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                                                                     Exhibit 4.8

                          UNITED STATES DISTRICT COURT
                         FOR THE DISTRICT OF NEW JERSEY

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                                           )   Case No. 00-CV-621 (JAP)
IN RE LUCENT TECHNOLOGIES INC.             )
SECURITIES LITIGATION                      )
                                           )
                                           )
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                     STIPULATION AND AGREEMENT OF SETTLEMENT

      This Stipulation and Agreement of Settlement (the "Stipulation") is
submitted pursuant to Rule 23 of the Federal Rules of Civil Procedure. Subject
to the approval of the Court, this Stipulation is entered into among Lead
Plaintiffs Teamsters Locals 175 & 505 D&P Pension Trust Fund; The Parnassus
Fund; and The Parnassus Income Trust/Equity Income Fund (collectively the "Lead
Plaintiffs") on behalf of themselves and the Class (as hereinafter defined), and
Defendants Lucent Technologies Inc. ("Lucent"); Richard A. McGinn; Donald K.
Peterson; and Deborah C. Hopkins (collectively, the "Individual Defendants")
(Lucent and the Individual Defendants are collectively referred to hereinafter
as the "Defendants"), by and through their respective counsel.

      WHEREAS:

      A. Beginning on January 7, 2000, eighteen class actions alleging
violations of federal securities laws - Kaufman, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cvl56 (AJL); Giskan, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cvl57 (AJL); Stern, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cvl58 (AJL); Weber, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cvl77 (AJL); Courtright, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cv204 (AJL); Razzano, et al. v. Lucent Technologies,
Inc., et al., Case No. 00cv227 (AJL); Powers, et al. v. Lucent Technologies,
Inc., Case No. 00cv314 (AJL); Schoeman, et al. v. Lucent Technologies, Inc.,
Case No.

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00cv265 (AJL); Mayeroff, et al. v. Lucent Technologies, Inc., et al., Case No.
00cv354 (AJL); Biglan, et al. v. Lucent Technologies, Inc., et al., Case No.
00cv418 (AJL); FMWL Enterprises, Inc., et al. v. Lucent Technologies, Inc., et
al., Case No. 00cv448 (AJL); Norrell, et al. v. Lucent Technologies, Inc., et
al., Case No. 00cv529 (AJL); Clifford, et al. v. Lucent Technologies, Inc., et
al., Case No. 00cv465 (AJL); Seiden, et al. v. Lucent Technologies, Inc., et
al., Case No. 00cv610 (AJL); Elan, et al. v. Lucent Technologies, Inc., et al.,
Case No. 00cv621 (AJL); Pearlman, et al. v. Lucent Technologies, Inc., et al.,
Case No. 00cv857 (AJL); Morelli, et al. v. Lucent Technologies, Inc., et al.,
Case No. 00cv985 (AJL); and Chaplinski, et al. v. Lucent Technologies, Inc., et
al., Case No. 00cv995 (AJL), were filed in this Court and were consolidated by
Orders dated February 25, 2000 and March 16, 2000 under the caption above, and
are hereinafter referred to as the "Action." Beginning on November 30, 2000,
five additional class actions alleging violations of federal securities laws:
Press, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv5874 (JWB);
Bragin, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv5834 (WHW);
Stone, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv5838 (WHW);
Pasparage, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv5930 (AJL);
and Marks, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv5953 (WHW),
were filed in this Court and were consolidated into the Action by Order dated
December 26, 2000. Another eleven class actions alleging violations of federal
securities laws: Murphy, et al. v. Lucent Technologies, Inc., et al., Case No.
00cv6111 (AJL); Abowitz, et al. v. Lucent Technologies, Inc., et al., Case No.
00cv6123 (AJL); Sakkal, et al. v. Lucent Technologies, Inc., et al., Case No.
00cv6282; Meyer, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv6285
(AJL); Harris, et al. v. Lucent Technologies, Inc., et al., Case No. 00cv6295
(AJL); Raphael, et al. v. Lucent Technologies, Inc., et al., Case No. 01cv255
(AJL); Parnassus Fund, et al. v. Lucent Technologies, et al., Case No. 01cv304
(AJL); Feder, et al. v. Lucent Technologies, Inc., et al., Case No. 01cv344
(AJL); Wizbicki, et al. v. Lucent Technologies, Inc., et al., Case No. 01cv477
(AJL);

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Davis, et al. v. Lucent Technologies, Inc., et al., Case No. 01cv796 (AJL); and
Riddle, et al. v. Lucent Technologies Inc., et al., Case No. 01cv952, were
consolidated into the Action by Order dated April 17, 2001;

      B. The Fifth Consolidated and Amended Class Action Complaint dated July
10, 2001 filed in the Action (the "Complaint") generally alleges, among other
things, that during the Class Period, October 26, 1999 through and including
December 21, 2000, Defendants issued materially false and misleading press
releases and other statements regarding Lucent's financial condition in
violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,
and Rule 10b-5 promulgated thereunder;

      C. On August 23, 2002, Lead Plaintiffs, together with plaintiffs New
England Health Care Employees Pension Fund and Perry Mermelstein (collectively,
the "Proposed Class Representatives") moved the Court for an order: (1)
certifying the Action as a class action pursuant to Rule 23 of the Federal Rules
of Civil Procedure on behalf of a class consisting of all persons or entities
who purchased Lucent common stock during the period beginning on October 26,
1999 through and including December 20, 2000 (the "Class Period")(1) and who
were damaged thereby (the "Class"); and (2) appointing the Proposed Class
Representatives as representatives of the Class. Excluded from the Class are:
(a) defendants Lucent, Richard A. McGinn, Donald K. Peterson, and Deborah C.
Hopkins; (b) members of the immediate family of each Individual Defendant; (c)
any entity in which any Defendant has a controlling interest; (d) any person who
was an officer or director of Lucent (or any Lucent

---------------
      (1) The Fifth Consolidated and Amended Class Action Complaint alleges a
Class Period ending on December 21, 2000. However, because Lucent issued the
press release that marks the end of the Class Period at 6:55 a.m. on December
21, 2000 (prior to opening of NYSE trading), Lead Plaintiffs moved to certify
this Action as a class action on behalf of individuals and entities who
purchased Lucent common stock prior to the close of trading on December 20,
2000.

