Document:

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                                                                     EXHIBIT 4.7

                                WARRANT AGREEMENT

                                   Dated as of

                              December [ ], 2004

                                     between

                            LUCENT TECHNOLOGIES INC.

                                       and

                              THE BANK OF NEW YORK,

                                as Warrant Agent

Warrants for
Common Stock of
Lucent Technologies Inc.
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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 Page
<S>            <C>                                                                               <C>
                                    ARTICLE I

                                   Definitions

SECTION 1.01.  Definitions........................................................................1
SECTION 1.02.  Other Definitions..................................................................3
SECTION 1.03.  Rules of Construction..............................................................4

                                   ARTICLE II

                              Warrant Certificates

SECTION 2.01.  Form and Dating....................................................................4
SECTION 2.02.  Execution and Countersignature.....................................................5
SECTION 2.03.  Certificate Register...............................................................6
SECTION 2.04.  Transfer and Exchange..............................................................6
SECTION 2.05.  Certificated Warrants..............................................................8
SECTION 2.06.  Replacement Certificates...........................................................8
SECTION 2.07.  Outstanding Warrants...............................................................8
SECTION 2.08.  Cancelation........................................................................9
SECTION 2.09.  CUSIP Numbers......................................................................9

                                   ARTICLE III

                                 Exercise Terms

SECTION 3.01.  Exercise...........................................................................9
SECTION 3.02.  Exercise Periods...................................................................9
SECTION 3.03.  Expiration........................................................................10
SECTION 3.04.  Manner of Exercise................................................................10
SECTION 3.05.  Issuance of Warrant Shares........................................................10
SECTION 3.06.  Fractional Warrant Shares.........................................................10
SECTION 3.07.  Reservation of Warrant Shares.....................................................11
SECTION 3.08.  Compliance with Law...............................................................11

                                   ARTICLE IV

                        Adjustment and Notice Provisions

SECTION 4.01.  Adjustment of Exercise Price......................................................12
SECTION 4.02.  No Adjustment to Exercise Price...................................................12
SECTION 4.03.  Adjustment to Number of Shares....................................................12
SECTION 4.04.  Reorganizations...................................................................13
SECTION 4.05.  Exercise Price Not Less Than Par Value............................................13
SECTION 4.06.  Notice of Certain Action..........................................................13
</TABLE>

                                      -i-
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<TABLE>
<S>            <C>                                                                               <C>
SECTION 4.07.  Notice of Adjustments.............................................................14
SECTION 4.08.  Adjustment to Warrant Certificate.................................................14

                                    ARTICLE V

                               Registration Rights

SECTION 5.01.  Effectiveness of Registration Statement...........................................15
SECTION 5.02.  Suspension........................................................................15
SECTION 5.03.  Blue Sky..........................................................................15
SECTION 5.04.  Additional Acts...................................................................15
SECTION 5.05.  Expenses..........................................................................16

                                   ARTICLE VI

                                  Warrant Agent

SECTION 6.01.  Appointment of Warrant Agent; Standard of Care; Limitation of Liability; Force
               Majeure...........................................................................16
SECTION 6.02.  Rights and Duties of Warrant Agent................................................16
SECTION 6.03.  Individual Rights of Warrant Agent................................................17
SECTION 6.04.  Warrant Agent's Disclaimer........................................................18
SECTION 6.05.  Compensation and Indemnity........................................................18
SECTION 6.06.  Successor Warrant Agent...........................................................18

                                   ARTICLE VII

                                  Miscellaneous

SECTION 7.01.  Persons Benefiting................................................................20
SECTION 7.02.  Rights of Holders.................................................................20
SECTION 7.03.  Amendment.........................................................................20
SECTION 7.04.  Notices...........................................................................21
SECTION 7.05.  Governing Law; Jurisdiction; Certain Waivers......................................22
SECTION 7.06.  Successors........................................................................22
SECTION 7.07.  Multiple Originals................................................................22
SECTION 7.08.  Table of Contents.................................................................22
SECTION 7.09.  Severability......................................................................22
</TABLE>

EXHIBIT A                  Form of Face of Warrant Certificate

                                      -ii-
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                              WARRANT AGREEMENT dated as of December [ ], 2004
                        (this "Agreement"), between LUCENT TECHNOLOGIES INC., a
                        Delaware corporation (the "Company"), and THE BANK OF
                        NEW YORK, a New York banking corporation, as Warrant
                        Agent (the "Warrant Agent").

            The Company desires to issue the warrants (the "Warrants") described
herein. The Warrants will initially entitle the holders thereof (the "Holders")
to purchase 200,000,000 shares of its common stock, par value $0.01 per share
(the "Common Stock") (the shares of Common Stock issuable on exercise of the
Warrants being referred to herein as the "Warrant Shares"). The Warrants are
being issued in connection with the settlement of certain litigations previously
pending against the Company and other defendants in the United States District
Court for the District of New Jersey, in accordance with the Settlement
Agreement, dated September 22, 2003, between the Company and the participants in
such settlement.

            The Company desires the Warrant Agent to act on behalf of the
Company in connection with the issuance of the Warrants as provided herein and
the Warrant Agent is willing to so act.

            Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of Warrants:

                                   ARTICLE I

                                   Definitions

            SECTION 1.01. Definitions.

            "Affiliate" of any Person means (i) any other Person which, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person, or (ii) any other Person who is a director or executive
officer (A) of such Person, (B) of any subsidiary of such Person or (C) of any
Person described in clause (i) above. For purposes hereof, (a) "control" of a
Person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise and
(b) beneficial ownership of 10% or more of the voting common equity (on a fully
diluted basis) or warrants to purchase such equity (whether or not currently
exercisable) of a Person shall be deemed to be in control of such Person; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

            "Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.

            "Business Day" means each day that is not a Saturday, a Sunday or a
day on which banking institutions are not required to be open in the State of
New York.

            "Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however
<PAGE>
                                       2

designated) equity of such Person, including any Preferred Stock, but excluding
any debt securities convertible into such equity.

            "Certificated Warrants" means certificated Warrants in fully
registered definitive form.

            "Common Stock" means the common stock, par value $0.01 per share, of
the Company.

            "Current Market Value" per share of Common Stock at any date means
the average of the daily Closing Prices for each Business Day during the period
commencing 20 Business Days before such date and ending on the date one day
prior to such date. The Closing Price for each day (the "Closing Price") shall
be the last reported sales price or, in case no such reported sale takes place
on such date, the average of the reported closing bid and asked prices, in
either case on The New York Stock Exchange (the "NYSE") or The Nasdaq National
Market (the "NNM"), as applicable, or, if the Common Stock is not listed or
admitted to trading on the NYSE or the NNM, the principal national securities
exchange or quotation system on which the Common Stock is quoted or listed or
admitted to trading or, if not quoted or listed or admitted to trading on any
national securities exchange or quotation system, the closing sales price or, in
case no reported sale takes place, the average of the closing bid and asked
prices, as furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no such prices are available, the Current Market Price per share
shall be the fair value of a share of Common Stock as reasonably determined in
good faith by the Board of Directors of the Company (which shall be evidenced by
an Officers' Certificate delivered to the Warrant Agent).

            "Date of Distribution" means December 10, 2004.

            "Depository" means The Depository Trust Company, its nominees and
their respective successors.

            "Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.

            "Exercise Date" means, for a given Warrant, the day on which such
Warrant is exercised pursuant to Section 3.04.

