Document:

<PAGE>   1
                                                                   EXHIBIT 10.10

August 8, 1995

Mr. Donald K. Peterson
11 Breckenridge
Nashville, TN 37215

     Dear Don,

     This offer letter completely replaces my offers of employment dated July
28 and August 2, 1995 and supersedes all other oral and written communications
on this subject.

     It gives me great pleasure to offer you a Senior Management position
within AT&T (the Company). In addition to confirming my offer, this letter will
detail the terms and conditions of your employment and outline the current
major features of AT&T's compensation and benefit plans and practices.

     Assumption of Duties: Effective on or about September 1, 1995, you will
assume the position of CFO within the Communications Services with a dual
reporting relationship to Alex Mandl, Executive Vice President AT&T and CEO
Communications Services Group and to Rick Miller, Executive Vice President AT&T
and Chief Financial Officer.

     Base Salary: Your initial base salary will be $325,000 per year. This rate
will increase annually to reflect individual performance and base salary
structure changes applicable to similarly situated Senior Managers. Your first
review for your base salary level will be effective January 1996.

<PAGE>   2
         Annual Incentive: The annual incentives for Senior Managers currently
take the form of (1) AT&T Performance Award (APA), (2) Merit Award (MA), and (3)
Unit Performance Award (UPA).

         (1) AT&T Performance Award (APA) is predicated on corporate
performance.

         (2) Merit Award (MA) is driven by individual and team
contributions.

         (3) Unit Performance Award (UPA) is predicated on your
organization meeting its financial targets.

         Except as reflected below in the "Guaranteed 1995 Annual Incentive"
provision, the Company cannot make any definitive representations regarding the
continuation of the APA/MA/UPA format or the size of individual awards under
these plans. The following information, however, will provide a frame of
reference regarding the potential size of your annual incentive. Based on your
initial base salary, your 1995 target (not actual) APA/MA is $113,000 and your
target (not actual) UPA is $61,000. These awards are payable in the first
quarter of 1996 and will be prorated to reflect partial 1995 service.

Guaranteed 1995 Annual Incentive Amount: In the event that your earned prorated
1995 APA/MA/UPA (see above provision) is less than $58,000 (assuming a September
1, 1995 start date), you will be provided a lump sum that, when combined with
your actual earned APA/MA/UPA, will total $58,000. In the event that your earned
prorated 1995 APA/MA/UPA is higher than $58,000, you would receive that higher
amount and no lump sum would be payable under this Guaranteed 1995 Annual
Incentive Amount provision.

It is understood that this minimum guaranteed incentive award for performance
year 1995 shall not in any way be construed as a precedent for future
performance years.

AT&T Long Term Incentives:

--AT&T Performance Shares: Effective on your date of hire, you will receive
2,366 AT&T Performance Shares covering the 1995-97 performance period (payout,
if any, is in the first quarter of 1998). This is the 1995 standard grant for
your Senior Management position. Historically, such awards have been made
annually. Performance shares, which are equivalent in value to AT&T common
shares, are awarded based on position rate at the beginning of a three-year
performance period. Payout of from 0% to 150% of such Performance Shares is made
in the form of cash and/or AT&T shares at
<PAGE>   3
the end of the performance period based on the Company's return to equity
performance as approved annually by the Board of Directors. Dividend equivalents
are paid quarterly on all undistributed Performance Shares.

--AT&T Stock Options: Effective on the date of your hire, you will be awarded
8,256 AT&T Stock Options. This is the 1995 standard grant for your Senior
Management position. Historically, standard stock option grants have been made
in

January of each year to Senior Managers. Currently, the term of the stock
option grant is ten years. Assuming continued Company employment, stock
options vest as follows: one-third of the options will vest on the first
anniversary of the date of grant, one-third on the second anniversary,
and
one-third on the third anniversary of the date of grant. The option price
is 100% of market price on date of grant, e.g., your date of hire for the
1995 award. As with the Annual Incentive Awards, Long Term Incentives are
closely liked with the Company's strategy to meet the challenges of an ever
changing marketplace. Accordingly, other than the initial grant, the Company
cannot guarantee continuation of the Long Term Incentive Plan in its current
format, nor can it guarantee annual grant levels to individual
participants.

Hiring Bonus: In order to address certain forfeitures, (e.g., Stock Options)
prompted by leaving your current employer and to incent you to join AT&T, the
Company will provide you with the following:

(I) You will be granted the following "Seasoned" AT&T Performance Shares under
the Company's Long Term Incentive Program:

-- 2,366 AT&T Performance Shares (1993-95 Performance Period, payable in 1996)

-- 2,366 AT&T Performance Shares (1994-96 Performance Period, payable in 1997)

Dividend equivalent payments will be made on the above Performance Share awards.

(II) You will be provided a one-time cash hiring bonus of $111,000 payable
within 30 days of your date of hire.

(III) You will receive a one-time "extra" (over and above the standard annual
award) grant of 24,100 AT&T Stock Options. These "extra" Stock Options will
cliff vest at the end of three years of employment with the Company.

(IV) In the event you forfeit your 1995 annual bonus (payable in 1996) from your
current employer, you will receive a one-time cash payment related to the amount
forfeited, (where the amount forfeited is based on the actual months of
employment at this employer during 1995). Based on
<PAGE>   4
an August 31, 1995 termination from your current employer, and an above target
payout of $166,000, this cash payment would be $111,000. Such amount will be
payable within 30 days of your date of hire.

(V) The Company will provide you a housing loan up to $250,000 on terms which
are generally comparable to those provided by your current employer.

(VI) In the event you are prevented from exercising your vested stock options
(or are required to repay to your current employer the bargain spread on such
options), the Company will reimburse you up to $89,000 for such forfeiture.

Severance Benefit: In the event of any Company initiated termination other than
for disability or for "cause" (as defined below), within 36 months from the
effective date of your employment you will be entitled to a payment equal to the
higher of (1) $650,000 or (2) 200% of your annual base salary in effect on the
date of such termination, such payment to be made in the month following the
month of termination.

Such payment as described above in this Severance Benefit provision as well as
any "DCA" benefits payable to you under the "Special Deferred Compensation
Account" provision (below) related to a Company initiated termination, will be
conditioned upon you signing a release and agreement not to sue the Company. The
form of this release and agreement will be that then in use for AT&T Senior
Managers.

For purposes of this employment letter, "cause" shall be defined as follows: (1)
your conviction (including a plea of guilty to nolo contendere) of a felony or
any crime of theft, dishonesty or moral turpitude; or (2) gross omission or
gross dereliction of any statutory or common law duty of loyalty to the Company,
or (3) violation of the Company's Code of Conduct.

Senior Management Employee Benefit Plans: Attachment A outlines the benefits
available to you under various Senior Management, mid-career and employee
benefit plans, programs and practices. In addition, under the provisions of the
Mid-Career Hire Program you will be eligible for the following benefits:

Mid-Career Pension: Managers hired at age thirty-five and over at salary band D
and above who retire or terminate employment at Executive level or above will be
eligible for supplemental pension benefits from the AT&T Mid-Career Hire Pension
Plan provided they have at least five years service credited while at or above
Executive level. (The Senior Management position you would be hired into is
above the Executive level). These supplemental pension payments are in addition
to those provided by other
<PAGE>   5
existing plans. For example: under the Plan's current terms and conditions, a
participant hired at age 46 and retired at age 65 would receive extra pension
credit for 16 years at approximately one half the rate under the AT&T Management
Pension Plan.

Special Deferred Compensation Account: Beginning on your date of hire, $190,000
will be credited in your name in an individual Deferred Compensation Account
(DCA). You will have no ownership interest in the DCA nor in any asset of the
Company and you may not assign or pledge the DCA. You will have no right to
receive any part of the DCA except as provided below under the "Vesting,
Forfeiture, and Distribution of DCA" paragraphs. Such credited DCA shall bear
interest from the first day following the effective date of your AT&T
employment. The interest credited thereon will be compounded as of the end of
each calendar quarter for as long as any sums remain in the DCA, and the
quarterly rate of interest applied at the end of any calendar quarter shall be
one-quarter of the average 30-year Treasury Note rate for the previous quarter.

