<PAGE>


                                                                    Exhibit 99.1


                              SETTLEMENT AGREEMENT


         This Settlement Agreement (together with its schedules and attachments,
the "Agreement") is entered into as of June 6, 2001 by and between Lucent
Technologies Inc., a Delaware corporation (together with its successors and
assigns, the "Company"), and Richard A. McGinn (the "Executive").

         WHEREAS, the Executive had been employed by the Company as the Chairman
of its Board of Directors and as its Chief Executive Officer ("CEO");

         WHEREAS, the Executive resigned as a director and as the CEO of the
Company effective October 22, 2000, and the Executive and the Company terminated
their employment relationship;

         WHEREAS, as a result of such termination the Executive is, based on the
Executive's age and years of Company service, automatically eligible to retire
from the Company and receive certain benefits under various Company plans;

         WHEREAS, the Company believes that it is in the best interest of its
shareholders to obtain a comprehensive non-compete agreement and general release
from the Executive;

         WHEREAS, the Executive and the Company (the "Parties") have negotiated
and agreed to a final settlement of their respective rights, obligations and
liabilities; and

         WHEREAS, the Parties have agreed that the effective date of this
Agreement shall be February 8, 2001 (the "Effective Date"), which was the date
of the earlier Settlement Agreement between the Parties, which was terminated by
mutual consent when certain details relating to the Loan Collateral (defined
below) were finalized.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Executive and the Company
hereby agree as follows:

         1. Payment.

            (a) The Company shall pay the Executive a severance payment equal to
the excess of $5.5 million over the gross amount of certain advances thereon,
such excess to be paid within 7 days of the Expiration Date (as defined in
Section 15). The Executive acknowledges that such $5.5 million represents a
gross amount before all




<PAGE>



applicable federal, state and local withholding taxes that are required to be
deducted by the Company.

            (b) The Company shall be entitled to an offset, against its
supplemental pension obligations to the Executive, for certain payments made to
or on behalf of the Executive on or after December 1, 2000.

            (c) The Company shall promptly reimburse the Executive for any
reasonable business expenses properly incurred through the Executive's
resignation date.

         2. Stock Options. Options granted to the Executive on October 5, 1998
and October 25, 1999 will vest on a pro-rata basis. The pro-rata number of
shares vesting will be determined by calculating a fraction where the numerator
is the period of time from the grant date through October 22, 2000 (inclusive),
and the denominator is the period of time from the grant date through the date
of full vesting, and applying that fraction to the number of option shares
granted. The balance of the October 5, 1998 and October 25, 1999 option grants
will be canceled as of October 22, 2000. All other outstanding stock options
shall vest, and become non-forfeitable, as of the Effective Date, and all vested
and outstanding options shall remain exercisable for the remainder of their
maximum stated term.

         3. Restricted Stock Units. A prorated portion, using the same
methodology as used for the stock options detailed in Section 2 through October
22, 2000, of the Restricted Stock Units awarded to the Executive on October 1,
1996 and October 6, 1997 were vested and paid in shares, net of shares for
statutory withholding taxes, promptly after the Effective Date. Such shares
shall be purchased by the Company from the Executive within 7 days of the
Expiration Date by reducing the principal amount of the loans referred to in
Section 4. The purchase price for such shares shall be the average of the high
and low trading prices of the Company's Common Stock on the Effective Date (the
"Price"). The stock certificates for such shares, together with the shares
referred to in Section 4, all accompanied by stock powers endorsed in blank by
the Executive, shall be delivered to the Company prior to (i) such reduction of
such loans and (ii) payment of the amount specified in Section 1(a).