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subsidiary or affiliate) during the Class Period; and (e) the legal
representatives, heirs, successors or assigns of any such excluded party. The
Court has not yet ruled on this motion for class certification;

      D. The Defendants deny any wrongdoing whatsoever and this Stipulation
shall in no event be construed or deemed to be evidence of or an admission or
concession on the part of any Defendant with respect to any claim or of any
fault or liability or wrongdoing or damage whatsoever, or any infirmity in the
defenses that the Defendants have asserted;

      E. The parties to this Stipulation recognize, however, that the Action has
been filed by plaintiffs and defended by Defendants in good faith and with
adequate basis in fact under Federal Rule of Civil Procedure 11, that the Action
is being voluntarily settled after advice of counsel, and believe that the terms
of the settlement are fair, adequate and reasonable. This Stipulation shall not
be construed or deemed to be a concession by any plaintiff of any infirmity in
the claims asserted in the Action;

      F. Plaintiffs' Counsel have conducted an investigation relating to the
claims and the underlying events and transactions alleged in the Complaint.
Plaintiffs' Counsel have analyzed the evidence adduced during pretrial discovery
and have researched the applicable law with respect to the claims of plaintiffs
and the other members of the Class against the Defendants and the potential
defenses thereto. Further, Lead Plaintiffs, by their counsel, have conducted
discussions and arm's length negotiations with counsel for Defendants with
respect to a compromise and settlement of the Action with a view to settling the
issues in dispute and achieving the best relief possible consistent with the
interests of the Class; and

      G. Based upon their investigation and pretrial discovery as set forth
above, Plaintiffs' Co-Lead Counsel have concluded that the terms and conditions
of this Settlement are fair, reasonable and adequate to plaintiffs and the other
members of the Class, and in their best interests, and have agreed to settle the
claims raised in the Action pursuant to the terms and provisions of this
Stipulation, after

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considering (a) the substantial benefits that plaintiffs and the other members
of the Class will receive from settlement of the Action, (b) the attendant risks
of litigation, and (c) the desirability of permitting the Settlement to be
consummated as provided by the terms of this Stipulation.

      NOW THEREFORE, without any admission or concession on the part of
plaintiffs of any lack of merit of the Action whatsoever, and without any
admission or concession on the part of Defendants as to the merit of the Action,
or as to any liability or wrongdoing whatsoever by Defendants, it is hereby
STIPULATED AND AGREED, by and among the parties to this Stipulation, through
their respective attorneys, subject to approval of the Court pursuant to Rule
23(e) of the Federal Rules of Civil Procedure, in consideration of the benefits
flowing to the parties hereto from the Settlement, that all Settled Claims (as
defined below) as against the Released Parties (as defined below) shall be
compromised, settled, released and dismissed with prejudice, upon and subject to
the following terms and conditions:

                               CERTAIN DEFINITIONS

            1. As used in this Stipulation, the following terms shall have the
following meanings:

            (a) "Authorized Claimant" means a Class Member that submits a timely
and valid Proof of Claim form to the Claims Administrator.

            (b) "Claimant" means a person or entity that submits a Proof of
Claim form to the Claims Administrator seeking to share in the proceeds of the
settlement of the Lucent Common Stock Class Action.

            (c) "Claims Administrator" means the firm of The Garden City Group,
Inc. which shall administer the Settlement.

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            (d) "Class" and "Class Members" means, for the purposes of this
Settlement only, all persons or entities who purchased Lucent common stock
during the period beginning on October 26, 1999 through and including December
20, 2000 (the "Class Period") and who were damaged thereby. Excluded from the
Class are: (a) defendants Lucent, Richard A. McGinn, Donald K. Peterson, and
Deborah C. Hopkins; (b) members of the immediate family of each Individual
Defendant; (c) any entity in which any Defendant has a controlling interest; (d)
any person who was an officer or director of Lucent (or any Lucent subsidiary or
affiliate) during the Class Period; and (e) the legal representatives, heirs,
successors or assigns of any such excluded party. Also excluded from the Class
are any putative Class Members who exclude themselves by filing a request for
exclusion in accordance with the requirements set forth in the Notice.

            (e) "Class Cash Escrow Fund" means the cash allocated to the Lucent
Common Stock Class Action pursuant to the Cover Agreement, and the proceeds of
the sale of any Class Securities, together with any interest earned thereon.

            (f) "Class Distribution Order" means the order described in
paragraph 8 below.

            (g) "Class Period" means, for the purposes of this Settlement only,
the period of time beginning on October 26, 1999 through and including December
20, 2000.

            (h) "Class Securities" means the Lucent common stock, Lucent
Warrants and Avaya, Inc. ("Avaya") common stock allocated to the Lucent Common
Stock Class Action pursuant to the Cover Agreement.

            (i) "Court" means the United States District Court for the District
of New Jersey, The Honorable Joel A. Pisano presiding.

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            (j) "Cover Agreement" means the Agreement Re: Global Settlement of
Lucent Litigations, which is being entered into contemporaneously herewith in
connection with the settlement of this and other litigation involving Lucent.

            (k) "Defendants" means Lucent and the Individual Defendants.

            (l) "Defendants' Counsel" means the law firm of Cravath, Swaine &
Moore LLP.

            (m) "Effective Date" means the date upon which the Settlement
contemplated by this Stipulation shall become effective as provided in paragraph
21 below and as defined in the Cover Agreement.