          Vesting, Forfeiture, and Distribution of DCA: In the event of your
termination of employment prior to August 13, 2009, for any reason other than
death, "long term disability" (as defined below), or Company initiated
termination for other than "cause" (as defined below), all amounts credited to
your DCA will be canceled, and you will not receive any distribution from the
DCA.

          In the event of your termination of employment, prior to August 13,
2009, because of death or "long term disability," the amount credited to your
DCA as of such termination will become vested. Your DCA balance as of your date
of death or termination will be distributed to you, or in the case of death, to
your designated beneficiary (or to your estate if no beneficiary has
designated), within 30 business days after your termination or death.

          In the event of your termination of employment from your date of hire
to August 13, 2009, as a result of a Company initiated termination for other
than "cause" (as defined below), your DCA will vest in full at such date and all
amounts credited to the DCA as of your termination of employment will be
distributed to you within 30 business days after your termination of employment.
As of August 13, 2009, all amounts then credited to your DCA will vest in full,
assuming your continued employment to such date with the Company or any
affiliate of the Company. Any amounts credited to your DCA subsequent to August
13, 2009 will vest as credited.

<PAGE>   6
          In the event of your termination of employment on or subsequent to
August 13, 2009, because of death all amounts credited to your DCA as of your
date of death will be distributed to your designated beneficiary (or to your
estate if no beneficiary has been designated), within 30 business days after
your death.

          In the event of your termination of employment on or subsequent to
August 13, 2009, for any reason other than for death, then all amounts credited
to your DCA as of your termination of employment will be distributed to you in
ten approximately equal annual installments. Interest will continue to be
credited on the outstanding balance in your DCA.

          Notwithstanding any other provision of this Special Deferred
Compensation Account, in the event of your termination of employment for
"cause", at any time from your date of hire to August 13, 2009, all amounts
credited to your DCA will be canceled and forfeited in their entirety, and you
will not receive any distribution from the DCA. For purposes of this DCA
provision, "cause" shall be as defined in the Severance Benefit provision above.
For purposes of this DCA provision, "long term disability" will mean your
termination of Company employment with eligibility to receive long term
disability benefits under the AT&T Long Term Disability Plan for Salaried
Employees or a replacement or comparable affiliate plan.

          The payments from the DCA are in addition to and not in lieu of any
pension, savings or other defined benefit or defined contribution type
retirement plans of the Company in which you would be eligible to participate as
an AT&T employee or AT&T Senior Manager. Accordingly, the DCA will not affect
your participation or potential participation in such plans. The DCA, however,
is not includable in the base for calculating any AT&T employee or Senior
Manager benefits.

          Payout of the DCA, when payable in ten installments, will commence on
the first day of the calendar quarter next following the end of the month in
which you terminate employment.

Relocation Plan: You will be eligible for the same AT&T Management
Relocation Plan (AT&TMRP) benefits accorded to other management employees
(Attachment B). It is understood that your family will be remaining in
Tennessee through June 1996. Therefore, effective with your month of
hire, you will be paid a monthly amount of $6,000 (100% taxable). These monthly
payments will cease after the earlier of (1) July 31, 1996 or (2) the month
you relocate to your New Jersey residence. It is understood and agreed that
these monthly payments will be made in lieu of the Lump Sum Payment

<PAGE>   7

(for interim living, home search, etc.) provided for in the AT&TMRP (see
Attachment B).

          It is agreed and understood that you will not talk about, write about
or otherwise disclose the terms of existence of this employment letter or any
fact concerning its negotiation or implementation. You may, however, discuss the
contents of this letter with your spouse, legal and/or financial counselor.

          As indicated in the attached AT&T Non-Competition Guideline
(Attachment C), a number of AT&T incentive arrangements and non-qualified
pension and benefit plans are subject to non-competition constraints.

          This offer is contingent upon successful completion of AT&T's
pre-employment medical review process. This letter reflects the entire agreement
regarding the terms and conditions of your employment. Accordingly, it
supersedes and completely replaces any prior oral or written communication on
this subject.

          This letter is not an employment D.K. Peterson - Page 7 contract and
should not be construed or interpreted as containing any guarantee of continued
employment. The employment relationship at AT&T is by mutual consent
("Employment-At-Will"). This means that managers have the right to terminate
their employment at any time and for any reason. Likewise, the Company reserves
the right to discontinue your employment with or without cause at any time and
for any reason.

          The incentive plans as well as the employee and Senior Management
benefit plans, programs and practices as briefly outlined in this letter,
reflect their current provisions. Payments and benefits under these plans and
programs, as well as other payments referred to in this letter, are subject to
IRS rules and regulations with respect to withholding, reporting, and taxation,
and will not be grossed-up unless specifically stated. The Company reserves the
right to discontinue or modify any such plans, programs and practices. Moreover,
the summaries contained herein are subject to the terms of such plans, programs
and practices.

          For purposes of the Senior Management and employee benefits plans, the
definition of compensation is as stated in the plans. Currently, pensions are
based on base salary and annual incentives. Other benefits are based on either
base salary or base salary plus annual incentives. All other compensation and
payments reflected in this offer, e.g., hiring bonus, relocation, long term
incentives, are not included in the calculation of any employee or Senior
Management benefits (except for the AT&T Incentive Deferral Award Plan, which
currently permits the deferral of annual incentives and Performance Shares).

<PAGE>   8

          By acceptance of this offer, you agree that (1) no trade secret or
proprietary information belonging to your previous employer will be disclosed or
used by you at AT&T, and that no such information, whether in the form of
documents, memoranda, software, drawings, etc., will be retained by you or
brought with your to AT&T, and (2) you have brought to AT&T's attention and
provided it with a copy of any agreement which may impact your future employment
at AT&T, including non-disclosure, non-competition, invention assignment
agreements or agreements containing future work restrictions.

          Don, I feel the package we have developed for you is attractive and
anticipates that you will make a critical contribution to the business as it
develops over the coming years. We look forward to having you join us. If you
have any questions, please don't hesitate to call me or Marty O'Donnell on
(908) 221-3596.

          If you agree with the foregoing, and affirm that there are no
agreements or other impediments not disclosed to AT&T that would prevent you
from providing exclusive service to the Company, please sign this letter by
August 11, 1995 in the space provided below and return the original executed
copy to me.

Sincerely,

----------------------------------------------------
          Acknowledged and Agreed to Date
                Donald K. Peterson

Attachments<PAGE>   1
                                                                   EXHIBIT 10.11

                                      AVAYA
                            SUPPLEMENTAL PENSION PLAN

                                      Avaya
                                       and
                   Such of its Subsidiary Companies which are
                             Participating Companies

                            Effective October 1, 2000
<PAGE>   2
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                      AVAYA
                            SUPPLEMENTAL PENSION PLAN

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                              <C>
1. INTRODUCTION AND PURPOSE ...............................................       3

2. DEFINITIONS ............................................................       4
     ADMINISTRATOR ........................................................       4
     AFFILIATED CORPORATION ...............................................       4
     ANNUAL BASIC PAY .....................................................       4
     BENEFIT LIMITATION ...................................................       4
     BOARD ................................................................       4
     CODE .................................................................       4
     COMMITTEE ............................................................       5
     COMPANY ..............................................................       5
     COMPENSATION .........................................................       5
     COMPENSATION LIMITATION ..............................................       5
     DISABILITY ...........................................................       5

