Exhibit 99.2
SEPARATION AGREEMENT
This Separation Agreement ("this Agreement") is made as of May 4, 2001
("the Effective Date") by and between Lucent Technologies Inc. (hereinafter
referred to as "the Company") and Xxxxxxx X. Xxxxxxx (hereinafter referred to as
"Employee").
In consideration of the mutual promises and covenants hereinafter set
forth, the parties agree as follows:
1. Employee understands that her employment with the Company will end
on the Effective Date. Employee has 15 accrued vacation days which, together
with any unpaid salary through the Effective Date, will be paid to her promptly
after the Applicable Time (as defined in Paragraph 18) has expired, less
applicable withholdings as required by law. The Company will provide Employee
with the same medical, dental, disability, life insurance, car allowance and
financial counseling benefits (but not more than $30,000 in total for financial
counseling services provided after the Effective Date) as are provided to
actively employed senior officers of the Company for a period equal to the
earlier of 24 months from the Effective Date or the date that Employee commences
new full-time employment. For the period of time from October 1, 2000 through
the Effective Date she will be paid a prorated fiscal year 2001 Lucent Award and
Individual Award if but only if any senior officers of the Company who are then
members of the Operating Committee receive such 2001 Awards; her 2001 Awards, if
any, to be based on the same criteria and the same average percentage to her
target as the Committee shall determine for such senior officers and to be paid
in a lump sum at the same time, less applicable withholdings as required by law;
provided, however, that, if the Compensation Committee of the Company's Board of
Directors ("the Committee") has terminated the exercisability of Employee's
stock options as provided in Paragraph 2(b) prior to the date of payment to her
of such prorated 2001 Awards, then the Company shall have no obligation to pay
any such Awards to her.
2. (a) In exchange for the covenants and consideration given by
Employee under this Agreement, the Company further agrees to pay Employee in a
lump sum a payment of $3,300,000, less applicable withholdings as required by
law. The payment will be made to her not later than June 11, 2001.
(b) All stock options heretofore granted to Employee by the Company
will vest on the Effective Date and
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will be exercisable until the first anniversary of the Effective Date; provided,
however, that the Committee can terminate the exercisability of such options if
(i) the Committee makes a good faith, reasonable determination (at a meeting at
which Employee shall be permitted to attend and present her views) that Employee
has violated the provisions of Paragraph 9 or (ii) if Employee, after receiving
written notice from the Company that she has failed to reasonably cooperate with
the Company's defense of pending or future litigation relating to events
occurring before the Effective Date, does not correct, to the Committee's
reasonable satisfaction (the Committee having considered the pending issues and
Employee's then other scheduled commitments), such failure within five business
days after receiving such notice. If the Committee should terminate the
exercisability of Employee's options as provided above, it shall immediately
give written notice thereof to Employee.
(c) All non-vested Restricted Stock Units heretofore granted to
Employee by the Company shall be canceled on the Effective Date, and the Company
will pay Employee in a lump sum an amount equal to the total number of such
Restricted Stock Units multiplied by the closing price of the Company's Common
Stock on the New York Stock Exchange on the Effective Date. The Company will
also purchase from Employee at the same price the 14,936 shares of the Company's
Common Stock received by her with respect to already vested Restricted Stock
Units, against receipt by the Company of the stock certificate for such shares
endorsed in blank by Employee. The payments, less applicable withholdings as
required by law in connection with the payment for the cancelled Restricted
Stock Units, will be made to her not later than June 11, 2001.
3. Payments set forth in Paragraphs 1 and 2 will be paid
notwithstanding the death of Employee, except for the benefits covered by the
third sentence of Paragraph 1 which shall terminate in the event of her death.
4. The Company agrees to reimburse Employee for, or to pay directly,
her reasonable legal fees and expenses relating to the preparation and execution
of this Agreement.
5. Employee agrees that the terms of this Agreement are confidential to
the extent they reflect terms not previously or hereafter filed with the
Securities and Exchange Commission, and she further agrees never to
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disclose such terms to any present or former Company employees or
representatives, or any third parties, except as required by law or lawful court
order. This prohibition does not preclude disclosure to Employee's immediate
family, attorneys, accountants, financial or tax advisors, or any governmental
taxing authority, or any potential employer (which disclosure is expressly
limited to the provisions of Paragraphs 6 and 8). Employee agrees to advise
these individuals of the confidential nature of this Agreement and the facts
giving rise to it as well as their obligations to maintain the confidentiality
of this Agreement or the facts giving rise to it. In any event, if disclosure is
sought by way of a request or demand for a judicial order, Employee shall give
the Company prompt written notice thereof, and the Company may resist by all
legitimate means any attempt, of any kind whatsoever, to compel disclosure or
otherwise breach the confidentiality of the existence or terms of this Agreement
or the amount to be paid hereunder. Employee affirms that as of the date she
executes this Agreement she has not disclosed the nature or the terms of this
Agreement, except as heretofore described.
