1                                                               (10) (iii) (A)4

                            LUCENT TECHNOLOGIES INC.
                           DEFERRED COMPENSATION PLAN

                           Revised through May 8, 1998

PREAMBLE

Effective October 1, 1996, Lucent Technologies Inc. (the "Company") established
the Lucent Technologies Inc. Officer Incentive Award Deferral Plan and the
Lucent Technologies Inc. Deferred Compensation Plan for Non-Employee Directors,
each of which was merged into the Lucent Technologies Inc. Deferred Compensation
Plan (the "Plan") in July 1997. The Plan is intended to constitute an unfunded,
deferred compensation plan maintained primarily for a select group of management
or highly compensated employees and for members of the Board of Directors who
are not employees of the Company. The purpose of the Plan is to provide a means
by which eligible employees and non-employee Directors may defer the receipt of
certain forms of compensation while at the same time giving the Company the
present use of the compensation so deferred. The Plan is intended to be an
employee pension benefit plan within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not a qualified
plan under Section 401(a) of the Internal Revenue Code of 1986, as amended.
Benefits under the Plan are paid directly by the Company out of its general
assets when due.

<PAGE> 

2                                                               (10) (iii) (A)4

SECTION 1.     DEFINITIONS.

As used in the Plan, the following terms shall have the meanings set forth
below:

(a) "1996 Program" shall mean the Lucent Technologies Inc. 1996 Long Term
Incentive Program.

(b) "Account" shall mean, for each Participant, such Participant's Deferred Cash
Equivalent Account and Deferred Share Equivalent Account.

(c) "Administrator" shall mean the Senior Vice President - Human Resources of
the Company.

(d) "Affiliate" shall mean (i) any Person that directly, or through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company or (ii) any entity in which the Company has a significant equity
interest, as determined by the Committee.

(e) "Beneficiary Election" shall mean a written instrument, in a form prescribed
by the Administrator, relating to elections under Section 5.

(f) "Board" shall mean the Board of Directors of the Company.

(g) "Change in Control" shall mean 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 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 1(g); or

 <PAGE> 

3                                                               (10) (iii) (A)4

                (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 shareowners,
                        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 either an actual or
                        threatened election contest (as such terms are used in
                        Rule 14a-11 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 shareowners 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 shareowners, 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 60%
                        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 imitation, a
                        corporation or other Person which as a result of such
                        transaction owns the Company or all or substantially all
                        of the Company's assets either directly or through one
                        or more subsidiaries (a "Parent Company")) in
                        substantially the same proportions as their ownership,
                        immediately prior to such Corporate Transaction, of the
                        Outstanding Company Common Stock and Outstanding Company
                        Voting Securities, (B) no Entity (other than the
                        Company, any employee benefit plan (or related trust) of
                        the Company, such corporation resulting from such
                        Corporate Transaction or, if reference was made to
                        equity ownership of any Parent Company for purposes of
                        determining whether clause (A) above is satisfied in
                        connection with the applicable Corporate Transaction,
                        such Parent Company) will beneficially own, directly or
                        indirectly, 20% or more of 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

<PAGE> 

4                                                                (10) (iii) (A)4

                        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 shareowners of the Company of a
                        complete liquidation or dissolution of the Company.

         (h) "Change in Control Election" shall mean a written instrument, in a
form prescribed by the Administrator, relating to elections under Section 7.

         (i) "Code" shall mean the Internal Revenue Code of 1986, as amended.

         (j) "Committee" shall mean the Corporate Governance and Compensation
Committee of the Board (or any successor committee).

         (k) "Company" shall mean Lucent Technologies Inc.

         (l) "Deferral Election" shall mean a written election, in a form
prescribed by the Administrator, to defer receipt of Incentive Awards, Retainer
Payments or salary otherwise payable to a Participant.

         (m) "Deferred Cash Equivalent Account" shall mean a book-entry account
in the name of a Participant maintained in the Company's records with entries
denominated in dollars.

         (n) "Deferred Share Equivalent Account" shall mean a book-entry account
in the name of a Participant maintained in the Company's records with entries
denominated in Share equivalents.

         (o) "Director" shall mean any non-employee member of the Board.

