Document:

Exhibit
10.10

	
  Nonqualified Stock Option No. 1

  	
  Option for 500,000 Shares

  

 

MEDAREX,
INC.

NONQUALIFIED STOCK OPTION AGREEMENT

FOR 2005 EQUITY INCENTIVE PLAN

MEDAREX, INC., a
New Jersey corporation (the “Company”), in consideration of the value to it of
the continuing services of HOWARD
H. PIEN (hereinafter called “Optionee”), which continuing services
the grant of this Option is designed to secure, and in consideration of the
various undertakings made herein by Optionee, and pursuant to its 2005 Equity Incentive Plan (hereinafter called the “Plan”),
hereby grants to Optionee an option (the “Option”), evidenced by this Option
Agreement, exercisable for the period and upon the terms hereinafter set out,
to purchase 500,000 shares (the “Option Amount”)
of $.01 par value common stock of the Company (“Common Stock”) at a price of $14.355 per share (the “Option Price”), which price
represents at least the Fair Market Value (as such term is defined in the Plan)
of the shares as of the Date of Grant (as hereinafter defined).

1.             Term of
Option.  This Option is
granted and dated on the date set forth next above the signature shown
(sometimes hereinafter called the “Date of Grant”), and will terminate and
expire, to the extent not previously exercised, one day prior to the end of ten
(10) years after the Date of Grant (i.e.,
on the 28th day of June, 2017), or at such
earlier time as may be specified in Section 5 hereof.

2.             Vesting.  Except as set forth in the immediately following
sentence or as otherwise provided in the Plan or this Option Agreement, this
Option will vest and be exercisable as follows, provided that vesting will
cease upon the termination of the Optionee’s Service: 166,667 shares shall vest
on each of the first and second anniversaries of the Date of Grant, and 166,666
shares shall vest on the third anniversary of the Date of Grant; provided,
however, that upon the occurrence of an event constituting a Change in Control (as
defined in the Optionee’s Employment Agreement with the Company dated May 16,
2007 (the “Employment Agreement”)) or in the event that the Optionee’s
employment is terminated by the Company Without Cause or by the Optionee for
Good Reason (as such terms are defined in the Employment Agreement), the Option
Amount shall become immediately vested and exercisable in full.

3.             Non-Transferability.  An Optionee may not sell or otherwise
transfer an Option except by will or the laws of descent and distribution or to
an Optionee’s family members pursuant to a gift (in accordance with the Plan)
or by means of a domestic relations order.

4.             Manner of
Exercise.  The Optionee
(or other person entitled to exercise the Option) shall purchase shares of
Common Stock subject hereto by the payment to the Company of the Option Price
in full.  This Option is to be exercised
by written notice to the Company stating the full number of shares to be
purchased and the time of delivery thereof, which shall be at least 15 days
after the giving of notice unless an earlier date shall have been agreed upon
between Optionee (or other person entitled to exercise the Option) and the
Company.  At such time, the Company
shall, without transfer or issue tax to the Optionee (or other person entitled
to

exercise the Option),
deliver at the principal office of the Company, or at such other place as shall
be mutually agreed upon, a certificate or certificates for such shares against
payment of the Option Price therefor in full for the number of shares to be
delivered; provided, however, that the time of delivery may be postponed by the
Company for such period as may be required for it to comply with reasonable
diligence with any requirements of law. 
Payment of the Option Price shall be made in cash either by a certified
or official bank check.

Notwithstanding the
foregoing, provided that at the time of exercise the Common Stock is publicly
traded, payment in whole or in part of the Option Price may be made in
unrestricted shares of Common Stock which are already owned by the Optionee free
and clear of any liens, claims, encumbrances or security interests, based upon
the Fair Market Value (as defined in the Plan) of the Common Stock on the date
the Option is exercised.  No shares of
Common Stock shall be issued until full payment therefor has been made and any
tax withholding obligations have been satisfied (in accordance with Section
10(d)).  If the Optionee (or other
persons entitled to exercise the Option) fails to accept a delivery of, or to
pay for all or any part of the number of shares specified in such notice upon
tender or delivery thereof, the right to exercise the Option with respect to
such undelivered shares shall be thereupon terminated.

Notwithstanding the
foregoing, provided that at the time of exercise the Common Stock is publicly
traded, payment in whole or in part of the Option Price may be made pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.

5.             Termination
of Service.

(a)           Death.  If any Optionee’s relationship with or
employment by the Company and/or any of its subsidiaries terminates by reason
of death, this Option may thereafter be exercised immediately in full by the
legal representative of the estate or by the legatee of the Optionee under the
will of the Optionee until the expiration of the stated term of the Option.