            "Issue Date" means the date on which the Warrants are initially
issued.

            "Officer" means, with respect to any person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, any Vice President, the Treasurer, any Assistant
Treasurer, the Controller, or the Secretary or an Assistant Secretary of the
Company.

            "Officers' Certificate" means a certificate signed by two Officers.
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                                       3

            "Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Warrant Agent. Such counsel may be an employee
of or counsel to the Company or the Warrant Agent.

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

            "Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the payment
of assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.

            "SEC" means the Securities and Exchange Commission.

            "Securities" means the Warrants and the Warrant Shares.

            "Securities Act" means the U.S. Securities Act of 1933, as amended.

            "Warrant Certificates" mean the Global Warrants or the Certificated
Warrants issued by the Company under this Agreement representing the Warrants.

                  "Warrant Custodian" means the custodian with respect to a
Global Warrant (as appointed by the Depository) or any successor person thereto
and shall initially be the Warrant Agent.

            "Warrant Shares" mean the shares of Common Stock (and any other
securities) for which the Warrants are exercisable or which have been issued
upon exercise of Warrants.

            SECTION 1.02. Other Definitions.

<TABLE>
<CAPTION>
                                                                                            Defined in
                                        Term                                                 Section
                                        ----                                                ----------
<S>                                                                                         <C>
"Agent Members".................................................................              2.01(b)
"Agreement".....................................................................             Recitals
"Certificate Register"..........................................................              2.03
"Common Shelf Registration Statement"...........................................              5.01
"Common Stock"..................................................................             Recitals
"Company".......................................................................             Recitals
"Exercise Price"................................................................              3.01
"Expiration Date"...............................................................              3.02(b)
"Global Warrant"................................................................              2.01(a)
"Holders".......................................................................             Recitals
"Losses"........................................................................              6.01
"Registrar".....................................................................              3.07
</TABLE>
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                                       4

<TABLE>
<CAPTION>
                                                                                            Defined in
                                        Term                                                 Section
                                        ----                                                ----------
<S>                                                                                         <C>
"Reorganization"................................................................              4.04(a)
"Stock Transfer Agent"..........................................................              3.05
"Warrant Agent".................................................................             Recitals
"Warrants"......................................................................             Recitals
</TABLE>

            SECTION 1.03. Rules of Construction. Unless the text otherwise
requires:

            (i) a defined term has the meaning assigned to it;

            (ii) an accounting term not otherwise defined has the meaning
      assigned to it in accordance with generally accepted accounting principles
      as in effect from time to time;

            (iii) "or" is not exclusive;

            (iv) "including" means including, without limitation; and

            (v) words in the singular include the plural and words in the plural
      include the singular.

                                   ARTICLE II

                              Warrant Certificates

            SECTION 2.01. Form and Dating. (a) Global Warrants. The Warrants
shall be issued initially in the form of one or more permanent Global Warrants,
in definitive, fully registered form with the global securities legend set forth
in Exhibit A hereto (each, a "Global Warrant"), which shall be deposited on
behalf of the Holders with the Warrant Agent, as custodian for the Depository
(or with such other custodian as the Depository may direct), and registered in
the name of the Depository or a nominee of the Depository, duly executed by the
Company and countersigned by the Warrant Agent as hereinafter provided.

            (b) Book-Entry Provisions. (i) This Section 2.01(b) shall apply only
to a Global Warrant deposited with or on behalf of the Depository.

            (ii) The Company shall execute and the Warrant Agent shall, in
      accordance with Section 2.02, countersign and deliver initially one or
      more Global Warrants that (A) shall be registered in the name of the
      Depository for such Global Warrant or Global Warrants or the nominee of
      the Depository and (B) shall be delivered by the Warrant Agent to the
      Depository or pursuant to the Depository's instructions or held by the
      Warrant Agent as custodian for the Depository.
<PAGE>
                                       5

            (iii) Members of, or participants in, the Depository ("Agent
      Members") shall have no rights under this Agreement with respect to any
      Global Warrant held on their behalf by the Depository or by the Warrant
      Agent as the custodian of the Depository or under such Global Warrant, and
      the Depository may be treated by the Company, the Warrant Agent and any
      agent of the Company or the Warrant Agent as the absolute owner of such
      Global Warrant for all purposes whatsoever. Notwithstanding the foregoing,
      nothing herein shall prevent the Company, the Warrant Agent or any agent
      of the Company or the Warrant Agent from giving effect to any written
      certification, proxy or other authorization furnished by the Depository or
      impair, as between the Depository and its Agent Members, the operation of
      customary practices of the Depository governing the exercise of the rights
      of a holder of a beneficial interest in any Global Warrant.

            (c) Certificated Securities. Except as provided in Section 2.04 or
2.05, owners of beneficial interests in Global Warrants will not be entitled to
receive physical delivery of Certificated Warrants.

            SECTION 2.02. Execution and Countersignature. Two Officers shall
sign the Warrant Certificates for the Company by manual or facsimile signature.

            If an Officer whose signature is on a Warrant Certificate no longer
holds that office at the time the Warrant Agent countersigns the Warrant
Certificate, the Warrants evidenced by such Warrant Certificate shall be valid
nevertheless.

            The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than 200,000,000 Warrant Shares upon a written order of the Company signed by
two Officers of the Company.

            The Warrant Agent may appoint an agent reasonably acceptable to the
Company to countersign the Warrant Certificates. Unless limited by the terms of
such appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.

            At any time and from time to time after the execution of this
Agreement, the Warrant Agent or an agent reasonably acceptable to the Company
shall upon receipt of a written order of the Company signed by two Officers of
the Company manually countersign for original issue a Warrant Certificate
evidencing the number of Warrants specified in such order; provided, however,
that the Warrant Agent shall be entitled to receive an Officers' Certificate and
an Opinion of Counsel of the Company that it may reasonably request in
connection with such countersignature of Warrants. Such order shall specify the
number of Warrants to be evidenced on the Warrant Certificate to be
countersigned, the date on which such Warrant Certificate is to be countersigned
and the number of Warrants then authorized.
<PAGE>
                                       6

            The Warrants evidenced by a Warrant Certificate shall not be valid
until an authorized signatory of the Warrant Agent or its agent as provided
above manually countersigns the Warrant Certificate. The signature shall be
conclusive evidence that the Warrant Certificate has been countersigned under
this Agreement.

            SECTION 2.03. Certificate Register. The Warrant Agent shall keep a
register (the "Certificate Register") of the Warrant Certificates and of their
transfer and exchange. The Certificate Register shall show the names and
addresses of the respective Holders and the date and number of Warrants
evidenced on the face of each of the Warrant Certificates. The Company and the
Warrant Agent may deem and treat the Person in whose name a Warrant Certificate
is registered as the absolute owner of such Warrant Certificate for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.

            SECTION 2.04. Transfer and Exchange. (a) Transfer and Exchange of
Global Warrants. (i) The transfer and exchange of Global Warrants or beneficial
interests therein shall be effected through the Depository, in accordance with
this Agreement (including applicable restrictions on transfer set forth herein)
and the procedures of the Depository therefor. A transferor of a beneficial
interest in a Global Warrant shall deliver to the Depository a written order
given in accordance with the Depository's procedures containing information
regarding the participant account of the Depository to be credited with a
beneficial interest in the Global Warrant.