            (n) "Final" means that an order is no longer subject to reversal,
modification or amendment. For the purposes hereof an order shall become "Final"
upon the expiration of any time for appeal or review of such order, or, if any
appeal, motion for re-argument or reconsideration is timely filed and not
dismissed, after such appeals or motions are decided without causing a material
change in the order, or after such order is upheld on appeal and is no longer
subject to review upon appeal or review by writ of certiorari.

            (o) "Lucent Common Stock Class Plaintiffs" or "Lead Plaintiffs"
means Lead Plaintiffs Teamsters Locals 175 & 505 D&P Pension Trust Fund, The
Parnassus Fund and The Parnassus Income Trust/Equity Income Fund.

            (p) "Lucent Common Stock Escrow Account" means an escrow account to
be maintained until the Effective Date under the joint control of Lucent's
Counsel and Plaintiffs' Co-Lead Counsel, which, after the Effective Date, shall
be under the exclusive control of Plaintiffs' Co-Lead Counsel.

            (q) "Net Class Cash Escrow Fund" means the cash allocated to the
Lucent Common Stock Class Action pursuant to the Cover Agreement, plus the
proceeds of any Class Securities as may

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be sold for the benefit of the Lucent Common Stock Class Action, together with
any interest earned thereon, less (i) any Taxes, (ii) the cash portion of the
attorneys' fee and expense award referred to in paragraph 7 hereof, and (iii)
any Notice and Administration Costs referred to in paragraph 8 hereof in excess
of the $5 million to be paid by Lucent as provided in paragraph 2.(e) of the
Cover Agreement.

            (r) "Net Class Securities" means the Class Securities less the
securities portion of the attorneys' fee award referred to in paragraph 7
hereof.

            (s) "Net Settlement Fund" means the Net Class Cash Escrow Fund and
the Net Class Securities.

            (t) "Notice" means the Notice of Pendency of Class Action, Hearing
On Proposed Settlement and Attorneys' Fee Petition and Right to Share in
Settlement Fund, which is to be sent to members of the Class substantially in
the form attached hereto as Exhibit 1 to Exhibit A.

            (u) "Order and Final Judgment" means the proposed order to be
entered approving the Settlement substantially in the form attached hereto as
Exhibit B.

            (v) "Plaintiffs' Counsel" means Plaintiffs' Co-Lead Counsel and all
of the other attorneys representing plaintiffs in the actions referred to in
recital A above.

            (w) "Plaintiffs' Co-Lead Counsel" means the law firms of Milberg
Weiss Bershad Hynes & Lerach LLP and Bernstein Litowitz Berger & Grossmann LLP.

            (x) "Preliminary Approval Order" means the proposed order
preliminarily approving the Settlement and directing notice thereof to the Class
substantially in the form attached hereto as Exhibit A.

            (y) "Publication Notice" means the summary notice of proposed
Settlement and hearing for publication substantially in the form attached as
Exhibit 3 to Exhibit A.

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            (z) "Released Parties" means any and all of the Defendants, Avaya,
Agere Systems Inc., or their current or former respective agents, servants,
attorneys, auditors, investment advisors, underwriters, officers, directors and
employees, partners, subsidiaries, affiliates, insurers, stockholders, heirs,
executors, representatives, parents, predecessors, successors, assigns, trusts,
benefits committees or other individual or entity in which any Defendant has a
controlling interest or which is related to or affiliated with any of the
Defendants or any of the parties listed above.

            (aa) "Settled Claims" means any and all claims, rights or causes of
action or liabilities whatsoever, whether based on federal, state, local,
statutory or common law or any other law, rule or regulation (whether foreign or
domestic), including both known claims and unknown claims, accrued claims and
not accrued claims, foreseen claims and unforeseen claims, matured claims and
not matured claims, that have been or could have been asserted from the
beginning of time to the end of time in any forum by the Class Members or any of
them against any of the Released Parties which arise out of or relate in any way
to the allegations, transactions, facts, matters or occurrences, representations
or omissions involved, set forth, referred to in this Action or that could have
been asserted relating to the purchase, transfer or acquisition of shares of the
common stock of Lucent during the Class Period, except claims relating to the
enforcement of the settlement of the Action. With respect to the above, it is
the intention of plaintiffs to expressly waive and relinquish, to the fullest
extent permitted by law: (a) the provisions, rights, and benefits of Section
1542 of the California Civil Code, which provides that: A general release does
not extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor; and (b) the provisions,
right and benefits of any similar statute or common law of any other
jurisdiction that may be, or may be asserted to be, applicable.

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            (bb) "Settled Defendants' Claims" means any and all claims which
Defendants or any of the other Released Parties ever had, now have or may ever
have, whether known or unknown, accrued or not accrued, foreseen or unforeseen,
matured or not matured, that could have been asserted by Defendants or any of
the other Released Parties against any of the Lead Plaintiffs, named plaintiffs
in any of the actions referred to in recital A above, and their attorneys, which
arise out of or relate in any way to the institution, prosecution, or settlement
of the Action, except claims relating to the enforcement of the settlement of
the Action.

            (cc) "Settlement" means the settlement contemplated by this
Stipulation.

            (dd) "Settlement Fund" means the Class Cash Escrow Fund and the
Class Securities.

            (ee) "Taxes" means all (i) taxes on any of the income of the
Settlement Fund (including taxes, if any, on the appreciation in value of any
securities deposited in the Lucent Common Stock Escrow Account), and (ii)
reasonable expenses and costs incurred in connection with the taxation of the
Settlement Fund (including, without limitation, reasonable expenses of tax
attorneys and accountants).

            (ff) "Warrant Agreement" means, an agreement between Bank of New
York and Lucent setting forth the terms and conditions associated with the
Warrants as part of this settlement, in substantially the same form as Exhibit C
hereto to be executed by Bank of New York and Lucent as soon as practicable
following the Effective Date and in no event later than three (3) business days
prior to the Distribution Date.