(b)           Disability.  If the Optionee’s relationship with or
employment by the Company and/or any of its subsidiaries terminates by reason
of “Disability” (as defined in Section 409A(a)(2)(C) of the Code), this Option
may thereafter be exercised in full by the Optionee for a period of three years
from the date of such termination or expiration of the stated term of the
Option, whichever period is the shorter.

(c)           Termination
for Cause.  If the Optionee’s
relationship with or employment by the Company is terminated by the Company for
“Cause”  (as defined in the Employment
Agreement), the Option shall thereupon terminate.  Notwithstanding the foregoing, nothing herein
shall be deemed to alter the at-will employment status of an employee of the
Company in any way.

(d)           Other
Termination.  If the Optionee’s
relationship with or employment by the Company terminates for any reason other
than pursuant to Section 5(a), (b) or (c) hereof, this Option may, to the
extent such Option has vested, thereafter be exercised by the Optionee for a

period of 90 days following the date of such termination or expiration
of the stated term of the Option, whichever period is the shorter.

6.             Adjustments
on Recapitalization; Change in Control; Dissolution or Liquidation.  The number of shares of Common Stock subject
hereto and the Option Price per share shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the Common Stock
resulting from the subdivision or consolidation of the shares, or the payment
of a stock dividend after the Date of Grant, or other decrease or increase in
the shares of Common Stock outstanding effected without receipt of
consideration by the Company; provided, however, that any Options to purchase
fractional shares resulting from such adjustments shall be eliminated.

In the event of a Change
in Control (as defined in the Employment Agreement), if the Option is not
assumed or substituted in connection with the Change in Control, the Option
shall be canceled in exchange for a cash payment with respect to each share of
Common Stock subject to such canceled Option in an amount having a Fair Market
Value equal to the excess of the Fair Market Value of the consideration to be
paid per share of stock in the Change in Control over the exercise price per
share under the Option.

Notwithstanding anything
in this Option Agreement to the contrary, in the event of the proposed
dissolution, liquidation or reorganization of the Company, other than pursuant
to certain mergers or consolidations), the Option granted hereunder shall
terminate as of a date to be fixed by the Committee (as that term is defined in
the Plan); provided that not less than 30 day’s prior written notice of the
date so fixed shall be given to the Optionee, and the Optionee shall have the
right, during the period of thirty (30) days preceding such termination, to
exercise his or her Option as to all or any part of the shares covered thereby,
including shares as to which such Option would not otherwise be exercisable.

7.             Subject to Plan.  This Option is subject to all the terms and
conditions of the Plan (and specifically to the power of the Committee to make
interpretations of the Plan and of the Options granted thereunder, and of the
Board of Directors of the Company (“Board of Directors”) to alter, amend,
suspend or discontinue the Plan subject to the limitations expressed in the
Plan), the provisions of which are hereby made a part of this Option.  By acceptance hereof, Optionee acknowledges
receipt of a copy of a Summary Plan Description, which describes the basic
terms and conditions of the Plan, and recognizes and agrees that
determinations, interpretations or other actions respecting the Plan may be
made by a majority of the Board of Directors or of the Committee, and that such
determinations, interpretations or other actions are final, conclusive and
binding upon all parties, including Optionee. 
In the event of any conflict between the provisions of this Option
Agreement and those of the Plan, the provisions of the Plan shall control.

8.             Rights as Shareholder.
 This Option shall not entitle
Optionee or any permitted transferee hereof to any rights of a shareholder of
the Company or to any notice of proceedings of the Company or to any notice of
proceedings of the Company in respect of any shares issuable upon exercise of
this Option unless and until the Optionee has given to the Company a written
notice of exercise, has paid in full the Option Price for such shares and, if
applicable, has given a representation to the Company that he or she is
purchasing such shares for investment only and

not with a view towards
any distribution.  The Company shall not
be required to issue or deliver any certificate for shares of its Common Stock
purchased hereunder prior to compliance with applicable federal and state laws
and regulations with respect to the issuance, registration or listing of such
shares.

9.             Securities
Laws.  Optionee
acknowledges that he or she has been informed of, or is otherwise familiar
with, the nature and the limitations imposed by the Securities Act of 1933, as
amended (the “Act”), the Exchange Act, and the rules and regulations thereunder
(in particular, Rule 144, promulgated under the Act and Section 16 of the
Exchange Act, and Rule 16b-3 promulgated thereunder), concerning the shares
issuable upon exercise of this Option and agrees to be bound by the
restrictions embodied in such Act, the Exchange Act, and all the rules and
regulations promulgated thereunder.