     ERISA ................................................................       5
     INTERCHANGE AGREEMENT ................................................       5
     INTERCHANGE COMPANY ..................................................       5
     LAWFUL SPOUSE ........................................................       5
     LONG TERM PLAN .......................................................       5
     MPA ..................................................................       6
     NORMAL RETIREMENT AGE ................................................       6
     OFFICER ..............................................................       6
     OFFICERS LONG TERM DISABILITY PLAN ...................................       6
     PARTICIPANT ..........................................................       6
     PARTICIPATING COMPANY ................................................       6
     PENSION PLAN .........................................................       6
     PLAN .................................................................       6
     RETIREMENT INCOME PLAN ...............................................       6
         SERVICE-BASED PROGRAM ............................................       6
         SHORT TERM AWARD .................................................       7
     SHORT TERM PLAN ......................................................       7
     SUBSIDIARY ...........................................................       7
     SURVIVING SPOUSE .....................................................       7
     TERM OF EMPLOYMENT ...................................................       7
     TRANSFERRED INDIVIDUAL ...............................................       7

3. EXCESS RETIREMENT BENEFIT ..............................................       8
     3.1. PARTICIPATION ...................................................       8
     3.2. AMOUNT OF EXCESS RETIREMENT BENEFIT .............................       8
     3.3. NO SURVIVING SPOUSE OR DESIGNATED BENEFICIARY ...................       8
     3.4. FUTURE BENEFIT ADJUSTMENTS ......................................       9
     3.5. DETERMINATION OF BENEFIT ........................................       9
     3.6. RELATIONSHIP TO OTHER PLANS .....................................       9

4. MINIMUM RETIREMENT OR SURVIVOR BENEFIT..................................      10
</TABLE>

                                       -i-
<PAGE>   3
                         AVAYA SUPPLEMENTAL PENSION PLAN

<TABLE>
<S>                                                                              <C>
     4.1. PARTICIPATION ...................................................      11
     4.2. MINIMUM RETIREMENT BENEFIT ......................................      11
     4.3. SURVIVOR BENEFIT ................................................      11

5. BENEFIT PAYMENTS .......................................................      13
     5.1. COMMENCEMENT AND FORM OF BENEFITS ...............................      13
     5.2. FUTURE INCREASES ................................................      13
     5.3. TREATMENT DURING SUBSEQUENT EMPLOYMENT ..........................      13
     5.4. MANDATORY PORTABILITY AGREEMENT .................................      14
     5.5. FORFEITURE OF BENEFITS ..........................................      14

6. DISPOSITION OF PARTICIPATING COMPANY ...................................      15
     6.1. SALE, SPIN-OFF, OR OTHER DISPOSITION OF PARTICIPATING COMPANY ...      15

7. SOURCE OF PAYMENT ......................................................      16
     7.1. SOURCE OF PAYMENTS ..............................................      16
     7.2. UNFUNDED STATUS .................................................      16
     7.3. FIDUCIARY RELATIONSHIP ..........................................      16

8. ADMINISTRATION OF THE PLAN .............................................      17
     8.1. ADMINISTRATION ..................................................      17
     8.2. INDEMNIFICATION .................................................      17
     8.3. CLAIMS PROCEDURE ................................................      17
     8.4. NAMED FIDUCIARIES ...............................................      18
     8.5. ROLE OF THE COMMITTEE ...........................................      18
     8.6. ALLOCATION OF RESPONSIBILITIES ..................................      18
     8.7. MULTIPLE CAPACITIES .............................................      18

9. AMENDMENT AND TERMINATION ..............................................      19
     9.1. AMENDMENT AND TERMINATION .......................................      19

10. GENERAL PROVISIONS ....................................................      20
     10.1. BINDING EFFECT .................................................      20
     10.2. NO GUARANTEE OF EMPLOYMENT .....................................      20
     10.3. TAX WITHHOLDING ................................................      20
     10.4. ASSIGNMENT OF BENEFITS .........................................      20
     10.5. FACILITY OF PAYMENT ............................................      20
     10.6. SEVERABILITY ...................................................      21
     10.7. PLAN YEAR ......................................................      21
     10.8. HEADINGS .......................................................      21
     10.9. GOVERNING LAW ..................................................      21
     10.10. ENTIRE PLAN ...................................................      21

APPENDIX A MID-CAREER PENSION BENEFIT .....................................      22
</TABLE>

                                      -ii-
<PAGE>   4
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                      AVAYA
                            SUPPLEMENTAL PENSION PLAN

      ADOPTED EFFECTIVE JANUARY 1, 1998, As Amended and Restated Effective
                                January 1, 2000

                                     ARTICLE
                                       1.
                            INTRODUCTION AND PURPOSE

         The Avaya Supplemental Pension Plan (the "Plan") is intended to
constitute both (i) an unfunded "excess benefit plan" as defined in ERISA
Section 3(36), and (ii) an unfunded plan primarily for the purpose of providing
deferred compensation and pension benefits for a select group of management or
highly compensated employees for purposes of Title I of the Employee Retirement
Income Security Act of 1974, as amended.

         The Plan is intended to reward participants who have provided the
Company with dedicated service during their employment and who, after
termination of employment with the Company, continue to acknowledge a duty of
loyalty to the Company and refrain from engaging in activities that are in
conflict with or adverse to the interests of the Company. Such restrictions are
necessary and reasonable to protect the Company's highly confidential and
proprietary information, valuable goodwill, customer relationships and
competitive position.

         The Plan is a successor to, and a restatement of, the Lucent
Technologies Inc. Supplemental Pension Plan.

         The Plan applies only to Participants who terminate employment on or
after January 1, 2000.

         Participation in the Mid-Career Pension Benefit described in Appendix A
as a continuation of the Mid-Career Pension Plan shall be limited to these
individuals categorized by the Company as Participants and Employees, within the
meaning of Appendix A, as of December 31, 2000.

                                      -3-
<PAGE>   5
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       2.
                                   DEFINITIONS

         Unless the context clearly indicates otherwise, the following terms
have the meanings described below when used in this Plan and references to a
particular Article or Section shall mean the Article or Section so delineated in
this Plan.

ACCOUNT BALANCE PROGRAM

         The account balance program provisions of the Retirement Income Plan,
applicable generally to eligible employees hired after December 31, 1998.

ADMINISTRATOR

         The Pension Plan Administrator under the Retirement Income Plan, or
such other person or entity designated by the Company.

AFFILIATED CORPORATION

         Any corporation of which more than 50 percent of the voting stock is
owned directly or indirectly by the Company.

ANNUAL BASIC PAY

         The annual base salary rate on the last day the Participant was on the
active payroll plus an amount determined with reference to the Short Term Plan
as described in the following sentence, but excluding all differentials regarded
as temporary or extra payments and all awards and distributions under the Long
Term Plan. For purposes of determining the Minimum Retirement and Survivor
Benefit under Article 4, the amounts determined with reference to the Short Term
Plan shall be the Participant's Target Award, as determined under the Short Term
Plan, in effect at the time of the Participant's retirement, termination of
employment or death.

BENEFIT LIMITATION

         The maximum benefit payable to a Participant under the Retirement
Income Plan or the Pension Plan in accordance with Code Sections 415(b) and (e),
but after application of the Compensation Limitation, if any, under the
Retirement Income Plan or the Pension Plan.

         BOARD

         The Board of Directors of the Company.

         CODE

         The Internal Revenue Code of 1986, as amended from time to time. Any
reference to a particular section of Code includes any applicable regulations
promulgated under that section.

         COMMITTEE

         The Avaya Employee Benefits Committee.

                                      -4-
<PAGE>   6
                         AVAYA SUPPLEMENTAL PENSION PLAN

         COMPANY

         Avaya, a Delaware Corporation, or its successor.

         COMPENSATION

         "Compensation" shall have the meaning set forth in the Retirement
Income Plan or the Pension Plan, as applicable, modified as set forth in this
Plan.

         COMPENSATION LIMITATION

         The maximum amount of annual compensation under Code Section 401(a)(17)
that may be taken into account in any Plan Year for benefit accrual purposes
under the Retirement Income Plan or the Pension Plan.

         DISABILITY or DISABLED

         "Disability" or "Disabled" shall have the meaning set forth in the
Avaya Long Term Disability Plan for Management Employees.

