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                                                                    EXHIBIT 10.6
                                                                         [DRAFT]


                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

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

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

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

         (c) "Board" means the Board of Directors of the Company.

         (d) "Change in Control" means the happening of any of the following
events:

                  (1)      An acquisition by any individual, entity or group
                           (within the meaning of Section 13(d)(3) or 14(d)(2)
                           of the Exchange Act) (an "Entity") of beneficial
                           ownership (within the meaning of Rule 13d-3
                           promulgated under the Exchange Act) of 20% or more of
                           either (A) the then outstanding shares of common
                           stock of the Company (the "Outstanding Company Common
                           Stock") or (B) the combined voting power of the then
                           outstanding voting securities of the Company entitled
                           to vote generally in the election of directors (the
                           "Outstanding Company Voting Securities"); excluding,
                           however, the following: (1) any acquisition directly
                           from the 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
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                           AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



                           pursuant to a transaction which complies with clauses
                           (A), (B) and (C) of subsection (3) of this Section
                           2(d); or



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

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



                           related trust) of the Company, such corporation
                           resulting from such Corporate Transaction or, if
                           reference was made to equity ownership of any Parent
                           Company for purposes of determining whether clause
                           (A) above is satisfied in connection with the
                           applicable Corporate Transaction, such Parent
                           Company) will beneficially own, directly or
                           indirectly, 20% or more of, respectively, the
                           outstanding shares of common stock of the corporation
                           resulting from such Corporate Transaction or the
                           combined voting power of the outstanding voting
                           securities of such corporation entitled to vote
                           generally in the election of directors unless such
                           ownership resulted solely from ownership of
                           securities of the Company prior to the Corporate
                           Transaction, and (C) individuals who were members of
                           the Incumbent Board will immediately after the
                           consummation of the Corporate Transaction constitute
                           at least a majority of the members of the board of
                           directors of the corporation resulting from such
                           Corporate Transaction (or, if reference was made to
                           equity ownership of any Parent Company for purposes
                           of determining whether clause (A) above is satisfied
                           in connection with the applicable Corporate
                           Transaction, of the Parent Company); or

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

Notwithstanding the foregoing, the Distribution shall not constitute a Change in
Control.

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

         (f) "Class A Stock" means the Class A common stock, par value $.01 per
share, of the Company.

         (g) "Class B Stock" means the Class B common stock, par value $.01 per
share, of the Company.


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

         (i) "Committee" means the Corporate Governance and Compensation
Committee of the Board (or any successor committee).

         (j) "Company" means Agere Systems Inc., a Delaware corporation.

         (k) "Company Action" means

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

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

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

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

         (l) "Covered Employee" means a "covered employee" within the meaning of
Section 162(m)(3) of the Code.

         (m) "Distribution" means the distribution of shares of the Company's
common stock by Lucent to Lucent's stockholders.

         (n) "Dividend Equivalent" means any right granted pursuant to Section
14(g) hereof.

         (o) "Effective Date" means the effective date of the registration
statement under the Securities Act of 1933 for the Initial Public Offering.

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

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

         (r) "Fair Market Value" means:

                  (i)      with respect to Shares, the average of the highest
                           and lowest reported sales prices, regular way, of
                           Shares in transactions reported on the New York Stock
                           Exchange on the date of determination of Fair Market
                           Value, or if


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



                           no sales of Shares are reported on the New York Stock
                           Exchange for that date, the comparable average sales
                           price for the last previous day for which sales were
                           reported on the New York Stock Exchange, unless the
                           date for which Fair Market Value is being determined
                           is the date of the final prospectus relating to the
                           Initial Public Offering, in which case Fair Market
                           Value shall mean the "price to the public" (or
                           equivalent) set forth on the cover page for the final
                           prospectus relating to the Initial Public Offering,
                           and

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

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

         (t) "Initial Public Offering" means the first underwritten, firm
commitment public offering pursuant to an effective registration statement under
the Securities Act of 1933, covering the offer and sale by the Company of its
Shares.

