FIRST AMENDMENT TO THE
LUCENT TECHNOLOGIES INC. 2003 LONG TERM INCENTIVE PROGRAM

WHEREAS, Section 13 of the Lucent Technologies Inc. 2003 Long Term Incentive Plan (the “2003 Plan”) provides that the Board of Directors of Lucent Technologies Inc. (the “Board”) may amend the 2003 Plan from time to time;

WHEREAS, pursuant to the recommendation of the Leadership Development and Compensation Committee of the Board, the Board approved on July 16, 2004 (the “Approval”) that the 2003 Plan be amended as set forth hereunder (the “Amendments”); and

WHEREAS, pursuant to the Approval, the Board authorized the Secretary of the Company to execute the Amendments to the 2003 Plan.

NOW, THEREFORE, IT IS RESOLVED that the 2003 Plan is amended as follows:

1. Section 2(f)(iii) of the 2003 Plan, “Definitions – Change in Control”, is amended by deleting the first clause through and including the first semicolon, which text is provided below under the caption “Original Clause” and replacing such clause with the text provided below under the caption “As amended in this First Amendment”:

Original Clause

 

     “(iii) The approval by the shareowners of the Company of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a “Corporate Transaction”) or, if consummation of such Corporate Transaction is subject, at the time of such approval by shareowners, to the consent of any government or governmental agency, the obtaining of such consent (either explicitly or implicitly by consummation); . . . ”

 

As amended in this First Amendment

 

     “(iii) The consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the assets of the Company (each, a “Corporate Transaction”); . . .”

 

2. Section 11(a)(i) of the 2003 Plan, “Change in Control Provisions — Impact of Event”, is amended by adding the following sentence to the end of subparagraph (a)(i) thereof:

 

“The exercise period for all Awards, other than Performance Awards, that become fully and immediately exercisable pursuant to this Section 11(a)(i) shall be determined pursuant to the terms of the Award Agreement applicable to such Award.”

 


Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the 2003 Plan.

Except as modified herein, the 2003 Plan shall continue in full force and effect in accordance with its terms.

Signature:

/s/ William R. Carapezzi, Jr.

 

 

William R. Carapezzi, Jr.
Senior Vice President,
General Counsel and Secretary

 

 

Dated: As of July 16, 2004.

<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex10-2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
 
<PAGE>
 
 
                                                                   Exhibit 10.2
 
 
 
                          LUCENT TECHNOLOGIES INC. 2003
                           LONG TERM INCENTIVE PROGRAM
 
SECTION 1.1 PURPOSE. The purposes of the Lucent Technologies Inc. 2003 Long Term
Incentive Program (the "Plan") are to encourage selected Employees of Lucent
Technologies Inc. (the "Company") and its Affiliates to acquire a proprietary
and vested interest in the growth and performance of the Company, to generate an
increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of
shareowners, and to enhance the ability of the Company and its Affiliates to
attract and retain individuals of exceptional talent upon whom, in large
measure, the sustained progress, growth and profitability of the Company depend.
 
Section 1.2 ESTABLISHMENT AND TERM OF THE 2003 PLAN. The Company establishes the
Plan effective as of February 19, 2003, subject to the Plan having been approved
by the Company's shareowners on or prior to that date. The Plan shall remain in
effect until the earlier of: (i) the date that no additional Shares are
available for issuance under the Plan, (ii) the date that the Plan has been
terminated in accordance with Section 13 or (iii) the close of business on
February 28, 2008. Upon the Plan becoming effective, no further awards shall be
made under the 1996 Plan. Upon the termination or expiration of the Plan as
provided in this Section 1.2, no Award shall be granted pursuant to the Plan,
but any Award theretofore granted may extend beyond such termination or
expiration.
 
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the
meanings set forth below:
 
         (a) "Affiliate" shall mean (i) any Person that directly, or through one
         or more intermediaries, controls, or is controlled by, or is under
         common control with, the Company or (ii) any entity in which the
         Company has a significant equity interest, as determined by the
         Committee.
 
         (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
         Stock Award, Performance Share, Performance Unit, Dividend Equivalent,
         Other Stock Unit Award, or any other right, interest, or option
         relating to Shares or other securities of the Company granted pursuant
         to the provisions of the Plan.
 
         (c) "Award Agreement" shall mean any written or electronic agreement,
         contract, or other instrument or document evidencing any Award granted
         by the Committee hereunder and signed or otherwise authenticated by
         both the Company and the Participant.
 
         (d) "Board" shall mean the Board of Directors of the Company.
 
 
 
 
<PAGE>
 
 
 
         (e) "Cause" shall mean for termination of employment of an Employee the
         definition given to it under the applicable Award Agreement or, in the
         absence of such a definition, (A) the definition given to it under
         applicable law, (B) for Employees who are subject to legislation which
         does not explicitly give such a definition, such circumstances which
         entitle the Company or the Affiliate to terminate the employment of the
         Employee without severance payments, or (C) for Employees who are
         subject to an employment agreement or severance policy with the Company
         or an Affiliate, the definition given to it under such employment
         agreement or severance policy.
 
