|1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


Article 1 - Background and Purpose


The purpose of the 1997
Lucent Long Term Incentive Plan For Agere Employees is to afford Employees of
Agere Systems Inc. (Agere) who held options under the Lucent
Technologies Inc. 1997 Long Term Incentive Plan (the Lucent Plan) at
the time of the Spin-off of Agere from Lucent Technologies Inc.
(Lucent), substantially the same rights and benefits of equity
ownership in their employer as they had prior to the Spin-off by providing those
Employees with the opportunity to acquire shares of Agere Common Stock upon
exercise of those options.


Except where the context
requires otherwise, the term Agere shall include all present and
future Subsidiaries of Agere.


Article 2 - Definitions


For the purposes of this
Plan, the following words shall have the meanings ascribed to them below:
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|(a) |  | Board
|--- |  | -----

| | The
Board of Directors of Agere.
| | --------------------------------

|(b) |  | Change
in Control
|--- |  | -----------------

| | The
happening of any of the following events:
| | ---------------------------------------------

| | (i)
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 Agere (the Outstanding Company Common
Stock) or (B) the combined voting power of the then outstanding voting securities of
Agere entitled to vote generally in the election of directors (the Outstanding
Company Voting Securities); excluding, however, the following: (1) any acquisition
directly from Agere, other than an acquisition by virtue of the exercise of a conversion
privilege unless the security so being converted was itself acquired directly from Agere,
(2) any acquisition by Agere, (3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by Agere or any corporation controlled by Agere, or (4) any
acquisition by any corporation pursuant to a transaction which complies with clauses (A),
(B) and (C) of subsection (iii) of this Article 2(b); or
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|1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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| | (ii)
A change in the composition of the Board such that the individuals who, as of the
effective date of the Plan, 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 effective
date of the Plan, whose election, or nomination for election by Agere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 14 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
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| | (iii)
The approval by the stockholders of Agere of a merger, reorganization or consolidation or
sale or other disposition of all or substantially all of the assets of Agere (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 beneficial owners,
respectively, of the Outstanding Company Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, 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, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a corporation or other
Person which as a result of such transaction owns Agere or all or substantially all of
Ageres assets either directly or through one or more subsidiaries (a Parent
Company)) in substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no Entity (other than
Agere, any employee benefit plan (or related trust) of Agere, 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 the directors unless such ownership resulted solely from
ownership of securities of Agere 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
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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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| | (iv)
The approval by the stockholders of Agere of a complete liquidation or dissolution of
Agere.
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|(c) |  | Change
in Control Price
|--- |  | -----------------------

| | 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 Corporate Transaction, the highest price per Share paid in such tender or
exchange offer or a Corporate Transaction, the highest price per Share paid in such tender
or exchange offer or Corporate Transaction. 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.
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|(d) |  | Code
|--- |  | ----

| | The
Internal Revenue Code of 1986, as amended.
| | ----------------------------------------------

|(e) |  | Committee
|--- |  | ---------

| | The
Corporate Governance and Compensation Committee (or any successor committee) of the Board.
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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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|(f) |  | Common
Stock
|--- |  | ------------

| | The
Class A common stock of Agere, par value $0.01 per share.
| | -------------------------------------------------------------

|(g) |  | Company
Action
|--- |  | --------------

| | A
force management program declared by Agere, a sale of a unit or portion of a unit, a
transfer of a Participant to a corporation, partnership, limited liability company or
other business entity in which Agere has an equity interest and which does not constitute
a Subsidiary or placement of the job function of a Participant with an outsourcing
contractor.
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|(h) |  | Delegate
|--- |  | --------

| | The
Employee Benefits Committee of Agere or any other person or committee authorized to
exercise specified authority under this Plan.
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|(i) |  | Disability
or Disabled
|--- |  | ----------------------

| | Termination
of employment under circumstances where the Employee qualifies for and receives payments
under a long-term disability pay plan maintained by Agere or as required by or available
under applicable local law.
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|(j) |  | Employee
|--- |  | --------

| | Any
employee of Agere, excluding leased employees within the meaning of Section 414(n) of the
Code.
| | ---------------------------------------------------------------------------------------------------

|(k) |  | Exchange
Act
|--- |  | ------------

| | The
Securities Exchange Act of 1934, as amended.
| | ------------------------------------------------