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

         (q) "Eligible Member" shall mean an Officer, a Director, Other
Participant or a participant in either Predecessor Plan or another person who is
designated by the Administrator as an Eligible Member.

         (r) "Fiscal Year" shall mean the period commencing October 1 and ending
on the next succeeding September 30, or such other period as the Company may
from time to time adopt as its fiscal year.

         (s) "Incentive Award" shall mean any award under the Short Term Plan,
any other bonus payment, any performance awards, stock unit awards or other
awards under the 1996 Program (other than options) and any dividend equivalent
payment under the 1996 Program.

         (t) "NYSE" shall mean the New York Stock Exchange, Inc.

         (u) "Officer" shall mean any employee of the Company or any of its
Affiliates holding a position evaluated or classified above the executive
("E-band") level or its equivalent, and identified in the Company's records as
an officer of the Company (including an Officer who was a participant in any
Predecessor Plan).

<PAGE> 

5                                                                (10) (iii) (A)4

         (v) "Other Participant" shall mean any employee of the Company or any
of its Affiliates (1) holding a position evaluated or classified at or above the
"D-Band" level or its equivalent, and identified in the Company's records as
affected by the limitations on covered compensation described in Section
401(a)(17) of the Code or the limitations on benefits described in Section 415
of the Code or who has an Account with a positive balance, or (2) holding a
position evaluated or classified at or above the "E-Band" level or its
equivalent, in either case, only if the Administrator determines that such group
of employees shall be eligible to participate in the Plan.

         (w) "Participant" shall mean an Eligible Member who delivers a Deferral
Election to the Company or who receives a Savings Plan Make-Up Credit. A person
shall not cease being a Participant if the person ceases being an Eligible
Member, if the person has an Account with a positive balance.

         (x) "Participating Company" shall mean the Company and any of its
Affiliates.

         (y) "Payment Election" shall have the meaning set forth in Section
6(a).

         (z) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, limited
liability company, other entity or government or political subdivision thereof.

         (aa) "Plan" shall mean this Lucent Technologies Inc. Deferred
Compensation Plan. (bb) "Plan Year" shall mean each twelve (12) consecutive
month period commencing January 1 and ending on December 31 of the same calendar
year.

         (cc) "Potential Change in Control" shall mean:

                (1)     the commencement of a tender or exchange offer by any
                        third person which, if consummated, would result in a
                        Change in Control;

                (2)     the execution of an agreement by the Company, the
                        consummation of which would result in the occurrence of
                        a Change in Control;

                (3)     the public announcement by any person (including the
                        Company) of an intention to take or to consider taking
                        actions which if consummated would constitute a Change
                        in Control other than through a contested election for
                        directors of the Company; or

                (4)     the adoption by the Board, as a result of other
                        circumstances, including, without limitation,
                        circumstances similar or related to the foregoing, of a
                        resolution to the effect that a Potential Change in
                        Control has occurred.

A Potential Change in Control shall be deemed to be pending until the earliest
of (i) the second anniversary thereof, (ii) the occurrence of a Change in
Control and (iii) the occurrence of a subsequent Potential Change in Control.

         (dd) "Predecessor Plans" shall mean the Lucent Technologies Inc.
Officer Incentive Award Deferral Plan and the Lucent Technologies Inc. Deferred
Compensation Plan for Non-Employee Directors.

         (ee) "Retainer Payments" shall mean any amounts payable to a Director
for service as a Director.

         (ff) "Savings Plan" shall mean the Lucent Technologies Inc. Long Term
Savings Plan for Management Employees.

<PAGE>

6                                                               (10) (iii) (A)4

         (gg) "Savings Plan Make-Up Credit" shall mean, for any Eligible Member
and any Plan Year, an amount equal to the excess, if any, of the value of the
contribution that would have been made by the Company for the applicable Plan
Year on behalf of the Eligible Member under Section 4.4 of the Savings Plan
(based upon the Pay Reduction Agreement (as defined in the Savings Plan) made by
the Eligible Member pursuant to Section 4.5(a) of the Savings Plan) or any
similar provision under any similar plan of the Company, without regard to any
limitation imposed by Sections 401(a)(17), 401(m)(2)(A) or 415 of the Code, over
the contribution actually made to the Savings Plan pursuant to such Section 4.4,
or to such other plan pursuant to such similar provision, for the applicable
Plan Year.