            (ii) Notwithstanding any other provisions of this Agreement (other
      than the provisions set forth in Section 2.05), a Global Warrant may not
      be transferred as a whole except by the Depository to a nominee of the
      Depository or by a nominee of the Depository to the Depository or another
      nominee of the Depository or by the Depository or any such nominee to a
      successor Depository or a nominee of such successor Depository.

            (iii) In the event that a Global Warrant is exchanged and
      transferred for Warrants in definitive registered form pursuant to Section
      2.05, such Warrants may be exchanged only in accordance with such
      procedures as are substantially consistent with the provisions of this
      Section 2.04 and such other procedures as may from time to time be adopted
      by the Company.

            (b) Cancelation or Adjustment of Global Warrant. At such time as all
beneficial interests in a Global Warrant have been exchanged for Certificated
Warrants, redeemed, repurchased or canceled, such Global Warrant shall be
returned to the Depository for cancelation or retained and canceled by the
Warrant Agent. At any time prior to such cancelation, if any beneficial interest
in a Global Warrant is exchanged for Certificated Warrants, redeemed,
repurchased or canceled, the number of Warrants represented by such Global
Warrant shall be reduced and an adjustment shall be made on the books and
records of the Warrant Agent (if it is then the Warrant Custodian for such
Global Warrant) with respect to such Global Warrant, by the Warrant Agent, to
reflect such reduction.
<PAGE>
                                       7

            (c) Obligations with Respect to Transfers and Exchanges of Warrants.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Warrant Agent shall countersign Certificated Warrants and Global
Warrants as required pursuant to the provisions of Section 2.02 and this Section
2.04.

            (ii) Any service charge for any registration of transfer or
      exchange, or any transfer tax, assessments, or similar governmental charge
      payable in connection therewith, shall be paid by the Holder.

            (iii) Prior to the due presentation for registration of transfer of
      any Warrant, the Company and the Warrant Agent may deem and treat the
      Person in whose name a Warrant is registered as the absolute owner of such
      Warrant, and neither the Company nor the Warrant Agent shall be affected
      by notice to the contrary.

            (iv) All Warrants issued upon any transfer or exchange pursuant to
      the terms of this Agreement shall be the valid obligations of the Company,
      entitled to the same benefits under this Agreement as the Warrants
      surrendered upon such transfer or exchange.

            (d) No Obligation of the Warrant Agent. (i) The Warrant Agent shall
have no responsibility or obligation to any beneficial owner of a Global
Warrant, a member of, or a participant in the Depository or other Person with
respect to the accuracy of the records of the Depository or its nominee or of
any participant or member thereof, with respect to any ownership interest in the
Warrants or with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depository) of any notice or the payment
of any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Warrants shall be given or made only to or upon the order of the
registered Holders (which shall be the Depository or its nominee in the case of
a Global Warrant). The rights of beneficial owners in any Global Warrant shall
be exercised only through the Depository subject to the applicable rules and
procedures of the Depository. The Warrant Agent may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its members, participants and any beneficial owners.

            (ii) The Warrant Agent shall have no obligation or duty to monitor,
      determine or inquire as to compliance with any restrictions on transfer
      imposed under this Agreement or under applicable law with respect to any
      transfer of any interest in any Warrant (including any transfers between
      or among the Depository participants, members or beneficial owners in any
      Global Warrant) other than to require delivery of such certificates and
      other documentation or evidence as are expressly required by, and to do so
      if and when expressly required by, the terms of this Agreement, and to
      examine the same to determine substantial compliance as to form with the
      express requirements hereof.
<PAGE>
                                       8

            SECTION 2.05. Certificated Warrants. (a) A Global Warrant deposited
with the Depository or with the Warrant Agent as custodian for the Depository
pursuant to Section 2.01 shall be transferred to the beneficial owners thereof
in the form of Certificated Warrants in a number equal to the number of Warrants
represented by such Global Warrant, in exchange for such Global Warrant, only if
such transfer complies with Section 2.04 and (i) the Depository notifies the
Company that it is unwilling or unable to continue as depositary for such Global
Warrant or if at any time the Depository ceases to be a "clearing agency"
registered under the Exchange Act and, in each such case, a successor depositary
is not appointed by the Company within 90 days of such notice or (ii) the
Company, in its sole discretion, notifies the Warrant Agent in writing that it
elects to cause the issuance of Certificated Warrants under this Agreement.

            (b) Any Global Warrant that is transferable to the beneficial owners
thereof pursuant to this Section 2.05 shall be surrendered by the Depository to
the Warrant Agent, to be so transferred, in whole or from time to time in part,
without charge, and the Warrant Agent shall countersign and deliver, upon such
transfer of each portion of such Global Warrant, an equal number of Certificated
Warrants.

            (c) Subject to the provisions of Section 2.05(b), the registered
Holder of a Global Warrant may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Agreement or the Warrants.

            (d) In the event of the occurrence of either of the events specified
in Section 2.05(a), the Company will promptly make available to the Warrant
Agent a reasonable supply of Certificated Warrants in definitive, fully
registered form.

            SECTION 2.06. Replacement Certificates. If a mutilated Warrant
Certificate is surrendered to the Warrant Agent or if the Holder of a Warrant
Certificate claims that the Warrant Certificate has been lost, destroyed or
wrongfully taken, the Company shall issue and the Warrant Agent shall
countersign a replacement Warrant Certificate if the reasonable requirements of
the Warrant Agent and of Section 8-405 of the Uniform Commercial Code as in
effect in the State of New York are met. If required by the Warrant Agent or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Warrant Agent to protect the Company and the Warrant
Agent from any loss which either of them may suffer if a Warrant Certificate is
replaced. The Company and the Warrant Agent may charge the Holder for their
expenses in replacing a Warrant Certificate. Every replacement Warrant
Certificate evidences an additional obligation of the Company.

            SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time
are all Warrants evidenced on all Warrant Certificates authenticated by the
Warrant Agent except for those canceled by it and those delivered to it for
cancelation. A Warrant does not cease to be outstanding because an Affiliate of
the Company holds the Warrant. A Warrant ceases to be outstanding if the Company
holds the Warrant.
<PAGE>
                                       9

            If a Warrant Certificate is replaced pursuant to Section 2.06, the
Warrants evidenced thereby cease to be outstanding unless the Warrant Agent and
the Company receive proof satisfactory to them that the replaced Warrant
Certificate is held by a bona fide purchaser.

            SECTION 2.08. Cancelation. (a) In the event the Company shall
purchase or otherwise acquire Certificated Warrants, the same shall thereupon be
delivered to the Warrant Agent for cancelation.

            (b) The Warrant Agent and no one else shall cancel and destroy all
Warrant Certificates surrendered for transfer, exchange, replacement, exercise
or cancelation and deliver a certificate of such destruction to the Company
unless the Company directs the Warrant Agent to deliver canceled Warrant
Certificates to the Company. The Company may not issue new Warrant Certificates
to replace Warrant Certificates to the extent they evidence Warrants which have
been exercised or Warrants which the Company has purchased or otherwise
acquired.

            SECTION 2.09. CUSIP Numbers. The Company in issuing the Warrants may
use "CUSIP" numbers (if then generally in use) and, if so, the Warrant Agent
shall use "CUSIP" numbers in notices as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Warrant Certificates or as
contained in any notice and that reliance may be placed only on the other
identification numbers printed on the Warrant Certificates.