         (f) "Change in Control" shall mean the happening of any of the
         following events:
 
                  (i) An acquisition by any individual, entity or group (within
                  the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
                  Act) (an "Entity") of beneficial ownership (within the meaning
                  of Rule 13d-3 promulgated under the Exchange Act) of 20% or
                  more of either (A) the then outstanding shares of common stock
                  of the Company (the "Outstanding Company Common Stock") or (B)
                  the combined voting power of the then outstanding voting
                  securities of the Company entitled to vote generally in the
                  election of directors (the "Outstanding Company Voting
                  Securities"); excluding, however, the following: (1) any
                  acquisition directly from the Company, other than an
                  acquisition by virtue of the exercise of a conversion
                  privilege unless the security being so converted was itself
                  acquired directly from the Company, (2) any acquisition by the
                  Company, (3) any acquisition by any employee benefit plan (or
                  related trust) sponsored or maintained by the Company or any
                  corporation controlled by the Company, or (4) any acquisition
                  by any corporation pursuant to a transaction which complies
                  with clauses (A), (B) and (C) of subsection (iii) of this
                  Section 2(f); or
 
                  (ii) A change in the Composition of the Board during any two
                  year period such that the individuals who, as of the beginning
                  of such two year period, constitute the Board (such Board
                  shall be hereinafter referred to as the "Incumbent Board")
                  cease for any reason to constitute at least a majority of the
                  Board; provided, however, that for purposes of this
                  definition, any individual who becomes a member of the Board
                  subsequent to the beginning of the two year period, whose
                  election, or nomination for election by the Company's
                  shareowners, was approved by a vote of
 
 
 
 
<PAGE>
 
 
 
                  at least a majority of those individuals who are members of
                  the Board and who were also members of the Incumbent Board (or
                  deemed to be such pursuant to this proviso) shall be
                  considered as though such individual were a member of the
                  Incumbent Board; and provided further, however, that any such
                  individual whose initial assumption of office occurs as a
                  result of or in connection with a solicitation subject to Rule
                  14a-12(c) of Regulation 14A promulgated under the Exchange Act
                  or other actual or threatened solicitation of proxies or
                  consents by or on behalf of an Entity other than the Board
                  shall not be so considered as a member of the Incumbent Board;
                  or
 
                  (iii) The approval by the shareowners of the Company of a
                  merger, reorganization or consolidation or sale or other
                  disposition of all or substantially all of the assets of the
                  Company (each, a "Corporate Transaction") or, if consummation
                  of such Corporate Transaction is subject, at the time of such
                  approval by shareowners, to the consent of any government or
                  governmental agency, the obtaining of such consent (either
                  explicitly or implicitly by consummation); excluding however,
                  such a Corporate Transaction pursuant to which (A) all or
                  substantially all of the individuals and entities who are the
                  beneficial owners of the Outstanding Company Common Stock and
                  Outstanding Company Voting Securities immediately prior to
                  such Corporate Transaction will beneficially own, directly or
                  indirectly, more than 60% of the outstanding shares of common
                  stock, and the combined voting power of the then outstanding
                  voting securities entitled to vote generally in the election
                  of directors of the corporation resulting from such Corporate
                  Transaction (including, without limitation, a corporation or
                  other Person which as a result of such transaction owns the
                  Company or all or substantially all of the Company's assets
                  either directly or through one or more subsidiaries (a "Parent
                  Company")) in substantially the same proportions as their
                  ownership, immediately prior to such Corporate Transaction, of
                  the Outstanding Company Common Stock and Outstanding Company
                  Voting Securities, (B) no Entity (other than the Company, any
                  employee benefit plan (or related trust) of the Company, such
                  corporation resulting from such Corporate Transaction or, if
                  reference was made to equity ownership of any Parent Company
                  for purposes of determining whether clause (A) above is
                  satisfied in connection with the applicable Corporate
                  Transaction, such
 
 
 
 
<PAGE>
 
 
 
                  Parent Company) will beneficially own, directly or indirectly,
                  20% or more of, respectively, the outstanding shares of common
                  stock of the corporation resulting from such Corporate
                  Transaction or the combined voting power of the outstanding
                  voting securities of such corporation entitled to vote
                  generally in the election of directors unless such ownership
                  resulted solely from ownership of securities of the Company
                  prior to the Corporate Transaction, and (C) individuals who
                  were members of the Incumbent Board will immediately after the
                  consummation of the Corporate Transaction constitute at least
                  a majority of the members of the board of directors of the
                  corporation resulting from such Corporate Transaction (or, if
                  reference was made to equity ownership of any Parent Company
                  for purposes of determining whether clause (A) above is
                  satisfied in connection with the applicable Corporate
                  Transaction, of the Parent Company); or
 
 
                  (iv) The approval by the shareowners of the Company of a
                  complete liquidation or dissolution of the Company.
 
         (g) "Change in Control Price" means the higher of (A) the highest
         reported sales price, regular way, of a Share in any transaction
         reported on the New York Stock Exchange Composite Tape or other
         national exchange on which Shares are listed or on NASDAQ during the
         60-day period prior to and including the date of a Change in Control or
         (B) if the Change in Control is the result of a tender or exchange
         offer or a Corporate Transaction, the highest price per Share paid in
         such tender or exchange offer or Corporate Transaction; provided
         however, that in the case of Incentive Stock Options and Stock
         Appreciation Rights relating to Incentive Stock Options, the Change in
         Control Price shall be in all cases the Fair Market Value of a Share on
         the date such Incentive Stock Option or Stock Appreciation Right is
         exercised or deemed exercised. To the extent that the consideration
         paid in any such transaction described above consists all or in part of
         securities or other noncash consideration, the value of such securities
         or other noncash consideration shall be determined in the sole
         discretion of the Board.
 
 
 
         (h) "Code" shall mean the Internal Revenue Code of 1986, as amended
         from time to time, and any successor thereto.
 