         (hh) "Shares" shall mean the shares of common stock, $.01 par value, of
the Company.

         (ii) "Short Term Plan" shall mean the Lucent Technologies Inc. Short
Term Incentive Plan.

         SECTION 2.    DEFERRAL ELECTIONS.

         (a) DELIVERY AND EFFECTIVENESS OF DEFERRAL ELECTIONS. A Participant may
elect to defer receipt of Incentive Awards, Retainer Payments or salary
otherwise payable to the Participant in future Fiscal Years by delivering a
Deferral Election to the Participant's employing Participating Company not later
than June 30 preceding the Fiscal Year in which the Deferral Election is to
become effective or such other time as the Administrator shall determine. A
Deferral Election shall become irrevocable for a Fiscal Year at the end of the
last day of the preceding Fiscal Year or, if later, on the date made. A deferral
election under a Predecessor Plan that has not been terminated shall be deemed a
Deferral Election for purposes of the Plan. During the period that a Deferral
Election is effective, the Participant shall not be entitled to receive
currently payments covered by such Deferral Election. The Company shall instead
make credits to the Participant's Account in accordance with Section 3.

         (b) CONTENTS OF DEFERRAL ELECTIONS. Each Deferral Election shall
specify the types of compensation which shall be subject to such Deferral
Election and the effective date of the Deferral Election and shall contain the
Participant's Payment Election. A Deferral Election may also contain the date on
which the Deferral Election is to terminate.

         (c) MODIFICATION AND RENEWAL OF DEFERRAL ELECTIONS. A Deferral Election
shall remain effective until the Participant terminates or modifies such
election by written notice to the Company. Any such termination or modification
shall become effective immediately following the end of the Fiscal Year in which
such notice is given. A Participant who has terminated a Deferral Election may,
so long as such Participant remains an Eligible Member or has an Account with a
positive balance, thereafter file a new Deferral Election in accordance with
Section 2(a).

         (d) DEFERRAL OF INCENTIVE AWARDS. A Deferral Election may relate to all
or any portion of the Incentive Awards otherwise payable to a Participant. If
the amount of the part of any Incentive Award (other than dividend equivalent
payments) subject to a Deferral Election is less than $1,000 (based on a
valuation at the time the award would otherwise be paid), that Incentive Award
will be paid currently and no credit relating to such Incentive Award will be
made under the Plan.

         (e) DEFERRAL OF SALARY. A Deferral Election may relate to all or part
of a Participant's salary; PROVIDED, HOWEVER, that a Participant may not elect
to defer salary in any Fiscal Year unless the Participant has elected to defer
all of his or her awards under the Short Term Plan and any other bonus payments
for such Fiscal Year.

<PAGE>

7                                                               (10) (iii) (A)4

         (f) DEFERRAL OF RETAINER PAYMENTS. A Director's Deferral Election may
relate to all or part of the Retainer Payments otherwise payable to the
Director. Notwithstanding Section 2(a), a newly-elected Director may deliver a
Deferral Election to the Company within 30 days after his or her election, which
Deferral Election shall be effective for all Retainer Payments after the date on
which the Deferral Election is delivered to the Company.

         SECTION 3.    PARTICIPANT ACCOUNTS.

         (a) DEFERRED CASH EQUIVALENT ACCOUNT. (i) There shall be credited to a
         Participant's Deferred Cash Equivalent Account the following:

                (A)     portions of Incentive Awards otherwise payable in cash
                        and for which a Deferral Election specifies crediting
                        under the Plan;

                (B)     that portion of a Director's Retainer Payment for which
                        a Deferral Election specifies crediting to the
                        Participant's Deferred Cash Equivalent Account;

                (C)     amounts related to salary for which a Deferral Election
                        specifies crediting under the Plan;

                (D)     amounts previously deferred into cash equivalent
                        accounts under the Predecessor Plans and credited under
                        this Plan, and

                (E)     Savings Plan Make-Up Credits.

                        (ii) If the Savings Plan Make-up Credit for an Eligible
Member for any Plan Year shall be greater than zero, the Deferred Cash
Equivalent Account of such Eligible Member shall be credited with an amount
equal to such Savings Plan MakeUp Credit at such time as the Administrator shall
determine.