                         SCOPE AND EFFECT OF SETTLEMENT

            2. The obligations incurred pursuant to this Stipulation shall be in
full and final disposition of the Action and any and all Settled Claims as
against any and all Released Parties and any

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and all Settled Defendants' Claims as against any and all of the Lead
Plaintiffs, named plaintiffs in any of the actions referred to in recital A
above, and their attorneys.

            3. (a) By operation of the Order and Final Judgment, upon the
Effective Date of this Settlement, each of the Lead Plaintiffs and all other
Class Members, on behalf of themselves and their respective heirs, executors,
administrators, successors and assigns and all persons acting in concert with
any such person, shall, with respect to each and every Settled Claim, waive,
release, forever discharge and dismiss and agree not to institute, maintain or
prosecute any or all Settled Claims against any or all of the Released Parties,
and shall be permanently and finally enjoined without the necessity of posting a
bond from commencing or prosecuting any actions or other proceedings asserting
any of the Settled Claims either directly, indirectly, representatively,
derivatively or in any other capacity against any of the Released Parties
herein. This injunction expressly extends to all claims covered by this
Stipulation and the Cover Agreement (insofar as the Cover Agreement applies to
this Action) and all Class Members defined herein.

            (b) By operation of the Order and Final Judgment, upon the Effective
Date of this Settlement, each of the Defendants, and each of the other Released
Parties, on behalf of themselves and their respective heirs, executors,
administrators, successors and assigns and all persons acting in concert with
any such person, shall waive, release and forever discharge each and every of
the Settled Defendants' Claims, and shall forever be enjoined from instituting,
maintaining or prosecuting any or all of the Settled Defendants' Claims as
against any and all of the Lead Plaintiffs, named plaintiffs in any of the
actions referred to in recital A above, and their attorneys.

                          THE SETTLEMENT CONSIDERATION

            4. Defendants are providing, in settlement of the Settled Claims of
Lead Plaintiffs and all the other members of the Class herein, the consideration
allocated to the Lucent Common Stock

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Class Action as set forth in the accompanying Cover Agreement in connection with
the settlement of this and other litigation as indicated therein.

            5. (a) The Class Cash Escrow Fund shall be used to pay (i) any
Taxes, (ii) the attorneys' fee and expense award referred to in paragraph 7
hereof, and (iii) any remaining Notice and Administration Costs referred to in
paragraph 8 hereof in excess of the $5 million to be paid by Lucent as provided
in paragraph 2.(e) of the Cover Agreement. The Net Class Cash Escrow Fund shall
be paid to the Authorized Claimants as provided in paragraphs 9-11 hereof.

               (b) The Class Securities shall be payable first to Plaintiffs'
Counsel, to the extent awarded by the Court pursuant to the attorneys' fee and
expense award referred to in paragraph 7 hereof (and unless otherwise ordered by
the Court, Plaintiffs' Counsel's fees shall be payable in the same proportions
of stock, cash and Warrants as obtained for the Class), and the balance shall be
paid to the Authorized Claimants as provided in paragraphs 9-11 hereof. All
Lucent common stock payable with respect to the Lucent Common Stock Class Action
pursuant to paragraphs 2.(a) and (b) of the Cover Agreement shall be issued by
Lucent in accordance with instructions given by Plaintiffs' Co-Lead Counsel,
which instructions may include distributions to the Lucent Common Stock Escrow
Account and/or any of the Indicated Recipients. Plaintiffs' Co-Lead Counsel
shall use reasonable efforts to obtain information from Indicated Recipients to
allow issuance of Lucent common stock to the Indicated Recipients in
certificate-less (book entry) form. With respect to the issuance of paper stock
certificates, Lucent shall be responsible for the costs associated with issuing
stock certificates to up to 100,000 members of the Lucent Common Stock Class,
and the costs associated with issuing stock certificates in excess of 100,000
shall be chargeable as an administrative expense, first against the Notice and
Administration Costs provided under paragraph 2.(e) of the Cover Agreement, or,
if such 2.(e) funds are insufficient, then from the Lucent Common Stock Escrow
Account. With respect to the costs associated

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with issuing any shares in certificate-less (book entry) form, no amount shall
be chargeable as an administration expense against either the Notice and
Administration Costs provided under paragraph 2.(e) of the Cover Agreement or
the Lucent Common Stock Escrow Account. With respect to the Avaya common stock
component of the Settlement consideration, Lucent will direct Avaya to pay the
shares as provided in paragraph 2.(d) of the Cover Agreement into the Lucent
Common Stock Escrow Account. The Warrants shall be DTC eligible. Within ten (10)
business days of the receipt by Lucent of a list of the Authorized Claimants and
their entitlements by the Claims Administrator, the Warrants shall be issued to
the Authorized Claimants in accordance with the terms of the Warrant Agreement.
No amount shall be chargeable as an administration expense against either the
Notice and Administration Costs provided under paragraph 2.(e) of the Cover
Agreement or the Lucent Common Stock Escrow Account with respect to the costs
associated with issuing any Warrants. The terms of the Warrants are set forth in
the Warrant Agreement and are fully incorporated herein by reference.

                                 ADMINISTRATION

            6. The Claims Administrator shall administer the Settlement under
Plaintiffs' Co-Lead Counsel's supervision and subject to the jurisdiction of the
Court. Except as stated in paragraph 13 hereof, Defendants shall have no
responsibility for the administration of the Settlement and shall have no
liability to the Class Members, Class or Plaintiffs' Co-Lead Counsel in
connection with such administration. Defendants' Counsel shall cooperate in the
administration of the Settlement to the extent reasonably necessary to
effectuate its terms including providing all information from Lucent's transfer
records concerning the identity of Class Members and their transactions. Lucent
shall cooperate in the administration of the Settlement to the extent reasonably
necessary to cause the securities payable under this agreement to be issued and
distributed in accordance with the terms of this Stipulation and the

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Cover Agreement. Plaintiffs' Co-Lead Counsel shall designate a contact person at
the Claims Administrator to whom Defendants can refer all inquiries they receive
from potential claimants.

