

Company Action Vesting Portion = N x M/D - E

      where:

                     N = the number of shares originally subject to the Option,
M = the number of complete months elapsed since the grant date of the Option,
D = the number of complete months between the grant date of the Option and the
date on which the Option was originally scheduled to become completely
exercisable, and
E = the number of Shares covered by the Option for which the Option has already
become exercisable (regardless of whether the Option has been exercised with
respect to such Shares).

        SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

of Stock Appreciation Rights need not be the same with respect to each
recipient. Any Stock Appreciation Right related to a Nonstatutory Stock Option
may be granted at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option. Any Stock Appreciation Right
related to an Incentive Stock Option must be granted at the same time such
Option is granted. In the case of any Stock Appreciation Right related to any
Option, the Stock Appreciation Right or applicable portion thereof shall
terminate and no longer be exercisable upon the termination or exercise of the
related Option, except that a Stock Appreciation Right granted with respect to
less than the full number of Shares covered by a related Option shall not be
reduced until the exercise or termination of the related Option exceeds the
number of Shares not covered by the Stock Appreciation Right. Any Option related
to any Stock Appreciation Right shall no longer be exercisable to the extent the
related Stock Appreciation Right has been exercised. The Committee may impose
such conditions or restrictions on the exercise of any Stock Appreciation Right
as it shall deem appropriate.

        SECTION 8. RESTRICTED STOCK. Restricted Stock Awards may be issued
hereunder to Participants, for no cash consideration or for such minimum
consideration as may be required by applicable law, either alone or in addition
to other Awards granted under the Plan. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient. Any Restricted Stock
Award issued hereunder may be evidenced in such manner as the Committee in its
sole discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of a Restricted Stock
Award, such certificate shall be registered in the name of the Participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. Except as otherwise determined by the
Committee, upon termination of employment for any reason during the restriction
period, any portion of a Restricted Stock Award still subject to restriction
shall be forfeited by the Participant and reacquired by the Company.

        SECTION 9. PERFORMANCE AWARDS. Performance Awards in the form of
Performance Units or Performance Shares may be issued hereunder to Participants,
for no cash consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards granted under the
Plan. The performance criteria to be achieved during any Performance Period and
the length of the Performance Period shall be determined by the Committee upon
the grant of each Performance Award or at any time thereafter. Except as
provided in Section 11, Performance Awards will be distributed only after the
end of the relevant Performance Period. Performance Awards may be paid in cash,
Shares, other property or any combination thereof, in the sole discretion of the
Committee at the time of payment. The performance levels to be achieved for each
Performance Period and the amount of the Award to be distributed shall be
conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period.

        SECTION 10. OTHER STOCK UNIT AWARDS. Other Awards of Shares and other
Awards that are valued in whole or in part by reference to, or are otherwise
based on, Shares or other property (“Other Stock Unit Awards”) may be granted
hereunder to Participants, either

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

alone or in addition to other Awards granted under the Plan. Other Stock Unit
Awards may be paid in Shares, other securities of the Company, cash or any other
form of property as the Committee shall determine. Shares (including securities
convertible into Shares) granted under this Section 10 may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law. Shares (including securities convertible into Shares) purchased pursuant to
a purchase right awarded under this Section 10 shall be purchased for such
consideration as the Committee shall in its sole discretion determine, which
shall not be less than the Fair Market Value of such Shares or other securities
as of the date such purchase right is awarded. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to determine the
Employees of the Company and its Subsidiaries to whom and the time or times at
which such Awards shall be made, the number of Shares to be granted pursuant to
such Awards, and all other conditions of the Awards. The provisions of Other
Stock Unit Awards need not be the same with respect to each recipient.

        SECTION 11. CHANGE IN CONTROL PROVISIONS.

        (a)    IMPACT OF EVENT. (i) Notwithstanding any other provision of the
Plan to the contrary, but subject to Section 11(a)(ii), unless the Committee
shall determine otherwise at the time of grant with respect to a particular
Award, in the event of a Change in Control:

        (1)     

Any Options and Stock Appreciation Rights outstanding as of the date such Change
in Control is determined to have occurred, and which are not then exercisable
and vested, shall become fully exercisable and vested.

        (2)     

The restrictions and deferral limitations applicable to any Restricted Stock
Awards shall lapse, and such Restricted Stock Awards shall become free of all
restrictions and limitations and become fully vested and transferable.

        (3)     

All Performance Awards shall be considered to be earned and payable in full, and
any deferral or other restriction shall lapse and such Performance Awards shall
be immediately settled or distributed.

        (4)     

The restrictions and deferral limitations and other conditions applicable to any
Other Stock Unit Awards or any other Awards shall lapse, and such Other Stock
Unit Awards or such other Awards shall become free of all restrictions,
limitations or conditions and become fully vested and transferable and, to the
extent applicable, be immediately settled or distributed.

        (ii)    This Section 11(a)(ii), and not Section 11(a)(i) shall apply to
Awards granted after February 21, 2002.