 
         (i) "Committee" shall mean the Corporate Governance and Compensation
         Committee of the Board (or any successor committee); provided, however,
         that (i) with respect to Awards to any Employees who are Officers or
         members of the Board for purposes of Section 16, Committee means all of
         the members of the Compensation Committee who are "non-employee
 
 
 
 
<PAGE>
 
 
 
         directors" within the meaning of Rule 16b-3 adopted under the Exchange
         Act, (ii) with respect to Awards to any Employees who are Officers or
         members of the Board for purposes of Section 16 and who are intended to
         satisfy the requirements for "performance based compensation" within
         the meaning of Section 162(m)(4)(C) of the Code, the regulations
         promulgated thereunder, and any successors thereto, Committee means all
         of the members of the Compensation Committee who are "outside
         directors" within the meaning of Section 162(m) of the Code, and (iii)
         with respect to all Awards, the Committee shall comprise of
         "independent" directors as required under the New York Stock Exchange
         listing requirements.
 
         (j) "Company" shall mean Lucent Technologies Inc., a Delaware
         corporation.
 
         (k) "Covered Employee" shall mean a "covered employee" within the
         meaning of Section 162(m)(3) of the Code.
 
         (l) "Dividend Equivalent" shall mean any right granted pursuant to
         Section 14(h) hereof.
 
         (m) "Employee" shall mean any employee of the Company or of any
         Affiliate. Unless otherwise determined by the Committee in its sole
         discretion, for purposes of the Plan, an Employee shall be considered
         to have terminated employment and to have ceased to be an Employee if
         his or her employer ceases to be an Affiliate, even if he or she
         continues to be employed by such employer.
 
         (n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
         amended from time to time, and any successor thereto.
 
         (o) "Exercise Period" shall have the meaning set forth in Section 11(b)
         hereof.
 
         (p) "Good Reason" shall mean "good reason" as such term is defined in
         the Award Agreement or, in the absence of such a definition, for
         Employees who are subject to an employment agreement or severance
         policy with the Company or an Affiliate, the definition given to it
         under such employment agreement or severance policy.
 
         (q) "Fair Market Value" shall mean, (i) with respect to Shares, the
         average of the highest and lowest reported sales prices, regular way,
         of Shares in transactions reported on the New York Stock Exchange on
         the date of determination of Fair Market Value, or if no sales of
         Shares are reported on the New York Stock Exchange for that date, the
         comparable average sales price for the last previous day for which
         sales were reported on the
 
 
 
 
<PAGE>
 
 
 
         New York Stock Exchange, and (ii) with respect to any other property,
         the fair market value of such property determined by such methods or
         procedures as shall be established from time to time by the Committee.
 
         (r) "Incentive Stock Option" shall mean an Option granted under Section
         6 hereof that is intended to meet the requirements of Section 422 of
         the Code or any successor provision thereto.
 
         (s) "Net Income" shall mean the net income of the Company as determined
         under generally accepted accounting principles, excluding (a)
         extraordinary items (net of applicable taxes); (b) cumulative effects
         of changes in accounting principles; (c) securities gains and losses
         (net of applicable taxes); and (d) nonrecurring items (net of
         applicable taxes) including, but not limited to, gains or losses on
         asset dispositions and sales of divisions, business units or
         subsidiaries, restructuring charges, gains and losses from qualified
         benefit plan curtailments and settlements, and income or expenses
         related to deferred tax assets.
 
         (t) "Nonstatutory Stock Option" shall mean an Option granted under
         Section 6 hereof that is not intended to be an Incentive Stock Option.
 
         (u) "Officer" shall mean any manager of the Company or any Affiliate
         holding a position above the executive level (E band) or any future
         salary grade that is the equivalent thereof.
 
         (v) "Option" shall mean any right granted to a Participant under the
         2003 Plan allowing such Participant to purchase Shares at such price or
         prices and during such period or periods as the Committee shall
         determine.
 
         (w) "Other Stock Unit Award" shall mean any right granted to a
         Participant by the Committee pursuant to Section 10 hereof.
 
         (x) "Participant" shall mean an Employee who is selected by the
         Committee to receive an Award under the Plan.
 
         (y) "Performance Award" shall mean any Award of Performance Shares or
         Performance Units pursuant to Section 9 hereof.
 
         (z) "Performance Period" shall mean that period, established by the
         Committee at the time any Performance Award is granted or at any time
         thereafter, during which any performance goals specified by the
         Committee with respect to such Award are to be measured.
 
         (aa) "Performance Share" shall mean any grant pursuant to Section 9
         hereof of a unit valued by reference to a designated number of Shares,
         which value may be paid to the Participant by delivery of such property
         as
 
 
 
 
<PAGE>
 
 
         the Committee shall determine, including, without limitation, cash,
         Shares, or any combination thereof, upon achievement of such
         performance goals during the Performance Period as the Committee shall
         establish at the time of such grant or thereafter.
 
         (bb) "Performance Unit" shall mean any grant pursuant to Section 9
         hereof of a unit valued by reference to a designated amount of property
         other than Shares, which value may be paid to the Participant by
         delivery of such property as the Committee shall determine, including,
         without limitation, cash, Shares, or any combination thereof, upon
         achievement of such performance goals during the Performance Period as
         the Committee shall establish at the time of such grant or thereafter.
 
         (cc) "Person" shall mean any individual, corporation, partnership,
         association, joint-stock company, trust, unincorporated organization,
         limited liability company, other entity or government or political
         subdivision thereof.
 
         (dd) "Plan" shall mean the Long Term Incentive Program set forth herein
         known as the "Lucent Technologies Inc. 2003 Long Term Incentive
         Program", as the same may be amended from time to time.
 
         (ee) "Restricted Stock" shall mean any Share issued with the
         restriction that the holder may not sell, transfer, pledge, or assign
         such Share and with such other restrictions as the Committee, in its
         sole discretion, may impose (including, without limitation, any
         restriction on the right to vote such Share, and the right to receive
         any cash dividends), which restrictions may lapse separately or in
         combination at such time or times, in installments or otherwise, as the
         Committee may deem appropriate.
 