                          ATTORNEYS' FEES AND EXPENSES

            7. Plaintiffs' Co-Lead Counsel will apply to the Court on behalf of
Plaintiffs' Counsel for an award from the Settlement Fund of attorneys' fees not
to exceed____% of the Settlement Fund and reimbursement of expenses. Such
attorneys' fees and expenses as are awarded by the Court shall be payable to
Plaintiffs' Co-Lead Counsel from the Settlement Fund upon award, notwithstanding
the existence of any timely filed objections thereto, or potential for appeal
therefrom, or collateral attack on the Settlement or any part thereof, subject
to: (i) Plaintiffs' Co-Lead Counsel's obligation to provide Defendants' Counsel
with adequate security for repayment, and (ii) Plaintiffs' Co-Lead Counsel's
joint and several obligation to make appropriate refunds or repayments to the
Settlement Fund plus accrued interest at the same net rate as is earned by the
Settlement Fund, if and when, as a result of any appeal and/or further
proceedings on remand, or successful collateral attack, the fee or cost award is
reduced or reversed. Plaintiffs' Co-Lead Counsel shall make the appropriate
refund or repayment in full within thirty (30) days of Lucent requesting said
payment following any such reduction of the fee or cost award, or the
termination of the Settlement. Unless otherwise ordered by the Court, the award
of attorneys' fees shall be allocated by Plaintiffs' Co-Lead Counsel among
Plaintiffs' Counsel in a fashion which, in the opinion of Plaintiffs' Co-Lead
Counsel, fairly compensates Plaintiffs' Counsel for their respective
contributions in the prosecution of the Action. Plaintiffs' Co-Lead Counsel may
make a supplemental application to the Court for an award of attorneys' fees and
expenses with respect to post-settlement proceedings and administration.

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                             ADMINISTRATION EXPENSES

            8. Plaintiffs' Co-Lead Counsel will apply to the Court, on notice to
Defendants' Counsel, for the Class Distribution Order: (i) approving the Claims
Administrator's administrative determinations concerning the acceptance and
rejection of the claims submitted herein; (ii) approving, in the event that the
reasonable Notice and Administration Costs of this Settlement exceed the Five
Million Dollars ($5,000,000) being paid by Lucent under paragraph 2.(e) of the
Cover Agreement, payment of any administration fees and expenses exceeding
$5,000,0000 associated with the administration of the Settlement from the Class
Cash Escrow Fund, and (iii) if the Effective Date has occurred, directing
payment of the Net Settlement Fund to the Authorized Claimants.

                      DISTRIBUTION TO AUTHORIZED CLAIMANTS

            9. The Claims Administrator shall determine each Authorized
Claimant's pro rata shares of the Net Class Cash Escrow Fund and the Net Class
Securities based upon each Authorized Claimant's Recognized Claim (as defined in
the Plan of Allocation described in the Notice annexed hereto as Exhibit 1 to
Exhibit A, or in such other Plan of Allocation as the Court approves). The Proof
of Claim form shall request Class Members to identify an account to which
Settlement Securities can be credited in certificate-less (book entry) form.
Warrants will be issued only to Authorized Claimants who have a brokerage
account into which the Warrants can be electronically transferred. The
securities will not be distributed in fractional amounts.

            10. The Plan of Allocation proposed in the Notice is not a necessary
term of this Stipulation and it is not a condition of this Stipulation that any
particular Plan of Allocation be approved.

            11. Each Authorized Claimant shall be allocated a pro rata share of
the Net Class Cash Escrow Fund and/or the Net Settlement Securities based on his
or her Recognized Claim compared to the total Recognized Claims of all
Authorized Claimants. This is not a claims-made settlement. The

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Defendants shall not be entitled to get back any of the settlement consideration
once the Effective Date has occurred. The Defendants shall have no involvement
in reviewing or challenging claims.

                        ADMINISTRATION OF THE SETTLEMENT

            12. Any member of the Class who does not submit a valid Proof of
Claim will not be entitled to receive any of the proceeds from the Net
Settlement Fund but will otherwise be bound by all of the terms of this
Stipulation and the Settlement, including the terms of the Order and Final
Judgment to be entered in the Action and the releases provided for herein, and
will be barred and enjoined from bringing any action against the Released
Parties concerning the Settled Claims.

            13. Plaintiffs' Co-Lead Counsel shall be responsible for supervising
the administration of the Settlement and disbursement of the Net Class Cash
Escrow Fund by the Claims Administrator. Except for their obligation to pay the
settlement consideration as provided in paragraph 2 of the Cover Agreement, and
to provide reasonable cooperation in the production of information, with respect
to the identification of Class Members from Lucent's shareholder transfer
records, as provided herein, and to issue and deliver the settlement
consideration in accordance with the directions of Plaintiffs' Co-Lead Counsel,
Defendants shall have no liability, obligation or responsibility for the
administration of the Settlement or disbursement of the Net Settlement Fund.
Plaintiffs' Co-Lead Counsel shall have the right, but not the obligation, to
waive what they deem to be formal or technical defects in any Proofs of Claim
submitted in the interests of achieving substantial justice.