10.          Miscellaneous;
Governing Law.

(a)           In the event
the Option shall be exercised in whole, this Option Agreement shall be
surrendered to the Company for cancellation. 
In the event the Option shall be exercised in part, or a change in the
number or designation of the Common Stock shall be made, this Option Agreement
shall be delivered by Optionee to the Company for the purpose of making
appropriate notation thereon, or of otherwise reflecting, in such manner as the
Company shall determine, the partial exercise or the change in the number of
designation of the Common Stock.

(b)           The Option
shall be exercised in accordance with such administrative regulations as the
Committee shall from time to time adopt.

(c)           The Option
and this Option Agreement shall be construed, administered and governed in all
respects under and by the laws of the State of New Jersey.

(d)           Optionee
hereby agrees that he or she will make such arrangements as the Company deems
necessary to discharge any federal, state, or local income or payroll tax
withholding obligations imposed upon the Company with respect to this
Option.  Upon Optionee’s request and
subject to the Company’s approval, in its sole discretion, and in compliance
with any applicable conditions or restrictions of law, the Company may withhold
from fully vested shares of Common Stock otherwise issuable to Optionee upon
exercise of the Option a number of whole shares of Common Stock having a Fair
Market Value, determined as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law.

(e)           Nothing
contained in this Agreement shall confer upon Optionee the right to employment
by the Company or any of its subsidiaries.

IN WITNESS
WHEREOF, this Option Agreement is executed as of the 29th day of
June, 2007.

	
  

  	
  MEDAREX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Christian S. Schade
  July 30, 2007

  
				

 

The undersigned Optionee
hereby accepts the foregoing Non-qualified Stock Option
Agreement No. 1 dated as of June 29, 2007 (the “Date of Grant”), and
the undertakings on his or her part contained therein, and agrees to all of the
terms and conditions thereof.

	
  DATED:

  	
   

  	
   

  
	
   

  	
  July 30, 2007

  	
  ,

  	
   

  	
   

  	
  /s/ Howard H.
  Pien

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Optionee
  – Howard H. PienExhibit 10.1

SEVERANCE
AGREEMENT

THIS AGREEMENT is entered
into as of the         day of                 ,       
(the “Effective Date”) by and between Avaya Inc., a Delaware corporation, and                ,
(the “Executive”).

W I
T N E S S E T H

WHEREAS, the Executive
currently serves as a key employee of the Company (as defined in Section 1) and
the Executive’s services and knowledge are valuable to the Company in
connection with the management of one or more of the Company’s principal
operating facilities, divisions, departments or subsidiaries; and

WHEREAS, the Board (as
defined in Section 1) has determined that it is in the best interests of the
Company and its stockholders to secure the Executive’s continued services and
to ensure the Executive’s continued dedication and objectivity in the event of
any threat or occurrence of, or negotiation or other action that could lead to,
or create the possibility of, a Change in Control (as defined in
Section 1) of the Company, without concern as to whether the Executive
might be hindered or distracted by personal uncertainties and risks created by
any such possible Change in Control, and to encourage the Executive’s full
attention and dedication to the Company, the Board has authorized the Company
to enter into this Agreement.

NOW, THEREFORE, for and
in consideration of the premises and the mutual covenants and agreements herein
contained, the Company and the Executive hereby agree as follows:

1.             Definitions.  As used in this Agreement, the following
terms shall have the respective meanings set forth below:

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

(b)           “Cause” means:

(1)           a
material breach by the Executive of those duties and responsibilities of the
Executive which do not differ in any material respect from the duties and
responsibilities of the Executive during the 90-day period immediately prior to
a Change in Control (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the Executive’s
part, which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company and which is not remedied in a
reasonable period of time after receipt of written notice from the Company
specifying such breach;

(2)           the
commission by the Executive of a felony involving moral turpitude;

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(3)           the
commission by the Executive of theft, fraud, breach of trust or any act of
dishonesty involving the Company or its subsidiaries; or

(4)           the
significant violation by the Executive of the Company’s code of conduct or any
statutory or common law duty of loyalty to the Company or its subsidiaries.

(c)           “Change in Control” means:

(1)           an
acquisition by any individual, entity or group (within the meaning of Section
13 (d)(3) or 14 (d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), (an “Entity”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% 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 so being converted was itself acquired directly from the Company, (2)
any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (A), (B) and
(C) of subsection (3) of this Section 1(c); or

(2)           a
change in the composition of the Board such that the individuals who, as of the
Effective Date, 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, that any individual who becomes a member of the Board
subsequent to the Effective Date, whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at least a majority of
those individuals who are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the Incumbent Board; and provided,
further  however, that any such individual whose initial
assumption of office occurs as a result of or in connection with either an
actual or threatened solicitation by an Entity other than the Board for the
purpose of opposing a solicitation by any other Entity with respect to the
election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of an Entity other than the Board shall not
be so considered as a member of the Incumbent Board; or

