Document:

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                                                                    Exhibit 10.6

                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
                           pursuant to a
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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

                           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;
                           or

                  (5)      The occurrence of a "Change in Control" (as such term
                           is defined in the Lucent Technologies Inc. 1996 Long
                           Term Incentive Program) if it shall occur prior to
                           the earlier of the date of a Change in Control of the
                           Company as defined herein or the Distribution.

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.

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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

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

         (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:

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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

                  (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, 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.

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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

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

         (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, 2003.

         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;

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                AGERE SYSTEMS INC. 2001 LONG TERM INCENTIVE PLAN

provided, that if any Shares are subject to an Award granted hereunder that is
forfeited, settled in 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, 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) 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.

                                      -11-
<PAGE>   12
                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

                                      -12-
<PAGE>   13
                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

                                      -13-
<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-<PAGE>   1
                                                                   Exhibit 10.20

                               AGERE SYSTEMS INC.
                        NON-EMPLOYEE DIRECTOR STOCK PLAN

     SECTION 1. PURPOSES. The Agere Systems Inc. Non-Employee Director Stock
Plan (the "Plan") is intended to promote the interests of Agere Systems Inc.
(the "Company") and to enable the Company to attract and retain qualified
persons to serve as directors, to enhance the equity interest of directors in
the Company, and to solidify the common interests of its directors and
stockholders in enhancing the value of the Company's common stock ("Shares").
The Plan seeks to encourage the highest level of director performance by
providing directors with a proprietary interest in the Company's performance and
progress. These purposes shall be achieved by the granting of options
("Options") to purchase Shares to members of the Board of Directors of the
Company (the "Board") who are not employees of the Company and who, prior to the
spin-off of the Company from Lucent Technologies Inc. ("Lucent"), are not
employees of Lucent ("Non-Employee Directors"), and making the Shares reserved
under the Plan available to satisfy distributions to Non-Employee Directors with
respect to cash compensation deferred by them into deferred share accounts under
the Agere Systems Inc. Deferred Compensation Plan (the "Agere Deferred
Compensation Plan") and earnings thereon. Under the Plan no Options will be
granted which are qualified as incentive stock options.

     SECTION 2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Corporate Governance and Compensation Committee (the "Committee") of the
Board. The Committee shall, subject to the provisions of the Plan, have the
power, in its absolute discretion, to make discretionary grants of Options to
Non-Employee Directors in addition to or in lieu of the automatic grants set
forth in Sections 5(c) and 5(d) hereof, to set the terms for any such
discretionary grants, to construe the Plan, to determine all questions
hereunder, to adopt and amend such rules and regulations for the administration
of the Plan as may be determined by the Committee, and to make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan. Decisions of the Committee shall
be final, conclusive and binding upon all persons, including the Company and all
Option holders (each an "Optionee").

     SECTION 3. SHARES SUBJECT TO THE PLAN. The total number of Shares which
shall be available under the Plan shall be 2 million in the aggregate, subject
to adjustment as provided in Section 7. Such Shares may be shares of Class A
common stock ("Class A Stock"), Class B common stock ("Class B Stock") or a
combination thereof. The Shares available under the Plan shall also be used to
satisfy distributions to Non-Employee Directors with respect to cash
compensation deferred into deferred share accounts, and earnings thereon,
pursuant to the Agere Deferred Compensation Plan. The Company shall at all times
reserve such number of Shares as will be sufficient to satisfy the requirements
of the Plan and outstanding Options and, with respect to the Share requirements
described above, the Agere Deferred Compensation Plan. Any Shares issued
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. The underlying Shares with respect to the unexercised portion
of any expired, terminated or canceled Option
<PAGE>   2
               AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

shall again be available for use under the Plan.

         SECTION 4. ELIGIBILITY. Only Non-Employee Directors are eligible to
participate in the Plan and to receive Options and Shares upon the exercise of
Options. Shares issued hereunder in respect of balances under the Agere Deferred
Compensation Plan may be issued only in respect of amounts deferred by
Non-Employee Directors and earnings on such amounts.

         SECTION 5. TERMS OF OPTIONS. Unless otherwise determined by the
Committee, the following shall apply to Options granted under the Plan:

         (a)      Options shall be granted with respect to Class A Stock.