         ERISA

         The Employee Retirement Income Security Act of 1974, as amended from
time to time. Any reference to a particular section of ERISA includes any
applicable regulations promulgated under that section.

         INTERCHANGE AGREEMENT

         "An Interchange Agreement" within the meaning of the Retirement Income
Plan and the Pension Plan.

         INTERCHANGE COMPANY

         An "Interchange Company" within the meaning of the Retirement Income
Plan and the Pension Plan.

         LAWFUL SPOUSE

         A person who is recognized as the lawful husband or lawful wife of a
Participant under the laws of the state of the Participant's domicile, and who
is a person whose consent is required pursuant to Section 417(a)(2)(A)(i) of the
Code for purposes of an election under Section 417(a)(1)(A)(i) of the Code.

         LONG TERM PLAN

         The Avaya 2000 Long Term Incentive Program, the Avaya 2000 Long Term
Incentive Plan for Management Employees, any other Avaya stock option plan
sponsored as a result of a merger or acquisition, or a predecessor long term
incentive plan.

         MPA

         The Mandatory Portability Agreement, effective January 1, 1985, between
and among AT&T, Former Affiliates and certain other companies and which, in
accordance with section

                                      -5-
<PAGE>   7
                         AVAYA SUPPLEMENTAL PENSION PLAN

559 of the Tax Reform Act of 1984, provides for the mutual recognition of
service credit and the transfer of benefit obligations for specified employees
who terminate employment with one company signatory to such agreement and
subsequently commence employment with another company signatory to such
agreement.

         NORMAL RETIREMENT AGE

         "Normal Retirement Age" shall have the meaning set forth in the
Retirement Income Plan or the Pension Plan, as applicable.

         OFFICER

         An employee of a Participating Company holding a position evaluated or
classified above the "Executive" level by the Company, except that no employee
who is assigned to such a position on a temporary basis after being notified in
writing of the temporary status of such assignment shall be an "Officer" for any
purpose under this Plan.

         OFFICERS LONG TERM DISABILITY PLAN

         The Lucent Technologies Inc. Officers Long Term Disability and Survivor
Protection Plan, as amended from time to time.

         PARTICIPANT

         An individual who qualifies for an Excess Retirement Benefit under
Article 3, a Minimum Retirement or Survivor Benefit under Article 4, or a
Mid-Career Pension Benefit under Appendix A.

PARTICIPATING COMPANY

         The Company and each of its subsidiaries that is a Participating
Company for purposes of the Retirement Income Plan or the Pension Plan.

         PENSION PLAN

         The Avaya Pension Plan, as amended from time to time.

         PLAN

         This Avaya Supplemental Pension Plan.

         RETIREMENT INCOME PLAN

         The Avaya Retirement Income Plan, as amended from time to time,
including the Service-Based Program and the Account Balance Program thereunder.

SERVICE-BASED PROGRAM

         The service-based program provisions of the Retirement Income Plan,
applicable generally to eligible employees hired before January 1, 1999.

                                      -6-
<PAGE>   8
                         AVAYA SUPPLEMENTAL PENSION PLAN

SHORT TERM AWARD

         The actual amount awarded (including any amounts deferred pursuant to
the Avaya Deferred Compensation Plan) annually to a Participant pursuant to the
Avaya Short Term Incentive Plan or predecessor short term incentive plans.
Notwithstanding any other provision in this paragraph to the contrary, Short
Term Awards, for purposes of the Plan, shall not include any amount paid or
credited to a Participant in January, 1999. Furthermore, such awards shall not
include any payments paid to a Participant in the form of Compensation or in
lieu of Compensation after termination of employment except that the Committee
may make reasonable assumptions, to be applied uniformly, regarding the amount
of such payments to be included in the Short Term Award. Once made, any such
decision of the Committee shall be conclusive and not subject to further review.

SHORT TERM PLAN

         The Avaya Short Term Incentive Plan or predecessor short term incentive
plans covering Officers.

SUBSIDIARY

         Any corporation as to which more than 80% of the voting stock is owned
directly or indirectly by the Company.

SURVIVING SPOUSE

         A deceased Participant's surviving Lawful Spouse who is eligible to
receive a survivor annuity benefit under the Retirement Income Plan or the
Pension Plan.

TERM OF EMPLOYMENT

         "Term of Employment" shall have the meaning set forth in the Retirement
Income Plan or the Pension Plan, as applicable, except that for all purposes
under the Mid-Career Pension Benefit, "Term of Employment" shall have the
meaning set forth in Appendix A.

TRANSFERRED INDIVIDUAL

         A "Transferred Individual" within the meaning of the Employee Benefits
Agreement between Lucent and the Company dated as of October 1, 2000.

                                      -7-
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                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       3.
                            EXCESS RETIREMENT BENEFIT

         3.1.     PARTICIPATION

         "Participant" for purposes of the Excess Retirement Benefit under this
Article 3 shall mean an individual who is a Participant, Surviving Spouse or
designated beneficiary under either the Retirement Income Plan or the Pension
Plan if such individual's benefit payable under the Retirement Income Plan or
the Pension Plan is limited by reason of the application of the Benefit
Limitation and/or the Compensation Limitation.

         3.2.     AMOUNT OF EXCESS RETIREMENT BENEFIT

         (a) The amount, if any, of the Excess Retirement Benefit payable to a
Participant, Surviving Spouse or designated beneficiary shall be equal to the
excess of (i) over (ii), where:

                  (i) is the Participant's, Surviving Spouse's or designated
         beneficiary' pension benefit determined in accordance with the
         provisions of the Retirement Income Plan or the Pension Plan, except
         that for purposes of determining the Excess Retirement Benefit, the
         Benefit Limitation and the Compensation Limitation shall be disregarded
         and the amount of the Short Term Award and any deferrals of salary or
         Short Term Award made under the Avaya Deferred Compensation Plan shall
         be included in Compensation; and

                  (ii) is the amount of the pension benefit actually payable to
         such Participant, Surviving Spouse or designated beneficiary under the
         Retirement Income Plan or the Pension Plan.

         (b) The amount of the Excess Retirement Benefit payable as a result of
the application of the Benefit Limitation under the Retirement Income Plan or
the Pension Plan shall be determined based upon the Retirement Income Plan or
the Pension Plan formula, as applicable, in effect (i) as of the date when
benefits are to commence; or (ii) for benefits payable in the form of an
annuity, as of the effective date of any subsequent increases or decreases in
the Benefit Limitation, and as of the effective date of any special increases in
the monthly benefit payable, prior to application of the Benefit Limitation, as
a result of amendments to the Retirement Income Plan or the Pension Plan,
whichever is applicable. Further, the amount of the Excess Retirement Benefit
shall be reduced for commencement of the Excess Retirement Benefit prior to the
date when the sum of the Participant's completed years and months of age and
Term of Employment is less than 75 years and/or for the cost of the survivor
annuity, if any, in the same manner as is set forth in the Retirement Income
Plan or the Pension Plan, as applicable.

         3.3.     NO SURVIVING SPOUSE OR DESIGNATED BENEFICIARY

         If a Participant dies before the date as of which his or her benefit
commences under the Service-Based Program or the Pension Plan, and he or she
does not have a Surviving Spouse or designated beneficiary on his or her date of
death, no Excess Retirement Benefit shall be paid with respect to such
Participant. If the Participant dies before the date as of which his or her
benefit commences under the Account Balance Program, the Excess Retirement
Benefit shall be

                                      -8-
<PAGE>   10
                         AVAYA SUPPLEMENTAL PENSION PLAN

paid to the surviving spouse, if any; if there is no surviving spouse such
benefit shall be paid to the beneficiary or beneficiaries designated under the
Retirement Income Plan or, if there is no such designated beneficiary, to the
Participant's estate.