         4. Loans. In view of the fact that the Executive had entered into
commercial loan transactions with several banks (the "Banks") based on an
assumption of continued active employment with the Company, the Company has
agreed to assume direct liability on the loans extended to the Executive by the
Banks, and the Executive shall be relieved of any and all liability to the Banks
with respect to such loans, whose aggregate outstanding principal, plus accrued
interest, as of the Effective Date was approximately $4.3 million, after giving
effect to (i) the reduction set forth in Section 3 and (ii) the purchase at the
Price by the Company from the Executive of all shares of Company Common Stock
pledged to the Banks by the Executive as collateral for such loans and the
application of such amount to a further reduction of such loans. In
consideration for having all liability to the Banks with respect to such loans
extinguished, and for having any and all collateral pledged to the Banks to
secure such loans released, the Executive


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<PAGE>


shall, on the execution of this Agreement, deliver to the Company a
full-recourse promissory note dated and effective as of the Effective Date (the
"Note"), in the form agreed upon by the Parties and secured by the Mortgage and
the Guarantee (such terms being defined in the Note) (the "Loan Collateral").
The Loan Collateral shall have a value as of the Effective Date of at least 100%
of the principal amount of the Note. The principal amount of the Note shall
equal the outstanding principal, plus then accrued interest, on the Bank loans
as of the Effective Date; interest on the Note shall, except to the extent
otherwise agreed upon by the Parties, accrue at the rates set forth in the Note
and according to the arrangements that would have applied had the loans remained
outstanding directly from the Banks; the principal amount of the Note shall be
due on the third anniversary of the Effective Date; and all accrued but unpaid
interest on the Note shall be paid by the Executive at the end of each six-month
period after the Effective Date; and prepayment shall be permitted without
penalty.

         5. Office Space / Secretarial Services. Until the earlier of (i) the
date that the Executive commences new full-time employment (other than
self-employment) and (ii) December 1, 2001, the Company shall reimburse the
Executive, on a monthly basis, for all reasonable costs incurred by him in
obtaining, furnishing and equipping an office at a non-Company location, and
obtaining secretarial services, up to a maximum of $9,000 per month.

         6. Pension, Insurance, Health and Welfare Benefits. As of the Effective
Date, the Executive shall be eligible, as a retired senior executive of the
Company, to participate in (i) pension benefits, (ii) life insurance benefits
for retired senior executives, and (iii) the Company's retiree plans which
provide health care and dental coverage to retired employees, in each case on no
less favorable a basis than that on which such benefits are from time to time
provided to other retired senior executives of the Company.

         7. Legal and Other Costs. The Company agrees to reimburse the Executive
for his out-of-pocket costs for, or to pay directly, the legal fees and other
expenses of the Law Offices of Joseph E. Bachelder relating to his separation
from the Company (including the negotiation and preparation of this Agreement).

         8. Consulting Agreement. As part of this Agreement, the Executive
hereby agrees to provide consulting services for up to ten hours a month to the
Company, from the Effective Date until the earlier of (i) the date on which he
commences new employment not in violation of this Agreement and (ii) October 22,
2002, as may be reasonably requested by the Company and at no additional cost to
the Company; provided, however, that any such request for consulting services
shall take into account the Executive's other personal and business commitments;
and provided, further that the Company shall promptly reimburse the Executive
for, or promptly advance to the Executive, all costs and expenses reasonably
incurred by the Executive in connection with providing such services.