         (b)      The per share purchase price of the Shares covered by an
                  Option granted pursuant to the Plan shall be 100% of the Fair
                  Market Value of one Share of the type of Shares subject to the
                  Option on the day the Option is granted. The Option price will
                  be subject to adjustment in accordance with the provisions of
                  Section 7 hereof. For purposes of the Plan, the "Fair Market
                  Value" of a Share means 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,
                  unless the date for which Fair Market Value is being
                  determined is the date of the final prospectus relating to the
                  initial public offering of the Company's Shares ("Initial
                  Public Offering"), in which case Fair Market Value shall mean
                  the "price to the public" (or equivalent) set forth on the
                  cover page of the final prospectus relating to the Initial
                  Public Offering.

         (c)      On the date of the final prospectus relating to the Initial
                  Public Offering, each Non-Employee Director shall
                  automatically be granted on such date, without further action
                  by the Board or the Committee, Options with respect to 50,000
                  Shares. Thereafter, on the date that any Non-Employee Director
                  first becomes elected as a Non-Employee Director, each such
                  Non-Employee Director shall automatically be granted on such
                  date, without further action by the Board or the Committee,
                  Options with respect to 50,000 Shares.

         (d)      Each year, on the date of the Company's Annual Meeting of
                  Stockholders, each member of the Board who remains a
                  Non-Employee Director subsequent to any election of directors
                  occurring at the meeting shall be automatically granted on
                  such date, without further action by the Board or the
                  Committee, an Option to purchase 30,000 Shares.

         (e)      The Options granted under subsection 5(c) above on account of
                  the Initial Public Offering or on the date that a Non-Employee
                  Director first becomes elected to the Board shall be fully
                  vested and exercisable on the first anniversary of the date of
                  grant. The Options granted under subsection 5(d) above on the
                  date of the Company's Annual Meeting of Stockholders shall be
                  fully vested and exercisable

                                      -2-
<PAGE>   3
               AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

                  on the earlier of the first anniversary of the date of grant
                  or the date of the Company's next Annual Meeting of
                  Stockholders.

         (f)      The last day to exercise an Option shall be the day preceding
                  the seventh anniversary of the date of grant, after which time
                  the Option shall expire.

         (g)      Each Option shall be exercised in accordance with procedures
                  established by the Company accompanied by payment in full of
                  the purchase price for the Shares subject to the Option.
                  Payment for such Shares may be made (as determined by the
                  Committee at the time of exercise) (i) in cash, (ii) by check,
                  acceptable to the Company, payable to the order of the Company
                  in the amount of such purchase price, (iii) by delivery to the
                  Company of Shares having an aggregate Fair Market Value equal
                  to such purchase price, which shares shall have been held by
                  the Optionee for at least six months, (iv) by irrevocable
                  instructions to a broker to sell the Shares to be issued upon
                  exercise of the Option and to deliver promptly to the Company
                  the amount of sale proceeds necessary to pay such purchase
                  price and any applicable withholding taxes, or (v) by any
                  combination of the methods of payment described in (i) through
                  (iv) above.

         (h)      An Optionee shall not have any of the rights of a stockholder
                  with respect to the Shares subject to an Option unless and
                  until such Shares are issued to the Optionee.

         (i)      Unless otherwise determined by the Committee prior to the time
                  of transfer, no Option shall be transferable, except by will
                  or the laws of descent and distribution, and any Option may be
                  exercised during the lifetime of the Optionee only by him. No
                  Option granted under the Plan shall be subject to execution,
                  attachment or other process.

         SECTION 6. TERMINATION OF OPTION RIGHTS.

         (a) In the event an Optionee ceases to be a member of the Board for any
reason other than death, any then unexercised Options granted to such Optionee
may be exercised, to the extent vested and exercisable on the date of such
cessation for the remainder of the term of the Option. All unvested options on
the date of such cessation shall immediately expire such cessation date.

         (b) In the event that an Optionee ceases to be a member of the Board by
reason of his or her death, all unexercised and unvested Options granted to such
Optionee shall immediately become fully vested and exercisable and all
unexercised Options granted to such Optionee may be exercised by the Optionee's
personal representative, heir or legatee for the remainder of the term of the
Option.

         SECTION  7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

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

                                      -3-
<PAGE>   4
               AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

Options as the Committee in its sole discretion deems equitable or appropriate,
including without limitation such adjustments in the aggregate number, class and
kind of shares which may be delivered under the Plan, in the number, class, kind
and option or exercise price of shares subject to outstanding Options
(including, if the Committee deems appropriate, the substitution of similar
options to purchase the shares of, or other awards denominated in the shares of,
another company) as the Committee may determine to be appropriate in its sole
discretion, provided that the number of Shares or other securities subject to
any Option shall always be a whole number.

