THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Avaya Inc. (AV)

12/21/2005 Proxy Information

On October 2, 2000, the Company sold to Warburg Pincus Equity Partners, L.P. and certain affiliated investment funds (the “Warburg Pincus Entities”) four million shares of the Company’s Series B convertible participating preferred stock and warrants to purchase Common Stock for an aggregate purchase price of $400 million. In the October 2000 transaction, the Warburg Pincus Entities also obtained the right to nominate a Director to Avaya’s Board of Directors.

In March 2002, the Company and the Warburg Pincus Entities completed a series of transactions pursuant to which the Warburg Pincus Entities (i) converted all four million shares of the Series B preferred stock into Common Stock based on a reduced conversion price (ii) exercised some of their warrants and (iii) purchased additional shares of common stock in a private offering. Following the transactions described above, the Warburg Pincus entities owned 53,000,000 shares of Avaya Common Stock and continued to hold warrants to purchase additional shares of our Common Stock. The Warburg Pincus Entities retained the right to nominate a Director to Avaya’s Board of Directors, as long as that Director was independent of the Warburg Pincus Entities and was reasonably acceptable to our Board of Directors. In April 2002, the Warburg Pincus Entities exercised that contractual right and, accordingly, Mr. Terracciano was appointed to Avaya’s Board of Directors as their nominee.

On December 23, 2002, Avaya and the Warburg Pincus Entities commenced an exchange offer to purchase approximately 70%, of our then outstanding Liquid Yield Option Notes (“LYONsTM”) due 2021 (the “Exchange Offer”) (LYONsTM is a trademark of Merrill Lynch & Co., Inc.). In consideration of the Warburg Pincus Entities’ participation in the Exchange Offer, (i) we reduced the per share exercise price of certain warrants held by them, (ii) the Warburg Pincus Entities exercised for cash a portion of those warrants to purchase an aggregate of 5,581,101 shares of Common Stock and (iii) the Warburg Pincus Entities agreed to convert all LYONs acquired by them into an aggregate of 1,588,548 shares of our Common Stock.

Mr. Terracciano resigned from the Board of Directors effective December 19, 2002, prior to the decision of the Board of Directors to proceed with the Exchange Offer. Mr. Terracciano may be entitled to indemnification by affiliates of the Warburg Pincus Entities against certain liabilities that he might have incurred as a result of serving as a Director of Avaya prior to that resignation. Under the agreement we entered into with the Warburg Pincus Entities in connection with the Exchange Offer, the Warburg Pincus Entities retained the right to nominate one individual for election to our Board of Directors as long as the Warburg Pincus Entities maintain beneficial ownership of a certain number of shares of our Common Stock, and that individual may be affiliated with the Warburg Pincus Entities. In January 2003, the Warburg Pincus Entities nominated Mr. Landy.

In February 2003, the Board of Directors, on its own motion and independent of his prior nomination by the Warburg Pincus Entities, appointed Mr. Terracciano as a Director. Mr. Terracciano has no affiliation with the Warburg Pincus Entities.

In October 2003, the Warburg Pincus Entities disposed of 25,000,000 shares of our Common Stock, according to an amendment to Schedule 13D filed with the SEC on October 23, 2003.

On October 2, 2004, 1,143,564 warrants held by the Warburg Pincus Entities expired pursuant to their terms.

In August and September 2005, the Warburg Pincus Entities distributed to their partners an aggregate of 24,999,998 shares of our Common Stock, according to two amendments to Schedule 13D filed with the SEC on August 4, 2005 and September 2, 2005, respectively.

On October 2, 2005, 5,379,732 warrants held by the Warburg Pincus Entities expired pursuant to their terms.

In addition, in October 2005, the Warburg Pincus Entities (i) exercised the remaining warrants held by them, resulting in their acquisition of 5,236,861 shares of our Common Stock and (ii) advised the Company that they had distributed to their partners an aggregate of 15,299,993 shares of our Common Stock.

As a result of the foregoing, as of November 1, 2005, the total number of shares of our Common Stock beneficially owned by the Warburg Pincus Entities was 156,529 shares, which represented approximately 0.056% of our Common Stock outstanding on that date.