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

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Transaction
pursuant to which (A) all or substantially all of the individuals and entities
who are beneficial owners, respectively, of the Outstanding Company Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 60% of,
respectively, 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, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a corporation
or other individual, partnership, association, joint-stock company, trust,
unincorporated organization, limited liability company, other entity or
government or political subdivision 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, as the case may be, (B) no Entity (other than the Company,
any employee benefit plan (or related trust) of the Company, such corporation
resulting from such Corporate Transaction or, if reference was made to equity
ownership of any Parent Company for purposes of determining whether clause (A) above
is satisfied in connection with the applicable Corporate Transaction, such
Parent Company) will beneficially own, directly or indirectly, 50% 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 the directors unless such ownership resulted solely from
ownership of securities of the Company prior to the Corporate Transaction, and
(C) individuals who were members of the Incumbent Board will immediately after
the consummation of the Corporate Transaction constitute at least a majority of
the members of the board of directors of the corporation resulting from such
Corporate Transaction (or, if reference was made to equity ownership of any
Parent Company for purposes of determining whether clause (A) above is
satisfied in connection with the applicable Corporate Transaction, of the
Parent Company); or

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

(d)           “Company” means Avaya Inc., a Delaware
corporation.

(e)           “Date of Termination” means:

(1)           the
effective date on which the Executive’s employment by the Company terminates as
specified in a prior written notice by the Company or the Executive, as the
case may be, to the other, delivered pursuant to Section 11 or

(2)           if
the Executive’s employment by the Company terminates by reason of death, the
date of death of the Executive.

(f)            “Entity” has the meaning set forth in
Section 1(c)(1).

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(g)           “Good Reason” means, without the Executive’s
express written consent, the occurrence of any of the following events after a
Change in Control:

(1)           any
of (i) the assignment to the Executive of additional duties inconsistent in any
material respect with, or materially greater in scope than the Executive’s
duties or responsibilities with the Company immediately prior to such Change in
Control without an appropriate increase in targeted compensation, (ii) any
material reduction in the Executive’s duties or responsibilities with the
Company immediately prior to such Change in Control; (iii) a change in the
Executive’s titles or offices with the Company as in effect immediately prior
to such Change in Control which is adverse to the Executive or (iv) any removal
or involuntary termination of the Executive from the Company otherwise than as
expressly permitted by this Agreement;

(2)           a
reduction by the Company in the Executive’s rate of annual base salary or
Target Percentage as in effect immediately prior to such Change in Control (or
if a different short-term incentive compensation opportunity is then in effect,
a reduction in the amount of such different short-term incentive compensation
opportunity below the short-term incentive compensation opportunity which had
been afforded by the Target Percentage as in effect immediately prior to such
Change in Control) or as the same may be increased from time to time
thereafter;

(3)           any
requirement of the Company that the Executive be based more than 30 miles from
the facility where the Executive is located at the time of the Change in
Control;

(4)           the
failure of the Company to continue in effect any incentive compensation plan or
supplemental retirement plan, including the Supplemental Pension Plan, in which
the Executive is participating immediately prior to such Change in Control,
unless the Executive is permitted to participate in other plans providing the
Executive with substantially comparable compensation opportunity and benefits,
or the taking of any action by the Company which would adversely affect the
Executive’s participation in or materially reduce the Executive’s compensation
opportunity and benefits under any such plan; or

(5)           the
failure of the Company to obtain the assumption agreement from any successor as
contemplated in Section 10(b).

For purposes of this Agreement, any good faith
determination of Good Reason made by the Executive shall be conclusive; provided,
however, that an isolated, insubstantial and inadvertent action taken in
good faith and which is remedied by the Company promptly after receipt of
written notice thereof given by the Executive shall not constitute Good Reason.

(h)           “Nonqualifying Termination” means a termination
of the Executive’s employment:

(1)           by
the Company for Cause,

(2)           by
the Executive for any reason other than Good Reason,

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(3)           by
the Executive for Good Reason more than six (6) months after the event
constituting Good Reason,

(4)           as
a result of the Executive’s death or

(5)           by
the Company under circumstances where the Executive qualifies for benefits
under a long-term disability pay plan.

(i)            “Potential Change in Control,” for purposes
of this Plan, shall mean the happening of any of the following events:

(1)           the
commencement of a tender or exchange offer by any third person which, if
consummated, would result in a Change in Control;

(2)           the
execution of an agreement by the Company, the consummation of which would
result in the occurrence of a Change in Control;

(3)           the
public announcement by any person (including the Company) of an intention to
take or to consider taking actions which if consummated would constitute a
Change in Control other than through a contested election for directors of the
Company; or

(4)           the
adoption by the Board, as a result of other circumstances, including, without
limitation, circumstances similar or related to the foregoing, of a resolution
to the effect that a Potential Change in Control has occurred.