                                  ARTICLE III

                                 Exercise Terms

            SECTION 3.01. Exercise. Each Warrant shall initially entitle the
Holder thereof, subject to adjustment pursuant to the terms of this Agreement,
to purchase one share of Common Stock for each Warrant evidenced thereby, at an
exercise price (the "Exercise Price") of $2.75 per share.

            SECTION 3.02. Exercise Periods. (a) Subject to the terms and
conditions set forth herein, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the Common Shelf Registration
Statement is declared effective by the SEC; provided, however, that Holders will
be able to exercise their Warrants only if (i) the Common Shelf Registration
Statement relating to the Warrant Shares is effective and (ii) the Warrant
Shares are qualified for sale or exempt from qualification under the applicable
securities laws of the states or other jurisdictions in which such Holders
reside.

            (b) No Warrant shall be exercisable after the third anniversary of
the Date of Distribution (the "Expiration Date").
<PAGE>
                                       10

            SECTION 3.03. Expiration. A Warrant shall terminate and become void
as of the earlier of (i) the close of business on the Expiration Date or (ii)
the date such Warrant is exercised.

            SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the office of the Warrant Agent of the related
Warrant Certificate, together with the form of election attached thereto to
purchase Common Stock on the reverse thereof duly filled in and signed by the
Holder thereof, (ii) payment to the Warrant Agent, for the account of the
Company, of the Exercise Price for each Warrant Share or other security issuable
upon the exercise of such Warrants then exercised and (iii) payment by the
Holder to the Warrant Agent of any exercise fee associated with the exercise of
such Warrants. Such payments shall be made in cash or by certified or official
bank check payable to the order of the Warrant Agent or by wire transfer of
funds to an account at the Warrant Agent designated by the Warrant Agent to the
Company for such purpose. Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part, and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant Certificate at any time prior to the Expiration
Date, a new Warrant Certificate representing the remaining Warrants shall be
issued. The Warrant Agent shall countersign and deliver the required new Warrant
Certificates, and the Company, at the Warrant Agent's request, shall supply the
Warrant Agent with Warrant Certificates duly signed on behalf of the Company for
such purpose.

            SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.05,
upon the surrender of Warrant Certificates and payment of the per share Exercise
Price, as set forth in Section 3.04, the Company shall issue and cause the
Warrant Agent or, if appointed, a transfer agent for the Common Stock ("Stock
Transfer Agent") to countersign and deliver to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities to which it is entitled,
registered or otherwise, to the Person or Persons entitled to receive the same
(including any depositary institution so designated by a Holder), together with
cash as provided in Section 3.06 in respect of any fractional Warrant Shares
otherwise issuable upon such exercise. Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrant Certificates and payment of the per
share Exercise Price, as aforesaid; provided, however, that if, at such date,
the transfer books for the Warrant Shares shall be closed, the certificates for
the Warrant Shares in respect of which such Warrants are then exercised shall be
issuable as of the date on which such books shall next be opened and until such
date the Company shall be under no duty to deliver any certificates for such
Warrant Shares; provided further, however, that such transfer books, unless
otherwise required by law, shall not be closed at any one time for a period
longer than twenty calendar days.

            SECTION 3.06. Fractional Warrant Shares. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one
<PAGE>
                                       11

Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares which may be
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.06, be issuable upon the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
equal to the Current Market Value per Warrant Share, as determined on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.

            SECTION 3.07. Reservation of Warrant Shares. The Company shall at
all times keep reserved out of its authorized shares of Common Stock a number of
shares of Common Stock sufficient to provide for the exercise of all outstanding
Warrants. The registrar for the Common Stock (the "Registrar") shall at all
times until the Expiration Date reserve such number of authorized shares as
shall be required for such purpose. The Company will keep a copy of this
Agreement on file with the Stock Transfer Agent. The Company will supply such
Stock Transfer Agent with duly executed stock certificates for such purpose and
will itself provide or otherwise make available any cash which may be payable as
provided in Section 3.06. The Company will furnish to such Stock Transfer Agent
a copy of all notices of adjustments (and certificates related thereto)
transmitted to each Holder.

            Before taking any action which would cause an adjustment pursuant to
Article IV to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.

            The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants shall, upon issue, be fully paid, nonassessable, free
of preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.

            SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in
this Agreement to the contrary, in no event shall a Holder be entitled to
exercise a Warrant unless (i) a registration statement filed under the
Securities Act in respect of the issuance of the Warrant Shares is then
effective or (ii) in the opinion of counsel to the Company addressed to the
Warrant Agent the exercise of such Warrants is exempt from the registration
requirements of the Securities Act and such securities are qualified for sale or
exempt from qualification under the applicable securities laws of the states or
other jurisdictions in which such Holders reside. Until such time as the Warrant
Agent shall have received from the Company an Officers' Certificate accompanied
by either a registration statement identified as a registration statement
described in (i) or an opinion of counsel identified as an opinion of counsel
described in (ii), the Warrant Agent need not recognize nor act upon any
exercise.

            (b) If any shares of Common Stock required to be reserved for
purposes of the exercise of Warrants require, under any other Federal or state
law or
<PAGE>
                                       12

applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such shares may be issued upon
exercise, the Company will cause such shares to be duly registered or approved
by such governmental authority or listed on the relevant national securities
exchange, as the case may be.

                                   ARTICLE IV

                        Adjustment and Notice Provisions

            SECTION 4.01. Adjustment of Exercise Price. Subject to the
provisions of this Article IV, the Exercise Price in effect from time to time
shall be subject to adjustment as follows:

            (a) In case the Company shall (i) declare a dividend payable in
stock or make some other distribution on the outstanding shares of its Common
Stock in shares of its Common Stock, (ii) subdivide or reclassify the
outstanding shares of its Common Stock into a greater number of shares or (iii)
combine or reclassify the outstanding shares of its Common Stock into a smaller
number of shares, the Exercise Price, in effect immediately after the record
date for such dividend or distribution or the effective date of such division,
reclassification or combination shall be proportionately adjusted by multiplying
the then Exercise Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. Such adjustment shall be made
successively whenever any event specified above shall occur.

            (b) All calculations under this Section 4.01 shall be made to the
nearest thousandth of a cent.

            SECTION 4.02. No Adjustment to Exercise Price. No adjustment in the
Exercise Price in accordance with the provisions of Section 4.01(a) need be made
if such adjustment would amount to a change in such Exercise Price of less than
ten cents; provided, however, that the amount by which any adjustment is not
made by reason of the provision of this Section 4.02 shall be carried forward
and taken into account at the time of any subsequent adjustment in the Exercise
Price.

