Exhibit 10.12


AGERE
  SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN




As amended effective
December 1, 2005



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



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


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



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



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



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



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


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










AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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





	                    (2)
      	     	

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



          




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







-2-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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








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



          


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


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



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




-3-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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



        (j)    
  “Company Action” means 




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


          

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





          

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



          




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



          


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



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




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



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



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



        (p)    
  “Fair Market Value” means: 




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



          




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



          




-4-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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



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



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



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



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



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



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



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



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



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



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




-5-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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



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



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



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



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




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



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



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




-6-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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




      SECTION
  4. SHARES SUBJECT TO THE PLAN. 




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



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




-7-








AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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



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



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



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



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



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



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



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




-8-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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



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



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



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

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


      where: 



	                    	 N = the number of shares
      originally subject to the Option,

      M = the number of complete months elapsed since the grant date of the Option,

      D = the number of complete months between the grant date of the Option and
      the date on which the Option was originally scheduled to become completely
      exercisable, and

      E = the number of Shares covered by the Option for which the Option has
      already become exercisable (regardless of whether the Option has been exercised
      with respect to such Shares). 






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




-9-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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



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



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



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




-10-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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




        SECTION
  11. CHANGE IN CONTROL PROVISIONS. 


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


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



                    




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



                    




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



                    




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




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


	        (1)
      	    	
       If the
        Company is not the surviving Person following a Change in Control, and
        the surviving Person or the acquiring Person (the surviving or acquiring
        Person being the “Acquiror”) does not assume the outstanding
        Awards or does not substitute equivalent equity awards relating to the
        securities of the Acquiror or its Affiliates







-11-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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







	        (2)
      	    	
       If the
        Company is the surviving Person following a Change in Control, or the
        Acquiror assumes the outstanding Awards or substitutes equivalent equity
        awards relating to the securities of the Acquiror or its Affiliates for
        such Awards, then all such Awards or such substitutes therefore shall
        remain outstanding and be governed by their respective terms and the provisions
        of the Plan. 



                    




	        (3)
      	    	
       If (A)
        the employment of a Participant with the Company is terminated (1) other
        than for Cause or (2) by the Participant for Good Reason, in either case
        within 24 months following a Change in Control, and (B) the Company is
        the surviving Person following the Change in Control, or the Acquiror
        assumes the outstanding Awards or substitutes equivalent equity awards
        relating to the securities of the Acquiror or its Affiliates for such
        Awards, then all Awards held by such Participant shall become immediately
        and fully exercisable (or in the case of Restricted Stock Awards, Performance
        Awards or Other Stock Unit Awards, fully vested and all restrictions will
        immediately lapse). 



                    



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



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




-12-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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




      SECTION
  12. CODE SECTION 162(m) PROVISIONS. 



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



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



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



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



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



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




-13-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN



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



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



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



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




      SECTION
  14. GENERAL PROVISIONS.



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



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



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


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

  


	        (1)
      	    	
       if required
        by the Committee, such recipient shall have executed or accepted pursuant
        to procedures established by the Committee, a written or electronic agreement
        or other instrument evidencing the Award and delivered a fully executed
        copy of any written agreement or other instrument to the Company, and
        



                    




	        (2)
      	    	
       such recipient
        shall have otherwise complied with the then applicable terms and conditions.
        







-14-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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


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


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



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

  


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

  


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

  


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

  


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

  





-15-









AGERE SYSTEMS
  INC. 2001 LONG TERM INCENTIVE PLAN


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

  


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

  


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

  


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

  


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

  


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




-16-