6. Employee agrees that she shall not, without the written consent of
the Senior Vice President - Human Resources of the Company, (i) within six
months after the Effective Date become an employee, director or consultant of
any of 11 competitors of the Company identified in a letter provided by the
Company to Employee pursuant to the letter between the parties dated April 21,
2000, or (ii) within 12 months after the Effective Date solicit or induce
employees of the Company at an officer, executive or director level to leave the
employment of the Company. If at any time within such period Employee violates
any provision of this Paragraph 6, any amounts remaining unpaid under the terms
of this Agreement as well as any benefits provided for in the Agreement (other
than those from tax qualified retirement or welfare plans), if any, shall be
immediately forfeited, and any amounts already paid in accordance herewith,
except $1,000, shall, at the sole discretion of the Company, be required to be
repaid by Employee to the Company within 10 business days of the Company's
request in writing therefor. In any such case, except for the provisions of
Paragraphs 2 and 6, all other provisions contained in this Agreement shall
remain in full effect. Any provisions relating to non-competition or
non-solicitation which may appear in any other agreement, document or plan
applicable to Employee shall not be applicable.
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7. In accordance with her existing and continuing obligations to the
Company, Employee agrees to return to the Company, on or before the Applicable
Time, all Company property or copies thereof, including, but not limited to,
files, records, computer access codes, computer programs, instruction manuals,
documents, business plans and other property which she received or prepared or
helped to prepare in connection with her employment with the Company, and to
assign to the Company all right, title and interest in such property, and any
other inventions, discoveries or works of authorship created by Employee during
the course of her employment; provided, however, that Employee may retain all
home office equipment and home security devices currently in her possession and
her rolodex or similar phone directories. Employee agrees to provide the Company
with a description of home office equipment (i.e., make and model) and serial
numbers within ten calendar days of the Applicable Time. The Company will
require purging of all Company information residing on such equipment. All
Company-provided remote access and internet access accounts or services will be
terminated effective immediately.
8. Employee affirms her obligation to keep all proprietary Company
information confidential and not to disclose it to any third party in the future
except as required by a lawful court order. As used in this Agreement, the term
"Proprietary Company Information" includes, but is not necessarily limited to,
technical, marketing, business, financial or other information which constitutes
trade secret information or information not available to competitors of the
Company, the use or disclosure of which might reasonably be construed to be
contrary to the interests of the Company.
9. Until the second anniversary of the Effective Date, Employee agrees
that neither she nor any person authorized by her to act on her behalf shall,
directly or indirectly, intentionally defame or disparage the Company or any
director or officer of the Company to the media or in a public forum or, with
the intent to damage the Company or any director or officer of the Company,
otherwise. During the two years after the termination date, neither the Company
(acting in a formal capacity through an authorized representative) nor any
officer or director of the Company shall, directly or indirectly, intentionally
defame or
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disparage the Employee to the media or in a public forum or, with the intent to
damage the Employee, otherwise.
10. Employee understands and agrees that a material violation of
Paragraph 8, relating to the use or disclosure of Proprietary Company
Information, prior to the second anniversary of the Effective Date will be
considered a material breach of this Agreement, for which Employee will forfeit
any moneys not already paid under this Agreement and/or be obligated to return
immediately all moneys which have already been paid under this Agreement -
except $1,000. The provisions of this Paragraph 10 in no way limit the Company's
right to also commence an action for damages and/or pursue other legal or
equitable remedies in the event Employee breaches any provision of this
Agreement. In the event that the Company takes such action, all of Employee's
other obligations under this Agreement shall remain in full force and effect.