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<PAGE>


         9. Non-Competition. For the remainder of the eighteen-month period that
commenced on October 22, 2000, the Executive shall not manage, operate, control
or materially participate in the management, or operation or control of, or be
connected as an officer, employee, partner, director, consultant, member of a
technical advisory board or similar body or otherwise become affiliated with, or
have any material financial interest in (including, without limitation,
indirectly through any interest, as a partner, employee, or otherwise, in a
buyout firm) (collectively, a "Connection") any entity (including any public or
private corporation) that sells, in direct competition with the Company,
products or services similar to those that are, as of the Effective Date, sold
or offered for sale or under active development by the Company (any such entity
being a "Competitor"). Notwithstanding the foregoing, the Executive shall not be
deemed to be in violation of this Section 9 (i) solely as a result of his
passive ownership of not more than two percent (2%) of the voting stock or other
equity securities of any entity, (ii) if an entity with which he has a
Connection shall be acquired by or merged with, or shall have transferred all or
substantially all of its business or assets to, a Competitor or any entity
controlled by, controlling, or under common control with, such Competitor or any
successor to any of the foregoing entities ("Competitor Affiliates") provided
that following the consummation of any such transaction his duties and
responsibilities with the entity with which he has become affiliated and that is
so acquired do not involve, directly or indirectly, any duties or
responsibilities with regard to any Competitor or Competitor Affiliate, (iii) as
a result of any Connection with any entity which is, or is a general partner in,
or manages or participates in managing, a private or public fund (including,
without limitation, a hedge fund), or other investment vehicle, that is engaged
in venture capital investments, leveraged buy-outs, or investments in public or
private companies at the mezzanine equity or debt level, or in other forms of
private or alternative equity transactions, or in public equity transactions,
which might make investments which the Executive could not make directly;
provided that, in each case, such entity does not engage in, participate in or
otherwise support a buyout of the Company or (iv) as a result of continuing to
serve on the boards of directors of Oracle Corporation and American Express
Company. At any time after the Effective Date, the Executive may make a written
request to the Board of Directors of the Company (the "Board") to consent to a
Connection with an entity describing such entity and Connection in detail and
also describing the basis for the Executive's reasonable belief that such
Connection would not violate the spirit of the non-competition provisions of
this Section 9. The Board will promptly review, and will not unreasonably delay
or withhold its consent to, such Connection. The Executive represents that, as
of the Effective Date, he is in compliance with this Section 9.

         10. Non-Solicitation. For the period that commences on the Effective
Date and expires on October 22, 2002, the Executive shall not, directly or
indirectly, without the prior written consent of the Company's CEO, knowingly
solicit for employment, either for himself or on behalf of any company or
business organization in which he is an officer, employee, partner or director,
any individual who was employed by the Company on the Effective Date and who
continued to be employed by the Company to a date that is within the three
months preceding any such solicitation. Anything to the contrary
notwithstanding, the Company agrees that (i) the Executive's responding to an


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<PAGE>

unsolicited request from any former employee of the Company for advice on
employment matters, and (ii) the Executive's responding to an unsolicited
request for an employment reference regarding any former employee of the Company
from such former employee, or from a third party, by providing a reference
setting forth his personal views about such former employee, shall not be deemed
a violation of this Section 10.

         11. Cooperation. For the period that commences on the Effective Date
and expires on October 22, 2002, the Executive hereby agrees to assist the
Company, upon reasonable request by the Company and subject to the Executive's
personal and business schedule, in connection with any pending or future
dispute, litigation, arbitration or similar proceeding or investigation
("Dispute") or any regulatory request or filing involving the Company, any of
its directors, or any of the directors of any of its subsidiaries, provided such
Dispute or regulatory request or filing related to a matter of which he had
knowledge or for which he was responsible prior to October 22, 2000, and that
such request for assistance is neither unduly burdensome nor unreasonable. The
Company shall promptly reimburse the Executive for, or promptly advance to the
Executive, all costs and expenses reasonably incurred by the Executive in
connection with rendering assistance to the Company in connection with any such
Dispute or regulatory request or filing, including without limitation reasonable
fees and disbursements of separate counsel for the Executive if the Executive
reasonably determines that the matter is of a nature which indicates that he
should have separate representation. Such expenses shall be reimbursed or
advanced promptly after the Executive's submission to the Company of statements
in such reasonable detail as the Company may require. Time devoted by the
Executive to assisting the Company pursuant to this Section 11, when added to
time devoted by the Executive to providing consulting services pursuant to
Section 8, shall not be required to exceed 20 hours in any month.

         12. Publicity and Non-Disparagement.

            (a) Until the Company publicly discloses this Agreement, the
Executive shall neither discuss any aspect of the terms of this Agreement with,
nor disclose all or any portion of this Agreement to, any person or
organization. Notwithstanding anything elsewhere to the contrary, the Executive
may in any event discuss this Agreement with, and disclose all or any portion of
this Agreement to, his spouse, his legal and financial advisors, and any
prospective employer.