            SECTION 4.03. Adjustment to Number of Shares. Upon each adjustment
of the Exercise Price pursuant to Section 4.01(a), each Warrant shall thereupon
evidence the right to purchase that number of shares of Common Stock (calculated
to the nearest hundredth of a share) obtained by multiplying the number of
shares of Common Stock purchasable immediately prior to such adjustment upon
exercise of the Warrant by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
<PAGE>
                                       13

            SECTION 4.04. Reorganizations. (a) Except as provided in Section
4.04(b), in case of any capital reorganization, consolidation or merger of the
Company (other than in the cases referred to in Section 4.01 or the
consolidation or merger of the Company with or into another corporation in which
the Company is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock or the conversion of
such outstanding shares of Common Stock into shares of other stock or other
securities or property), or the sale of all or substantially all of the
Company's assets (a "Reorganization"), the Holders of Warrants which have not
been exercised (or otherwise expired or been terminated) shall have the right to
receive, upon exercise of the Warrants and payment of the Exercise Price, the
kind and amount of shares of stock and other securities and property receivable
upon such Reorganization by a Holder of the number of shares of Common Stock
into which such Warrants so exercised might have been exercised immediately
prior to such Reorganization. Unless Section 4.04(b) is applicable to a
Reorganization, the Company shall provide that the surviving or acquiring Person
in such Reorganization will enter into an agreement with the Warrant Agent
confirming the Holders' rights pursuant to this Section 4.04(a) and providing
for adjustments, which shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article IV.

            (b) In the event of a Reorganization where consideration to the
holders of Common Stock in exchange for their shares is payable solely in cash,
the Holders of the Warrants shall be entitled to receive, upon surrender of
their Warrant Certificates, such cash distributions on an equal basis with the
holders of Common Stock or other securities issuable upon exercise of the
Warrants, as if the Warrants had been exercised immediately prior to such event,
less the Exercise Price.

            (c) In the event of sale or conveyance or other transfer of all or
substantially all of the assets of the Company as a part of a plan for
liquidation of the Company, all rights to exercise any Warrant shall terminate
thirty days after the Company gives written notice to each Holder in the manner
specified in Section 7.04 that such sale or conveyance or other transfer has
been consummated.

            SECTION 4.05. Exercise Price Not Less Than Par Value. In no event
shall the Exercise Price be adjusted below the par value per share of the Common
Stock.

            SECTION 4.06. Notice of Certain Action. In the event the Company
shall:

            (a) declare any dividend payable in stock to the holders of its
Common Stock or make any other distribution in property other than cash to the
holders of its Common Stock; or

            (b) offer to the holders of its Common Stock as such rights to
subscribe for or purchase any shares of any class of stock or any other rights
or opinions; or
<PAGE>
                                       14

            (c) effect any reclassification of its Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock), Reorganization or the liquidation, dissolution or
winding up of the Company;

then, in each such case, the Company shall cause notice of such proposed action
to be given to the Warrant Agent. Such notice shall specify the date on which
the books of the Company shall close, or a record be taken, for determining
holders of Common Stock entitled to receive such stock dividend or other
distribution or such rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, dissolution or winding up shall take place or
commence, as the case may be, and the date as of which it is expected that
holders shall be entitled to receive securities or other property deliverable
upon such action, if any such date has been fixed. The Company shall also cause
the Warrant Agent to mail copies of such notice to each Holder of a Warrant
Certificate in the manner specified in Section 7.04 unless such notice is
otherwise available on the SEC's Electronic Data Gathering, Analysis and
Retrieval System or similar system. Such notice shall be mailed, in the case of
any action covered by Section 4.06(a) or 4.06(b), at least ten days prior to the
record date for determining holders of the Common Stock for purposes of
receiving such payment or offer, and in the case of any action covered by
Section 4.06(c), at least ten days prior to the earlier of the date upon which
such action is to take place or any record date to determine holders of Common
Stock entitled to receive such securities or other property.

            SECTION 4.07. Notice of Adjustments. Whenever any adjustment is made
pursuant to this Article IV, the Company shall cause notice of such adjustment
to be mailed to the Warrant Agent within fifteen days thereafter, such notice to
include in reasonable detail (i) the events precipitating the adjustment, (ii)
the computation of any adjustments, and (iii) the Exercise Price, the number of
shares or the securities or other property purchasable upon exercise of each
Warrant after giving effect to such adjustment. The Warrant Agent shall be
entitled to rely on such notice and any adjustment therein contained and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such notice. The Warrant Agent shall within fifteen days after
receipt of such notice from the Company cause a similar notice to be mailed to
each Holder.

            SECTION 4.08. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Agreement. The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
<PAGE>
                                        15

                                     ARTICLE V

                                Registration Rights

               SECTION 5.01. Effectiveness of Registration Statement. Subject to
Section 5.02, no later than five days from the Date of Distribution, the Company
shall use its reasonable best efforts to cause to be filed pursuant to Rule 415
(or any successor provision) of the Securities Act, and shall use its reasonable
best efforts to cause to be effective, a shelf registration statement covering
the issuance of Warrant Shares to the Holders upon exercise of the Warrants by
the Holders thereof (the "Common Shelf Registration Statement"). The Company
shall use its reasonable best efforts to cause the Common Shelf Registration
Statement to remain effective until the earlier of (i) such time as all Warrants
have been exercised and (ii) the Expiration Date. The Company shall promptly
inform the Warrant Agent of any change in the status of the effectiveness or
availability of the Common Shelf Registration Statement.

               SECTION 5.02. Suspension. The Company shall be entitled to
suspend the availability of the Common Shelf Registration Statement from time to
time during any consecutive 365-day period for a total not to exceed ninety days
during such consecutive 365-day period (except for the forty-five
consecutive-day period immediately prior to the Expiration Date) if the Board
determines in the exercise of its reasonable judgment that such suspension is
necessary in order to comply with applicable laws and provides notice to the
Holders of the Warrants that such determination was made; provided, however,
that in no event shall the Company be required to disclose the business purpose
for such suspension if the Company determines in good faith that such business
purpose must remain confidential.

               SECTION 5.03. Blue Sky. The Company shall use its best efforts to
register or qualify the Warrant Shares under all applicable securities laws,
blue sky laws or similar laws of all jurisdictions in the United States in which
any Holder may or may be deemed to purchase Warrant Shares upon the exercise of
Warrants and shall use its best efforts to maintain such registration or
qualification for so long as it is required to cause the Common Shelf
Registration Statement to remain effective under the Securities Act pursuant to
Section 5.01; provided, however, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 5.03 or to take any action
which would subject it to general service of process or to taxation in any such
jurisdiction where it is not then so subject.

               SECTION 5.04. Additional Acts. If the issuance or sale of any
Common Stock issuable upon the exercise of the Warrants requires registration or
approval of any governmental authority (other than the registration requirements
under the Securities Act), or the taking of any other action under the laws of
the United States or any political subdivision thereof before such securities
may be validly offered or sold in compliance with such laws, then the Company
covenants that it will, in good faith and as expeditiously as reasonably
possible, use its reasonable best efforts to secure and maintain such
registration or approval or to take such other action, as the case may be.
<PAGE>
                                       16

The Company shall promptly notify the Warrant Agent in writing when (i) the
Company has obtained all such governmental approvals and authorizations and (ii)
such approvals and authorizations thereafter cease to be in effect.

               SECTION 5.05. Expenses. All expenses incident to the Company's
performance of or compliance with its obligations under this Article V relating
to the issuance of the Warrant Shares will be borne by the Company, including:
(i) all SEC, stock exchange or National Association of Securities Dealers, Inc.
registration and filing fees, (ii) all reasonable fees and expenses incurred in
connection with the compliance with state securities or blue sky laws, (iii) all
expenses of any Persons incurred by or on behalf of the Company in preparing or
assisting in preparing, printing and distributing the Common Shelf Registration
Statement or any other registration statement, prospectus, any amendments or
supplements thereto and other documents relating to the performance of and
compliance with this Article V, (iv) the fees and disbursements of counsel for
the Company and the Warrant Agent as agreed and (v) the fees and disbursements
of the independent public accountants of the Company, including the expenses of
any special audits or comfort letters required by or incident to such
performance and compliance.