         SECTION 8. FURTHER CONDITIONS OF EXERCISE.

         (a) Unless prior to the exercise of an Option the offer and sale of the
Shares issuable upon such exercise are the subject of an effective registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), and a prospectus
meeting the requirements of Section 10(a)(3) of the Securities Act has been
distributed to the Optionees, the Company shall be under no obligation to honor
any such exercise unless the Committee determines otherwise in which case the
notice of exercise with respect to such Option shall be accompanied by a
representation or agreement of the Optionee to the Company to the effect that
such shares are being acquired for investment only and not with a view to the
resale or distribution thereof in violation of the Securities Act, or such other
documentation as may be required by the Company, unless, in the opinion of
counsel to the Company, such representation, agreement or documentation is not
necessary to comply with the Securities Act.

         (b) Anything in subsection (a) of this Section 8 to the contrary
notwithstanding, the Company shall not be obligated to issue or sell any Shares
until they have been listed on each securities exchange on which the Shares may
then be listed and until and unless, in the opinion of counsel to the Company,
the Company may issue such shares pursuant to a qualification or an effective
registration statement, or an exemption from registration, under such state and
federal laws, rules or regulations as such counsel may deem applicable. The
Company shall use reasonable efforts to effect such listing, qualification and
registration, as the case may be.

         SECTION 9. TERMINATION AND AMENDMENT OF PLAN. The Board may at any time
terminate the Plan or make such modification or amendment thereof as it deems
advisable; provided, however, that the Board may not, without approval by a
majority of the Shares present in person or by proxy and entitled to vote
thereon increase the maximum number of Shares available for use under the Plan.
Termination or any modification or amendment of the Plan shall not, without
consent of an Optionee, negatively affect his rights under an Option previously
granted to him.

         SECTION 10. CHANGE IN CONTROL. In the event of a Change in Control, as
defined below, all outstanding Options issued under the Plan shall become
immediately vested and exercisable notwithstanding any vesting schedule
previously applicable to such Options. A "Change in Control" of the Company
shall be deemed to occur upon:

         (a)      An acquisition by any individual, entity or group (within the
                  meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of
                  1934, as amended (the "Exchange Act")) (an "Entity") of
                  beneficial ownership (within the meaning of Rule 13d-3

                                      -4-
<PAGE>   5
               AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

                  promulgated under the Exchange Act) of 20% or more of either
                  (A) the then outstanding shares of common stock of the Company
                  (the "Outstanding Company Common Stock") or (B) the combined
                  voting power of the then outstanding voting securities of the
                  Company entitled to vote generally in the election of
                  directors (the "Outstanding Company Voting Securities");
                  excluding, however, the following: (1) any acquisition
                  directly from the Company, other than an acquisition by virtue
                  of the exercise of a conversion privilege unless the security
                  being so converted was itself acquired directly from the
                  Company, (2) any acquisition by the Company, (3) any
                  acquisition by any employee benefit plan (or related trust)
                  sponsored or maintained by the Company or any corporation
                  controlled by the Company, or (4) any acquisition by any
                  corporation pursuant to a transaction which complies with
                  clauses (A), (B) and (C) of subsection (c) of this Section 10;
                  or

         (b)      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

         (c)      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

                                      -5-
<PAGE>   6
               AGERE SYSTEMS INC. NON-EMPLOYEE DIRECTOR STOCK PLAN

                  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

         (d)      The approval by the stockholders of the Company of a complete
                  liquidation or dissolution of the Company; or

         (e)      The occurrence of a "Change in Control" (as such term is
                  defined in the Lucent Technologies Inc. 1999 Stock
                  Compensation Plan for Non-Employee Directors) if it shall
                  occur prior to the earlier of the date of a Change in Control
                  of the Company as defined in this Section 10 or the
                  Distribution, as defined below.

         Notwithstanding the foregoing, the Distribution, as defined below,
shall not constitute a Change in Control. "Distribution" means the distribution
of the Shares held by Lucent to Lucent's stockholders.

         SECTION 11. EFFECTIVE DATE; TERM OF PLAN. The Plan shall become
effective as of March _, 2001 (the "Effective Date"). The Plan shall terminate
and no further Options shall be granted hereunder after the date that is ten
(10) years from the Effective Date (the "Termination Date"); provided, however,
that the terms of the Plan shall continue in operation to the extent necessary
with respect to Options outstanding as of the Termination Date.

                                      -6-

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