            14. For purposes of determining the extent, if any, to which a Class
Member shall be entitled to be treated as an Authorized Claimant, the following
conditions shall apply:

                  (a) Each Class Member shall be required to submit a Proof of
Claim substantially in the form attached hereto as Exhibit 2 to Exhibit A,
supported by such documents as are designated therein, including proof of the
Claimant's loss, or such other documents or proof as the

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<PAGE>

Claims Administrator, in its discretion (subject to Plaintiffs' Co-Lead
Counsel's supervision), may deem acceptable;

                  (b) All Proofs of Claim must be submitted by the date
specified in the Notice unless such period is extended by Order of the Court.
Any Class Member who fails to submit a Proof of Claim by such date shall be
forever barred from receiving any payment pursuant to this Stipulation (unless,
by Order of the Court, a later submitted Proof of Claim by such Class Member is
approved), but shall in all other respects be bound by all of the terms of this
Stipulation and the Settlement including the terms of the Order and Final
Judgment to be entered in the Action and the releases provided for herein, and
will be barred and enjoined from bringing any action against the Released
Parties concerning the Settled Claims. Provided that it is received before the
motion for the Class Distribution Order is filed, a Proof of Claim shall be
deemed to have been submitted when posted, if received with a postmark indicated
on the envelope and if mailed by first-class mail and addressed in accordance
with the instructions thereon. In all other cases, the Proof of Claim shall be
deemed to have been submitted when actually received by the Claims
Administrator;

                  (c) Each Proof of Claim shall be submitted to and reviewed by
the Claims Administrator, under the supervision of Plaintiffs' Co-Lead Counsel,
who shall determine in accordance with this Stipulation the extent, if any, to
which each claim shall be allowed, subject to review by the Court pursuant to
subparagraph (e) below;

                  (d) Proofs of Claim that do not meet the submission
requirements may be rejected. Prior to rejection of a Proof of Claim, the Claims
Administrator shall communicate with the Claimant in order to remedy any curable
deficiencies in the Proof of Claims submitted. The Claims Administrator, under
supervision of Plaintiffs' Co-Lead Counsel, shall notify, in a timely fashion
and in writing, all Claimants whose Proofs of Claim they propose to reject in
whole or in part, setting forth the

                                       17

<PAGE>

reasons therefor, and shall indicate in such notice that the Claimant whose
claim is to be rejected has the right to a review by the Court if the Claimant
so desires and complies with the requirements of subparagraph (e) below;

                  (e) If any Claimant whose claim has been rejected in whole or
in part desires to contest such rejection, the Claimant must, within twenty (20)
days after the date of mailing of the notice required in subparagraph (d) above,
serve upon the Claims Administrator a notice and statement of reasons indicating
the Claimant's grounds for contesting the rejection along with any supporting
documentation, and requesting a review thereof by the Court. If a dispute
concerning a claim cannot be otherwise resolved, Plaintiffs' Co-Lead Counsel
shall thereafter present the request for review to the Court; and

                  (f) The administrative determinations of the Claims
Administrator accepting and rejecting claims shall be presented to the Court, on
notice to Defendants' Counsel, for approval by the Court in the Class
Distribution Order.

            15. Each Claimant shall be deemed to have submitted to the
jurisdiction of the Court with respect to the Claimant's claim, and the claim
will be subject to investigation and discovery under the Federal Rules of Civil
Procedure, provided that such investigation and discovery shall be limited to
that Claimant's status as a Class Member and the validity and amount of the
Claimant's claim. No discovery shall be allowed on the merits of the Action or
Settlement in connection with processing of the Proofs of Claim.

            16. Payment pursuant to this Stipulation shall be deemed final and
conclusive against all Class Members. All Class Members whose claims are not
approved by the Court shall be barred from participating in distributions from
the Net Settlement Fund, but otherwise shall be bound by all of the terms of
this Stipulation and the Settlement, including the terms of the Order and Final
Judgment to

                                       18

<PAGE>

be entered in the Action and the releases provided for herein, and will be
barred and enjoined from bringing any action against any and all of the Released
Parties concerning any and all of the Settled Claims.

            17. All proceedings with respect to the administration, processing
and determination of claims described by paragraphs 12-15 of this Stipulation
and the determination of all controversies relating thereto, including disputed
questions of law and fact with respect to the validity of claims, shall be
subject to the jurisdiction of the Court.

            18. The Net Settlement Fund shall be distributed to Authorized
Claimants only after the Effective Date and after: (i) all Proofs of Claim have
been processed, and all Claimants whose Proofs of Claim have been rejected or
disallowed, in whole or in part, have been notified and provided the opportunity
to be heard concerning such rejection or disallowance; (ii) all objections with
respect to all rejected or disallowed claims have been resolved by the Court,
and all appeals therefrom have been resolved or the time therefor has expired;
(iii) all matters with respect to attorneys' fees, costs, and disbursements have
been resolved by the Court, all appeals therefrom have been resolved or the time
therefor has expired; and (iv) all costs of administration have been paid.

                       TERMS OF PRELIMINARY APPROVAL ORDER

            19. Promptly after this Stipulation has been fully executed,
Plaintiffs' Co-Lead Counsel and Defendants' Counsel jointly shall apply to the
Court for entry of a Preliminary Approval Order, substantially in the form
annexed hereto as Exhibit A. During the period from the entry of the Preliminary
Order to the Effective Date, each of the Lead Plaintiffs on behalf of themselves
and all other Class Members, and their respective heirs, executors,
administrators, successors and assigns and all persons acting in concert with
any such person, agree not to institute, maintain or prosecute any or all
Settled Claims against any or all of the Released Parties.

                                       19

<PAGE>

                        TERMS OF ORDER AND FINAL JUDGMENT

            20. If the Settlement contemplated by this Stipulation is approved
by the Court, Plaintiffs' Co-Lead Counsel and Defendants' Counsel shall request
that the Court enter an Order and Final Judgment substantially in the form
annexed hereto as Exhibit B.

               EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

            21. The Effective Date of this Settlement shall be the date when all
the following shall have occurred:

                  (a) entry of the Preliminary Approval Order in all material
respects in the form annexed hereto as Exhibit A;

                  (b) approval by the Court of the Settlement, following notice
to the Class and a hearing, as prescribed by Rule 23 of the Federal Rules of
Civil Procedure;

                  (c) an Order and Final Judgment, in all material respects in
the form set forth in Exhibit B annexed hereto, has been entered by the Court
and has become Final, or, in the event that the Court enters an order and final
judgment in form other than that provided above ("Alternative Judgment") and
none of the signatories hereto elect to terminate this Settlement, the date that
such Alternative Judgment becomes Final; and

                  (d) the Orders and Final Judgments approving the Stipulations
and Agreements of Settlement attached to the Cover Agreement as Exhibits 2, 4,
5, 6, and 7 shall have become Final.

