EXHIBIT 99.1
Warburg, Pincus Equity Partners, L.P.
Warburg, Pincus Netherlands Equity Partners I, C.V.
Warburg, Pincus Netherlands Equity Partners II, C.V.
Warburg, Pincus Netherlands Equity Partners III, C.V.
466 Lexington Avenue
New York, NY 10017
January 30, 2003
Avaya Inc.
211 Mount Airy Road
Basking Ridge, NJ. 07920
Re: EXCHANGE OFFER FOR AVAYA LYONS
Ladies & Gentlemen:
Reference is made to the Backstop Agreement, dated as of
December 23, 2002, as amended January 13, 2003 (the "Agreement"), by and among
Avaya Inc. ("Avaya") and the Investors signatories thereto. Capitalized terms
used but not defined in this letter shall have the meanings ascribed thereto in
the Agreement.
The Investors hereby waive their right under Section 3.01(b)
of the Agreement to receive any Series D Warrants at the Subsequent Closing. In
consideration of this waiver, Avaya hereby agrees that the Investor Cash Amount
shall be $17,596,190.50. Accordingly, the Investors hereby agree to promptly
transfer such Investor Cash Amount to the Exchange Agent.
Further, in connection with the Closing of the Exchange Offer
on and as of the date hereof, the Investors and Avaya desire to confirm the
application of the provisions of the Agreement as set forth below.
1. The Market Value of a share of Common Stock is $2.7356.
2. Pursuant to Section 3.01(c)(i)(A) of the Agreement, effective
as of February 12, 2003, the Exercise Price of the Series A
Warrants shall be reduced to $0.01.
3. Notwithstanding Section 3.01(c)(i)(A), no adjustment to the
Exercise Price of the Series B Warrants shall be made.
4. As contemplated by the last sentence of Section 3.01(c)(i) of
the Agreement, no adjustment to the number of shares of Common
Stock that may be purchased upon exercise of the Series A
Warrants and the Series B Warrants shall be made.
5. Pursuant to Section 3.02 of the Agreement, at the Subsequent
Closing, the Investors shall exercise for cash a portion of
the Series A Warrants to purchase an aggregate of 5,581,101
shares of Common Stock for aggregate cash consideration of
$55,811.01.
6. Pursuant to Section 3.03 of the Agreement, at the Subsequent
Closing, the Investors shall convert all LYONs acquired by
them into an aggregate of 1,588,548 shares of Common Stock.
7. Pursuant to Section 5.03 of the LYONs Indenture, Avaya shall
pay to the Investors an amount equal to $2.53, in lieu of
issuing a fractional share of Common Stock upon conversion of
the LYONs acquired by the Investors.
Please indicate your agreement by countersigning this letter where
indicated below.
[Signature pages follow]
Very truly yours,
WARBURG, PINCUS EQUITY PARTNERS, L.P.
By: WARBURG PINCUS & CO.
Its General Partner
By: /s/ Scott A. Arenare
--------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS I, C.V.
By: WARBURG PINCUS & CO.
Its General Partner
By: /s/ Scott A. Arenare
--------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS II, C.V.
By: WARBURG PINCUS & CO.
Its General Partner
By: /s/ Scott A. Arenare
--------------------
Name: Scott A. Arenare
Title: Partner
WARBURG, PINCUS NETHERLANDS EQUITY
PARTNERS III, C.V.
By: WARBURG, PINCUS & CO.
Its General Partner
By /s/ Scott A. Arenare
--------------------
Name: Scott A. Arenare
Title: Partner
Agreed and accepted as of the date hereof:
AVAYA INC.
By: /s/ Rhonda L. Seegal
--------------------
Name: Rhonda L. Seegal
Title: Vice President and Treasurer