A Potential Change in Control shall be deemed to be
pending until the earliest of (i) the first anniversary thereof, (ii) the
occurrence of a Change in Control and (iii) the occurrence of a subsequent
Potential Change in Control.

(j)            “Supplemental Pension Plan” means the Avaya
Inc. Supplemental Pension Plan or any successor plan.

(k)           “Target Percentage” means the annualized
percentage applied to an Executive’s annual base salary in order to calculate
the target award for such Executive under the Company’s short-term incentive
compensation program, prior to the application of Company or individual
performance factors.

(l)            “Termination Period” means the period of
time beginning with a Change in Control and ending on the earlier to occur of:

(1)           two
years following such Change in Control and

(2)           the
Executive’s death.

2.             Obligations of the
Executive.  The Executive agrees that
in the event of a Potential Change in Control, he shall not voluntarily leave
the employ of the Company without Good Reason prior to the termination of such
Potential Change in Control as follows:

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(a)           if the Potential Change in Control
terminates by reason other than the occurrence of a Change in Control, until
the earlier of (1) the first anniversary of such Potential Change in Control
and (2) the occurrence of a subsequent Potential Change in Control; and

(b)           if the Potential Change in Control
terminates by reason of the occurrence of a Change in Control, until 90 days
following such Change in Control.

For purposes of clause (a) of the preceding sentence, Good
Reason shall be determined as if a Change in Control had occurred when such
Potential Change in Control became known to the Board.

3.             Payments Upon
Termination of Employment.

(a)           If during the Termination Period the
employment of the Executive shall terminate, other than by reason of a
Nonqualifying Termination, then the Company shall pay to the Executive, within
30 days following the Date of Termination, as compensation for services
rendered to the Company:

(1)           a
cash amount equal to the sum of (i) the Executive’s full annual base salary
from the Company and its affiliated companies through the Date of Termination
and any short-term incentive compensation earned by the Executive for any
performance period ending prior to the Date of Termination, in each case to the
extent not theretofore paid, (ii) an amount equal to the Executive’s annual
base salary multiplied by the Executive’s Target Percentage applicable
immediately prior to the Date of Termination (or, if greater, immediately prior
to the Change in Control), multiplied by a fraction, the numerator of which is
the number of days elapsed in the applicable twelve-month performance period in
which the Date of Termination occurs through the Date of Termination and the
denominator of which is 360 (or if a different short-term incentive
compensation opportunity is then in effect, an amount equal to the target
short-term incentive compensation afforded by such different short-term
incentive compensation opportunity for the applicable performance period in which
the Date of Termination occurs (but not less than the amount that would have
been afforded by the Target Percentage as in effect immediately prior to such
Change in Control), multiplied by a fraction, the numerator of which is the
number of days elapsed in the applicable performance period in which the Date
of Termination occurs through the Date of Termination and the denominator of
which is the total number of days in such applicable performance period) and
(iii) any compensation previously deferred by the Executive (together with any
interest and earnings thereon) and any accrued vacation pay, in each case to
the extent not theretofore paid; plus

(2)           a
lump-sum cash amount (subject to any applicable payroll or other taxes required
to be withheld pursuant to Section 5) in an amount equal to (i)           times the Executive’s highest annual base
salary from the Company and its affiliated companies in effect during the
12-month period prior to the Date of Termination, plus (ii) an amount equal to
the product of           times such annual base salary multiplied
by the Executive’s Target Percentage as applicable immediately prior to the
Date of Termination (or, if greater, immediately prior to the Change in
Control) (or if a different short-term incentive

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compensation
opportunity is then in effect, an amount equal to the product of         
times the annual target short-term incentive compensation afforded by such
different short-term incentive compensation opportunity, but not less than
         times the amount that would
have been afforded by the Target Percentage as in effect immediately prior to
such Change in Control);  provided,
however, that any amount paid pursuant to this Section 3(a)(2) shall be
paid in lieu of any other amount of severance relating to salary, short-term
incentive compensation or other bonus continuation to be received by the
Executive upon termination of employment of the Executive under any severance
plan, policy or arrangement of the Company. 
Notwithstanding the foregoing, if the Company is obligated by law or
contract to pay severance pay, notice pay or other similar benefits, or if the
Company is obligated by law or by contract to provide advance notice of
separation (“Notice Period”), then the payments made pursuant to this Section
3(a)(2) shall be reduced by the amount of any such severance, notice pay or
other similar benefits, as applicable, and by the amount of any severance pay,
notice pay or other similar benefits received during any Notice Period.

