Exhibit 10.1
SEPARATION AGREEMENT AND GENERAL
RELEASE
This Separation Agreement and
General Release (“Separation Agreement”) is entered
into by and between Garry K. McGuire (“Executive” or
“you”) and Avaya Inc. (the “Company”), and
confirms the agreement that has been reached with you in connection
with your termination of employment with the Company.
1.
Transition and Termination of Employment . You agree
that, except as provided below, you shall cease to be employed by
the Company as a senior officer as of December 31, 2006, and until
such date you will in good faith and under the direction of the
Board of Directors (including any committees thereof) and the Chief
Executive Officer and any of their respective designees perform all
the duties of the position of Chief Financial Officer. During
the period from January 1, 2007 through March 30, 2007 (the
“Transition Period”), you shall continue as a
non-executive employee and shall perform the duties set forth in
paragraph 2a below. Your employment shall terminate as of the
close of business on March 30, 2007 (the “Separation
Date”). You further agree to execute any additional
documents necessary to effectuate the foregoing.
2.
In consideration of your execution of this Separation Agreement and
your compliance with its terms and conditions, and provided that
you execute the General Release attached hereto as Exhibit A and do
not revoke such General Release within the time frame provided
therein for such revocation, the Company agrees to pay or provide
you with the following benefits, all of which exceed any payment
and benefits to which you are otherwise entitled and are the
exclusive benefits and payments to which you are
entitled:
a.
In consideration of your continued services from January 1, 2007
through March 30, 2007, the Company shall continue to pay you at
your current rate of base salary, in accordance with the
Company’s payroll practices, and will continue your current
car allowance. In addition, during the Transition Period, you
shall continue to be entitled to participate in employee benefit
plans to which you are currently participating, in accordance with
the terms of such plans, as in effect from time to time.
During the Transition Period you agree to be available to provide
consultation and to respond promptly to the best of your abilities
to all inquiries relating to the Company, its finances or any of
its businesses. Further, the Company will continue to provide
home security services during the Transition Period.
b.
The Company shall pay you a Severance Amount of
$1,304,250.00. The Severance Amount shall be paid on July 3,
2007, unless you revoke this Separation Agreement and General
Release or the General Release attached hereto as Exhibit A in
accordance with the revocation terms set forth. There shall
be deducted from the payment of the
Severance Amount all applicable
federal, state and local withholding taxes and other appropriate
deductions.
c.
You will be eligible to receive a 2006 bonus, in an amount
determined by the Compensation Committee of the Board (the
“Committee”) in accordance with the terms of the
Company’s short term incentive plan, based on an individual
performance factor for you of 100% and the Company performance
factor as determined by the Committee. You will not be
eligible to receive any bonus in respect of the Company’s
2007 fiscal year.
d.
The Company shall provide you with continued coverage under the
Company’s group health, vision and dental plans, on a basis
that is substantially similar to the coverage provided to the
Company’s senior executives (including, without limitation,
with respect to the allocation of premium costs), for a period of
six months following the Separation Date. You may thereafter
elect to continue your group health coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act
(“COBRA”). In addition, the Company shall provide
you with (i) financial counseling services for three months
following the Separation Date and (ii) outplacement services
suitable to your position for a period of one year following the
Separation Date, at the Company’s sole cost.
e.
In consideration for your agreement to remain in the position of
CFO and to assist in assuring a successful transition the Company
agrees to pay you a one-time lump sum payment of $350,000.00,
payable on July 3, 2007. There shall be deducted from the
payment of the amount in this paragraph 2e all applicable federal,
state and local withholding taxes and other appropriate
deductions.
f.
You acknowledge and agree that you are party to certain Stock
Option agreements in which you have been granted stock options to
purchase shares of common stock of the Company (the
“Options”). The Company agrees that, subject to
the terms and conditions of the Option Agreements, you shall be
entitled to exercise all vested Options held by you as of the
Separation Date until the earlier to occur of the ninetieth day
following the Separation Date or the original expiration date of
the Options as set forth in the Option Agreements. You
acknowledge and agree that all Options that have not vested as of
the Separation Date shall terminate on the Separation
Date.
g.
The Company’s obligation to make the payments and to provide
the benefits set forth in paragraphs 2b through 2e above shall
cease as of the date of any breach of your obligations under the
restrictive covenants set forth in paragraph 7 hereof.
3.