     3.4.     FUTURE BENEFIT ADJUSTMENTS

         If a Participant has commenced receiving a service or disability
pension under the Retirement Income Plan or the Pension Plan in the form of a
joint and survivor annuity and his or her designated annuitant subsequently
predeceases him or her, the Participant's Excess Retirement Benefit under this
Article 3 shall be calculated in accordance with Section 3.2 and thereafter
paid, prospectively, by restoring the original cost of the joint and survivor
annuity form of benefit under the Retirement Income Plan or the Pension Plan,
whichever is applicable. Such adjustment shall be effective as of the first day
of the first month following the death of the designated annuitant.

     3.5.     DETERMINATION OF BENEFIT

         Excess Retirement Benefit payments under this Article 3 shall be
calculated in accordance with the rules, procedures, and assumptions utilized
under the Retirement Income Plan or the Pension Plan, whichever is applicable.
Thus, whenever it is necessary to determine whether one benefit is less than,
equal to, or larger than another, or to determine the equivalent actuarial value
of any benefit, whether or not such form of benefit is provided under this Plan,
such determination shall be made, at the Administrator's discretion, by the
Company's enrolled actuary, using mortality, interest and other assumptions
normally used at the time in determining actuarial equivalence under the
Retirement Income Plan or Pension Plan, whichever is applicable.

     3.6.     RELATIONSHIP TO OTHER PLANS

         The Excess Retirement Benefit payable under this Article 3 shall be in
addition to any other benefits provided, directly or indirectly, to a
Participant, Surviving Spouse or designated beneficiary by any Participating
Company. Participation in the Plan shall not preclude or limit the participation
of the Participant in any other benefit plan sponsored by a Participating
Company for which such Participant would otherwise be eligible. The Excess
Retirement Benefit payable to a Participant, Surviving Spouse or designated
beneficiary under this Plan shall not duplicate benefits payable to such
Participant, Surviving Spouse or designated beneficiary under any other plan or
arrangement of a Participating Company or any Affiliated Corporation.

                                      -9-
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                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       4.
                     MINIMUM RETIREMENT OR SURVIVOR BENEFITS

     4.1.     PARTICIPATION

         "Participant" for purposes of the Minimum Retirement Benefit under
Section 0 shall mean (1) an Officer or a former employee of a Participating
Company who was an Officer on the last day of employment, if such individual is
retired on a service pension under the Retirement Income Plan, (2) an Officer
whose Term of Employment has been five years or more, is not Disabled, and who
terminates employment on or after his or her sixty-second birthday.

         "Participant" for purposes of the Survivor Benefit under Section 0
shall mean an Officer, or a former employee of a Participating Company who was
an Officer on the last day of employment, if such former employee (1) is
Disabled or (2) is eligible to receive a Minimum Retirement Benefit under this
Article 4 of the Plan.

     4.2.     MINIMUM RETIREMENT BENEFIT

         A Participant shall be eligible to receive an annual minimum retirement
benefit payable monthly, equal to 15% of the Participant's Annual Basic Pay on
the last day the Participant was on the active payroll reduced by the sum of the
following benefits received by the Participant which are attributable to the
period for which benefits are provided under this Section 4.2: a service pension
or deferred vested pension under the Retirement Income Plan or Pension Plan, an
Excess Retirement Benefit under Article 3, a Mid-Career Pension Benefit under
Appendix A, and by any other retirement income payments received by the
Participant from his or her Participating Company or from a Successor or
Predecessor Plan Sponsor. However, no reduction shall be made on account of any
pension under the Retirement Income Plan at a rate greater than the rate of such
pension on the date the Participant first received such pension after his or her
retirement or other termination of employment, and no reduction shall be made on
account of an Excess Retirement Benefit under Article 3, or a Mid-Career Pension
Benefit under Appendix A, at a rate greater than the rate of such benefit, as of
first date the Participant was entitled to receive such benefit after his or her
retirement or other termination of employment.

     4.3.     SURVIVOR BENEFIT

         In the event of the death of a Participant, the Surviving Spouse or
designated beneficiary of such Participant shall be eligible to receive an
annual benefit, payable monthly, equal to 15 percent of the Participant's Annual
Basic Pay on the last day the Participant was on the active payroll prior to his
or her death reduced by the sum of the following benefits received by the
Participant's Surviving Spouse or designated beneficiary on account of the death
of the Participant and which are attributable to the period for which benefits
are provided under this Section 4.3: an annuitant's pension under the Retirement
Income Plan or Pension Plan, an annuitant's Excess Retirement Benefit under
Article 3, a Mid-Career Pension Benefit under Appendix A, and any other lifetime
payments to such Surviving Spouse or designated beneficiary from the
Participant's Participating Company or from any Successor Plan Sponsor. However,
no reduction shall be made on account of an annuitant's pension under the
Retirement

                                      -10-
<PAGE>   12
                         AVAYA SUPPLEMENTAL PENSION PLAN

Income Plan, or on account of an annuitant's Excess Retirement Benefit under
Article 3 at a rate greater than (1) the rate of such pension or annuity on the
date such pension or annuity was first payable in the case of the death of a
Participant who is on the active payroll or (2) the rate of such pension or
annuity on the date such pension or annuity first would have been payable had
the Participant died on the day after the last day the Participant was on the
active payroll in the case of the death of a Participant who is not on the
active payroll.

                                      -11-
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                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       5.
                                BENEFIT PAYMENTS

     5.1.     COMMENCEMENT AND FORM OF BENEFITS

         Any benefit provided under this Plan payable to a Participant,
Surviving Spouse or designated beneficiary (i) shall commence at the same time,
(ii) shall be paid for as long as and (iii) shall be paid in the same benefit
form as the Participant's, Surviving Spouse's or beneficiary's benefits are paid
under the Retirement Income Plan or the Pension Plan, whichever is applicable,
provided, however, that the Committee shall have the right to approve the
Participant's election of the form of the Excess Retirement Benefit under
Article 3 payable to the Participant. In addition, the joint and survivor
annuity benefit option form shall not be available to Participants eligible for
a Mid-Career Pension Benefit under Appendix A for that portion of the benefit
under this Plan.

     5.2.     FUTURE INCREASES

         If an amendment to the Retirement Income Plan in respect of a
Participant who did not elect a lump sum payment under the Retirement Income
Plan or to provide for an increase in the service pensions of previously retired
employees or an increase in the survivor annuities payable under the Retirement
Income Plan, then a Participant's, Surviving Spouse's or designated
beneficiary's benefit under this Plan, as applicable, shall be increased
pursuant to the same terms and conditions as are set forth in such Retirement
Income Plan amendment, except that no such increase shall apply to the Surviving
Spouse or designated beneficiary benefit related to a deceased Participant who
had not terminated employment or died prior to the effective date of such
amendment.

     5.3.     TREATMENT DURING SUBSEQUENT EMPLOYMENT

         Notwithstanding any other provision of the Plan, a Participant's
employment or reemployment with any Participating Company or with any
Interchange Company (if the Employee is covered by the applicable Interchange
Agreement and, if applicable, has not waived coverage pursuant to the terms of
the Interchange Agreement) subsequent to retirement or termination of employment
with entitlement to a benefit under the Plan shall result in the permanent
suspension of payment of such benefit to the Participant for the period of such
employment or reemployment to the extent and in a manner consistent with the
terms and conditions applicable to the suspension of benefit payments under the
Retirement Income Plan or the Pension Plan, whichever is applicable. A
Participant's benefit shall recommence simultaneously with the recommencement of
his or her benefits under the Retirement Income Plan or the Pension Plan. The
amount of the Participant's benefit upon recommencement shall be adjusted to
reflect adjustments, if any, in the amount of the Participant's pension benefit
under the Retirement Income Plan or the Pension Plan resulting from the period
of reemployment. Following recommencement of payment, the Participant, Surviving
Spouse or designated beneficiary shall not be eligible to receive any benefit
payments that would otherwise have been payable but for the suspension.