                        (iii) Amounts credited to the Participant's Deferred
Cash Equivalent Account shall bear interest as provided in Section 4 from the
date the Incentive Award, Retainer Payment, salary or Savings Plan Make-Up
Credits would otherwise have been paid to the Participant or paid or credited to
the Savings Plan, as applicable. Interest shall be credited to Deferred Cash
Equivalent Accounts at the end of each fiscal quarter of the Company.

         (b) DEFERRED SHARE EQUIVALENT ACCOUNT. (i) There shall be credited to a
Participant's Deferred Share Equivalent Account the following:

                (A)     portions of Incentive Awards otherwise payable in Shares
                        and for which a Deferral Election specifies crediting
                        under the Plan;

                (B)     that portion of a Director's Retainer Payment for which
                        a Deferral Election specifies crediting to the
                        Participant's Deferred Share Equivalent Account; and

                (C)     amounts previously deferred into share equivalent
                        accounts under the Predecessor Plans and credited under
                        this Plan.

<PAGE> 

8                                                                (10) (iii) (A)4

                        (ii) Cash amounts credited to a Participant's Deferred
Share Equivalent Account shall be converted to the number of Share equivalents
determined by dividing such cash amount by the Conversion Price. In addition,
the Participant's Deferred Share Equivalent Account shall be credited on each
dividend payment date for Shares, with an amount equal to the number of Shares
that could be purchased at the Conversion Price with dividends that would have
been payable on the number of Shares equal to the number of Share equivalents in
the Participant's Deferred Share Equivalent Account on the record date for such
dividend. "Conversion Price" means the average of the daily high and low sale
prices of Shares on the NYSE for the period of five trading days ending on the
date such amount otherwise would have been paid to the Participant or, in the
case of a dividend equivalent, on the dividend payment date, or the period of
five trading days immediately preceding such applicable date if the NYSE is
closed on such applicable date.

                        (iii) In the event of any change in outstanding Shares
by reason of any stock dividend or stock split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change, the Board shall make such adjustments, if any, that it deems appropriate
in the number of Share equivalents then credited to Participants' Deferred Share
Equivalent Accounts. Any and all such adjustments shall be within the sole
discretion of the Board and its decision in regard to such adjustments shall be
conclusive, final and binding upon all parties concerned.


         SECTION 4.    DEFERRED CASH EQUIVALENT ACCOUNT INTEREST RATE.

         (a) INTEREST RATE GENERALLY. The interest rate to be accrued on a
Participant's Deferred Cash Equivalent Account shall be such rate as is
determined, from time to time, by the Board. Such rate may be applied by the
Board to a Participant's existing balance in a Deferred Cash Equivalent Account
or to amounts subsequently credited to such Participant's Account. The
determination by the Board pursuant to this Section 4 shall be within its sole
discretion and its decision shall be conclusive, final and binding upon all
parties concerned.

         (b) INTEREST RATE FOLLOWING TERMINATION WITHOUT THE COMPANY'S
CONSENT. Notwithstanding Section 4(a), with respect to amounts credited to the
Deferred Cash Equivalent Accounts of Officers and Other Participants who
terminate employment (other than by death or disability) under circumstances
that the Administrator determines are not in the interests of the Company, the
effective annual rate of interest following the date of such termination of
employment shall be the one-year U.S. Treasury note rate.

         SECTION 5.    PAYMENTS FOLLOWING DEATH.

         (a) FORM OF PAYMENT. A Participant may deliver a Beneficiary
Election to the Administrator electing that, in the event the Participant should
die before full payment of all amounts credited to the Participant's Account,
the balance of the Account shall be distributed in one payment or in some other
number of approximately equal annual installments (not exceeding five (5)) to
the person(s) designated in the Beneficiary Election. In the event that a
Participant fails to designate such a beneficiary, or the beneficiary(ies)
predecease(s) him, payment following the death of the Participant shall be made
to the Participant's surviving spouse or, if there is no surviving spouse, to
the Participant's estate. The first installment (or the single payment if the
Participant has so elected) shall be paid on the first day of the calendar
quarter next following the month of death; PROVIDED, HOWEVER, that the
Administrator may, in his or her sole discretion, direct that the first
installment (or the single payment) shall be paid on the first day of the Fiscal
Year next following the date of death.