As previously reported, in 2004, Gyrographic Communications, Inc. (“Gyro”) was selected to provide certain services regarding marketing events and demand generation activities related to the launch of various Avaya products. Garry McGuire, Jr., the President of Gyro USA, a division of Gyro, is the son of Garry K. McGuire, Avaya’s Chief Financial Officer. The Company continued to obtain services from Gyro for similar events and activities during 2005. In June 2005, Daniel Peterson, the son of Avaya’s Chairman and Chief

Executive Officer, Donald K. Peterson, became employed by Gyro. During fiscal 2005 and fiscal 2004, the Company paid Gyro $4.6 million and $1.3 million, respectively, for its services. The terms, including pricing, on which the Company did business with Gyro during fiscal years 2004 and 2005 were comparable overall with those on which the Company obtained similar services from other vendors.

During a portion of fiscal 2005, Mr. Peterson served on the board of directors of Reynolds and Reynolds. During fiscal 2005, Reynolds and Reynolds was invoiced approximately $510,000 by the Company for maintenance of certain equipment and software under service agreements and for the continuation of other communications-related services for that company’s facilities. Mr. Odeen, who is Chairman of Avaya’s Compensation Committee and Chairman of Reynolds and Reynolds, served as the Interim Chief Executive Officer of Reynolds and Reynolds from July 2004 through January 2005. Mr. Odeen no longer holds that interim position, and Mr. Peterson no longer serves as a director of Reynolds and Reynolds.

1/4/2005 Proxy Information

On October 2, 2000, the Company sold to Warburg Pincus Equity Partners, L.P. and certain affiliated investment funds (the “Warburg Pincus Entities”) four million shares of the Company’s Series B convertible participating preferred stock and warrants to purchase Common Stock for an aggregate purchase price of $400 million. In the October 2000 transaction, the Warburg Pincus Entities also obtained the right to nominate a Director to Avaya’s Board of Directors.

Mr. Landy has been a managing member of Warburg Pincus LLC since October 2002 and has been co-President of Warburg Pincus LLC since April 2002. From September 2000 to April 2002, Mr. Landy served as an Executive Managing Director of Warburg Pincus LLC. Mr. Landy has been with Warburg Pincus LLC since 1985.

In March 2002, the Company and the Warburg Pincus Entities completed a series of transactions pursuant to which the Warburg Pincus Entities (i) converted all four million shares of the Series B preferred stock into Common Stock based on a reduced conversion price, (ii) exercised some of their warrants, and (iii) purchased additional shares of common stock in a private offering. Following the transactions described above, there were no shares of Series B preferred stock outstanding, and the Warburg Pincus entities owned 53,000,000 shares of Avaya Common Stock. In addition, the Warburg Pincus Entities continued to hold warrants to purchase additional shares of our Common Stock.

Following the March 2002 transaction described above, the Warburg Pincus Entities retained the right to nominate a Director to Avaya’s Board of Directors, as long as that Director was independent of the Warburg Pincus Entities and was reasonably acceptable to our Board of Directors. In April 2002, the Warburg Pincus Entities exercised that contractual right and, accordingly, Mr. Terracciano was appointed to Avaya’s Board of Directors as their nominee.

On December 23, 2002, Avaya and the Warburg Pincus Entities commenced an exchange offer to purchase approximately 70%, of our then outstanding Liquid Yield Option Notes (“LYONsTM”) due 2021 (the “Exchange Offer”) (LYONsTM is a trademark of Merrill Lynch & Co., Inc.). In consideration of the Warburg Pincus Entities’ participation in the Exchange Offer, (i) we reduced the per share exercise price of Series A warrants held by them, (ii) the Warburg Pincus Entities exercised for cash a portion of the Series A warrants to purchase an aggregate of 5,581,101 shares of common stock of Avaya and (iii) the Warburg Pincus Entities agreed to convert all LYONs acquired by them into an aggregate of 1,588,548 shares of common stock of Avaya.