                                      -12-
<PAGE>   14
                         AVAYA SUPPLEMENTAL PENSION PLAN

     5.4.     MANDATORY PORTABILITY AGREEMENT

         A Participant (i) who is employed by an "Interchange Company," as that
term is defined under the MPA, subsequent to retirement or termination of
employment from the Company, its subsidiaries or any Affiliated Corporation,
(ii) who is covered under the terms and conditions of the MPA, and (iii) for
whom assets and liabilities are transferred from the Retirement Income Plan or
the Pension Plan, shall forfeit his rights to a benefit under the Plan,
including the rights of the Participant's Surviving Spouse and beneficiaries to
a benefit under this Plan.

     5.5.     FORFEITURE OF BENEFITS

         Notwithstanding any eligibility or entitlement to benefits of a
Participant arising or conferred under any other provision or paragraph of this
Plan, all benefits for which a Participant would otherwise be eligible hereunder
shall be forfeited under the following circumstances:

         (a)      (i) the Participant is discharged by a Participating Company
         for cause. For purposes of this Plan, cause shall mean:

                  (A) the Participant's conviction (including a plea of guilty
         or nolo contendere) of a felony or any crime of theft, dishonesty or
         moral turpitude;

                  (B) gross omission or gross dereliction of any statutory or
         common law duty of loyalty to the Company.

                  (ii) determination by the Board or its delegate that the
Participant engaged in misconduct in connection with the Participant's
employment with a Participating Company or with any other entity of which the
Company has an ownership interest; or

         (b) the Participant without the Company's consent both during and after
termination for any reason of employment with a Participating Company, on behalf
of any competitor of the Company (A) renders any service relating to (1)
strategic planning, research and development, manufacturing, marketing, or
selling with respect to any product, process, material or service which
resembles, competes with, or is the same as a product, process, material or
service of the Company about which such Participant gained any proprietary or
confidential information or on which such Participant worked prior to his
termination of employment, or (2) any actual or potential customer of the
Company about whom the Participant gained any proprietary or confidential
knowledge or with whom such Participant worked prior to his termination of
employment; and (B) solicits or offers, or induces or encourages others to
solicit or offer, employment to any employee of the Company, provided, however,
that the portion of the Excess Retirement Benefit accrued prior to December 31,
1997 shall not be subject to the provisions of this Section 5.5(b).

                                      -13-
<PAGE>   15
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       6.
                      DISPOSITION OF PARTICIPATING COMPANY

     6.1.     SALE, SPIN-OFF, OR OTHER DISPOSITION OF PARTICIPATING COMPANY

         (a) Subject to Section 10.1, in the event the Company sells, spins off,
or otherwise disposes of a Subsidiary or an Affiliated Corporation, or disposes
of all or substantially all of the assets of a Subsidiary or an Affiliated
Corporation such that one or more Participants terminate employment for the
purpose of accepting employment with the purchaser of such stock or assets, any
person employed by such Subsidiary or Affiliated Corporation who ceases to be an
employee as a result of the sale, spin-off, or disposition shall be deemed to
have terminated his or her employment with a Participating Company and be
eligible for a benefit under this Plan commencing at the same time as his or her
benefit, if any, commences under the Retirement Income Plan or the Pension Plan.

         (b) Notwithstanding the foregoing provisions of this Section 6.1, and
subject to Section 10.1, if, as part of the sale, spin-off, or other disposition
of the stock or assets of a Subsidiary or Affiliated Corporation, the Subsidiary
or Affiliated Corporation, its successor owner, or any other party agrees in
writing to assume the liability for the payment of any of the benefits under
this Plan to which the Participant, Surviving Spouse and/or designated
beneficiary would have been entitled under the Plan but for such sale, spin-off,
or other disposition, then the entitlement of the Participant, his or her
Surviving Spouse or beneficiary to any such benefits under this Plan shall
terminate. Any subsequent entitlement of the former Participant, his or her
Surviving Spouse or beneficiary to such benefits shall be the sole
responsibility of the assuming party.

         (c) Upon the assumption of the liability for the payment of an Excess
Retirement Benefit or a Mid-Career Pension Benefit by Lucent Technologies Inc.
pursuant to Section 7.1 of the Management Interchange Agreement or Section 3.1
of the Occupational Interchange Agreement, both dated as of April 8, 1996,
between Lucent Technologies Inc. and Avaya, the entitlement of a Transition
Individual (as defined in Section 1.38(a) or (d) of the Management Interchange
Agreement or Section 1.30(a) or (d) of the Occupational Interchange Agreement),
and/or his or her Surviving Spouse or Beneficiary, to an Excess Retirement
Benefit or a Mid-Career Pension Benefit under this Plan shall terminate.

                                      -14-
<PAGE>   16
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       7.
                                SOURCE OF PAYMENT

         7.1.     SOURCE OF PAYMENTS

         Benefits arising under this Plan and all costs, charges, and expenses
relating thereto will be payable from the Company's general assets. The Company
may, however, establish a trust to pay such benefits and related expenses,
provided such trust does not cause the Plan to be "funded" within the meaning of
ERISA. To the extent trust assets are available, they may be used to pay
benefits arising under this Plan and all costs, charges, and expenses relating
thereto. To the extent that the funds held in the trust, if any, are
insufficient to pay such benefits, costs, charges and expenses, the Company
shall pay such benefits, costs, charges, and expenses from its general assets.

         7.2.     UNFUNDED STATUS

         The Plan at all times shall be entirely unfunded for purposes of the
Code and ERISA and no provision shall at any time be made with respect to
segregating any assets of a Participating Company for payment of any benefits
hereunder. Funds that may be invested through a trust described in Section 7.1
shall continue for all purposes to be part of the general assets of the
Participating Company which invested the funds. The Plan constitutes a mere
promise by the Company and the Participating Companies to make benefit payments,
if any, in the future. No Participant, Surviving Spouse, beneficiary or any
other person shall have any interest in any particular assets of a Participating
Company by reason of the right to receive a benefit under the Plan and to the
extent the Participant, Surviving Spouse, beneficiary or any other person
acquires a right to receive benefits under this Plan, such right shall be no
greater than the right of any unsecured general creditor of a Participating
Company.

         7.3.     FIDUCIARY RELATIONSHIP

         Nothing contained in the Plan, and no action taken pursuant to the
provisions of the Plan, shall create or be construed to create a trust or a
fiduciary relationship between or among the Company, any other Participating
Company, the Board, the Administrator, the Committee, any Participant, any
Surviving Spouse, beneficiary or any other person, except as provided in Section
8.4.

                                      -15-
<PAGE>   17
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       8.
                           ADMINISTRATION OF THE PLAN

         8.1.     ADMINISTRATION

         The Company shall be the "plan administrator" of the Plan as that term
is defined in ERISA.

         8.2.     INDEMNIFICATION

         Neither the Administrator, any member of the Board or of the Committee,
nor each other officer to whom any duty or power relating to the administration
or interpretation of the Plan may be allocated or delegated, shall be personally
liable by reason of any contract or other instrument executed by such individual
or on his or her behalf in his or her capacity as the Administrator or as a
member of the Board or of the Committee, nor for any mistake of judgment made in
good faith, and the Company shall indemnify and hold harmless the Administrator,
each member of the Board, each member of the Committee, and each other employee
or officer to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim) arising out of any act or omission to act in connection
with the Plan unless arising out of such person's own fraud or bad faith.

         8.3.     CLAIMS PROCEDURE

         (a) All claims for benefit payments under the Plan shall be submitted
in writing by the Participant, Surviving Spouse, Beneficiaries, or any
individual duly authorized by them (Claimant for purposes of this Section 8.3),
to the Administrator. The Administrator shall notify the Claimant in writing
within 90 days after receipt as to whether the claim has been granted or denied.
This period may be extended for up to an additional 90 days in unusual cases
provided that written notice of the extension is furnished to the Claimant prior
to the commencement of the extension. In the event the claim is denied, such
notice shall (i) set forth the specific reasons for denial, (ii) make reference
to the pertinent Plan provisions on which the denial is based, (iii) describe
any additional material or information necessary before the Claimant's request
may be acted upon, and (iv) explain the procedure for appealing the adverse
determination.