                                   ARTICLE VI

                                  Warrant Agent

               SECTION 6.01. Appointment of Warrant Agent; Standard of Care;
Limitation of Liability; Force Majeure. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the provisions of this
Agreement and the Warrant Agent hereby accepts such appointment. The Warrant
Agent shall not be liable for any claims, losses, liabilities, damages, costs,
expenses or judgments (including reasonable attorneys' fees and expenses)
("Losses") except to the extent the same constitute direct money damages caused
by the gross negligence or willful misconduct of the Warrant Agent. In no event
shall the Warrant Agent be liable: (i) for any indirect, special, or
consequential damages, regardless of the form of action and even if the same was
foreseeable; (ii) for any acts or omissions of the Depository; or (iii) for any
non-performance or delay in performance or Losses caused by forces beyond the
Warrant Agent's reasonable control, including strikes, work stoppages, acts of
war or terrorism, insurrection, revolution, nuclear or natural catastrophes,
acts of God, the insolvency of the Depository, or any loss, interruption or
malfunction of utility, communication, or computer (hardware or software)
services.

               SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent for
the Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship or agency or trust for or
with any of the holders of Warrant Certificates or beneficial owners of
Warrants.

               (b) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel to the Company), and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken,
<PAGE>
                                       17

suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.

               (c) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing suffered by it
in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably believed
by it to be genuine and to have been presented or signed by the proper parties.

               (d) No Implied Obligations. The Warrant Agent shall be obligated
to perform only such duties as are specifically set forth herein and in the
Warrant Certificates, and no implied duties or obligations of the Warrant Agent
shall be read into this Agreement or the Warrant Certificates against the
Warrant Agent. The Warrant Agent shall not be under any obligation to take any
action hereunder which may tend to involve it in any expense or liability for
which it does not receive indemnity if such indemnity is reasonably requested.
The Warrant Agent shall not be accountable or under any duty or responsibility
for the use by the Company of any of the Warrant Certificates countersigned by
the Warrant Agent and delivered by it to the Holders or on behalf of the Holders
pursuant to this Agreement or for the application by the Company of the proceeds
of the Warrants. The Warrant Agent shall have no duty or responsibility in case
of any default by the Company in the performance of its covenants or agreements
contained herein or in the Warrant Certificates or in the case of the receipt of
any written demand from a Holder with respect to such default, including any
duty or responsibility to initiate or attempt to initiate any proceedings at law
or otherwise.

               (e) Not Responsible for Adjustments or Validity of Stock. The
Warrant Agent shall not at any time be under any duty or responsibility to any
Holder to determine whether any facts exist that may require an adjustment of
the number of shares of Common Stock issuable upon exercise of each Warrant or
the Exercise Price, or with respect to the nature or extent of any adjustment
when made, or with respect to the method employed, or herein or in any
supplemental agreement provided to be employed, in making the same. The Warrant
Agent shall not be accountable with respect to the validity or value of any
shares of Common Stock or of any securities or property which may at any time be
issued or delivered upon the exercise of any Warrant or upon any adjustment
pursuant to Article IV, and it makes no representation with respect thereto. The
Warrant Agent shall not be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver any shares of Common Stock or
stock certificates upon the surrender of any Warrant Certificate for the purpose
of exercise or upon any adjustment pursuant to Article IV, or to comply with any
of the covenants of the Company contained in Article IV.

               SECTION 6.03. Individual Rights of Warrant Agent. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its affiliates or become pecuniarily interested in transactions in which the
Company or its affiliates may be interested, or contract with or lend money to
the Company or its affiliates or otherwise act as fully and freely as though it
were not the Warrant Agent under this Agreement.
<PAGE>
                                       18

Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.

               SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall
not be responsible for and makes no representation as to the validity or
adequacy of this Agreement or the Warrant Certificates and it shall not be
responsible for any statement in this Agreement or the Warrant Certificates
other than its countersignature thereon.

               SECTION 6.05. Compensation and Indemnity. The Company agrees that
the Warrant Agent is entitled, from time to time, reasonable compensation for
its services as agreed and to reimbursement for all reasonable out-of-pocket
expenses incurred by it, including the reasonable compensation and expenses of
the Warrant Agent's agents and counsel as agreed. The Parties agree that, up to
the Issue Date, these costs are deemed "Settlement Administration" costs and
shall be paid from the "Lucent Common Stock Escrow Account" that is established
for the Settlement of the heretofore mentioned litigation. The Company shall
indemnify the Warrant Agent, its officers, directors, agents and counsel against
any Losses, other than Losses for which the Warrant Agent has accepted liability
under Section 6.01, arising out of or in connection with the acceptance or
performance of its duties under this Agreement. The Warrant Agent shall notify
the Company promptly of any claim for which it may seek indemnity, but no delay
in providing notice shall affect the Warrant Agent's right to its indemnity. The
Company's payment obligations pursuant to this Section 6.05 shall survive the
termination of this Agreement or any resignation or removal of the Warrant
Agent.

               To secure the Company's payment obligations under this Agreement,
the Warrant Agent shall have a lien prior to the Holders on all money or
property held or collected by the Warrant Agent, and the Warrant Agent shall be
entitled to set-of and apply any such money in reduction or payment of such
obligations.

               SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide
and Maintain Warrant Agent. The Company agrees for the benefit of the Holders
that there shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.

               (b) Resignation and Removal. The Warrant Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective;
provided, however, that such date shall not be less than sixty days after the
date on which such notice is given unless the Company otherwise agrees. The
Warrant Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than sixty days after such notice is given unless the Warrant Agent
otherwise agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
<PAGE>
                                       19

               (c) The Company To Appoint Successor. In the event that at any
time the Warrant Agent shall resign, or shall be removed, or shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or shall
commence a voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent
and acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder; provided, however, that in the
event of the resignation of the Warrant Agent under this Section 6.06(c), such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.

               (d) Successor To Expressly Assume Duties. Any successor Warrant
Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the rights and obligations of
such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Warrant Agent shall be entitled to receive, all monies,
securities and other property on deposit with or held by such predecessor, as
Warrant Agent hereunder.

               (e) Successor by Merger. Any corporation into which the Warrant
Agent hereunder may be merged or consolidated, or any corporation resulting from
any merger or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all of its assets and business, shall be the successor Warrant
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided, however, that it
shall be qualified as aforesaid.
<PAGE>
                                       20

                                    ARTICLE VII

                                   Miscellaneous

               SECTION 7.01. Persons Benefiting. Nothing in this Agreement is
intended or shall be construed to confer upon any Person other than the Company,
the Warrant Agent and the Holders any right, remedy or claim under or by reason
of this Agreement or any part hereof.

               SECTION 7.02. Rights of Holders. Holders of unexercised Warrants
are not entitled to (i) receive dividends or other distributions, (ii) receive
notice of or vote at any meeting of the stockholders, (iii) consent to any
action of the stockholders, (iv) receive notice of any other proceedings of the
Company, (v) exercise any preemptive right or (vi) exercise any other rights
whatsoever as stockholders of the Company.

               SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including any addition or modification to
provide for compliance with the transfer restrictions set forth herein);
provided, however, that such action shall not adversely affect the rights of any
of the Holders. Any amendment or supplement to this Agreement that has an
adverse effect on the interests of the Holders shall require the written consent
of the Holders of a majority of the then outstanding Warrants. The consent of
each Holder affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares issuable upon
exercise of Warrants would be decreased (other than pursuant to adjustments
provided herein). In determining whether the Holders of the required number of
Warrants have concurred in any direction, waiver or consent, Warrants owned by
the Company shall be disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Warrant Agent shall be protected in
relying on any such direction, waiver or consent, only Warrants which the
Warrant Agent knows are so owned shall be so disregarded. Also, subject to the
foregoing, only Warrants outstanding at the time shall be considered in any such
determination.
<PAGE>
                                       21

               SECTION 7.04. Notices. Any notice or communication shall be in
writing and delivered in Person or mailed by first-class mail addressed as
follows:

               if to the Company:

                      Lucent Technologies Inc.
                      600 Mountain Avenue
                      Murray Hill, NJ 07974
                      Telephone:    (908) 582-8500
                      Facsimile:    (980) 582-6130

                      Attention:    General Counsel

               with a copy to:

                      Cravath, Swaine & Moore LLP
                      825 Eighth Avenue
                      New York, NY 10019
                      Telephone:    (212) 474-1000
                      Facsimile:    (212) 474-3700

                      Attention:    Paul C. Saunders, Esq.

               if to the Warrant Agent:

                      The Bank of New York
                      Stock Transfer Administration Department
                      101 Barclay St. 11E
                      New York, NY 10286
                      Telephone:    (212) 815-4423
                      Facsimile:    (212) 815-3141

                      Attention:    Jim Kiszka

               with a copy to:

                      Bank of New York
                      One Wall Street
                      New York, NY 10286
                      Telephone:
                      Facsimile:

                      Attention:    Barbara Lubitz, Esq.

               The Company or the Warrant Agent by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
<PAGE>
                                       22

               Any notice or communication mailed to a Holder shall be mailed to
the Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.

               Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.

               SECTION 7.05. Governing Law; Jurisdiction; Certain Waivers. This
Agreement shall be interpreted and construed in accordance with the internal
substantive laws (and not the choice of law rules) of the State of New York. All
actions and proceedings relating to or arising from, directly or indirectly,
this Agreement shall be litigated in courts located within the State of New
York. Each party hereby submits to the personal jurisdiction of such courts;
hereby waives personal service of process upon it and consents that any such
service of process may be made by certified or registered mail, return receipt
requested, directed to such party at its address last specified for notices
hereunder, and service so made shall be deemed completed five days after the
same shall have been so mailed, and hereby waives the right to a trial by jury
in any action or proceeding relating to or arising from, directly or indirectly,
this Agreement. In this regard, the parties agree that the courts of the State
of New York are the most convenient forum to resolve such actions and,
accordingly, will not argue to the contrary in such actions or proceedings.

               SECTION 7.06. Successors. All agreements of the Company in this
Agreement and the Warrant Certificates shall bind its successors. All agreements
of the Warrant Agent in this Agreement shall bind its successors.

               SECTION 7.07. Multiple Originals. The parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Agreement.

               SECTION 7.08. Table of Contents. The table of contents and
headings of the Articles and Sections of this Agreement have been inserted for
convenience of reference only, are not intended to be considered a part hereof
and shall not modify or restrict any of the terms or provisions hereof.

               SECTION 7.09. Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
<PAGE>
               IN WITNESS WHEREOF, the parties have caused this Warrant
Agreement to be duly executed as of the date first written above.

                                        LUCENT TECHNOLOGIES INC.,
                                            by
                                                ------------------------------
                                                Name:
                                                Title:

                                        THE BANK OF NEW YORK, as Warrant Agent,
                                            by
                                                ------------------------------
                                                Name:
                                                Title:
<PAGE>
                                                                       EXHIBIT A

                      [FORM OF FACE OF WARRANT CERTIFICATE]

                           [Global Securities Legend]

        UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

        TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.
<PAGE>
No. [  ]                                           Certificate for [  ] Warrants

CUSIP No. [  ]                                                        [  ], 2004

                      WARRANTS TO PURCHASE COMMON STOCK OF
                            LUCENT TECHNOLOGIES INC.

               THIS CERTIFIES THAT [        ], or its registered assigns, is the
registered holder of the number of Warrants set forth above (the "Warrants").
Each Warrant entitles the holder thereof (the "Holder"), at its option and
subject to the provisions contained herein and in the Warrant Agreement referred
to below, to purchase from LUCENT TECHNOLOGIES INC., a Delaware corporation
("the Company"), [    ] shares of common stock, par value of $0.01 per share, of
the Company (the "Common Stock") at the per share exercise price of $2.75 (the
"Exercise Price"). This Warrant Certificate shall terminate and become void as
of the close of business on December 10, 2007 (the "Expiration Date") or upon
the exercise hereof as to all the shares of Common Stock subject hereto. The
number of shares issuable upon exercise of the Warrants and the Exercise Price
per share shall be subject to adjustment from time to time as set forth in the
Warrant Agreement.

               This Warrant Certificate is issued under and in accordance with a
Warrant Agreement dated as of December 10, 2004 (the "Warrant Agreement"),
between the Company and The Bank of New York (the "Warrant Agent", which term
includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to the
Warrant Agent, The Bank of New York, Attention: Stock Transfer Administration
Department.

               Subject to the terms of the Warrant Agreement, the Warrants may
be exercised in whole or in part by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent and payment by the Holder to the Warrant Agent of any exercise fee
associated with the exercise of such Warrants. Payment of the Exercise Price in
cash shall be made by certified or official bank check payable to the order of
the Warrant Agent or by wire transfer of funds to an account designated for such
purpose.

               As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the Issue Date; provided, however,
that Holders of Warrants will be able to exercise their Warrants only if the
Common Shelf Registration Statement relating to the Common Stock underlying the
Warrants is effective or the exercise of such Warrants is exempt from the
registration requirements of the Securities Act of 1933 and such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such Holders reside; provided
further, however, that no Warrant shall be exercisable after December 10, 2007.

               As provided in the Warrant Agreement, the number of shares of
Common Stock issuable upon the exercise of the Warrants and the Exercise Price
are subject to adjustment upon the happening of certain events.
<PAGE>
               Any service charge for any registration of transfer or exchange,
or any transfer tax, assessments, or similar governmental charge payable in
connection therewith, shall be paid by the Holder.

               Upon any partial exercise of the Warrants, there shall be
countersigned and issued to the Holder hereof a new Warrant Certificate
representing those Warrants which were not exercised. This Warrant Certificate
may be exchanged at the office of the Warrant Agent by presenting this Warrant
Certificate properly endorsed with a request to exchange this Warrant
Certificate for other Warrant Certificates evidencing an equal number of
Warrants. No fractional Warrant Shares will be issued upon the exercise of the
Warrants, but the Company shall pay an amount in cash equal to the Current
Market Value per Warrant Share on the day immediately preceding the date the
Warrant is exercised, multiplied by the fraction of a Warrant Share that would
be issuable on the exercise of any Warrant.

               All shares of Common Stock issuable by the Company upon the
exercise of the Warrants shall, upon such issue, be duly and validly issued and
fully paid and non-assessable.