Mr. Terracciano resigned from the Board of Directors effective December 19, 2002, prior to the decision of the Board of Directors to proceed with the Exchange Offer. Mr. Terracciano may be entitled to indemnification by affiliates of the Warburg Pincus Entities against certain liabilities that he might have incurred as a result of serving as a Director of Avaya prior to that resignation. Under the agreement we entered into with the Warburg Pincus Entities in connection with the Exchange Offer, the Warburg Pincus Entities retained the right to nominate one individual for election to our Board of Directors, and that individual may be affiliated with the Warburg Pincus Entities. In January 2003, the Warburg Pincus Entities nominated Mr. Joseph P. Landy.

In February 2003, the Board of Directors, on its own motion and independent of his prior nomination by the Warburg Pincus Entities, appointed Mr. Terracciano as a Director. Mr. Terracciano has no affiliation with the Warburg Pincus Entities.

In October 2003, the Warburg Pincus Entities disposed of 25,000,000 shares of our Common Stock, according to a Schedule 13D/A filed with the SEC. In addition, on October 2, 2004, 1,143,564 warrants held by the Warburg Pincus Entities expired pursuant to their terms.

As a result of the foregoing, as of October 2, 2004, the total number of shares of our Common Stock held by the Warburg Pincus Entities, including shares of our Common Stock that could be acquired upon the exercise of certain warrants, was 47,955,205 shares. For more information regarding the shares of common stock and warrants held by the Warburg Pincus Entities, see “Security Ownership of Certain Beneficial Owners and Management.”

Gyrographic Communications, Inc. (“Gyro”) provides global support of events and demand generation activities related to the launch of certain Avaya products. Garry McGuire, Jr., the President of Gyro USA, a division of Gyro, is the son of Garry K. McGuire, Avaya’s Chief Financial Officer. Gyro was selected as a vendor based on a number of factors, including its relevant communications industry experience, its small and medium business marketing experience, and its global network of offices for consistency of program execution. Pursuant to Avaya’s Code of Conduct, the existence of the familial relationship was fully disclosed to Mr. Peterson, Avaya’s CEO and Mr. McGuire’s supervisor, during the vendor selection process, and Mr. McGuire did not participate in the vendor selection process. Under the current contract with Gyro, Gyro would receive approximately $1.6 million for its services.

Mr. Peterson is a director of Reynolds and Reynolds. During fiscal 2004, Reynolds and Reynolds paid approximately $500,000 to Avaya for the purchase of certain equipment and software, installation and other services for that company’s facilities and for continuation of other communications-related services. Mr. Odeen is Chairman and Interim Chief Executive Officer of Reynolds and Reynolds and Chairman of Avaya’s Compensation Committee.

Prior to September 30, 2000, Avaya operated as a division of Lucent. Some of our Directors and/or executive officers own Lucent common stock and vested Lucent options that are significantly under water. Ownership of Lucent common stock and Lucent options by our Directors and executive officers could create, or appear to create, potential conflicts of interest when faced with decisions that affect both Lucent and Avaya. Mr. Stanzione is President Emeritus of Bell Laboratories, where he began his career in 1972. He served as Special Advisor to the Chairman of Lucent Technologies Inc. (Lucent) from October 1999 to October 2000. Mr. Stanzione served as Chief Operating Officer of Lucent from November 1997 to October 1999 and as the President of Bell Laboratories from January 1995 to October 1999.

1/9/2004 Proxy Information

Mr. Landy has been a managing member of Warburg Pincus LLC since October 2002 and has been co-President of Warburg Pincus LLC since January 2002. Since April 1983, Mr. Harris has been a Member and Managing Director of Warburg Pincus LLC and a partner of Warburg Pincus & Co. Mr. Schacht is a Senior Advisor of Lucent Technologies Inc. and Managing Director and Senior Advisor for E.M. Warburg, Pincus & Company, L.L.C. He served as Chairman of Avaya Inc. from February 2000 to October 2000.