         (u) "Lucent" means Lucent Technologies Inc.

         (v) "Net Income" means the net income of the Company as determined
under generally accepted accounting principles, excluding (a) extraordinary
items (net of applicable taxes); (b) cumulative effects of changes in accounting
principles; (c) securities gains and losses (net of applicable taxes); and (d)
nonrecurring items (net of applicable taxes) including, but not limited to,
gains or losses on asset dispositions and sales of divisions, business units or
subsidiaries, restructuring charges, gains and losses from qualified benefit
plan curtailments and settlements, and income or expenses related to deferred
tax assets.

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

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

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

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



         (aa) "Participant" means an Employee who is selected by the Committee
to receive an Award under the Plan.

         (bb) "Performance Award" means any Award of Performance Shares or
Performance Units pursuant to Section 9 hereof.

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

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

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

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

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

         (hh) "Restricted Stock Award" means an award of Restricted Stock under
Section 8 hereof.

         (ii) "Shares" means shares of Class A Stock, Class B Stock or other
securities of the Company, as the Committee may from time to time determine. For
purposes of provisions of the Plan that contain price determinations, the term
Shares shall be deemed to be the type of securities that are the basis of the
Award for which the price is being determined.


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

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

         (ll) "Term" means the period beginning on the Effective Date, and
ending on February 28, 2004.

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

         SECTION 4.  SHARES SUBJECT TO THE PLAN.

         (a) Subject to adjustment as provided in Section 4(b), the total number
of Shares available for Awards granted under the Plan during the Term shall be
180 million Shares; provided, that if any Shares are subject to an Award granted
hereunder that is forfeited, settled in


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



cash, expires, or otherwise is terminated without issuance of Shares, the Shares
subject to such Award shall again be available for Awards under the Plan, if no
Participant shall have received any benefits of ownership in respect thereof;
and provided further, that no more than 40 million Shares shall be available for
the grant of Incentive Stock Options under the Plan during the Term; and
provided further, that no more than 40 million Shares shall be available for the
grant of Awards in the form of Stock Appreciation Rights pursuant to Section 7
(excluding for this purpose any Stock Appreciation Right granted in relation to
an Incentive Stock Option or a Nonstatutory Stock Option), Restricted Stock
pursuant to Section 8, Performance Shares pursuant to Section 9, and Other Stock
Unit Awards pursuant to Section 10 that are valued by reference to Shares during
the Term; and provided further, that no Participant may be granted Awards with
respect to more than 10 million Shares in the aggregate during the Term. Any
Shares issued hereunder may consist, in whole or in part, of authorized and
unissued Shares or treasury Shares.

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

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

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

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

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

         (d) METHOD OF EXERCISE. Subject to the other provisions of the Plan and
any applicable Award Agreement, any Option may be exercised by the Participant
in whole or in part at such time or times, and the Participant may make payment
of the option price in such form or forms, including, without limitation,
payment by delivery of cash, Shares or other consideration (including, where
permitted by law and the Committee, Awards) having a Fair Market Value on the
exercise date equal to the total option price, or by any combination of cash,
Shares and other consideration as the Committee may specify in the applicable
Award Agreement.

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

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

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

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



         where:

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

         SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted hereunder to Participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific Option
granted under Section 6. The provisions of Stock Appreciation Rights need not be
the same with respect to each recipient. Any Stock Appreciation Right related to
a Nonstatutory Stock Option may be granted at the same time such Option is
granted or at any time thereafter before exercise or expiration of such Option.
Any Stock Appreciation Right related to an Incentive Stock Option must be
granted at the same time such Option is granted. In the case of any Stock
Appreciation Right related to any Option, the Stock Appreciation Right or
applicable portion thereof shall terminate and no longer be exercisable upon the
termination or exercise of the related Option, except that a Stock Appreciation
Right granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of Shares not covered by the Stock
Appreciation Right. Any Option related to any Stock Appreciation Right shall no
longer be exercisable to the extent the related Stock Appreciation Right has
been exercised. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it shall deem appropriate.