|(l) |  | Expiration
Date
|--- |  | ---------------

| | The
date specified in the Stock Option Agreement relating to the corresponding Lucent option
after which the right to exercise the Option expires.
| | --------------------------------------------------------------------------------------------------------------------------------------------------

|(m) |  | Reserved
|--- |  | --------

|(n) |  | Grant
Date
|--- |  | ----------

| | The
Grant Date shall be the original grant date of the corresponding option under the Lucent
Plan, as specified in the Stock Option Agreement.
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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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|(o) |  | Option
|--- |  | ------

| | An
option issued pursuant to the Plan in substitution for an option under the Lucent Plan.
| | ------------------------------------------------------------------------------------------

|(p) |  | Option
Price
|--- |  | ------------

| | The
purchase price per share of Common Stock under an Option as determined in Article 6 (c)
below.
| | --------------------------------------------------------------------------------------------------

|(q) |  | Participant
|--- |  | -----------

| | An
Employee of Agere to whom an Option is issued under the Plan.
| | ----------------------------------------------------------------

|(r) |  | Plan
|--- |  | ----

| | The
1997 Lucent Long Term Incentive Plan for Agere Employees.
| | -------------------------------------------------------------

|(s) |  | Retirement
|--- |  | ----------

| | Termination
of the employment of an Employee with Agere under circumstances where: (i) the Employee
is eligible to receive a retirement benefit under a pension plan or arrangement with
Agere; (ii) the Employees age at termination is at least 50 and the Employee has a
minimum of at least 15 years of service with Agere or a Susidiary, or (iii) the sum of
the Employees years of service with Agere (subject to the following sentence) and
attained age at termination equals or exceeds seventy five (75). In addition to a
Participants service with Agere, the Committee will recognize service with Lucent
(including service with other entities that would have been recognized under the Lucent
Plan) for purposes of determining eligibility to receive pension benefits and years of
service. Any determination with respect to these matters shall be made by the Committee
in its sole discretion.
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|(t) |  | Share
|--- |  | -----

| | A
share of Common Stock.
| | ------------------------

|(u) |  | Spin-off
|--- |  | --------

| | The
Spin-off of Agere from Lucent, effective June 1, 2002.
| | ----------------------------------------------------------

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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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|(v) |  | Stock
Option Agreement
|--- |  | ----------------------

| | The
written agreement provided to the Participant by Lucent, which evidenced the grant of an
option under the Lucent Plan and specifies the terms and conditions under which such
option was granted, including the Grant Date, number of Shares, and Expiration Date.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(w) |  | Subsidiary
|--- |  | ----------

| | A
subsidiary corporation of Agere as defined in Section 424(f) of the Code, an
entity in which Agere directly or indirectly owns 50% or more of the voting interests or
an entity in which Agere has a significant equity interest, as determined by the Board,
the Committee, or the Delegate.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Article 3 - Shares Available for Option


(a) There shall be
available for purchase under Options such number of Shares as are subject to
Options. No new options may be granted under the Plan and Shares subject to
Options which are forfeited, canceled, expired, or otherwise terminated without
the issuance of Shares shall not be available for the grant of Options.


(b) 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 Common Stock of Agere, such adjustments and
other substitutions shall be made to the Plan, and to Options as the Committee
in its sole discretion deems equitable or appropriate, including without
limitation: such adjustments in the aggregate number, class and kind of shares
or other consideration which may be delivered under the Plan, in the aggregate
or to any one Participant; in the number, class, kind and exercise price of
outstanding Options; and in the number, class and kind of shares subject to
Options (including, if the Committee deems appropriate, the substitution of
similar options to purchase the shares of, or other awards denominated in the
shares of, another company) provided, however, that the number of
shares or other securities subject to any Options shall always be a whole
number.


Article 4 - Administration


The Plan shall be
administered by the Committee. The Delegate may administer and interpret the
provisions of the Plan, promulgate rules and regulations under the Plan,
discharge the duties of the Committee under Articles 7 and 13, designate
employees to perform ministerial functions under this Plan and execute documents
on behalf of Agere.


The interpretations and
construction of any provision of the Plan by the Committee or Delegate, as well
as any factual determinations, shall be final, unless otherwise determined by
the Board. No member of the Board, the Committee or any Delegate shall be liable
for any action or determination made by him or her in good faith.