On October 2, 2000, the Company sold to Warburg Pincus Equity Partners, L.P. and certain affiliated investment funds (the "Warburg Pincus Entities") four million shares of the Company's Series B convertible participating preferred stock and warrants to purchase Common Stock for an aggregate purchase price of $400 million. On March 21, 2002, the Company completed a series of transactions pursuant to which the Warburg Pincus Entities acquired 53,000,000 shares of Avaya Common Stock by (i) converting all four million shares of the Series B preferred stock into Common Stock based on a reduced conversion price, (ii) exercising some of their warrants, and (iii) purchasing additional shares of common stock in a private offering, all resulting in gross proceeds to Avaya of $100 million. Following the transactions described above, there were no shares of Series B preferred stock outstanding. In addition to the shares of Common Stock owned by the Warburg Pincus Entities following the March 21, 2002 transactions described above, the Warburg Pincus Entities continued to hold warrants to purchase additional shares of our Common Stock.

As part of the March 2002 transaction described above, the Warburg Pincus Entities obtained the right to nominate a Director who was independent of the Warburg Pincus Entities and was reasonably acceptable to our Board of Directors. In April 2002, the Warburg Pincus Entities exercised that contractual right and, accordingly, Mr. Terracciano was appointed to Avaya's Board of Directors as their nominee.

On December 23, 2002, Avaya and the Warburg Pincus Entities commenced an exchange offer to purchase approximately $661 million aggregate principal amount at maturity, or 70%, of our outstanding Liquid Yield Option Notes ("LYONs™") due 2021 (the "Exchange Offer").1 Under the terms of the Exchange Offer, holders of LYONs could elect to receive either cash consideration or a combination of cash plus shares of Common Stock. Of the $200 million of cash available in the Exchange Offer, no more than $100 million could be paid by Avaya and no more than $100 million could be paid by the Warburg Pincus Entities. Under the terms of the Exchange Offer, Avaya had the right to determine how much of the consideration paid in cash would be paid by us and how much would be paid by the Warburg Pincus Entities. The Exchange Offer terminated on January 28, 2003. In consideration of the Warburg Pincus Entities' participation in the Exchange Offer, (i) we reduced the per share exercise price of Series A warrants held by the Warburg Pincus Entities to $0.01, (ii) the Warburg Pincus Entities agreed to exercise for cash a portion of the Series A warrants to purchase an aggregate of 5,581,101 shares of common stock of Avaya for aggregate cash consideration of $55,811 and (iii) the Warburg Pincus Entities agreed to convert all LYONs acquired by them into an aggregate of 1,588,548 shares of common stock of Avaya.

On October 23, 2003, the Warburg Pincus Entities disposed of 25,000,000 shares of our Common Stock, according to a Schedule 13D/A filed with the SEC on that date.

As a result of the foregoing, as of October 23, 2003, the total number of shares of our Common Stock held by the Warburg Pincus Entities, including shares of our Common Stock that could be acquired upon the exercise of certain warrants, was 49,098,769 shares. For more information regarding the shares of common stock and warrants held by the Warburg Pincus Entities, see "Security Ownership of Certain Beneficial Owners and Management."

In February 2003, the Board of Directors, on its own motion and independent of his prior nomination by the Warburg Pincus Entities, appointed Mr. Terracciano as a Director. Mr. Terracciano has no affiliation with the Warburg Pincus Entities.

Prior to September 30, 2000, Avaya operated as a division of Lucent. Some of our Directors and executive officers own Lucent common stock and vested Lucent options. Ownership of Lucent common stock and Lucent options by our Directors and executive officers could create, or appear to create, potential conflicts of interest when faced with decisions that affect both Lucent and Avaya.

Mr. Stanzione is President Emeritus of Bell Laboratories and retired from Lucent Technologies Inc. in 2000. He was appointed Chief Operating Officer of Lucent in 1997. Mr. Thomas is a director of Lucent. Prior to September 30, 2000, Avaya operated as a division of Lucent. Some of our Directors and executive officers own Lucent common stock and vested Lucent options. Ownership of Lucent common stock and Lucent options by our Directors and executive officers could create, or appear to create, potential conflicts of interest when faced with decisions that affect both Lucent and Avaya.