            (b) The Executive agrees that he shall not intentionally make any
public statement to third parties, the public, the press or the media, or any
administrative agency that is intended to disparage the Company or to cause
injury to the Company with respect to events occurring prior to the Effective
Date. The Company agrees that it shall use its reasonable best efforts to cause
its officers and directors not knowingly to make any public statement to third
parties, the public, the press or the media, or any administrative agency
intending to disparage the Executive with respect to events occurring prior to
the Effective Date.


                                       5




<PAGE>


            (c) Notwithstanding the foregoing, nothing in this Section 12 shall
prevent any person from:

         (i) responding publicly to incorrect, disparaging or derogatory public
statements to the extent reasonably necessary to correct or refute such public
statements, provided, in the case of the Executive, that, prior to making any
such responses or statements he has informed the Company of their substance and
tenor reasonably in advance and discussed his intended course of action with it;
or,

         (ii) disclosing this Agreement, or making any truthful statement, to
the extent (x) necessary to enforce this Agreement or (y) required by law or by
any court, arbitrator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order such person to disclose
or make accessible such information.

         13. Confidentiality.

            (a) The Executive hereby agrees and covenants that:

               (i) he shall not (subject to the provisions of Section 13(b)
below) intentionally divulge to any person or entity other than the Company,
without express written authorization, any information known to him to
constitute trade secrets or proprietary information belonging to the Company, or
other confidential financial information, operating budgets, strategic plans, or
research methods, projects or plans, received or gained by him in the course of
his employment by the Company or of his duties with the Company ("Confidential
Information"), nor shall he (subject to the provisions of Section 13(b) below)
make use of any such Confidential Information on his own behalf or on behalf of
any other person or entity; and

               (ii) he shall return or cause to be returned to the General
Counsel of the Company any and all property of the Company of any kind or
description whatsoever which on the Effective Date is in his possession or under
his control (including, but not limited to, any Confidential Information in
written or other tangible form) and shall not retain any copies, duplicates,
reproductions or excerpts thereof, except as otherwise provided hereunder.
Anything to the contrary notwithstanding, nothing in this Section 13(a) shall
prevent the Executive from retaining a home computer and security system, papers
and other materials of a personal nature, including personal diaries, calendars
and Rolodexes, information showing his compensation or relating to reimbursement
of expenses, information that he reasonably believes may be needed for tax
purposes, and copies of plans, programs and agreements relating to his
employment.

            (b) Notwithstanding the foregoing, the provisions of Section
13(a)(i) shall not apply (i) to any disclosure or use of Confidential
Information in connection with providing services or assistance under Section 8
or Section 11, (ii) when disclosure is required by law or by any court,
arbitrator, or administrative or legislative body (including any committee
thereof) with apparent jurisdiction to order the Executive to disclose or make
accessible any information, (iii) in connection with enforcing this


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<PAGE>


Agreement, or (iv) as to Confidential Information that becomes generally known
to the public or within the relevant trade or industry other than due to the
Executive's violation of Section 13(a)(i).

         14. Preemption. Sections 9, 10, 12 and 13 of this Agreement shall
supersede, to the extent less favorable to the Executive than the provisions in
such Sections, any provision in any plan, policy, agreement, award or other
arrangement of the Company or any of its predecessors or affiliates (each a
"Company Arrangement") relating to non-competition, non-solicitation, non-hire,
confidentiality, disparagement or other analogous restrictions on conduct
following termination of employment. Such Sections, and other surviving
restrictions, may be enforced through injunction and claims for damages, but
violations thereof shall not result in forfeiture, or reduction, of any benefit
granted under, or preserved by, this Agreement unless such violation is willful
and material, and the Executive persists in the conduct that constitutes such
violation for more than seven days following his receipt of notice from the
Company requesting that he cease such conduct.