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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


Article 5 - Eligibility


Employees who, at the time
of the Spin-off, held outstanding options originally granted under the Lucent
Plan as of the Spin-off, received substitute Options to purchase Shares under
the Plan. No other awards will be granted under the Plan.


The adoption of this Plan
shall not be deemed to give any Employee any right to be granted an option to
purchase Common Stock of Agere, except and to the extent and upon such terms and
conditions as may be determined by the Committee.


Article 6 - Terms and Conditions of Option


Options are nonqualified
stock options. Each Option shall be subject to the following terms and
conditions:


(a) Grant of Option


Each Option shall be
governed by the corresponding Stock Option Agreement, with references to Lucent
being deemed references to Agere and references to the number of Shares and
exercise price being deemed to be such amounts as reflect the conversion of the
option at the time of the Spin-off.


(b) Number of Shares


Each Stock Option Agreement
states the total number of shares of Lucent common stock to which it pertains.
That number was adjusted as a result of the Spin-off to reflect the fact that
the Option is now exercisable for Common Stock.


(c) Option Price


The exercise price per
Share of Agere Common Stock shall be equal to the exercise price per share of
Lucent stock under the Lucent Plan as adjusted as a result of the Spin-off.


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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


(d) Option Period and Limitations on
Exercise of Options


Unless earlier canceled, or
as otherwise provided in Article 7, Options may be exercised no later than the
expiration of ten years from the Grant Date. No option shall be exercisable
prior to vesting.


(e) Exercise of Option


An Option shall be
exercised according to procedures established by the Committee and communicated
to Participants.


(f) Vesting of Option


Options shall vest on the
third anniversary of the Grant Date, except as otherwise provided in this Plan
or in any Stock Option Agreement.


Article 7 - Termination of Employment


Except as shall otherwise
be provided in a Stock Option Agreement, this Article 7 shall govern the right
of a Participant to exercise an outstanding Option following termination of
employment.


(a) Termination Other than for
Retirement, Disability, or Death


If the Participants
employment terminates for any reason other than Retirement, Disability or death,
then:


(1)
any exercisable portion of the Option which has not been exercised may be
exercised until the earlier of ninety days following termination of employment
and the Expiration Date.


(2)
any portion of the Option that has not become exercisable (the Unvested Portion)
shall be forfeited and canceled, except that:
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| | A.
if the Grant Date is before April 20, 2000 and the reason for the termination of
employment is a Company Action occurring on or after April 15, 1998, then the Unvested
Portion shall not be forfeited and canceled; instead, the Unvested Portion shall become
immediately exercisable upon termination for the period specified in clause (a)(1).
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| | B.
if the Grant Date is after April 19, 2000 and the reason for the termination of
employment is a Company Action, then the Company Action Vesting Portion shall not be
forfeited and canceled and instead shall become immediately exercisable upon termination
for the period specified in clause (a)(1). 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):
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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES
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| | 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,
D = the number of complete months between the Grant Date and the
date on which the Option was originally scheduled to become completely
exercisable, and
E = the number of Shares covered by the Option for which the Option
has already become exercisable (regardless of whether the Option has
been exercised with respect to such Shares).
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|(b) Retirement


Upon termination of
employment by reason of Retirement, any portion of a Participants Option
that is then outstanding shall, to the extent not then exercisable, be
immediately forfeited and canceled in its entirety. To the extent that an Option
is exercisable on the date of a Participants Retirement, the Option will
remain exercisable until the Expiration Date of the Option. Notwithstanding the
foregoing, if a Participants employment is terminated pursuant to a
Company Action under circumstances that also constitute Retirement for such
Participant, then the Company Action Vesting Portion (if the Grant Date was
after April 19, 2000), or the entire portion of the Option which is not then
exercisable (if the Grant Date was before April 20, 2000) shall not be forfeited
and shall become immediately exercisable until the Expiration Date.


(c) Disability


(1)
For any Option with a Grant Date on or before July 19, 2000, upon termination of
employment by reason of Disability, any portion of the Option that is then
outstanding shall, to the extent not then exercisable, be immediately forfeited
and canceled in its entirety. To the extent that the Option is exercisable on
the date of the Participants termination by reason of Disability, the
Option will remain exercisable until the Expiration Date.