            22. Defendants' Counsel or Plaintiffs' Co-Lead Counsel shall have
the right to terminate the Settlement and this Stipulation by providing written
notice of their election to do so ("Termination Notice") to all other
signatories hereto, and to all other signatories to the Cover Agreement, within
thirty (30) days of: (a) the Court's declining to enter the Preliminary Approval
Order

                                       20

<PAGE>

in any material respect; (b) the Court's refusal to approve this Stipulation or
any material part of it; (c) the Court's declining to enter the Order and Final
Judgment in any material respect; (d) the date upon which the Order and Final
Judgment is modified or reversed in any material respect by the Court of Appeals
or the Supreme Court; or (e) the date upon which an Alternative Judgment is
modified or reversed in any material respect by the Court of Appeals or the
Supreme Court.

            23. Defendants shall have the option to terminate the Settlement and
this Stipulation in the event that, with respect to any of the Actions (as that
term has been defined in the Cover Agreement) which are class actions, putative
members of any class who purchased or held (as appropriate to each Action) in
excess of 3% of the securities purchased or held, as the case may be, by all
class members in that class during that class period, properly elect to exclude
themselves in accordance with the requirements for requesting exclusion provided
in the notices to be sent to putative class members in each of the Actions.
Solely for the purposes of determining whether Lucent's right to terminate has
been triggered by the provisions of this paragraph, the Private Plaintiffs (as
defined in the Cover Agreement) shall be deemed not to have opted out of the
class in any of the Actions. With respect to exclusions received with respect to
this Action, Defendants shall have up to one (1) business day prior to the
Settlement Fairness Hearing in this Action to give notice of termination to
Plaintiffs' Co-Lead Counsel. Plaintiffs' Co-Lead Counsel and Defendants Counsel
shall jointly request that the deadline for submitting exclusions from this
Action be set ten (10) business days prior to the Settlement Fairness Hearing.
Copies of all requests for exclusion from the Class herein received by the
Claims Administrator (or other person designated to receive exclusion requests)
shall be provided to Lucent no later than seven (7) business days prior to the
hearing on the Settlement in this Action. Plaintiffs' Co-Lead Counsel shall
cause the Claims Administrator to provide to Lucent, no later than three (3)
business days prior to the hearing, a list of all persons or entities requesting
exclusion and the amounts of the

                                       21

<PAGE>

securities purchased or held, as the case may be, by each person or entity
requesting exclusion (as set forth in each exclusion request) and to certify, no
later than (3) business days prior to the Settlement Fairness Hearing, that all
requests for exclusion received have been copied and provided to Defendants'
Counsel.

            24. In the event that there is any non-delivery of any of the
securities required to be delivered hereunder within ten (10) business days
after the dates that such securities are due, then Plaintiffs' Co-Lead Counsel
shall have the option to terminate this Settlement or to seek an Order from the
Court directing specific performance of Lucent's obligation to issue and/or
deliver such securities, unless such non-delivery is cured within ten (10)
business days.

            25. Except as otherwise provided herein, in the event the Settlement
is terminated or fails to become effective for any reason, then the parties to
this Stipulation shall be deemed to have reverted to their respective status in
the Action immediately prior to September 5, 2002 and, except as otherwise
expressly provided, the parties shall proceed in all respects as if this
Stipulation and any related orders had not been entered, and (i) any portions of
the settlement funds previously paid on behalf of Defendants by the D&O
Insurers, together with any interest income earned thereon, less any Taxes due
with respect to such interest income shall be returned to the D&O Insurers, and
(ii) any other portions of the settlement consideration previously paid by or on
behalf of the Defendants, together with any interest earned or appreciation
thereon, less any Taxes due with respect to such income (including taxes, if
any, on the appreciation in value of any Class Securities held in the Lucent
Common Stock Escrow Account), and less the costs of notice and administration
actually incurred and paid or payable (and if not already paid by Lucent, Lucent
shall remain liable as provided in paragraph 2.(e) of the Cover Agreement to pay
for up to $5 million of notice and administration costs in total incurred prior
to termination) and less any losses realized on the sale of the Lucent and/or
Avaya stock shall be returned

                                       22

<PAGE>

to the persons or entities paying the same. Plaintiffs shall not be liable to
reimburse Lucent for any amounts of notice and administration costs up to the $5
million referred to in paragraph 2.(e) of the Cover Agreement in the event the
Settlement is terminated or fails to become effective for any reason.

                           NO ADMISSION OF WRONGDOING

            26. This Stipulation, whether or not consummated, and any
proceedings taken pursuant to it:

                  (a) shall not be offered or received against the Defendants as
evidence of, or construed as, or deemed to be evidence of any presumption,
concession, or admission by any of the Defendants with respect to the truth of
any fact alleged by plaintiffs or the validity of any claim that had been or
could have been asserted in the Action or in any litigation, or of any
liability, negligence, fault, or wrongdoing of the Defendants;

                  (b) shall not be offered or received against the Defendants as
evidence of a presumption, concession or admission of any fault,
misrepresentation or omission with respect to any statement or written document
approved or made by any Defendant, or against the Lead Plaintiffs or any other
members of the Class as evidence of any infirmity in the claims of Lead
Plaintiffs or the other members of the Class;

                  (c) shall not be offered or received against the Defendants or
against the Lead Plaintiffs or any other members of the Class as evidence of a
presumption, concession or admission with respect to any liability, negligence,
fault or wrongdoing, or in any way referred to for any other reason as against
any of the parties to this Stipulation, in any other civil, criminal or
administrative action or proceeding, other than such proceedings as may be
necessary to effectuate the provisions of this Stipulation; provided, however,
that if this Stipulation is approved by the Court, Defendants may refer to it to
effectuate the liability protection granted them hereunder;

                                       23

<PAGE>

                  (d) shall not be construed against Defendants, Lead Plaintiffs
or any other members of the Class as an admission or concession that the
consideration to be given hereunder represents the amount which could be or
would have been recovered after trial;

                  (e) shall not be construed as or received in evidence as an
admission, concession or presumption against Lead Plaintiffs or any other
members of the Class or any of them that any of their claims are without merit
or that damages recoverable under the Complaint would not have exceeded the
settlement amounts; and

                  (f) shall not be construed as or received in evidence as an
admission, concession or presumption that class certification is appropriate in
this Action.