<PAGE>

9                                                                (10) (iii) (A)4

         (b) CHANGE OF BENEFICIARY DESIGNATION. The elections referred to in
Section 5(a), including the designation of a beneficiary or beneficiaries, may
be changed by a Participant at any time by delivering a new Beneficiary Election
to the Administrator.


         SECTION 6.    PAYMENTS.

         (a) COMMENCEMENT OF BENEFITS. (i) At the time a Participant makes a
Deferral Election, the Participant shall also make an election under Section
6(a)(ii) with respect to the distribution of the amounts credited to such
Participant's Account pursuant to such Deferral Election (each such election, a
"Payment Election"). Any similar election related to the distribution of
deferred amounts under the Predecessor Plans which has not been modified or
terminated shall be deemed a Payment Election under this Plan. A Participant
may, at any time earlier than twelve (12) months prior to the date on which a
distribution of a portion (or all) of a Participant's Account would be payable
under the terms of such Payment Election, submit a written election to the
Company requesting that the initial distribution date be further deferred
(hereinafter a "Redeferral Election"). A Participant may make a single
Redeferral Election with respect to each Payment Election, and the Redeferral
Election shall supersede the Payment Election and be irrevocable upon delivery
to the Administrator.

             (ii) Each Payment Election shall specify whether payments related
to Account balances other than Savings Plan Make-Up Credits shall commence (i)
on the first day of the calendar quarter next following the month in which the
Participant attains the age specified in such election, which age shall not be
earlier than 55 or later than 70, (ii) on the first day of the calendar quarter
next following the month in which the Participant retires from a Participating
Company or otherwise terminates employment (including termination of service as
a member of the Board) with any Participating Company (except for a transfer to
another Participating Company); PROVIDED, HOWEVER, that the Administrator may,
in his or her sole discretion, direct that the Participant's benefits shall
commence on the first day of the Fiscal Year next following the date of
retirement or other termination of employment, or (iii) on the first day (the
"First Day") of the calendar year next following the calendar year in which the
Participant retires from a Participating Company or otherwise terminates
employment (including termination of service as a member of the Board) with any
Participating Company (except for a transfer to another Participating Company) ;
PROVIDED, HOWEVER, that the Administrator may, in his or her sole discretion,
direct that the Participant's benefits shall commence on the first day of the
Fiscal Year next following the First Day.

             (iii) Notwithstanding the foregoing, amounts credited to a
Participant's Account as Savings Plan Make-Up Credits or earnings thereon shall
be distributed in one payment following the Participant's termination of
employment.

         (b) FORM OF DISTRIBUTIONS. Amounts credited to a Participant's Deferred
Cash Equivalent Account shall be distributed in cash. Amounts credited to a
Participant's Deferred Share Equivalent Account as Share equivalents shall be
distributed in the form of an equal number of Shares, unless the Company shall
determine that payment of an equivalent cash amount is necessary or convenient
for its purposes.

         (c) PAYMENT PERIOD. (i) A Participant may elect in a Payment Election
to receive the amounts credited to the Participant's Account other than Savings
Plan MakeUp Credits in one payment or in some other number of approximately
equal annual installments (not exceeding ten (10) or such longer period as
approved by the Committee, in individual cases), PROVIDED, HOWEVER, that the
number of annual installments may not extend beyond the life expectancy of the
Participant, determined as of the date the first installment is paid.

<PAGE>
10                                                               (10) (iii) (A)4

             (ii) Installments subsequent to the first installment to the
Participant, or to a beneficiary or to the Participant's estate, shall be paid
on the first day of the applicable calendar quarter in each succeeding calendar
year until the entire amount credited to the Participant's Account shall have
been paid. Prior to distribution, Accounts shall continue to receive credits
under Section 3(a)(ii) and Section 3(b)(ii).