(b)           In addition to the payments to be made
pursuant to Section 3(a), the Company shall pay to the Executive at the time
the payments pursuant to Section 3(a) shall be made, a lump-sum cash amount
equal to the actuarial equivalent of the excess of (i) the Executive’s accrued
annuity benefits as of December 31, 2003 under any qualified defined benefit
pension plan and any nonqualified supplemental defined benefit pension plan of
the Company in which the Executive is a participant, calculated by increasing
the Executive’s age and service credit under such plans as of the Date of
Termination by          year(s) over
(ii) the Executive’s accrued annuity benefits under such plans as of December
31, 2003.  Such excess payment will be
discounted back to the Executive’s age as of the Termination Date.  Such lump sum cash amount shall be computed
using the same actuarial methods and assumptions then in use for purposes of
computing benefits under such plans, provided that the interest rate used in
making such computation shall not be greater than the interest rate permitted
under Section 417(e) of the Internal Revenue Code of 1986, as amended (the “Code”),
on the Date of Termination.

(c)           Furthermore, in addition to the payments to
be made pursuant to Section 3(a) and 3(b), the Company shall pay to the
Executive a lump-sum cash amount equal to (i)         
times the Savings Plan Amount plus (ii)         
times the Savings Restoration Plan Amount. 
The “Savings Plan Amount” and the “Savings Restoration Plan Amount” are
the amounts that would have been credited to the Executive’s accounts as
automatic company allocations and matching allocations under the Avaya Inc.
Savings Plan for Salaried Employees (the “Savings Plan”) and the Avaya Inc.
Savings Restoration Plan (the “Restoration Plan”), respectively, had the
Executive remained employed by the Company for the twelve-month period
following the Termination Date (the “Period”). 
In determining the Savings Plan Amount and the Savings Restoration Plan
Amount, the following shall be assumed: 
(i) the Executive’s aggregate contributions to each of the Savings Plan
and the Restoration Plan for the Period would have been identical to the
aggregate eligible contributions made by the Executive to the Savings Plan and
Restoration Plan, respectively, for the twelve-month period prior to the
Termination Date (or, if contributions were made for a shorter period, then
identical to the contributions made by

 7
 

the Executive for such shorter period), and (ii) the Executive’s annual
base salary for the Period would have remained the same as on the Termination
Date.

(d)           For a period of           years commencing on the Date of
Termination, the Company shall continue to keep in full force and effect all
policies of medical and life insurance with respect to the Executive and his
dependents with the same level of coverage, upon the same terms and otherwise
to the same extent as such policies shall have been in effect immediately prior
to the Date of Termination or as provided generally with respect to other peer
executives of the Company and its affiliated companies, and the Company and the
Executive shall share the costs of the continuation of such insurance coverage
in the same proportion as such costs were shared immediately prior to the Date
of Termination; provided, however, that the medical and life
insurance coverage provided pursuant to this Section 3(d) shall be in lieu of
any other medical and life insurance coverage to which the Executive is
entitled under any plan, policy or arrangement of the Company or any law obligating
the Company to provide such insurance coverage upon termination of employment
of the Executive.

(e)           If during the Termination Period the
employment of the Executive shall terminate by reason of a Nonqualifying
Termination, then the Company shall pay to the Executive,  within 30 days following the Date of
Termination, a cash amount equal to the sum of:

(1)           the
Executive’s full annual base salary from the Company through the Date of
Termination, to the extent not theretofore paid, and

(2)           any
compensation previously deferred by the Executive (together with any interest
and earnings thereon) and any accrued vacation pay, in each case to the extent
not theretofore paid.

4.             Certain Additional
Payments by the Company.  

(a)           Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company or its affiliated companies to or for the benefit
of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including, without
limitation, as a result of the acceleration of the vesting of stock options,
restricted stock units or other equity awards, but determined without regard to
any additional payments required under this Section 4) (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code, or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income and employment taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments; provided, however, that the
Executive shall be entitled to receive a Gross-Up Payment only if the amount of
the “parachute payment” (as defined in Section 280G(b)(2) of the Code)
exceeds the sum of 

 8
 

(A) $50,000 plus (B) 2.99 times the Executive’s “base amount”
(as defined in Section 280G(b)(3) of the Code), and provided  further,
that if the Executive is not entitled to receive a Gross-Up Payment, the
Executive shall be entitled to receive only such amounts under
Sections 3(a)(2), 3(b) and 3(c) of this Agreement that would not include
any “excess parachute payment” (as defined in Section 280G(b)(1) of the
Code).  The intent of the parties is that
the Company shall be solely responsible for, and shall pay, any Excise Tax on
any Payment and Gross-Up Payment and any income and employment taxes
(including, without limitation, penalties and interest) imposed on any Gross-Up
Payment, as well as bearing any loss of tax deduction caused by the Gross-Up
Payment.