(2)
For any Option with a Grant Date after July 19, 2000, upon termination of
employment by reason of Disability, the outstanding portion of such Option
shall, to the extent not then exercisable, become immediately exercisable in
full and the outstanding portion of the Option shall remain exercisable until
the Expiration Date.


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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


(d) Death


Upon the death of a
Participant, the outstanding portion of such Participants Option shall, to
the extent not then exercisable, become immediately exercisable in full and the
outstanding portion of the Option shall remain exercisable until the Expiration
Date.


(d) Waiver or Modification


The Committee may, in its
sole discretion, waive or modify the application of this Article 7 in the case
of any individual Participant.


Article 8 - Rights to Continued Employment


Neither this Plan nor any
Option shall be construed as giving any person the right to be retained in the
employ of Agere. No Employee or Participant shall have any claim to be granted
any Option under the Plan, and there is no obligation of uniformity of treatment
of Employees or Participants under the Plan. This Plan creates no ongoing
obligation of Agere to provide any future benefit of similar value.


Article 9 - Nonassignability


No Option shall be assigned
or transferred by the Participant otherwise than by will or by the laws of
descent and distribution, and such Option shall be exercisable, during the
Participants lifetime, only by the Participant.


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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


Article 10 - Change in Control Provisions
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|(a) |  | IMPACT OF
      EVENT. Notwithstanding any other provision of the Plan to the contrary,
      unless the Committee shall determine otherwise with respect to a particular
      Option, in the event of a Change in Control any Options 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 to the full extent of the original grant.

|(b) |  | CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of the Plan,
during the 60-day period from and after a Change in Control (the Exercise
Period), if the Committee shall determine, 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 Agere, to elect (within the Exercise Period) to
surrender all or part of the Option to Agere 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 this Article 10 (b) shall have been exercised.
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|Article 11 - Reservation of Shares


Agere, during the term of
this Plan, will at all times reserve and keep available, and will seek or obtain
from any regulatory body having jurisdiction any requisite authority necessary
to issue and to sell, the number of Shares that shall be sufficient to satisfy
the requirements of this Plan. The inability of Agere to obtain from any
regulatory body having jurisdiction the authority deemed necessary by counsel
for Agere for the lawful issuance and sale of Shares hereunder shall relieve
Agere of any liability in respect of the failure to issue or sell Shares as to
which the requisite authority has not been obtained.


Article 12- Taxes


Agere shall have the right
to condition the issuance or exercise of any Option on a Participants
payment of any applicable amounts required by a governmental agency to be
withheld from payment to the Participant or paid or deducted by Agere in
connection with an Option (withholding tax). Agere shall also have
the right to deduct any withholding tax from a Participants other
compensation or to make any other arrangements to satisfy withholding tax
obligations, including arrangements with one or more brokerage firms pursuant to
cashless exercise procedures. Agere shall further have the right to deduct from
any payment under an Option under the Plan or from a Participants other
compensation any tax or social insurance payment imposed on Agere in connection
with such Option.


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1997 LUCENT
LONG TERM INCENTIVE PLAN FOR AGERE EMPLOYEES


Article 13 - Employees Based Outside of the United States


Notwithstanding any
provision of the Plan to the contrary, in order to foster and promote
achievement of the purposes of the Plan or to comply with the provisions of laws
in other countries in which Agere or a Subsidiary operates or has Employees, the
Committee or its Delegate, in its sole discretion, shall have the power and
authority to (1) determine which Employees that are subject to the tax laws of
nations other than the United States are eligible to participate in the Plan,
(2) modify the terms and conditions of any Options issued to such Employees, and
(3) establish subplans, modified Option exercise procedures and other terms and
procedures to the extent such actions may be necessary or advisable. Any
subplans established under this Article 13 by the Committee shall be attached to
this Plan as Appendices.


Article 14 - Amendment of Plan


The Board may amend the
Plan at any time and from time to time. The Board may, at any time or from time
to time, suspend or terminate this Plan in whole or in part.


No such amendment,
suspension or termination of the Plan may, however, alter or impair any Option
without the written consent of the affected Participant.


Article 15 - Effective Date


The Plan shall become
effective as of June 1, 2002. The Plan shall terminate when no Options shall
remain outstanding.


Article 16 - Governing Law


The Plan, and the validity
and construction of any Options shall be governed by the laws of the State of
Delaware.


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