         15. Releases.

            (a) Executive Release. In consideration of the Company's entering
into this Agreement, the Executive, on behalf of himself and his heirs,
executors, administrators, successors and assigns, knowingly and voluntarily
releases and discharges the Company, each of its subsidiaries and affiliates,
their respective current and former officers, employees, agents and directors,
and any successor or assign of any of the foregoing, from any claim, charge,
action or cause of action any of them may have against any such released person,
whether known or unknown (except to the extent that the Executive lacks
knowledge of such claim as of the Effective Date and such lack of knowledge is
owing to fraud or improper withholding of information by the Company, any of its
affiliates, or any other released person), from the beginning of time through
the Effective Date based upon any matter, cause or thing whatsoever related to
or arising out of the Executive's employment with the Company or the termination
thereof, other than claims for indemnification under this Agreement, the
Articles of Incorporation or By-Laws of the Company, or under any applicable
insurance policy, or any right to obtain contribution as permitted by law in the
event of entry of judgment against the Executive as a result of any act or
failure to act for which the Executive and any released person are jointly
liable; in addition, this release shall not extend to (i) the Executive's right,
as debtor on the loans, or otherwise, to enforce the terms and conditions of
this Agreement, (ii) any rights or claims that arise after the Effective Date,
(iii) the Executive's rights under any stock option, restricted stock, stock
purchase, deferred compensation or other similar compensation plan, program,
agreement or arrangement, (iv) the Executive's rights under any pension,
retirement or welfare benefit plan, program, agreement or arrangement, or (v)
any rights arising out of any investor relationship the Executive may have, all
of which rights shall be preserved. The Executive represents and warrants that
he currently knows of no basis for any claims against the Company.

         The release and waiver includes, but is not limited to, any rights or
claims under United States federal, state or local law for wrongful or abusive
discharge, or for


                                       7




<PAGE>


discrimination based upon race, color, ethnicity, sex, age, national origin,
religion, disability, sexual orientation, including rights or claims under the
Age Discrimination in Employment Act of 1967 ("ADEA").

         The Executive affirms that he has been given at least twenty-one (21)
days within which to consider this release and its consequences, that he has
seven (7) days following the date of this Agreement (the seventh day being the
("Expiration Date")) to revoke and cancel the terms and conditions contained
herein and the terms and conditions of this Agreement shall not become effective
or enforceable until the seven-day revocation period has expired, and that,
prior to the execution of this Agreement, he has been advised by the Company to
consult with an attorney of his choice concerning the terms and conditions set
forth herein.

            (b) Company Release. In consideration of the Executive's entering
into this Agreement, the Company, on behalf of itself, each of its subsidiaries
and affiliates, their respective current and former officers, directors, agents
and employees, and any successor or assign of any of the foregoing, knowingly
and voluntarily releases and discharges the Executive, his family, estate, legal
representatives, agents, attorneys, heirs, executors, successors and assigns
from any claim, charge, action or cause of action any of them may have against
any such released person, whether known or unknown, (except to the extent that
the Company lacks knowledge of such claim as of the Effective Date and such lack
of knowledge is owing to fraud or improper withholding of information by the
Executive or any other released person), from the beginning of time through the
Effective Date based upon any matter, cause or thing whatsoever related to or
arising out of the Executive's employment with the Company or the termination
thereof, other than any right to obtain contribution as permitted by law in the
event of entry of judgment against the Company as a result of any act or failure
to act for which the Company and any released person are jointly liable; in
addition, this release shall not extend to (i) the Company's right, whether as
subrogee or otherwise, to enforce the terms and conditions of this Agreement
(including, without limitation, the Note and Loan Collateral arrangements
referred to in Section 4) or (ii) any rights or claims that arise after the
Effective Date, all of which rights shall be preserved. The Company represents
and warrants that it currently knows of no basis for any claim against the
Executive.