               The holder in whose name the Warrant Certificate is registered
may be deemed and treated by the Company and the Warrant Agent as the absolute
owner of the Warrant Certificate for all purposes whatsoever and neither the
Company nor the Warrant Agent shall be affected by notice to the contrary.

               The Warrants do not entitle any Holder hereof to any of the
rights of a stockholder of the Company.
<PAGE>
               This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

                                            LUCENT TECHNOLOGIES INC.,
                                                By
                                                    ----------------------------
                                                    Name:
                                                    Title:

                                                By
                                                    ----------------------------
                                                    Name:
                                                    Title:

Countersigned:

THE BANK OF NEW YORK,
as Warrant Agent,
    By
       ----------------------------
          Authorized Signatory
<PAGE>
                   FORM OF ELECTION TO PURCHASE WARRANT SHARES
                (to be executed only upon exercise of Warrants)

                            LUCENT TECHNOLOGIES INC.

               The undersigned hereby irrevocably elects to exercise
__________________ Warrants to acquire shares of Common Stock, par value $0.01
per share, of LUCENT TECHNOLOGIES INC., at an exercise price per share of Common
Stock of $2.75 and otherwise on the terms and conditions specified in the within
Warrant Certificate and the Warrant Agreement therein referred to, surrenders
this Warrant Certificate and all right, title and interest therein to LUCENT
TECHNOLOGIES INC. and directs that the shares of Common Stock deliverable upon
the exercise of such Warrants be registered or placed in the name and at the
address specified below and delivered thereto.

Date:   _______________, ______

                                      _______________________________________(1)
                                          (Signature of Owner)

                                      ________________________________________
                                          (Street Address)

                                      ________________________________________
                                          (City)    (State)   (Zip Code)

                                      Signature Guaranteed by:

                                      ________________________________________

_________

(1)  The signature must correspond with the name as written upon the face of the
     within Warrant Certificate in every particular, without alteration or
     enlargement or any change whatever, and must be guaranteed by a national
     bank or trust company or by a member firm of any national securities
     exchange.
<PAGE>
Securities and/or check to be issued to:

Please insert social security or identifying number:

        Name:

        Street Address:

        City, State and Zip Code:

A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:

        Please insert social security or identifying number:

        Name:

        Street Address:

        City, State and Zip Code:
<PAGE>
                            FORM OF WARRANT TRANSFER

               For value received, the undersigned hereby sells, assigns and
transfers unto the right to purchase ________________________(________ ) Warrant
Shares representing shares of common stock, par value $0.01 per share, of Lucent
Technologies Inc. (the "Company") pursuant to the attached Warrant Certificate
and does hereby irrevocably constitute and appoint _________________ attorney to
transfer the Warrant, or such portion as is transferred hereby, on the books of
the Company with full power of substitution in the premises. The undersigned
requests said attorney to issue to the transferee a Warrant Certificate
evidencing such transfer and to issue to the undersigned a new Warrant
Certificate evidencing the right to purchase Warrant Shares for the balance not
so transferred, if any.

Date:   _______________, ______

                                      _______________________________________(2)
                                          (Signature of Owner)

                                      ________________________________________
                                          (Street Address)

                                      ________________________________________
                                          (City)    (State)   (Zip Code)

                                      Signature Guaranteed by:

                                      ________________________________________

Name in which new Warrant(s) should be registered:

___________________________________
(Name)

___________________________________
(Street Address)

___________________________________
(City)    (State)   (Zip Code)

___________________________________
(social security or identifying number)

________

(2)  The signature must correspond with the name as written upon the face of the
     within Warrant Certificate in every particular, without alteration or
     enlargement or any change whatever, and must be guaranteed by a national
     bank or trust company or by a member firm of any national securities
     exchange.
<PAGE>
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY(3)

The following increases or decreases in this Global Security have been made:

<TABLE>
<CAPTION>
                                                           Number of
                      Decrease in       Increase in       Warrants in
                       number of         number of        this Global
                      Warrants in       Warrants in         Warrant        Signature of
                      this Global       this Global       Certificate       authorized
                        Warrant           Warrant       following such      officer of
 Date of Exchange     Certificate       Certificate         change        Warrant Agent
 ----------------     -----------       -----------         ------        -------------
<S>                   <C>               <C>             <C>               <C>

</TABLE>

________
(3)  To be included only if Warrants are in global form.<PAGE>
                                                                     Exhibit 4.8

                          UNITED STATES DISTRICT COURT
                         FOR THE DISTRICT OF NEW JERSEY

-------------------------------------------x
                                           )   Case No. 00-CV-621 (JAP)
IN RE LUCENT TECHNOLOGIES INC.             )
SECURITIES LITIGATION                      )
                                           )
                                           )
-------------------------------------------x

                     STIPULATION AND AGREEMENT OF SETTLEMENT

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

      WHEREAS:

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

                                        1

<PAGE>

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

                                       2
<PAGE>

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

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

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

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

                                       3
<PAGE>

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

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

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

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

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

                                       4
<PAGE>

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

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

                               CERTAIN DEFINITIONS

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

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

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

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

                                       5
<PAGE>

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

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

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

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

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

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

                                       6
<PAGE>

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

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

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

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

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

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

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

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

                                       7
<PAGE>

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

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

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

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

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

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

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

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

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

                                       8
<PAGE>

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

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

                                       9
<PAGE>

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

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

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

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

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

                         SCOPE AND EFFECT OF SETTLEMENT

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

                                       10

<PAGE>

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

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

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

                          THE SETTLEMENT CONSIDERATION

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

                                       11

<PAGE>

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

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

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

                                       12

<PAGE>

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

                                 ADMINISTRATION

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

                                       13

<PAGE>

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

                          ATTORNEYS' FEES AND EXPENSES

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

                                       14

<PAGE>

                             ADMINISTRATION EXPENSES

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

                      DISTRIBUTION TO AUTHORIZED CLAIMANTS

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

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

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

                                       15

<PAGE>

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

                        ADMINISTRATION OF THE SETTLEMENT

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

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

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

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

                                       16

<PAGE>

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

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

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

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

                                       17

<PAGE>

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

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

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

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

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

                                       18

<PAGE>

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

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

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

                       TERMS OF PRELIMINARY APPROVAL ORDER

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

                                       19

<PAGE>

                        TERMS OF ORDER AND FINAL JUDGMENT

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

               EFFECTIVE DATE OF SETTLEMENT, WAIVER OR TERMINATION

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

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

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

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

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

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

                                       20

<PAGE>

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

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

                                       21

<PAGE>

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

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

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

                                       22

<PAGE>

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

                           NO ADMISSION OF WRONGDOING

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

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

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

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

                                       23

<PAGE>

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

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

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

                            MISCELLANEOUS PROVISIONS

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

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

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

                                       24

<PAGE>

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

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

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

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

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

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

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

                                       25

<PAGE>

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

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

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

DATED:   September 22, 2003

                                           MILBERG WEISS BERSHAD
                                            HYNES & LERACH LLP

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

                                                   -AND-

                                       26
<PAGE>

                                          BERNSTEIN  LITOWITZ BERGER &
                                            GROSSMANN LLP

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

                                          CO-LEAD COUNSEL FOR LEAD PLAINTIFFS
                                          AND THE CLASS

                                          CRAVATH, SWAINE & MOORE LLP

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

                                                 - AND -

                                          LINDABURY, MCCORMICK & ESTABROOK, P.A.

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

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

                                       27

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