(b)           Subject to the provisions of Section 4(c),
all determinations required to be made under this Section 4, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up Payment
and the assumptions to be utilized in arriving at such determination, shall be
made by the Company’s public accounting firm (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company.  All fees and expenses of the
Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant
to this Section 4, shall be paid by the Company to the Executive within five
(5) days of the receipt of the Accounting Firm’s determination.  If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty.  The
Accounting Firm shall make all determinations under the tax standard of “substantial
authority” as such term is used in Section 6662 of the Code.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event that the Company exhausts its
remedies pursuant to Section 4(c) and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

(c)           The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

(1)           give
the Company any information reasonably requested by the Company relating to
such claim,

 9
 

(2)           take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,

(3)           cooperate
with the Company in good faith in order effectively to contest such claim, and

(4)           permit
the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses.  Without limitation on the foregoing
provisions of this Section 4(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided  further, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to the Executive on an interest-free basis
and shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and provided  further, that
any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

(d)           If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 4(c), the Executive becomes
entitled to receive, and receives, any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 4(c)) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable
thereto).  If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 4(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

 10
 

5.             Withholding Taxes.  The Company may withhold from all payments
due to the Executive (or his beneficiary or estate) hereunder all taxes which,
by applicable federal, state, local or other law, the Company is required to
withhold therefrom.

6.             Reimbursement of
Expenses.  If any contest or dispute
shall arise under this Agreement involving termination of the Executive’s
employment with the Company or involving the failure or refusal of the Company
to perform fully in accordance with the terms hereof, the Company shall
reimburse the Executive, on a current basis, for all reasonable legal fees and
expenses, if any, incurred by the Executive in connection with such contest or
dispute, together with interest thereon at a rate equal to the prime rate, as
published under “Money Rates” in The Wall Street Journal from time to
time, but in no event higher than the maximum legal rate permissible under
applicable law, such interest to accrue from the date the Company receives the
Executive’s statement for such fees and expenses through the date of payment
thereof; provided, however, that in the event the resolution of
any such contest or dispute includes a finding denying, in total, the Executive’s
claims in such contest or dispute, the Executive shall be required to reimburse
the Company, over a period of 12 months from the date of such resolution, for
all sums advanced to the Executive pursuant to this Section 6.

7.             Operative Event.  Notwithstanding any provision herein to the
contrary, no amounts shall be payable hereunder unless and until there is a
Change in Control at a time when the Executive is employed by the Company.

8.             Termination of
Agreement.

(a)           This Agreement shall be effective on the
Effective Date and shall expire on the first anniversary of the Effective Date,
provided that the term of this Agreement shall be extended automatically for
one additional year as of each annual anniversary of the Effective Date,
commencing with the first anniversary of the Effective Date (each such date a “Renewal
Date”) unless this Agreement is terminated pursuant to Section 8(b) or, if
earlier, upon the earlier to occur of (i) termination of the Executive’s
employment with the Company prior to a Change in Control and (ii) the Executive’s
death.  Notwithstanding the foregoing,
any expiration of this Agreement shall not retroactively impair or otherwise
adversely affect the rights of the Executive which have arisen prior to the
date of such expiration.

(b)           The Company shall have the right, in its
sole discretion, pursuant to action by the Board, to approve the amendment or
termination of this Agreement, which amendment or termination shall not become
effective until the Renewal Date coincident with or next following the date of
such action, or if later, the date fixed by the Board for such amendment or
termination; provided, that an amendment which is not adverse to the interests
of the Executive shall take effect immediately; and provided further, that in
no event shall this Agreement be amended in a manner adverse to the interests
of the Executive or be terminated during any period that a Potential Change in
Control is pending or in the event of a Change in Control.

9.             Scope of Agreement.  Nothing in this Agreement shall be deemed to
entitle the Executive to continued employment with the Company or its
subsidiaries and, if the Executive’s employment with the Company shall
terminate prior to a Change in Control, then the Executive shall have no
further rights under this Agreement; provided, however, that any 

 11
 

termination of the
Executive’s employment following a Change in Control shall be subject to all of
the provisions of this Agreement.

10.           Successors; Binding
Agreement.

(a)           This Agreement shall not be terminated by
any merger or consolidation of the Company whereby the Company is or is not the
surviving or resulting corporation or as a result of any transfer of all or
substantially all of the assets of the Company. 
In the event of any such merger, consolidation or transfer of assets,
the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are
transferred.