         (ff) "Restricted Stock Award" shall mean an award of Restricted Stock
         under Section 8 hereof.
 
         (gg) "Section 16" shall mean Section 16 of the Exchange Act and the
         rules promulgated thereunder and any successor provision thereto as in
         effect from time to time.
 
         (hh) "Shares" shall mean the shares of common stock, $.01 par value, of
         the Company and such other securities of the Company as the Committee
         may from time to time determine.
 
         (ii) "Stock Appreciation Right" shall mean any right granted to a
         Participant pursuant to Section 7 hereof to receive, upon exercise by
         the Participant, the excess of (i) the Fair Market Value of one Share
         on the date of exercise or, if the Committee shall so determine in the
         case of any such right other than one related to any Incentive Stock
         Option, at any
 
 
 
 
<PAGE>
 
 
 
         time during a specified period before the date of exercise over (ii)
         the grant price of the right on the date of grant, or if granted in
         connection with an outstanding Option on the date of grant of the
         related Option, as specified by the Committee in its sole discretion,
         which, other than in the case of Substitute Awards, shall not be less
         than the Fair Market Value of one Share on such date of grant of the
         right or the related Option, as the case may be. Any payment by the
         Company in respect of such right may be made in cash, Shares, other
         property, or any combination thereof, as the Committee, in its sole
         discretion, shall determine.
 
         (jj) "Subsidiary" shall mean a "subsidiary corporation" of the Company
         as defined in Section 424(f) of the Code, an entity in which the
         Company directly or indirectly owns 50% or more of the voting interests
         or an entity in which the Company has a significant equity interest, as
         determined by the Board or the Committee.
 
         (kk) "Substitute Award" shall have the meaning set forth in Section
         4(d).
 
         (ll) "1996 Plan" shall mean the Company's 1996 Long-Term Incentive
         Program.
 
         (mm) "1997 Plan" shall mean the Company's 1997 Long-Term Incentive
         Plan.
 
SECTION 3.  ADMINISTRATION.
 
         (a) AUTHORITY OF COMMITTEE. The Plan shall be administered by the
         Committee. The Committee shall have full power and authority, subject
         to such resolutions not inconsistent with the provisions of the Plan as
         may from time to time be adopted by the Board, to: (i) select the
         Employees of the Company and its Affiliates to whom Awards may from
         time to time be granted hereunder; (ii) determine the type or types of
         Award to be granted to each Participant hereunder; (iii) determine the
         number of Shares to be covered by each Award granted hereunder; (iv)
         determine the terms and conditions, not inconsistent with the
         provisions of the Plan, of any Award granted hereunder; (v) determine
         whether, to what extent and under what circumstances Awards may be
         settled in cash, Shares or other property or canceled or suspended;
         (vi) determine whether, to what extent and under what circumstances
         cash, Shares and other property and other amounts payable with respect
         to an Award under this Plan shall be deferred either automatically or
         at the election of the Participant; (vii) interpret and administer the
         Plan and any instrument or agreement entered into under the Plan;
         (viii) establish such rules and regulations and appoint such agents as
         it shall deem appropriate for the proper administration of the Plan;
         and (ix) make any other determination and take any other action that
         the Committee deems
 
 
 
 
<PAGE>
 
 
 
         necessary or desirable for administration of the Plan. Notwithstanding
         anything in this Section 3(a) to the contrary, the Committee shall not
         have the authority to reduce the exercise price for Options and Stock
         Appreciation Rights other than in connection with adjustments as
         provided in Section 4(g).
 
         (b) DECISIONS BINDING. Decisions of the Committee shall be final,
         conclusive and binding upon all Persons, including the Company, any
         Participant, any shareowner, and any employee of the Company or of any
         Affiliate.
 
         (c) DELEGATION. Subject to the terms of the Plan and terms and
         limitations as the Committee shall determine, the Committee may
         delegate its authority as identified herein to any individual or
         committee of individuals (who need not be directors of the Board),
         including without limitation the authority to make Awards to
         Participants who are not Officers or directors of the Company for
         purposes of Section 16 or who are otherwise not subject to such
         Section. To the extent that the Committee delegates its authority to
         make Awards as provided by this Section 3(c), all references in the
         Plan to the Committee's authority to make Awards and determinations
         with respect thereto shall be deemed to include the Committee's
         delegate. Any such delegate shall serve at the leisure of, and may be
         removed at any time by, the Committee.
 
SECTION 4.  SHARES SUBJECT TO THE 2003 PLAN.
 
         (a) NUMBER OF SHARES AVAILABLE FOR GRANTS. Subject to adjustment as
         provided in Section 4(g), the aggregate number of Shares that may be
         issued to Participants pursuant to Awards granted under the Plan shall
         not exceed the sum of one hundred seventy million (170,000,000) Shares.
 
         (b) LAPSED AWARDS. If any Award is canceled, terminates, expires, or
         lapses for any reason, any Shares subject to such Award shall not count
         against the aggregate number of Shares that may be issued under the
         Plan set forth in Section 4(a) above.
 
         (c) SHARES USED TO PAY OPTION PRICE AND WITHHOLDING TAXES. If a
         Participant pays the option price for an Option by tendering previously
         owned Shares in accordance with the provisions of Section 6 herein or
         satisfies any tax withholding requirement by having the Company
         withhold Shares in accordance with Section 14 herein, then such Shares
         surrendered to pay the option price or used to satisfy such tax
         withholding requirements shall not count against the aggregate number
         of Shares that may be issued under the Plan set forth in Section 4(a)
         above.
 