        (1)     

If the Company is not the surviving Person following a Change in Control, and
the surviving Person or the acquiring Person (the surviving or acquiring Person
being the “Acquiror”) does not assume the outstanding Awards or does not
substitute equivalent equity awards relating to the securities of the Acquiror
or its Affiliates

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

                 

for outstanding Awards, then all such Awards shall become immediately and fully
exercisable (or in the case of Restricted Stock Awards, Performance Awards or
Other Stock Unit Awards, fully vested and all restrictions will immediately
lapse). In addition, the Committee may in its sole discretion, provide for a
cash payment to be made to each Participant upon consummation of the Change in
Control for the outstanding Awards held by such Participant, determined on the
basis of the value that would be received in such Change in Control by the
holders of the Company’s securities relating to such Awards. Notwithstanding the
foregoing, any Option intended to be an Incentive Stock Option shall be adjusted
in a manner to preserve such status.

        (2)     

If the Company is the surviving Person following a Change in Control, or the
Acquiror assumes the outstanding Awards or substitutes equivalent equity awards
relating to the securities of the Acquiror or its Affiliates for such Awards,
then all such Awards or such substitutes therefore shall remain outstanding and
be governed by their respective terms and the provisions of the Plan.

        (3)     

If (A) the employment of a Participant with the Company is terminated (1) other
than for Cause or (2) by the Participant for Good Reason, in either case within
24 months following a Change in Control, and (B) the Company is the surviving
Person following the Change in Control, or the Acquiror assumes the outstanding
Awards or substitutes equivalent equity awards relating to the securities of the
Acquiror or its Affiliates for such Awards, then all Awards held by such
Participant shall become immediately and fully exercisable (or in the case of
Restricted Stock Awards, Performance Awards or Other Stock Unit Awards, fully
vested and all restrictions will immediately lapse).

        (b)    CHANGE IN CONTROL CASH-OUT. (i) Notwithstanding any other
provision of the Plan (other than Section 11(b)(ii)), during the 60-day period
from and after a Change in Control (the “Exercise Period”), if the Committee
shall determine at, or at any time after, the time of grant, a Participant
holding an Option shall have the right, whether or not the Option is fully
exercisable and in lieu of the payment of the purchase price for the Shares
being purchased under the Option and by giving notice to the Company, to elect
(within the Exercise Period) to surrender all or part of the Option to the
Company and to receive cash, within 30 days of such notice, in an amount equal
to the amount by which the Change in Control Price per Share on the date of such
election shall exceed the purchase price per Share under the Option (the
“Spread”) multiplied by the number of Shares granted under the Option as to
which the right granted under this Section 11(b) shall have been exercised.

        (ii)     This Section 11(b)(ii), rather than Section 11(b)(i), shall
apply to Options granted after February 21, 2002. Following a Change in Control,
the Committee may cancel all outstanding Options and in lieu thereof, provide
for the payment to each holder of an outstanding Option, whether or not such
Option was then exercisable, of an amount equal to the amount by which the
Change in Control Price per Share on the date of the Change in Control shall
exceed

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

the purchase price per Share under the Option multiplied by the number of Shares
subject to such Option.

      SECTION 12. CODE SECTION 162(m) PROVISIONS.

        (a)     Notwithstanding any other provision of this Plan, if the
Committee determines at the time Restricted Stock, a Performance Award or an
Other Stock Unit Award is granted to a Participant that such Participant is, or
may be as of the end of the tax year for which the Company would claim a tax
deduction in connection with such Award, a Covered Employee, then the Committee
may provide that this Section 12 is applicable to such Award under such terms as
the Committee shall determine.

        (b)     If an Award is subject to this Section 12, then the lapsing of
restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the Company having a level
of Net Income for such period of time as is determined by the Committee, such
level of Net Income to be set by the Committee within the time prescribed by
Section 162(m) of the Code or the regulations thereunder in order for the level
to be considered “pre-established”. The Committee may, in its discretion, reduce
the amount of any Performance Award or Other Stock Unit Award subject to this
Section 12 at any time prior to payment based on such criteria as it shall
determine, including but not limited to individual merit and the attainment of
specified levels of one or any combination of the following: net cash provided
by operating activities, earnings per Share from continuing operations,
operating income, revenues, gross margin, return on operating assets, return on
equity, economic value added, stock price appreciation, total stockholder return
(measured in terms of stock price appreciation and dividend growth), or cost
control, of the Company or the Subsidiary or division of the Company for or
within which the Participant is primarily employed.

        (c)     Notwithstanding any contrary provision of the Plan other than
Section 11, the Committee may not adjust upwards the amount payable pursuant to
any Award subject to this Section 12, nor may it waive the achievement of the
Net Income requirement contained in Section 12(b), except in the case of the
death or disability of a Participant.

        (d)     Prior to the payment of any Award subject to this Section 12,
the Committee shall certify in writing that the Net Income requirement
applicable to such Award was met.