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

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

         SECTION 11.  CHANGE IN CONTROL PROVISIONS.

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

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

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


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



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

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

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

         (c) Notwithstanding any other provision of this Plan, if any right
granted pursuant to this Plan would make a Change in Control transaction
ineligible for pooling-of-interests accounting under APB No. 16 (or other
relevant accounting literature), which transaction (after giving effect to any
other actions taken to cause such transaction to be eligible for such
pooling-of-interests accounting treatment), but for the nature of such grant,
would otherwise be eligible for such accounting treatment, the Committee shall
have the ability to substitute for the cash payable pursuant to such right,
Shares with an equivalent Fair Market Value.

         SECTION 12.  CODE SECTION 162(m) PROVISIONS.

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

         (b) If an Award is subject to this Section 12, then the lapsing of
restrictions thereon and the distribution of cash, Shares or other property
pursuant thereto, as applicable, shall be subject to the Company having a level
of Net Income for the fiscal year preceding lapse or distribution set by the
Committee within the time prescribed by Section 162(m) of the Code or


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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



the regulations thereunder in order for the level to be considered
"pre-established". The Committee may, in its discretion, reduce the amount of
any Performance Award or Other Stock Unit Award subject to this Section 12 at
any time prior to payment based on such criteria as it shall determine,
including but not limited to individual merit and the attainment of specified
levels of one or any combination of the following: net cash provided by
operating activities, earnings per Share from continuing operations, operating
income, revenues, gross margin, return on operating assets, return on equity,
economic value added, stock price appreciation, total stockholder return
(measured in terms of stock price appreciation and dividend growth), or cost
control, of the Company or the Subsidiary or division of the Company for or
within which the Participant is primarily employed.

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

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

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

         SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of an optionee or Participant under an Award
theretofore granted, without the optionee's or Participant's consent, or that
without the approval of the stockholders would:

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

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

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

         SECTION 14.  GENERAL PROVISIONS.

         (a) Unless the Committee determines otherwise at the time the Award is
granted, no Award, and no Shares subject to Awards described in Section 10 which
have not been issued or as to which any applicable restriction, performance or
deferral period has not lapsed, may be


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<PAGE>   14
                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



sold, assigned, transferred, pledged or otherwise encumbered, except by will or
by the laws of descent and distribution and all Awards shall be exercisable,
during the Participant's lifetime, only by the Participant or, if permissible
under applicable law, by the Participant's guardian or legal representative;
provided that, if so determined by the Committee, a Participant may, in the
manner established by the Committee, designate a beneficiary to exercise the
rights of the Participant with respect to any Award upon the death of the
Participant.

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

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

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

         (1)      if required by the Committee, such recipient shall have
                  executed or accepted pursuant to procedures established by the
                  Committee, a written or electronic agreement or other
                  instrument evidencing the Award and delivered a fully executed
                  copy of any written agreement or other instrument to the
                  Company, and
         (2)      such recipient shall have otherwise complied with the then
                  applicable terms and conditions.

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

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

         (g) Subject to the provisions of this Plan and any Award Agreement, the
recipient of an Award (including, without limitation, any deferred Award) may,
if so determined by the Committee, be entitled to receive, currently or on a
deferred basis, interest or dividends, or


                                      -14-
<PAGE>   15
                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



interest or dividend equivalents, with respect to the number of Shares covered
by the Award, as determined by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested.

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

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

         (j) The Committee is authorized to establish procedures pursuant to
which the payment of any Award may be deferred.

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

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

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

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

         (o) If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the


                                      -15-
<PAGE>   16
                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN



determination of the Committee, materially altering the intent of the Plan, it
shall be stricken and the remainder of the Plan shall remain in full force and
effect.

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

         SECTION 15. EFFECTIVE DATE OF PLAN. The Plan shall become effective on
the Effective Date.

         SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the
Plan after February 28, 2003, but any Award theretofore granted may extend
beyond that date.


                                      -16-