 
 
 
<PAGE>
 
 
         (d) OTHER ITEMS NOT INCLUDED. The following items shall not count
         against the aggregate number of Shares that may be issued under the
         Plan set forth in Section 4(a) above: (i) the payment in cash of
         dividends or dividend equivalents under any outstanding Award; (ii) any
         Award that is settled in cash rather than by issuance of Shares; or
         (iii) Awards granted through the assumption of, or in substitution for,
         outstanding awards previously granted to individuals who become
         Employees as a result of a merger, consolidation, acquisition or other
         corporate transaction involving the Company or any Subsidiary
         ("Substitute Award").
 
         (e) AWARD LIMITS. Notwithstanding any provision herein to the contrary,
         the following provisions shall apply (subject to adjustment as provided
         in Section 4(g) below):
 
                  (i) in no event shall a Participant receive an Award or Awards
                  during any one (1) calendar year covering in the aggregate
                  more than six million (6,000,000) Shares (whether such Award
                  or Awards may be settled in Shares, cash or any combination of
                  Shares and cash) or twenty million Shares (20,000,000)
                  covering the term of the Plan; provided that, during the
                  initial year of employment, the limit shall be increased to
                  ten million (10,000,000) Shares;
 
                  (ii) in no event shall there be granted during the term of the
                  Plan Incentive Stock Options covering more than an aggregate
                  of forty million (40,000,000) Shares; and
 
                  (iii) in no event shall there be granted during the term of
                  the Plan Shares of Restricted Stock, Performance Units,
                  Performance Shares or Other Stock Based Awards (or any similar
                  plan or program as determined by the Committee) covering more
                  than fifty-one million (51,000,000) Shares.
 
 
         (f) SOURCE OF SHARES. Shares issued under the Plan may be original
         issue shares, treasury stock or shares purchased in the open market or
         otherwise, all as determined by the Chief Financial Officer of the
         Company (or the Chief Financial Officer's designee) from time to time.
 
         (g) ADJUSTMENTS. In the event of any merger, reorganization,
         consolidation, recapitalization, stock dividend, stock split, reverse
         stock split, spin-off or similar transaction or other change in
         corporate structure affecting the Shares, such adjustments and other
         substitutions shall be made to the Plan and to Awards as the Committee
         in its sole discretion deems equitable or appropriate, including
         without limitation such adjustments in the aggregate number, class and
         kind of Shares which may be delivered under the Plan, in the aggregate
         or to any one Participant, in
 
 
 
 
<PAGE>
 
 
 
         the number, class, kind and option or exercise price of Shares subject
         to outstanding Options, Stock Appreciation Rights or other Awards
         granted under the Plan, and in the number, class and kind of Shares
         subject to Awards granted under the Plan (including, if the Committee
         deems appropriate, the substitution of similar options to purchase the
         shares of, or other awards denominated in the shares of, another
         company) as the Committee may determine to be appropriate in its sole
         discretion, provided that the number of Shares or other securities
         subject to any Award shall always be a whole number.
 
SECTION 5. ELIGIBILITY. Any Employee (excluding any member of the Committee)
shall be eligible to be selected as a Participant.
 
SECTION 6. STOCK OPTIONS. Options may be granted hereunder to Participants
either alone or in addition to other Awards granted under the Plan. Options may
be granted for no consideration or for such consideration as the Committee may
determine. Any Option granted under the Plan shall be evidenced by an Award
Agreement in such form as the Committee may from time to time approve. Any such
Option shall be subject to the following terms and conditions and to such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall deem desirable:
 
         (a) OPTION PRICE. The exercise price per Share under an Option shall be
         determined by the Committee in its sole discretion; provided that,
         except in the case of an Option pursuant to a Substitute Award, such
         purchase price shall not be less than the Fair Market Value of a Share
         on the date of the grant of the Option.
 
         (b) OPTION PERIOD. The term of each Option shall be fixed by the
         Committee in its sole discretion; provided that no Option shall be
         exercisable after the expiration of seven years from the date the
         Option is granted.
 
         (c) EXERCISABILITY. Options shall be exercisable at such time or times
         as determined by the Committee at or subsequent to grant.
 
         (d) METHOD OF EXERCISE. Subject to the other provisions of the 2003
         Plan and any applicable Award Agreement, any Option may be exercised by
         the Participant in whole or in part at such time or times, and the
         Participant may make payment of the option price in such form or forms,
         including, without limitation, payment by delivery of cash, Shares or
         other consideration (including, where permitted by law and the
         Committee, Awards) having a Fair Market Value on the exercise date
         equal to the total option price, or by any combination of cash, Shares
         and other consideration as the Committee may specify in the applicable
         Award Agreement.
 
 
 
 
<PAGE>
 
 
         (e) INCENTIVE STOCK OPTIONS. In accordance with rules and procedures
         established by the Committee, the aggregate Fair Market Value
         (determined as of the time of grant) of the Shares with respect to
         which Incentive Stock Options held by any Participant which are
         exercisable for the first time by such Participant during any calendar
         year under the Plan (and under any other benefit plans of the Company
         or of any parent or Subsidiary of the Company) shall not exceed
         $100,000 or, if different, the maximum limitation in effect at the time
         of grant under Section 422 of the Code, or any successor provision, and
         any regulations promulgated thereunder. The terms of any Incentive
         Stock Option granted hereunder shall comply in all respects with the
         provisions of Section 422 of the Code, or any successor provision, and
         any regulations promulgated thereunder.
 
         (f) FORM OF SETTLEMENT. In its sole discretion, the Committee may
         provide, at the time of grant, that the shares to be issued upon an
         Option's exercise shall be in the form of Restricted Stock or other
         similar securities, or may reserve the right so to provide after the
         time of grant. Similarly, the Committee may require Shares to be held
         for a specific period of time.
 