         16. Indemnification.

            (a) The Company agrees that, if the Executive is made a party to, is
threatened to be made a party to, receives any legal process in, or receives any
discovery request or request for information in connection with, any action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he was a director, officer, employee,
consultant or agent of the Company, or was serving at the request of, or on
behalf of, the Company as a director, officer, employee, consultant or agent of
another corporation, limited liability corporation, partnership, joint venture,
trust or other entity, including service with respect to employee benefit plans,
whether or not the basis of such Proceeding is the Executive's alleged action in
an official capacity while serving as a director, officer, member, employee,
consultant or


                                       8




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agent of the Company or other entity, the Executive shall be indemnified and
held harmless by the Company to the fullest extent permitted or authorized by
the Company's Articles of Incorporation and By-Laws or, if greater, by the laws
of the State of Delaware, against any and all costs, expenses, liabilities and
losses (including, without limitation, attorneys' fees reasonably incurred,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement and any reasonable cost and fees incurred in enforcing his rights
to indemnification or contribution) incurred or suffered by the Executive in
connection therewith, and such indemnification shall continue as to the
Executive even though he has ceased to be a director, officer, member, employee,
consultant or agent of the Company or other entity and shall inure to the
benefit of the Executive's heirs, executors and administrators. The Company
shall reimburse the Executive for all costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by him in connection with any
Proceeding within 20 business days after receipt by the Company of a written
request for such reimbursement and appropriate documentation associated with
these expenses. Such request shall include an undertaking by the Executive to
repay on an after-tax basis the amount of such reimbursements if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses.

            (b) The failure of the Company (including the Board, independent
legal counsel or stockholders) to have made a determination that indemnification
of the Executive is proper because he has met the applicable standard of conduct
shall not create a presumption or inference that the Executive has not met the
applicable standard of conduct.

            (c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive at a level, and on
terms and conditions, no less favorable to him than the coverage the Company
provides as of the Effective Date for its directors and senior-level officers,
until such time as suits against the Executive are no longer permitted by law.

            (d) Nothing in this Section 16 shall be construed as reducing or
waiving any right to indemnification, or advancement of expenses, the Executive
would otherwise have under the Company's Articles of Incorporation or under the
laws of the State of Delaware.

         17. Representations of the Company. The Company represents and warrants
to the Executive that (i) all corporate action required to be taken by the
Company to fully authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, any action required to be taken by the Board,
any Committee of the Board, or any other person or body to interpret or
otherwise act with respect to any Company Arrangement) has been duly and
effectively taken, (ii) the execution, delivery and performance of this
Agreement does not violate any applicable law, regulation, order, judgment or
decree or any agreement, arrangement, plan or corporate governance document to
which the Company is a party or by which it is bound, and (iii) upon the


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execution and delivery of this Agreement by the parties, it shall be a valid and
binding obligation of the Company, enforceable against it in accordance with its
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally. The Company acknowledges that the Executive has relied upon
such representations and warranties in entering into this Agreement.

         18. No Mitigation; No Offset. The Executive shall be under no
obligation to seek other employment or to become self-employed, and there shall
be no offset against amounts due the Executive, under this Agreement or
otherwise, on account of any remuneration attributable to any subsequent
employment that he may obtain, or on account of any claim the Company may have
against him (other than for offset: (i) under Section 1(b); (ii) with respect to
any claim under the Note and Loan Collateral arrangements referred to in Section
4; or (iii) for forfeitures (after giving full effect to Sections 14 and 15(b)
of this Agreement) under Section 5.5 of the Company's Supplemental Pension Plan
applicable to Executive).