11. In consideration of the payments set forth in this Agreement,
Employee, on behalf of herself and her heirs, executors and/or assigns, waives,
releases and forever discharges any and all claims and rights which she may have
against the Company and any of its subsidiaries or affiliated companies, and
their respective successors and assigns, current and former officers, agents,
board of directors members, representatives and employees, various benefits
committees, and their respective successors and assigns, heirs, executors and
personal and legal representatives (collectively referred to as "Lucent"), based
on any act, event or omission occurring before her execution of this Agreement
related to Employee's employment or termination thereof. Employee specifically
waives, releases and forever discharges any and all claims arising from or
relating to her employment or the termination thereof (including any claim for
attorneys' fees) based on any act, event or omission occurring before she
executes this Agreement including, but not limited to, any claims which could be
asserted now or in the future, under: common law, including, but not limited to,
breach of express or implied duties, wrongful termination, defamation, or
violation of public policy; any policies, practices, or procedures of the
Company; any federal or state statutes or regulations including, but not limited
to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. sec. 2000e
et seq., the Civil Rights Act of 1866 and 1871, the Age Discrimination in
Employment Act, 29 U.S.C. sec. 621 et
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seq., the Americans With Disabilities Act, 42 U.S.C. sec. 12101 et seq., the
Employee Retirement Income Security Act, 29 U.S.C. sec. 1001 et seq., the New
Jersey Law Against Discrimination and any state laws prohibiting discrimination;
any contract of employment, expressed or implied; any provision of the United
States or New Jersey Constitutions; and any provision of any other law, common
or statutory, of the United States, the State of New Jersey or any other state.
The foregoing release shall not cover rights of indemnification under the
Company's Certificate of Incorporation or otherwise, rights to directors and
officers liability insurance, rights to accrued pension and savings plan
benefits, and rights under this Agreement.
12. Employee agrees to forever refrain from instituting, maintaining or
prosecuting any claim, suit, action, proceeding or demand in any forum against
Lucent based upon any claims, controversies, actions, causes of action,
obligations or liabilities of any nature whatsoever, whether or not now or
hereafter known or suspected, or claims which Employee ever had, now has or
hereafter can have on account of any of the claims released and discharged under
this Agreement. The foregoing shall not be violated by Employee being part of a
class action, provided Employee opts out when given the opportunity to do so.
13. This Agreement shall not be construed as an admission by the
Company of any liability to Employee, and this Agreement shall not be offered,
used or considered as evidence in any proceeding except to the extent necessary
to enforce the terms of this Agreement. The Company specifically denies any
wrongdoing whatsoever with respect to Employee's employment or the termination
thereof.
14. Employee and the Company are bound by this Agreement. Anyone who
succeeds to their rights and responsibilities, such as, in the case of Employee,
her heirs or the executor of her estate, is also bound. This Agreement is made
for the benefit of the Company and all who succeed to its rights and
responsibilities, such as any successors or assigns.
15. Except to the extent expressly provided herein, nothing in this
Agreement shall be deemed to alter, amend, modify or otherwise affect any
employee benefit, compensation or other plan, program or policy maintained by
the Company or any provision thereof.
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16. In the event that any one or more of the provisions contained in
this Agreement shall for any reason be held to be unenforceable in any respect
under the law of any state or of the United States of America, such
unenforceabilty shall not affect the validity or enforceability of any other
provisions of this Agreement.
17. The construction, interpretation and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to
conflict of laws principles.
18. Employee understands that, pursuant to the Older Workers Benefit
Protection Act of 1990, she has the right to consult with an attorney before
signing this Agreement, she has 21 calendar days to consider the Agreement
before signing it and she may revoke this Agreement within seven calendar days
after signing it. Notice of revocation should be sent to Senior Vice President -
Human Resources. Employee further understands that this Agreement will not
become effective or enforceable until the seven day revocation period has
expired ("the Applicable Time") and that the payments provided in this Agreement
will not be paid until such period has expired.
19. This Agreement, consisting of 21 numbered paragraphs, constitute
the entire agreement between the Company and Employee with respect to the
subject matter hereof and shall not be amended, modified, or amplified without
specific written provision to that effect, signed by both parties. No oral
statement of any person shall, in any manner or degree, modify or otherwise
affect the terms and provisions of this Agreement. This Agreement, when it
becomes effective as provided in Paragraph 18, shall supersede in all respects
the employment letter dated April 21, 2000 between the Company and Employee
which shall terminate and be void and of no effect from and after such
effectiveness. In the event Employee is successful in pursuing any claim or
dispute arising out of this Agreement, the Company will pay all Employee's
reasonable attorneys' fees and costs.