SECTION 7. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted
hereunder to Participants either alone or in addition to other Awards granted
under the Plan and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need not be the same with
respect to each recipient. Any Stock Appreciation Right related to a
Nonstatutory Stock Option may be granted at the same time such Option is granted
or at any time thereafter before exercise or expiration of such Option. Any
Stock Appreciation Right related to an Incentive Stock Option must be granted at
the same time such Option is granted. In the case of any Stock Appreciation
Right related to any Option, the Stock Appreciation Right or applicable portion
thereof shall terminate and no longer be exercisable upon the termination or
exercise of the related Option, except that a Stock Appreciation Right granted
with respect to less than the full number of Shares covered by a related Option
shall not be reduced until the exercise or termination of the related Option
exceeds the number of Shares not covered by the Stock Appreciation Right. Any
Option related to any Stock Appreciation Right shall no longer be exercisable to
the extent the related Stock Appreciation Right has been exercised. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
 
SECTION 8. RESTRICTED STOCK AWARDS. Restricted Stock Awards may be issued
hereunder to Participants, for no cash consideration or for such minimum
consideration as may be required by applicable law, either alone or in addition
to other Awards granted under the Plan. The provisions of Restricted Stock
Awards need not be the same with respect to each recipient. Any Restricted Stock
Award issued hereunder may be evidenced in such manner as the Committee in its
sole discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of a Restricted Stock
Award, such certificate shall be registered in the name of the Participant,
 
 
 
 
<PAGE>
 
 
 
and shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. Except as otherwise determined by the
Committee and subject to Section 11 hereof, upon termination of employment for
any reason during the restriction period, any portion of a Restricted Stock
Award still subject to restriction shall be forfeited by the Participant and
reacquired by the Company.
 
SECTION 9. PERFORMANCE AWARDS. Performance Awards in the form of Performance
Units or Performance Shares may be issued hereunder to Participants, for no cash
consideration or for such minimum consideration as may be required by applicable
law, either alone or in addition to other Awards granted under the Plan. The
performance criteria to be achieved during any Performance Period and the length
of the Performance Period shall be determined by the Committee upon the grant of
each Performance Award or at any time thereafter. Except as provided in Section
11, Performance Awards will be distributed only after the end of the relevant
Performance Period. Performance Awards may be paid in cash, Shares, other
property or any combination thereof, in the sole discretion of the Committee.
The performance levels to be achieved for each Performance Period and the amount
of the Award to be distributed shall be conclusively determined by the
Committee. Performance Awards may be paid in a lump sum or in installments
following the close of the Performance Period.
 
SECTION 10. OTHER STOCK UNIT AWARDS. Other Awards of Shares and other Awards
that are valued in whole or in part by reference to, or are otherwise based on,
Shares or other property ("Other Stock Unit Awards") may be granted hereunder to
Participants, either alone or in addition to other Awards granted under the
Plan. Other Stock Unit Awards may be paid in Shares, other securities of the
Company, cash or any other form of property as the Committee shall determine.
Shares (including securities convertible into Shares) granted under this Section
10 may be issued for no cash consideration or for such minimum consideration as
may be required by applicable law. Shares (including securities convertible into
Shares) purchased pursuant to a purchase right awarded under this Section 10
shall be purchased for such consideration as the Committee shall in its sole
discretion determine, which shall not be less than the Fair Market Value of such
Shares or other securities as of the date such purchase right is awarded.
Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees of the Company and its Affiliates
to whom and the time or times at which such Awards shall be made, the number of
Shares to be granted pursuant to such Awards, and all other conditions of the
Awards. The provisions of Other Stock Unit Awards need not be the same with
respect to each recipient.
 
SECTION 11. CHANGE IN CONTROL PROVISIONS.
 
         (a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
         the contrary, unless the Committee shall determine otherwise at the
         time of grant with respect to a particular Award, in the event of a
         Change in Control:
 
                  (i) All outstanding Awards other than Performance Awards shall
                  become fully and immediately exercisable unless such Awards
                  are converted, assumed, or replaced by a successor.
 
 
 
 
<PAGE>
 
 
                  If a Participant's employment is subsequently terminated
                  without Cause or for Good Reason within 24 months of the
                  Change in Control, any such Awards (other than Performance
                  Awards) so converted, assumed, or replaced that remain
                  unvested shall become fully and immediately exercisable upon
                  the date of the Participant's termination and all deferral and
                  restriction limitations applicable shall lapse.
 
                  (ii) All Performance Awards earned and outstanding as of the
                  date of the Change in Control is determined to have occurred
                  shall be payable in full in accordance with the payout
                  schedule pursuant to the Award Agreement. Any remaining
                  Performance Awards (including any applicable Performance
                  Period) for which the payout level has not been determined
                  shall be prorated at the target payout level up to and
                  including the date of such Change in Control and shall be
                  payable in full in accordance with the payout schedule
                  pursuant to the Award Agreement. Any existing deferrals or
                  other restrictions shall remain in effect. If the
                  Participant's employment is terminated without Cause following
                  the Change in Control, any Awards remaining to be paid will be
                  paid in accordance with the employment termination provision
                  of the Award Agreement. If the Participant's employment is
                  terminated for Good Reason following the Change in Control,
                  any Awards remaining to be paid will be paid in accordance
                  with the payout schedule pursuant to the Award Agreement.
 