         (d) ACCELERATION OF PAYMENT FOR SEVERE FINANCIAL HARDSHIP. In the event
a Participant, or the Participant's beneficiary after the Participant's death,
incurs a severe financial hardship, the Administrator may, in his or her sole
discretion, accelerate or otherwise revise the payment schedule for the
Participant's Account to the extent reasonably deemed necessary to eliminate or
alleviate the severe financial hardship. For the purpose of this Section 6(d) a
severe financial hardship must have been caused by an accident, illness or other
event beyond the control of the Participant or, if applicable, the beneficiary.

         (e) IMMEDIATE DISTRIBUTION OF DEFERRED CASH EQUIVALENT ACCOUNT BALANCE.
A Participant may at any time elect to receive a distribution of all or any
portion of the balance in his or her Deferred Cash Equivalent Account. Amounts
credited to Deferred Share Equivalent Accounts shall not be available for
distribution under this Section 6(e). Requests for distributions shall be
submitted in writing (on a form prescribed by the Administrator for such
purpose) to the Administrator. Distributions from the Participant's Deferred
Cash Equivalent Account pursuant to this Section 6(e) will at all times be
subject to (i) reduction for applicable tax withholdings pursuant to Section
9(h), and (ii) a reduction in the amount paid equal to six percent (6%) of the
amount requested. Distributions pursuant to this Section 6(e) shall be payable
in a single lump sum, in cash, within thirty (30) days of submission of the
completed form.

         (f) IMMEDIATE DISTRIBUTION OF ACCOUNT BALANCE FOLLOWING CERTAIN
TERMINATIONS OF EMPLOYMENT. Notwithstanding any contrary election pursuant to
this Section 6, the entire amount then credited to a Participant's Account shall
be paid immediately in a single payment (A) if the Participant is discharged for
cause by his or her Participating Company, (B) if the Administrator determines
that the Participant engaged in misconduct in connection with the Participant's
employment with the Participating Company, (C) if the Participant terminates
employment under circumstances that the Administrator determines are not in the
interest of the Company, or (D) if the Participant without the consent of the
board of directors of his or her Participating Company, during either the
Participant's period of employment with a Participating Company or the nine (9)
month period following termination for any reason of the Participant's
employment with a Participating Company, on behalf of any competitor of the
Company (x) renders any services relating to: (1) strategic planning, research
and development, manufacturing, marketing, or selling with respect to any
product, process, material or service which resembles, competes with, or is the
same as a product, process, material or service of the Company about which the
Participant gained any proprietary or confidential information or on which the
Participant worked during the three (3) years prior to termination of
employment, or (2) any actual or potential customer of Lucent about whom the
Participant gained any proprietary or confidential knowledge or with whom the
Participant worked during the three (3) years prior to termination of
employment, or (y) solicits or offers, or induces or encourages others to
solicit or offer, employment to any employee of the Company.

<PAGE>

11                                                              (10) (iii) (A)4

         SECTION 7. CHANGE IN CONTROL.

         (a) Notwithstanding any Payment Election, a Participant may, prior to
the earlier of a Change in Control or September 30, 1998, deliver a Change in
Control Election to the Administrator, electing to have the aggregate amount
credited to the Participant's Account both before and after the filing of such
Change in Control Election paid in one lump-sum payment as soon as practicable
following a Change in Control, but in no event later than 90 days after such
Change in Control. Notwithstanding any Payment Election, any person who becomes
a Participant after September 30, 1998, may file a written notice with the
Administrator within 90 days of becoming a Participant, electing to have the
aggregate amount credited to the Participant's Account paid in one lump-sum
payment as soon as practicable following a Change in Control, but in no event
later than 90 days after such Change in Control.

         (b) A Participant may, prior to the earlier of a Change in Control or
the beginning of the Fiscal Year in which the election is to take effect,
deliver a Change in Control Election to the Administrator, electing to have the
aggregate amount credited to the Participant's Account, in all Fiscal Years
commencing with the first Fiscal Year beginning after the date the Change in
Control Election is delivered to the Administrator, paid in one lump-sum payment
as soon as practicable following a Change in Control, but in no event later than
90 days after such Change in Control. Amounts credited to the Participant's
Account prior to the effective date of such Change in Control Election shall not
be affected by such Change in Control Election and shall be distributed
following a Change in Control in accordance with any prior Change in Control
Election or, if the Participant has not made a Change in Control Election, in
accordance with the Plan.