         19. Resolution of Disputes. Any controversy, dispute or claim arising
out of or relating to this Agreement, any other agreement or arrangement between
the Executive and the Company, the Executive's employment with the Company, or
the termination thereof (collectively, "Covered Claims") shall be resolved by
binding arbitration, to be held in the Borough of Manhattan in New York City, in
accordance with the Commercial Arbitration Rules (and not the National Rules for
the Resolution of Employment Disputes) of the American Arbitration Association
and this Section 19. Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction thereof. The Company shall promptly
advance to the Executive (and his beneficiaries) any and all costs and expenses
(including without limitation attorneys' fees and other charges of counsel)
incurred by the Executive (or any of his beneficiaries) in resolving any such
Covered Claim; provided, however, that the recipient agrees to repay any amounts
advanced to the extent that the recipient's claims/defenses are found by the
arbitrator(s) to have lacked a reasonable basis. Pending the resolution of any
Covered Claim, the Executive (and his beneficiaries) shall continue to receive
all payments and benefits due under this Agreement or otherwise.

         20. Notice. Any notice, request, or other communication given in
connection with this Agreement shall be in writing and shall be deemed to have
been given (i) when delivered personally to the recipient or (ii) provided that
a written acknowledgement of receipt is obtained, three days after being sent by
prepaid certified or registered mail, or two days after being sent by a
nationally recognized overnight courier, to the address specified below for the
recipient (or to such other address as the recipient shall have specified by ten
days' advance written notice given in accordance with this Section 20). Such
communication should be addressed to the Executive at his principal residence
and to the Company at its corporate headquarters to the attention of the General
Counsel.


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<PAGE>



         21. Successors and Assigns.

            (a) No rights or obligation of the Company under this Agreement may
be assigned or transferred by the Company without the Executive's prior written
consent, except that such rights or obligations may be assigned or transferred
pursuant to a merger or consolidation in which the Company is not the continuing
entity, or a sale, liquidation or other disposition of all or substantially all
of the business and assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the business and
assets of the Company and assumes the liabilities, obligations and duties of the
Company under this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of any disposition of its business and
assets described in the preceding sentence, it shall take whatever action it can
in order to cause such assignee or transferee expressly to assume the
liabilities, obligations and duties of the Company hereunder. No rights or
obligations of the Executive under this Agreement may be assigned or transferred
by the Executive, without the Company's prior written consent, other than his
rights to compensation and benefits, which may be transferred only by will or
operation of law; provided, however that the Executive shall be entitled, to the
extent permitted under applicable law or relevant plans, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit hereunder
following his death by giving the Company written notice thereof.

            (b) To the extent applicable, this Agreement shall be binding upon,
and inure to the benefit of, the successors and assigns, beneficiaries,
devisees, heirs, next of kin , executors and administrators of the Executive. In
the event of the Executive's death or a judicial determination of his
incompetence, references in this Agreement to the Executive shall be deemed to
refer, where appropriate, to his legal representative, or, where appropriate, to
his beneficiary or beneficiaries.

         22. Headings. The headings of the Sections contained in this Agreement
are for convenience only and shall not be deemed to control or affect the
meaning or construction of any provision of this Agreement.

         23. Entire Agreement. Except as expressly set forth herein, this
Agreement contains the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations, and undertakings, whether written or oral, between
the parties with respect thereto. This Agreement may be modified only by a
written document signed by the Executive and a duly authorized officer of the
Company. Any waiver by any person of any provision of this Agreement shall be
effective only if in writing and signed by the person against whom enforcement
of the waiver is sought. For any waiver or modification to be effective, it must
specifically refer to this Agreement and to the terms or provisions being
modified or waived. No waiver of any provision of this Agreement shall be
effective as to any other provision of this Agreement except to the extent
specifically provided in an effective written waiver. In the event of any
inconsistency between the terms of this Agreement and the terms of any other
Company Arrangement, the terms of this Agreement shall control.


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<PAGE>



         24. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.

         25. Governing Law. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New Jersey without
reference to the principles of conflicts of law.

         26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. Signatures delivered by
facsimile shall be effective for all purposes.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.


                                         Lucent Technologies Inc.

                                         By:
                                             -----------------------------------
                                         Name:  Pamela O. Kimmet

                                         Title: Vice President, Compensation,
                                                Benefits and Health Services



                                         The Executive

                                         ---------------------------------------
                                         Richard A. McGinn



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