         (b) CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of
         the Plan, during the 60-day period from and after a Change in Control
         (the "Exercise Period"), if the Committee shall determine at, or at any
         time after, the time of grant, a Participant holding an Option shall
         have the right, whether or not the Option is fully exercisable and in
         lieu of the payment of the purchase price for the Shares being
         purchased under the Option and by giving notice to the Company, to
         elect (within the Exercise Period) to surrender all or part of the
         Option to the Company and to receive cash, within 30 days of such
         notice, in an amount equal to the amount by which the Change in Control
         Price per Share on the date of such election shall exceed the purchase
         price per Share under the Option multiplied by the number of Shares
         granted under the Option as to which the right granted under this
         Section 11(b) shall have been exercised.
 
 
 
 
 
 
<PAGE>
 
 
SECTION 12. CODE SECTION 162(m) PROVISIONS.
 
         (a) Notwithstanding any other provision of this Plan, if the Committee
         determines at the time Restricted Stock, a Performance Award or an
         Other Stock Unit Award is granted to a Participant that such
         Participant is, or may be as of the end of the tax year for which the
         Company would claim a tax deduction in connection with such Award, a
         Covered Employee, then the Committee may provide that this Section 12
         is applicable to such Award under such terms as the Committee shall
         determine.
 
         (b) If an Award is subject to this Section 12, then the lapsing of
         restrictions thereon and the distribution of cash, Shares or other
         property pursuant thereto, as applicable, shall be subject to the
         Company having a level of Net Income for the fiscal year preceding
         lapse or distribution set by the Committee within the time prescribed
         by Section 162(m) of the Code or the regulations thereunder in order
         for the level to be considered "pre-established". The Committee may, in
         its discretion, reduce the amount of any Performance Award or Other
         Stock Unit Award subject to this Section 12 at any time prior to
         payment based on such criteria as it shall determine, including but not
         limited to individual merit and the attainment of specified levels of
         one or any combination of the following: net cash provided by operating
         activities, earnings per Share from continuing operations, operating
         income, revenue growth, gross margin, operating return on sales, return
         on operating assets, return on equity, economic value added, stock
         price appreciation, total shareowner return (measured in terms of stock
         price appreciation and dividend growth), or cost control, of the
         Company or the Affiliate or division of the Company for or within which
         the Participant is primarily employed.
 
         (c) Notwithstanding any contrary provision of the Plan other than
         Section 11, the Committee may not adjust upwards the amount payable
         pursuant to any Award subject to this Section 12, nor may it waive the
         achievement of the Net Income requirement contained in Section 12(b),
         except in the case of the death or disability of a Participant.
 
         (d) Prior to the payment of any Award subject to this Section 12, the
         Committee shall certify in writing that the Net Income requirement
         applicable to such Award was met.
 
         (e) The Committee shall have the power to impose such other
         restrictions on Awards subject to this Section 12 as it may deem
         necessary or appropriate to ensure that such Awards satisfy all
         requirements for "performance-based compensation" within the meaning of
         Section 162(m)(4)(C) of the Code, the regulations promulgated
         thereunder, and any successors thereto.
 
SECTION 13. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the 2003 Plan, but no amendment, alteration, or discontinuation
shall be
 
 
 
 
<PAGE>
 
 
 
made that would impair the rights of an optionee or Participant under
an Award theretofore granted, without the optionee's or Participant's consent,
or that without the approval of the shareowners would:
 
         (a) except as is provided in Section 4 of the Plan, increase the total
         number of shares reserved for the purpose of the Plan;
 
         (b) change the employees or class of employees eligible to participate
         in the Plan; or
 
         (c) reduce the exercise price for Options and Stock Appreciation Rights
         by repricing or replacing such Awards.
 
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without his consent. Except as provided in Section 4 and Section
14(e), the Committee shall not have the authority to cancel any outstanding
Option and issue a new Option in its place with a lower exercise price;
provided, however, that this sentence shall not prohibit an exchange offer
whereby the Company provides certain Participants with an election to cancel an
outstanding Option and receive a grant of a new Option at a future date if such
exchange offer only occurs with shareowner approval.
 
SECTION 14. GENERAL PROVISIONS.
 
         (a) Unless the Committee determines otherwise at the time the Award is
         granted, no Award, and no Shares subject to Awards described in Section
         10 which have not been issued or as to which any applicable
         restriction, performance or deferral period has not lapsed, may be
         sold, assigned, transferred, pledged or otherwise encumbered, except by
         will or by the laws of descent and distribution and all Awards shall be
         exercisable, during the Participant's lifetime, only by the Participant
         or, if permissible under applicable law, by the Participant's guardian
         or legal representative; provided that, if so determined by the
         Committee, a Participant may, in the manner established by the
         Committee, designate a beneficiary to exercise the rights of the
         Participant with respect to any Award upon the death of the
         Participant.
 
         (b) The term of each Award shall be for such period of months or years
         from the date of its grant as may be determined by the Committee;
         provided that in no event shall the term of any Option or any Stock
         Appreciation Right related to any Option exceed a period of seven (7)
         years from the date of its grant.
 
         (c) No Employee or Participant shall have any claim to be granted any
         Award under the Plan and there is no obligation for uniformity of
         treatment of Employees or Participants under the Plan.
 
 
 
 
<PAGE>
 
 
 
         (d) The prospective recipient of any Award under the Plan shall not,
         with respect to such Award, be deemed to have become a Participant, or
         to have any rights with respect to such Award, until and unless such
         recipient shall have complied with the then applicable terms and
         conditions.
 
         (e) Except as provided in Section 12, the Committee shall be authorized
         to make adjustments in Performance Award criteria or in the terms and
         conditions of other Awards in recognition of unusual or nonrecurring
         events affecting the Company or its financial statements, or changes in
         applicable laws, regulations or accounting principles. The Committee
         may correct any defect, supply any omission or reconcile any
         inconsistency in the Plan or any Award in the manner and to the extent
         it shall deem desirable. In the event the Company shall assume
         outstanding employee benefit awards or the right or obligation to make
         future such awards in connection with the acquisition of another
         corporation or business entity, the Committee may, in its discretion,
         make such adjustments in the terms of Awards under the Plan as it shall
         deem appropriate.
 