Whether or not you execute this Separation Agreement, you will be
paid for any accrued but unused vacation days, and for previously
submitted un-reimbursed business expenses (in accordance with usual
Company
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guidelines and practices), to the
extent not theretofore paid. In addition, following the
Separation Date, you will be entitled to receive vested amounts
payable to you under the Company’s 401(k) plan and other
retirement and deferred compensation plans in accordance with the
terms of such plans and applicable law. Except as
specifically set forth herein, your participation in all Company
plans shall remain subject to the terms and conditions of such
plans as in effect from time to time and you agree that such terms
and conditions are binding on you and the Company.
4.
You agree that, as a condition to your receipt of the payments and
benefits set forth in paragraphs 2b through 2e, you will execute
the General Release attached hereto as Exhibit A on the Separation
Date. None of the payments or benefits described in
paragraphs 2b through 2e above shall commence prior to the
Effective Date, as defined in the General Release.
5.
a.
You agree that you will not disparage or encourage or induce others
to disparage any of the Company, its subsidiaries and affiliates,
together with all of their respective past and present directors,
managers, officers, shareholders, partners, employees, agents,
attorneys, servants and clients and each of their predecessors,
successors and assigns (collectively, the “Company Entities
and Persons”).
b.
The Company agrees that its Senior Officers will not disparage you
or encourage others to disparage you to third parties. For
purposes of this section 5b, “Senior Officer” shall
mean the CEO and the officers reporting directly to the
CEO.
c.
For the purposes of this Separation Agreement, the term
“disparage” as used in section 5a includes, without
limitation, comments or statements adversely affecting in any
manner (i) the conduct of the business of the Company Entities and
Persons or (ii) the business reputation of the Company Entities and
Persons. The term “disparage” as used in 5b
refers to comments or statements to third parties concerning the
Executive’s performance, reputation and conduct as CFO.
Nothing in this Separation Agreement is intended to or shall
prevent either party from providing testimony in response to a
valid subpoena, court order, regulatory request or other judicial,
administrative or legal process or otherwise as required by
law.
6.
a.
You agree that you will cooperate with the Company Entities and
Persons and its or their respective counsel, in connection with any
investigation, inquiry, administrative proceeding or litigation
relating to any matter in which you were involved or of which you
have knowledge by providing truthful information, provided that
such cooperation does not unreasonably interfere with your then
current professional and personal commitments. The Company
agrees to reimburse you promptly for reasonable expenses
necessarily incurred by you, in connection with your cooperation
pursuant to this paragraph.
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b.
You agree that, in the event you are subpoenaed by any person or
entity (including, but not limited to, any government agency) to
give testimony (in a deposition, court proceeding or otherwise)
which in any way relates to your employment by the Company, you
will give prompt notice of such request within two (2) business
days of such request to the General Counsel of the Company, Avaya
Inc. 211 Mount Airy Road 3W365, Basking Ridge, NJ 07920, and will
provide the Company with a reasonable opportunity to contest the
right of the requesting person or entity to such disclosure before
making such disclosure. Nothing in this provision shall
require you violate your obligation to comply with valid legal
process.
7.
a.
You recognize and acknowledge and agree that during your employment
with the Company you have had access to highly confidential and
proprietary information relating to the Company and/or Company
Entities and Person and trade secrets (“Proprietary
Information,” as described herein) and the use,
misappropriation or disclosure of Proprietary Information
would cause irreparable injury to the Company; and it is essential
to the protection of the Company’s good will and to the
maintenance of the Company’s competitive position that
Proprietary Information be kept secret and that you not disclose
Proprietary Information to others, or use any Proprietary
Information to your own advantage or the advantage of any third
parties. For purposes of this Separation Agreement, the term
“Proprietary Information” shall include any and all
information, in any form whatsoever, including but not limited to,
hard copy, computer floppy diskette, CD, CD-ROM drive, information
retained in electronic storage, or other information storage means,
relating to the Company’s technology; techniques; processes;
tools; research and development; market research, data and
strategy; and, information relating to sales, pricing and
customers, including customer-specific sales information, pricing
policies and strategies. You acknowledge and agree that your
obligations under this paragraph shall survive the Separation
Date.
b.
You agree that during the period that you perform services for the
Company and thereafter until April 1, 2008, you will not, directly
or indirectly:
i)
Own, control, manage, loan money to, represent, render any service
or advice to or act as an officer, director, employee, agent,
representative, partner or independent contractor of any
busines