20. While this Agreement is being entered into by the Company and
Employee without regard to and totally unrelated to any future change in
ownership or effective control of the Company or any future change in ownership
of
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a substantial portion of the assets of the Company (in each case within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended ("the
Code") and the regulations thereunder) (a "Change in Control") Employee has
requested that she be protected against any claim that might hereafter be made
by the Internal Revenue Service that an Excise Tax (as defined below) is owing
because of a future Change in Control and the Company has agreed to do so solely
to accommodate her request. The inclusion of this Section 20 shall in no way
indicate or be used by any third person to claim that this Agreement was entered
into in contemplation of a Change in Control.
If, following a Change in Control, it is determined that any payments
or benefits made or provided to Employee under this Agreement ("the Payments")
are subject to the excise tax imposed by Section 4999 of the Code ("the Excise
Tax"), the Company shall pay the Employee an additional amount (the "Gross-Up
Payment") which, after the imposition of all income, employment, excise and
other taxes thereon, is equal to the Excise Tax on the Payments. The
determination of whether a Gross-Up Payment is required and, if so, the amount
to be paid to Employee and the time of payment pursuant to this Paragraph 20
shall be made by an independent auditor ("the Auditor") selected by the Company
and Employee and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm which has not, during the two
years preceding the date of its selection, acted in any way on behalf of the
Company or any affiliate thereof. If Employee and the Company cannot agree on
the firm to serve as the Auditor, then Employee and the Company shall each
designate one accounting firm and those two firms shall jointly select the
accounting firm to serve as the Auditor. All fees and expenses of the Auditor
shall be borne solely by the Company. Any Gross-Up Payment shall be paid by the
Company to Employee within five calendar days of the receipt of the Auditor's
determination. Any determination by the Auditor shall be binding upon the
Company and Employee.
Since there may be uncertainty in the application of Sections 280G and
4999 of the Code at the time of the initial determination by the Auditor
hereunder, it is possible that the Gross-Up Payment made will have been an
amount more than the Company should have paid pursuant to this Paragraph 20 (the
"Overpayment") or that the Gross-Up Payment made, if any, will have been an
amount less than the
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Company should have paid pursuant to this Paragraph 20 (the "Underpayment"). In
the event that there is a final determination by the Internal Revenue Service,
or a final determination by a court of competent jurisdiction, that an
Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to the Employee which the Employee shall repay to the Company
together with interest at the applicable Federal rate provided for in Section
1274(b)(2) of the Code. In the event that there is a final determination by the
Internal Revenue Service, or a final determination by a court of competent
jurisdiction, that an Underpayment arises under this Agreement, any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Employee together with interest at the applicable Federal rate provided for in
Section 1274(b)(2)(B) of the Code.
Employee shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would result in an Underpayment
and would require the payment by the Company of a Gross-Up Payment or an
additional Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after Employee is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Employee shall not
pay such claim prior to the expiration of the 30 calendar day period following
the date on which Employee gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies Employee in writing prior to the expiration of
such period that it desires to contest such claim, Employee shall:
(a) give the Company any information reasonably requested by the
Company relating to such claim,
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order effectively to
contest such claim, and
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(d) permit the Company to participate in any proceeding relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Employee harmless, on
an after-tax basis, for any Excise Tax or income or employment tax (including
interest and penalties with respect thereto) imposed as a result of such
proceeding and payment of costs and expenses. Without limitation of the
foregoing provisions of this Paragraph 20, the Company shall control all
proceedings taken in connection with such contest, provided that the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder, and Employee shall be entitled to
settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
21. By signing this Agreement, Employee states that:
(a) She has read it and understands it and has had at least 21 days
to consider it and a period of seven days after executing it to revoke
same;
(b) She understands it and knows that she is giving up important
rights, including rights provided by the Older Workers Benefit Protection
Act of 1990, for consideration to which she was not already otherwise
entitled;
(c) She agrees with everything in it;
(d) She has consulted with an attorney; and
(e) She has signed it knowingly and voluntarily.
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IN WITNESS WHEREOF, the parties have executed this Agreement on May 18,
2001, effective as of May 4, 2001.
Lucent Technologies Inc.
by
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Name: Xxxxxx X. Xxxxxx
Title: Vice President-
Compensation, Benefits
and Health Services
Employee
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Xxxxxxx X. Xxxxxxx
THIS IS A LEGAL AGREEMENT,
RELEASE AND COVENANT NOT TO XXX
XXXX CAREFULLY BEFORE SIGNING