         (f) Subject to Section 13, the Committee shall have full power and
         authority to determine whether, to what extent and under what
         circumstances any Award shall be canceled or suspended. In particular,
         but without limitation, all outstanding Awards to any Participant shall
         be canceled if the Participant, without the consent of the Committee,
         while employed by the Company or after termination of such employment,
         engages in any activity which is in competition with the Company, as
         determined by the Committee, one or more Officers of the Company or a
         committee of Officers of the Company to whom the authority to make such
         determination is delegated by the Committee. The Committee shall have
         the discretion with respect to any Award granted under this Plan to
         establish, upon its grant, conditions under which (i) the Award may be
         subsequently forfeited, cancelled, rescinded, suspended, withheld or
         otherwise limited or restricted; or (ii) the gains that are realized by
         the grantee in connection with an Award or the exercise of an Award may
         be recovered; provided, however, that such conditions and their
         consequences are: (a) clearly set forth in the Award Agreement or other
         grant document; and (b) comply with applicable laws. These conditions
         may include, without limitation, actions by the Participant which
         constitute a conflict of interest with the Company, are prejudicial to
         the Company's interests, or are in violation of any non-compete
         agreement or obligation, any confidentiality agreement or obligation,
         the Company's applicable policies, or the Participant's terms and
         conditions of employment.
 
         (g) All certificates for Shares delivered under the Plan pursuant to
         any Award shall be subject to such stock-transfer orders and other
         restrictions as the Committee may deem advisable under the rules,
         regulations, and other requirements of the Securities and Exchange
         Commission, any stock
 
 
 
 
<PAGE>
 
 
 
         exchange upon which the Shares are then listed, and any applicable
         Federal or state securities law, and the Committee may cause a legend
         or legends to be put on any such certificates to make appropriate
         reference to such restrictions.
 
         (h) Subject to the provisions of this Plan and any Award Agreement, the
         recipient of an Award (including, without limitation, any deferred
         Award) may, if so determined by the Committee, be entitled to receive,
         currently or on a deferred basis, interest or dividends, or interest or
         dividend equivalents, with respect to the number of Shares covered by
         the Award, as determined by the Committee, in its sole discretion, and
         the Committee may provide that such amounts (if any) shall be deemed to
         have been reinvested in additional Shares or otherwise reinvested.
 
         (i) Except as otherwise required in any applicable Award Agreement or
         by the terms of the Plan, recipients of Awards under the Plan shall not
         be required to make any payment or provide consideration other than the
         rendering of services.
 
         (j) [Intentionally omitted]
 
         (k) The Committee is authorized to establish procedures pursuant to
         which the payment of any Award may be deferred.
 
         (l) The maximum value of the property, including cash, that may be paid
         or distributed to any Participant pursuant to grants of Performance
         Units and/or Other Stock Unit Awards or any other Award (paid or
         payable in cash or other property) that are valued with reference to
         property other than Shares made in any one calendar year is
         $10,000,000.
 
         (m) The Company is authorized to withhold from any Award granted or
         payment due under the Plan the amount of withholding taxes due in
         respect of an Award or payment hereunder and to take such other action
         as may be necessary in the opinion of the Company to satisfy all
         obligations for the payment of such taxes. The Committee shall be
         authorized to establish procedures for election by Participants to
         satisfy such withholding taxes by delivery of, or directing the Company
         to retain, Shares, and will not issue Shares or Awards until such tax
         obligations have been satisfied.
 
         (n) Nothing contained in this Plan shall prevent the Board of Directors
         from adopting other or additional compensation arrangements, subject to
         shareowner approval if such approval is otherwise required; and such
         arrangements may be either generally applicable or applicable only in
         specific cases.
 
 
 
 
<PAGE>
 
 
 
         (o) The validity, construction, and effect of the Plan and any rules
         and regulations relating to the Plan shall be determined in accordance
         with the laws of the State of Delaware and applicable Federal law.
 
         (p) If any provision of this Plan is or becomes or is deemed invalid,
         illegal or unenforceable in any jurisdiction, or would disqualify the
         Plan or any Award under any law deemed applicable by the Committee,
         such provision shall be construed or deemed amended to conform to
         applicable laws or if it cannot be construed or deemed amended without,
         in the determination of the Committee, materially altering the intent
         of the Plan, it shall be stricken and the remainder of the Plan shall
         remain in full force and effect.
 
         (q) Awards may be granted to Employees who are foreign nationals or
         employed outside the United States, or both, on such terms and
         conditions different from those specified in the Plan as may, in the
         judgment of the Committee, be necessary or desirable in order to
         recognize differences in local law or tax policy. The Committee also
         may impose conditions on the exercise or vesting of Awards in order to
         minimize the Company's obligation with respect to tax equalization for
         Employees on assignments outside their home country.
 
 
         IN WITNESS WHEREOF, the Company has caused this Plan, which was
         approved by the Board of Directors on November 25, 2002, to be
         executed effective the 19th day of February, 2003.
 
         For Lucent Technologies Inc.
 
 
         By:     /s/ Pamela O. Kimmet
                 --------------------------------------
                 Pamela O. Kimmet
                 Senior Vice President, Human Resources
 
 
         Attest: /s/ Richard J. Rawson
                 --------------------------------------
                 Richard J. Rawson
                 Senior Vice President, General Counsel
                 and Secretary
 
 
 
 
</TEXT>
</DOCUMENT>