         (c) A Participant may, prior to the earlier of a Change in Control or
the beginning of any Fiscal Year, deliver a written notice to the Administrator
revoking any Change in Control Election with respect to amounts credited to the
Participant's Account in Fiscal Years commencing after the written notice is
delivered. Amounts credited to the Participant's Account prior to the effective
date of the written notice delivered pursuant to this Section 7(c) shall not be
affected by such written notice and shall be distributed following a Change in
Control in accordance with any existing Change in Control Election or, if the
Participant has not made a Change in Control Election, in accordance with the
Plan.

         SECTION 8.    ADMINISTRATION.

         (a) ADMINISTRATION. The Administrator shall have the authority to
administer and to interpret the Plan.

         (b) RESPONSIBILITES AND POWERS OF THE ADMINISTRATOR. In administering
the Plan, the Administrator shall have the following responsibilities:

                (1)     To administer the Plan in accordance with the terms
                        hereof, and to exercise all powers specifically
                        conferred upon the Administrator hereby or necessary to
                        carry out the provisions hereof;

                (2)     To construe this Plan, which construction shall be
                        conclusive, correct any defects, supply omissions, and
                        reconcile inconsistencies to the extent necessary to
                        effectuate the Plan;

                (3)     To determine in his or her sole discretion the amount of
                        benefits payable to Participants under the Plan. Any
                        interpretation or determination made by the Plan
                        Administrator pursuant to its discretionary authority
                        shall be final and binding on the Company, any
                        Participant, and any other affected party; and

<PAGE>

12                                                              (10) (iii) (A)4

                (4)     To keep all records relating to Participants and such
                        other records as are necessary for proper operation of
                        the Plan.

        (c)     ACTIONS OF THE ADMINISTRATOR. In carrying out the
                responsibilities set forth in Section 8(b):

                (1)     The Administrator may adopt rules and regulations
                        necessary for the administration of the Plan which are
                        consistent with the provisions hereof.

                (2)     All acts and decisions of the Administrator shall apply
                        uniformly to all Participants in like circumstances.
                        Written records shall be kept of all acts and decisions.

                (3)     The Administrator may delegate, in writing, any of his
                        or her responsibilities and powers with respect to the
                        Plan to another individual or individuals.

         (d) The Administrator shall have the right to hire, at the expense of
the Company, such professional assistants and consultants as he or she, in his
or her sole discretion, deems necessary or advisable, including but not limited
to accountants, actuaries, consultants, counsel and such clerical assistance as
is necessary for proper discharge of his or her duties hereunder.

         SECTION 9. MISCELLANEOUS.

         (a) BENEFITS PAYABLE BY THE COMPANY. All benefits payable under this
Plan constitute an unfunded obligation of the Company. Payments shall be made,
as due, from the general funds of the Company or, in the case of Share payments,
from newly issued Shares, Shares purchased in the market, treasury Shares or
otherwise. The Company may, at its option, maintain one or more bookkeeping
reserve accounts to reflect its obligations under the Plan and may make such
investments as it may deem desirable to assist it in meeting its obligations.
Any such investments shall be assets of the Company subject to the claims of its
general creditors. No person eligible for a benefit under this Plan shall have
any right, title to, or interest in any such investments. Nothing contained in
this Section 9(a) shall limit the ability of the Company to pay benefits through
one or more grantor trusts as provided in Section 9(b). Participants are
general, unsecured creditors of the Company. This Plan constitutes a mere
promise to pay benefits in the future.

         (b) GRANTOR TRUSTS. (i) The Company shall create a grantor trust or
utilize an existing grantor trust to assist it in accumulating the shares of
Common Stock and cash needed to fulfill its obligations under this Plan to
Directors (including former Directors), to which it shall be obligated to make
contributions, no later than the date upon which any Potential Change in Control
occurs, of a number of Shares and an amount of cash such that the assets of such
trust are sufficient to discharge all of the Company's obligations under this
Plan to Directors (including former Directors) accrued as of the date of the
Potential Change in Control. While a Potential Change in Control is pending and
after any Change in Control, the Company shall be obligated to make additional
contributions at least once each fiscal quarter to the extent necessary to
ensure that the assets of such trust remain sufficient to discharge all such
obligations accrued as of the last day of such fiscal quarter. If a Potential
Change in Control occurs but ceases to be pending without the occurrence of a
Change in Control or a subsequent Potential Change in Control then the Company
shall be permitted (but not required) to cause the trustee of such trust to
distribute any or all of the assets of the Trust to the Company.