        (e)     The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 12 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
“performance-based compensation” within the meaning of Section 162(m)(4)(C) of
the Code, the regulations promulgated thereunder, and any successors thereto.

        SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of an optionee or Participant under an Award
theretofore granted,

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

without the optionee’s or Participant’s consent, or that without the approval of
the stockholders would:

        (a)     except as is provided in Section 4(c) of the Plan, increase the
total number of shares reserved for the purpose of the Plan; or

        (b)     change the employees or class of employees eligible to
participate in the Plan.

The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his consent.

      SECTION 14. GENERAL PROVISIONS.

        (a)    Unless the Committee determines otherwise at the time the Award
is granted, no Award, and no Shares subject to Awards described in Section 10
which have not been issued or as to which any applicable restriction,
performance or deferral period has not lapsed, may be sold, assigned,
transferred, pledged or otherwise encumbered, except by will or by the laws of
descent and distribution and all Awards shall be exercisable, during the
Participant’s lifetime, only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative; provided
that, if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary to exercise the rights of
the Participant with respect to any Award upon the death of the Participant.

        (b)    The term of each Award shall be for such period of months or
years from the date of its grant as may be determined by the Committee; provided
that in no event shall the term of any Incentive Stock Option or any Stock
Appreciation Right related to any Incentive Stock Option exceed a period of ten
(10) years from the date of its grant.

        (c)    No Employee or Participant shall have any claim to be granted any
Award under the Plan and there is no obligation for uniformity of treatment of
Employees or Participants under the Plan.

        (d)    The prospective recipient of any Award under the Plan shall not,
with respect to such Award, be deemed to have become a Participant, or to have
any rights with respect to such Award, unless and until

        (1)     

if required by the Committee, such recipient shall have executed or accepted
pursuant to procedures established by the Committee, a written or electronic
agreement or other instrument evidencing the Award and delivered a fully
executed copy of any written agreement or other instrument to the Company, and

        (2)     

such recipient shall have otherwise complied with the then applicable terms and
conditions.

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

        (e)    Except as provided in Section 12, the Committee shall be
authorized to make adjustments in Performance Award criteria or in the terms and
conditions of other Awards in recognition of unusual or nonrecurring events
affecting the Company or its financial statements, or changes in applicable
laws, regulations or accounting principles. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award in the manner and to the extent it shall deem desirable.

        (f)    All certificates for Shares delivered under the Plan pursuant to
any Award shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

        (g)    Subject to the provisions of this Plan and any Award Agreement,
the recipient of an Award (including, without limitation, any deferred Award)
may, if so determined by the Committee, be entitled to receive, currently or on
a deferred basis, interest or dividends, or interest or dividend equivalents,
with respect to the number of Shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested.

        (h)    Except as otherwise required in any applicable Award Agreement or
by the terms of the Plan, recipients of Awards under the Plan shall not be
required to make any payment or provide consideration other than the rendering
of services.

        (i)    To the extent permitted by law, the Committee may delegate to one
or more directors of the Company (who need not be members of the Committee) the
right to grant Awards to Employees who are not officers of the Company for
purposes of Section 16 of the Exchange Act or directors of the Company and may
delegate to any Officer its other authority hereunder, including the authority
to amend, administer, interpret, waive conditions with respect to, cancel or
suspend Awards to Employees who are not such officers.

        (j)    The Committee is authorized to establish procedures pursuant to
which the payment of any Award may be deferred, including any gain upon exercise
of an Option.

    (k)    The maximum value of the property, including cash, that may be paid
or distributed to any Participant pursuant to grants of Performance Units and/or
Other Stock Unit Awards that are valued with reference to property other than
Shares made in any one calendar year is $9 million.

        (l)    The Company is authorized to withhold from any Award granted or
payment due under the Plan the amount of withholding taxes due in respect of an
Award or payment hereunder and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes. The Committee shall be authorized to establish

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AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

procedures for election by Participants to satisfy such withholding taxes by
delivery of, or directing the Company to retain, Shares.

        (m)    Nothing contained in this Plan shall prevent the Board of
Directors from adopting other or additional compensation or equity arrangements,
and such arrangements may be either generally applicable or applicable only in
specific cases.

        (n)    The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with the
laws of the State of Delaware and applicable Federal law.

        (o)    If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.

        (p)    Awards may be granted to Employees who are foreign nationals or
employed outside the United States, or both, on such terms and conditions
different from those specified in the Plan as may, in the judgment of the
Committee, be necessary or desirable in order to recognize differences in local
law or tax policy. The Committee also may impose conditions on the exercise or
vesting of Awards in order to minimize the Company’s obligation with respect to
tax equalization for Employees on assignments outside their home country.

        SECTION 15. EFFECTIVE DATE AND DURATION OF PLAN. The Plan originally
became effective on March 27, 2001, and shall expire when Shares are no longer
available for the grant, exercise or settlement of Awards, unless the Board
terminates the Plan earlier.

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