         (b) Any Claimant whose claim for benefits has been denied, in whole or
in part, may, within 60 days of receipt of any adverse benefit determination,
appeal such denial to the Committee. All appeals shall be in the form of a
written statement and shall (i) set forth all of the reasons in support of
favorable action on the appeal, (ii) identify those provisions of the Plan upon
which the Claimant is relying, and (iii) include copies of any other documents
or materials which may support favorable consideration of the claim. The
Committee shall decide the issues presented within 60 days after receipt of such
request, but this period may be extended for up to an additional 60 days in
unusual cases provided that written notice of the extension is furnished to the
Claimant prior to the commencement of the extension. The decision of the
Committee shall be set forth in writing, include specific reasons for the
decision, refer to pertinent Plan provisions on which the decision is based, and
shall be final and binding on all persons affected

                                      -16-
<PAGE>   18
                         AVAYA SUPPLEMENTAL PENSION PLAN

thereby.

         Any Claimant whose claim for benefits has been denied shall have such
further rights of review as are provided in ERISA Section 503, and the Committee
and Administrator shall retain such right, authority, and discretion as is
provided in or not expressly limited by ERISA Section 503.

         (c) The Committee shall serve as the final review committee, under the
Plan and ERISA, for the review of all appeals by Claimants whose initial claims
for benefits have been denied, in whole or in part, by the Administrator. The
Committee shall have the authority to determine conclusively for all parties any
and all questions arising from administration of the Plan, and shall have sole
and complete discretionary authority and control to manage the operation and
administration of the Plan, including, but not limited to, authorizing
disbursements according to the Plan, the determination of all questions relating
to eligibility for participation and benefits, interpretation of all Plan
provisions, determination of the amount and kind of benefits payable to any
Participant, Surviving Spouse or Beneficiary, and the construction of disputed
and doubtful terms. Such decisions by the Committee shall be conclusive and
binding on all parties and not subject to further review.

         8.4.     NAMED FIDUCIARIES

         The Company, the Committee, the Pension Plan Administrator(s) and each
Participating Company is each a named fiduciary as that term is used in ERISA
with respect to the particular duties and responsibilities herein provided to be
allocated to each of them.

         8.5.     ROLE OF THE COMMITTEE

         (a) The Committee shall have the specific powers elsewhere herein
granted to it and shall have such other powers as may be necessary in order to
enable it to administer the Plan, except for powers herein granted or provided
to be granted to others.

         (b) The procedures for the adoption of by-laws and rules of procedure
and for the employment of a secretary and assistants shall be the same as are
set forth in the Retirement Income Plan or the Pension Plan.

         8.6.     ALLOCATION OF RESPONSIBILITIES

         The Company may allocate responsibilities for the operation and
administration of the Plan consistent with the Plan's terms, including
allocation of responsibilities to the Committee and the other Participating
Companies. The Company and other named fiduciaries may designate in writing
other persons to carry out their respective responsibilities under the Plan, and
may employ persons to advise them with regard to any such responsibilities.

         8.7.     MULTIPLE CAPACITIES

         Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.

                                      -17-
<PAGE>   19
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                       9.
                            AMENDMENT AND TERMINATION

         9.1.     AMENDMENT AND TERMINATION

         Pursuant to ERISA Section 402(b)(3), the Board or its delegate (acting
pursuant to the Board's delegations of authority then in effect) may from time
to time amend, suspend, or terminate the Plan at any time. Plan amendments may
include, but are not limited to, elimination or reduction in the level or type
of benefits provided prospectively to any class or classes of Participants (and
any Surviving Spouse or designated beneficiary). Any and all Plan amendments may
be made without the consent of any Participant, Surviving Spouse or designated
beneficiary. Notwithstanding the foregoing, no such amendment, suspension, or
termination shall retroactively impair or otherwise adversely affect the rights
of any Participant, Surviving Spouse, beneficiary or other person to benefits
under the Plan, the Retirement Income Plan or the Pension Plan which have arisen
prior to the date of such action.

                                      -18-
<PAGE>   20
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                     ARTICLE
                                      10.
                               GENERAL PROVISIONS

         10.1.    BINDING EFFECT

         The Plan shall be binding upon and inure to the benefit of each
Participating Company and its successors and assigns, and to each Participant,
his or her successors, designees, Beneficiaries, designated annuitants, and
estate. The Plan shall also be binding upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. Nothing in the Plan shall preclude the Company from merging or
consolidating into or with, or transferring all or substantially all of its
assets to, another corporation which assumes the Plan and all obligations of the
Company hereunder. The Company agrees that it will make appropriate provision
for the preservation of the rights of Participants, Surviving Spouses and
beneficiaries under the Plan in any agreement or plan or reorganization into
which it may enter to effect any merger, consolidation, reorganization, or
transfer of assets. Upon such a merger, consolidation, reorganization, or
transfer of assets, the term "Participating Company" shall refer to such other
corporation and the Plan shall continue in full force and effect.

         10.2.    NO GUARANTEE OF EMPLOYMENT

         Neither the Plan nor any action taken hereunder shall be construed as
(i) a contract of employment or deemed to give any Participant the right to be
retained in the employment of a Participating Company, the right to any level of
compensation, or the right to future participation in the Plan; or (ii)
affecting the right of a Participating Company to discharge or dismiss any
Participant at any time.

         10.3.    TAX WITHHOLDING

         The Company or a Participating Company, as applicable, shall withhold
all federal, state, local, or other taxes required by law to be withheld from
all benefit payments under the Plan.

         10.4.    ASSIGNMENT OF BENEFITS

         No benefits under the Plan or any right or interest in such benefits
shall be assignable or subject in any manner to anticipation, alienation, sale,
transfer, claims of creditors, garnishment, pledge, execution, attachment or
encumbrance of any kind, including, but not limited to, pursuant to any domestic
relations order (within the meaning of ERISA Section 206(d)(3) and Code Section
414(p)(1)(B)) or judgment or claims for alimony, support, separate maintenance,
and claims in bankruptcy proceedings, and any such attempted disposition shall
be null and void.

         10.5.    FACILITY OF PAYMENT

         If the Administrator shall find that any person to whom any amount is
or was payable under the Plan is unable to care for his or her affairs because
of illness or accident, then any payment, or any part thereof, due to such
person (unless a prior claim therefor has been made by a duly appointed legal
representative), may, if the Administrator so directs the Company, be paid to
the same person or institution that the benefit with respect to such person is
paid or to be paid under the Retirement Income Plan or Pension Plan, if
applicable, or the Participant's Lawful

                                      -19-

<PAGE>   21
                         AVAYA SUPPLEMENTAL PENSION PLAN

Spouse, a child, a relative, an institution maintaining or having custody of
such person, or any other person deemed by the Administrator to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be in complete discharge of the liability of the Company, the
Board, the Committee, the Administrator, and the Participating Company therefor.
If any payment to which a Participant, Surviving Spouse or beneficiary is
entitled under this Plan is unclaimed or otherwise not subject to payment to the
person or persons so entitled, such amounts representing such payment or
payments shall be forfeited after a period of two years from the date the first
such payment was payable and shall not escheat to any state or revert to any
party; provided, however, that any such payment or payments shall be restored if
any person otherwise entitled to such payment or payments makes a valid claim.

         10.6.    SEVERABILITY

         If any section, clause, phrase, provision, or portion of this Plan or
the application thereof to any person or circumstance shall be invalid or
unenforceable under any applicable law, such event shall not affect or render
invalid or unenforceable the remainder of this Plan and shall not affect the
application of any section, clause, provision, or portion hereof to other
persons or circumstances.

         10.7.    PLAN YEAR

         For purposes of administering the Plan, each plan year shall begin on
January 1 and end on December 31.