<PAGE>

13                                                              (10) (iii) (A)4

             (ii) The Company may create a grantor trust or utilize an existing
grantor trust to assist it in accumulating the Shares and cash needed to fulfill
its obligations under this Plan to Participants who are not Directors (or former
Directors). The Board shall determine whether it is necessary or desirable to
create such a trust and to deposit Shares and cash in such trust to enable the
Company to meets its obligations under this Plan and the extent of any such
deposit to such trust.

             (iii) Participants shall have no beneficial or other interest in
any trust referred to in this Section 9(b) and the assets thereof, and their
rights under the Plan shall be as general creditors of the Company, unaffected
by the existence of any trust, except that payments to Participants from any
such trust shall, to the extent thereof, be treated as satisfying the Company's
obligations under this Plan.

         (c) OBLIGATION FOR PAYMENT OF BENEFITS. The obligation to make a
distribution of amounts credited to a Participant's Account shall be borne by
the Participating Company which otherwise would have paid such amounts
currently. However, the obligation to make a distribution with respect to
Accounts which are related to amounts credited under a Predecessor Plan, and
with respect to which no Participating Company would otherwise have paid the
related award or deferred amount currently, shall be borne by the Participating
Company to which the Participant was assigned on October 1, 1996.

         (d) AMENDMENT OR TERMINATION. (i) The Board may amend the Plan or
terminate the Plan at any time, but such amendment or termination shall not
adversely affect the rights of any Participant, without his or her consent, to
any benefit under the Plan to which such Participant may have previously become
entitled prior to the effective date of such amendment or termination. The
Administrator with the concurrence of the General Counsel of the Company or his
delegate shall be authorized to make minor or administrative changes to the
Plan, as well as amendments required by applicable federal or state law (or
authorized or made desirable by such statutes). Any amendment to the Plan by the
Board shall be made in writing, with or without a meeting, or shall be made in
writing by the Administrator, to the extent of the aforementioned authorization.

             (ii) If the Plan is terminated, a valuation shall be made of each
Participant's Account balance as of the Plan termination date. The amount of
such Account balance shall be payable to the Participant at the time it would
have been payable under Section 5 and Section 6 had the Plan not been
terminated; PROVIDED, HOWEVER, that the Committee may elect instead to
immediately distribute all Participants' Account balances in lump sums upon
termination of the Plan.

         (e) ENTIRE AGREEMENT. This Plan constitutes the entire agreement of the
Company with respect to the benefits provided herein and cannot be modified
orally or in any writing other than as set forth in Section 9(d).

         (f) PAYMENTS TO INCOMPETENTS. If a Participant entitled to receive any
benefits hereunder is adjudged to be legally incapable of giving valid receipt
and discharge for such benefits, they will be paid to the duly appointed
guardian of such Participant or to such other legally appointed person as the
Administrator may designate. Such payment shall, to the extent made, be deemed a
complete discharge of any liability for such payment under the Plan.

         (g) BENEFITS NOT TRANSFERABLE. The right of any person to any benefit
or payment under the Plan shall not be subject to voluntary or involuntary
transfer, alienation or assignment and, to the fullest extent permitted by law,
shall not be subject to attachment, execution, garnishment, sequestration or
other legal or equitable process. In the event a person who is receiving or is
entitled to receive benefits under the Plan attempts to assign, transfer or
dispose of such right, or if an attempt is made to subject said right to such
process, such assignment, transfer, or disposition shall be null and void.

<PAGE> 

14                                                              (10) (iii) (A)4

         (h) TAX WITHHOLDING. The Company is authorized to withhold from any
Account or payment due under the Plan the amount of applicable withholding taxes
in respect of such payment or Account 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 federal, state or other governmental entity tax obligation.

         (i) GOVERNING LAW. The provisions of the Plan shall be construed in
accordance with the laws of the State of Delaware.


Approved:

/s/ Curtis R. Artis
---------------------------------------
Curtis R. Artis
Senior Vice President - Human Resources