                            MISCELLANEOUS PROVISIONS

            27. All of the exhibits attached hereto are hereby incorporated by
reference as though fully set forth herein.

            28. The parties to this Stipulation intend the Settlement to be a
final and complete resolution of all disputes asserted or which could be
asserted by the Lead Plaintiffs, any other members of the Class and their
attorneys against the Released Parties with respect to the Settled Claims.
Accordingly, Lead Plaintiffs and Defendants agree not to assert in any forum
that the Action was brought by plaintiffs or defended by Defendants in bad faith
or without a reasonable basis. The parties hereto shall assert no claims of any
violation of Rule 11 of the Federal Rules of Civil Procedure relating to the
prosecution, defense, or settlement of the Action. The parties agree that the
amount paid and the other terms of the Settlement were negotiated at arm's
length in good faith by the parties, and reflect a settlement that was reached
voluntarily after consultation with experienced legal counsel.

            29. This Stipulation may not be modified or amended, nor may any of
its provisions be waived except by a writing signed by all signatories hereto or
their successors-in-interest.

                                       24

<PAGE>

            30. The headings herein are used for the purpose of convenience only
and are not meant to have legal effect.

            31. The administration and consummation of the Settlement as
embodied in this Stipulation shall be under the authority of the Court and the
Court shall retain jurisdiction for the purpose of entering orders providing for
awards of attorneys' fees and expenses to Plaintiffs' Counsel and enforcing the
terms of this Stipulation.

            32. The waiver by one party of any breach of this Stipulation by any
other party shall not be deemed a waiver of any other prior or subsequent breach
of this Stipulation.

            33. This Stipulation and its exhibits and the Cover Agreement
constitute the entire agreement among the parties hereto concerning the
Settlement of the Action, and no representations, warranties, or inducements
have been made by any party hereto concerning this Stipulation and its exhibits
and the Cover Agreement other than those contained and memorialized in such
documents.

            34. This Stipulation may be executed in one or more original and/or
faxed counterparts. All executed counterparts and each of them shall be deemed
to be one and the same instrument provided that counsel for the signatories of
this Stipulation shall exchange among themselves original signed counterparts.

            35. This Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.

            36. The construction, interpretation, operation, effect and validity
of this Stipulation, and all documents necessary to effectuate it, shall be
governed by the internal laws of the State of New Jersey without regard to
conflicts of laws, except to the extent that federal law requires that federal
law govern.

                                       25

<PAGE>

            37. This Stipulation shall not be construed more strictly against
one party than another merely by virtue of the fact that it, or any part of it,
may have been prepared by counsel for one of the parties, it being recognized
that it is the result of arm's-length negotiations between the parties and all
parties have contributed substantially and materially to the preparation of this
Stipulation.

            38. All counsel and any other person executing this Stipulation and
any of the exhibits hereto, or any related settlement documents, warrant and
represent that they have the full authority to do so and that they have the
authority to take appropriate action required or permitted to be taken pursuant
to the Stipulation to effectuate its terms.

            39. Plaintiffs' Co-Lead Counsel and Defendants' Counsel agree to
cooperate fully with one another in seeking Court approval of the Preliminary
Approval Order, the Stipulation and the Settlement, and to promptly agree upon
and execute all such other documentation as may be reasonably required to obtain
final approval by the Court of the Settlement.

DATED:   September 22, 2003

                                           MILBERG WEISS BERSHAD
                                            HYNES & LERACH LLP

                                           By: /s/ David J. Bershad
                                               ------------------------
                                               David J. Bershad
                                               Jerome M. Congress
                                               Elaine S. Kusel
                                           One Pennsylvania Plaza
                                           New York, New York 10119-0165
                                           Telephone: (212) 594-5300
                                           Facsimile: (212) 868-1229

                                                   -AND-

                                       26
<PAGE>

                                          BERNSTEIN  LITOWITZ BERGER &
                                            GROSSMANN LLP

                                          By: /s/ Daniel L. Berger
                                              -----------------------
                                              Max W. Berger
                                              Daniel L. Berger
                                              Steven B. Singer
                                              Rochelle Feder Hansen
                                          1285 Avenue of the Americas
                                          New York, New York 10019
                                          Telephone: (212) 554-1400
                                          Facsimile: (212) 554-1444

                                          CO-LEAD COUNSEL FOR LEAD PLAINTIFFS
                                          AND THE CLASS

                                          CRAVATH, SWAINE & MOORE LLP

                                          By: /s/ Michael A. Paskin
                                              -----------------------
                                              Paul C. Saunders
                                              Daniel Slifkin
                                              Michael A. Paskin
                                          Worldwide Plaza
                                          825 Eighth Avenue
                                          New York, New York 10019
                                          Telephone: (212) 474-1000
                                          Facsimile: (212) 474-3700

                                                 - AND -

                                          LINDABURY, MCCORMICK & ESTABROOK, P.A.

                                          By: /s/ John H. Schmidt, Jr.
                                              ------------------------
                                              John H. Schmidt, Jr.
                                              John F. Goemaat
                                          53 Cardinal Drive
                                          P.O. Box 2369
                                          Westfield, New Jersey 07091
                                          Telephone: (908) 233-6800
                                          Facsimile: (908) 233-5078

                                          ATTORNEYS FOR DEFENDANTS LUCENT
                                          TECHNOLOGIES, INC., RICHARD A.
                                          MCGINN, DONALD K. PETERSON AND
                                          DEBORAH C. HOPKINS

                                       27