         10.8.    HEADINGS

         The captions preceding the sections and articles hereof have been
inserted solely as a matter of convenience and shall not in any manner define or
limit the scope or intent of any provisions of the Plan.

         10.9.    GOVERNING LAW

         The Plan shall be governed by the laws of the State of New Jersey
(other than its conflict of laws provisions) from time to time in effect, except
to the extent such laws are preempted by the laws of the United States of
America.

         10.10.   ENTIRE PLAN

         This written Plan document is the final and exclusive statement of the
terms of this Plan, and any claim of right or entitlement under the Plan shall
be determined in accordance with its provisions pursuant to the procedures
described in Article 8. Unless otherwise authorized by the Board or its
delegate, no amendment or modification to this Plan shall be effective until
reduced to writing and adopted pursuant to Section 9.1.

         IN WITNESS WHEREOF, the Company has caused this Plan to be executed on
this ___ day of ___________, 2000.

                                      -20-
<PAGE>   22
                         AVAYA SUPPLEMENTAL PENSION PLAN

         By:__________________________

         Attest:________________________

                                      -21-
<PAGE>   23
                         AVAYA SUPPLEMENTAL PENSION PLAN

                                    APPENDIX
                                       A.
                           MID-CAREER PENSION BENEFIT

         (A) PARTICIPATION

         An individual is a Participant for purposes of the Mid-Career Pension
Benefit if (a) the individual was hired or rehired by a Participating Company
(or, with respect to Transferred Individuals, a "Participating Company" under a
predecessor plan) on or before July 16, 1997 and at age 35 or older, and (b) the
individual was hired or rehired by a Participating Company (or, with respect to
Transferred Individuals, a "Participating Company" under the Predecessor Plan)
at D-band or above, and (c) the individual's Term of Employment includes at
least one year of continuous employment for a Participating Company (or, with
respect to Transferred Individuals, a "Participating Company" under the
Predecessor Plan) at D-band or above, provided, however, that if an individual
was hired or rehired by a Participating Company (or, with respect to Transferred
Individuals, a "Participating Company" under a predecessor plan) on or after
November 18, 1981, such continuous employment was on a full-time basis (as
classified by the Company), and (d) the individual terminates employment at
Executive level or above; provided that "Participant" shall be limited to
Participants identified in the records of the Company as of December 31, 2000.

         "Executive level," formerly E-Level, E-band, Fifth level and SG-12
through SG-14, shall mean the level directly above Director level, formerly
D-band, or any equivalent salary grade or level as determined by the Company.

         (B) ELIGIBILITY

         (1) EMPLOYEE

         The word "Employee" shall mean for purposes of the Mid-Career Pension
Benefit a Participant, as defined above, (a) who was hired or rehired on or
after November 18, 1981, and (b) who has completed a term of employment of at
least five years, classified by the Company as full-time, for one or more
Participating Companies (including, with respect to term of employment before
October 1, 1996, with "Participating Companies" under a predecessor plan) at
Executive level or above, prior to the last day of the month in which he or she
reaches Normal Retirement Age, provided, however, that unless approved by the
Board, or its delegate, an individual is not an Employee if:

         (i) the individual (ineligible to participate in this Plan because he
or she was hired before age 35 and/or he or she was hired below D-band)
terminates employment with a Participating Company, and is rehired by a
Participating Company within one year of his or her termination of employment;

         (ii) the individual terminates employment with a company with which a
Participating Company has an Interchange Agreement, and is hired by a
Participating

                                      -22-
<PAGE>   24
                         AVAYA SUPPLEMENTAL PENSION PLAN

Company within one year of termination of employment, if the individual has not
waived coverage pursuant to the terms of the applicable Interchange Agreement;

         (iii) the individual terminates employment with a company in which a
Participating Company has an ownership interest, and is hired or rehired by a
Participating Company within one year of termination of employment, unless he or
she was a Participant in the Plan prior to employment with the Lucent
non-Controlled Group company or the nonparticipating Controlled Group company;
or

         (iv) the individual is employed by a company which is acquired by a
Participating Company.

         (2) SERVICE AND DISABILITY BENEFIT

                  Any Employee shall be eligible for a service benefit or a
disability benefit if he or she is eligible for a service or a disability
pension pursuant to the Service-Based Provisions of the Retirement Income Plan,
including an Employee who is eligible for a service pension as the result of a
Transition Leave of Absence or a Transition to Retirement as set forth in the
Retirement Income Plan.

         (3) DEFERRED BENEFIT

                  Any Employee is eligible for a deferred benefit if the
Employee is vested under the Retirement Income Plan or the Pension Plan but is
not eligible for either a service or a disability pension under the
Service-Based Provisions of the Retirement Income Plan or under the Pension
Plan.

         (C) CALCULATION OF MID-CAREER PENSION BENEFIT AMOUNT

                  The annual benefit amount will equal:

                  A x B x C

         Where:

                  A = Mid-Career Pension Credits;

                  B = One-half of the Retirement Income Plan Base Formula
Multiplier; and

                  C = The sum of Average Base Period Compensation and Post-Base
Period Compensation divided by total Term of Employment.

                  (I) MID-CAREER PENSION CREDITS

         For purposes of determining A above, "Mid-Career Pension Credits" is
defined as:

         (i) For those employees hired or rehired at Executive level or above,
and all of whose Term of Employment is at Executive level or above, Mid-Career
Pension Credits is the difference between 35 years and the Term of Employment
that could accrue if the employee

                                      -23-
<PAGE>   25
                         AVAYA SUPPLEMENTAL PENSION PLAN

worked to the later of Normal Retirement Age, retirement or termination of
employment, provided that the Mid-Career Pension Credits shall not exceed the
actual Term of Employment and shall not include any part-time service if the
employee was hired by the Company on or after November 18, 1981.

         (ii) For those employees hired or rehired at D-band or above, and whose
Term of Employment includes service at D-band or below, Mid-Career Pension
Credits is computed by multiplying the employee's Mid-Career Pension Credits as
defined in (i) above, by a fraction, the numerator of which shall be the number
of years and months of service completed with a Participating Company (or, with
respect to Transferred Individuals, a "Participating Company" under any
predecessor plan) at Executive level and above, and the denominator of which
shall be the actual Term of Employment at termination of employment, provided,
however, that for any Transferred Individual on the active roll of AT&T as of
August 29, 1991, his or her benefit under this Plan shall equal the greater of
the benefit calculated under the definition of Mid-Career Pension Credits in
this subsection (ii) as of the Transferred Individual's retirement or
termination of employment or the benefit accrued under a predecessor plan as of
August 29, 1991;

                  (II) RETIREMENT INCOME PLAN BASE FORMULA MULTIPLIER

         For purposes of determining B above, the "Management Plan Base Formula
Multiplier" shall be the numerical percentage which is multiplied by the
Employee's average annual Compensation for the Base Period, in the calculation
of the Employee's accrued pension benefit under the Retirement Income Plan.

         "Base Period" shall mean the pay base averaging period used to
calculate the Employee's benefit under the Retirement Income Plan.

                  (III) AVERAGE BASE PERIOD COMPENSATION

         For purposes of determining C above, "Average Base Period Compensation"
shall be the Employee's average annual Compensation for the Base Period used in
the calculation of the Employee's accrued benefit under the Retirement Income
Plan, except that for purposes of determining the benefit amount hereunder, the
Compensation Limitation shall be disregarded and the amount of the Short Term
Award and any salary deferrals made under the Avaya Deferred Compensation Plan
shall be included in Compensation.

                  (IV) POST-BASE PERIOD COMPENSATION

         For purposes of determining C above, "Post-Base Period Compensation"
shall be the Employee's Compensation after the Base Period used in the
calculation of the Employee's accrued benefit under the Retirement Income Plan,
except that for purposes of determining the benefit amount hereunder, the
Compensation Limitation shall be disregarded and the amount of the Short Term
Award and any salary deferrals made under the Avaya Deferred Compensation Plan
shall be included in Compensation.

                                      -24-

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