(b)           The Company agrees that concurrently with
any merger, consolidation or transfer of assets referred to in Section 10(a),
it will cause any successor or transferee unconditionally to assume, by written
instrument delivered to the Executive (or the Executive’s beneficiary or
estate), all of the obligations of the Company hereunder.  Failure of the Company to obtain such
assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall be a breach of this Agreement and shall entitle the
Executive to compensation and other benefits from the Company in the same
amount and on the same terms as the Executive would be entitled hereunder if
the Executive’s employment were terminated following a Change in Control other
than by reason of a Nonqualifying Termination during the Termination
Period.  For purposes of implementing the
foregoing, the date on which any such merger, consolidation or transfer becomes
effective shall be deemed the Date of Termination.

(c)           This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.  If the Executive shall die
while any amounts would be payable to the Executive hereunder had the Executive
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to such person or persons
appointed in writing by the Executive to receive such amounts or, if no person
is so appointed, to the Executive’s estate.

11.           Notices.

(a)           For purposes of this Agreement, all notices
and other communications required or permitted hereunder shall be in writing
and shall be deemed to have been duly given when delivered or five (5) days
after deposit in the United States mail, certified and return receipt
requested, postage prepaid, addressed

(1)           if
to the Executive, to the home address of the Executive on the most current
Company records, and if to the Company, to Avaya Inc., attention Vice
President, Human Resources with a copy to the Secretary of the Board, or

(2)           to
such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 12
 

(b)           A written notice of the Executive’s Date of
Termination by the Company or the Executive, as the case may be, to the other,
shall (i) indicate the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) specify the termination
date (which date shall be not less than  fifteen
(15) days after the giving of such notice). 
The failure by the Executive or the Company to set forth in such notice
any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder or preclude
the Executive or the Company from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.

12.           Full Settlement;
Resolution of Disputes. 

(a)           The Company’s obligation to make any
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others.  In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment.

(b)           If there shall be any dispute between the
Company and the Executive in the event of any termination of the Executive’s
employment, then, unless and until there is a final, nonappealable judgment by
a court of competent jurisdiction declaring that such termination was for
Cause, that the determination by the Executive of the existence of Good Reason
was not made in good faith, or that the Company is not otherwise obligated to
pay any amount or provide any benefit to the Executive and his dependents or
other beneficiaries, as the case may be, under Sections 3(a), 3(b) and 3(c),
the Company shall pay all amounts, and provide all benefits, to the Executive
and his dependents or other beneficiaries, as the case may be, that the Company
would be required to pay or provide pursuant to Sections 3(a), 3(b) and 3(c) as
though such termination were by the Company without Cause or by the Executive
with Good Reason; provided, however, that the Company shall not
be required to pay any disputed amounts pursuant to this Section 12(b) except
upon receipt of an undertaking by or on behalf of the Executive to repay all
such amounts to which the Executive is ultimately adjudged by such court not to
be entitled.

13.           Employment with
Subsidiaries.  Employment with the
Company for purposes of this Agreement shall include employment with (i) any “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code, (ii) an
entity in which the Company directly or indirectly owns 50% or more of the
voting interests or (iii) an entity in which the Company has a significant
equity interest, as determined by the Board or by the Corporate Governance and
Compensation Committee (or any successor committee) of the Board.

14.           Governing Law;
Validity.  The interpretation,
construction and performance of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware without regard to the principle of conflicts of laws.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the 

 13
 

validity or
enforceability of any other provisions of this Agreement, which other provisions
shall remain in full force and effect.

15.           Counterparts.  This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original and both of which
together shall constitute one and the same instrument.

16.           Miscellaneous.  No provision of this Agreement may be
modified or waived unless such modification or waiver is agreed to in writing
and signed by the Executive and by a duly authorized officer of the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.  Failure
by the Executive or the Company to insist upon strict compliance with any
provision of this Agreement or to assert any right the Executive or the Company
may have hereunder, including, without limitation, the right of the Executive
to terminate employment for Good Reason, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.  Except as otherwise expressly set forth in
this Agreement, the rights of, and benefits payable to, the Executive, his estate
or his beneficiaries pursuant to this Agreement are in addition to any rights
of, or benefits payable to, the Executive, his estate or his beneficiaries
under any other employee benefit plan or compensation program of the Company.  This Agreement supersedes all prior
agreements between the Executive and the Company relating to the subject matter
hereof.

 14
 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by a duly authorized officer
of the Company and the Executive has executed this Agreement as of the day and
year first above written.

	
  

  	
  AVAYA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 15
 

Note: The Company has
entered into Severance Agreements with each of the Chief Executive Officer, the
Chief Financial Officer, and the other executive officers identified as Named
Executive Officers in the Company’s Proxy Statement filed with the Securities
and Exchange Commission.  Such Severance
Agreements are substantially identical in all material respects, except that
the multiple referred to throughout the agreement dated September 1, 2004 with
Mr. D’Ambrosio, the Company’s Chief Executive Officer, is three (3) times and
the multiple for each of the other executive officers is two (2) times.

 16

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