<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 20, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LUCENT TECHNOLOGIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3408857
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
600 MOUNTAIN AVENUE
MURRAY HILL, NEW JERSEY 07974
(908) 582-8500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAMELA F. CRAVEN, ESQ.
VICE PRESIDENT -- LAW AND SECRETARY
LUCENT TECHNOLOGIES INC.
600 MOUNTAIN AVENUE
MURRAY HILL, NEW JERSEY 07974
(908) 582-8500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING PHONE NUMBER, OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times after the effective date of this registration statement as the
selling securityholders shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, par value $.01
per share, and related
preferred stock purchase
rights...................... 16,771,596 shares $57.3125 $961,222,096 $267,219.74
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based on the average of the high and low prices
of the common stock of Lucent Technologies Inc. as reported on the New York
Stock Exchange on October 18, 1999.
(2) No separate consideration will be received for the rights, which initially
will trade together with the common stock.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Information contained in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION DATED OCTOBER 20, 1999
PROSPECTUS
16,771,596 SHARES
LUCENT TECHNOLOGIES INC.
COMMON STOCK
------------------------
The 16,771,596 shares of our common stock offered by this prospectus were
originally issued by us in connection with our acquisition of Nexabit Networks,
Inc. and Kenan Systems Corporation. All the shares of our common stock offered
by this prospectus may be sold from time to time by or on behalf of certain
Lucent securityholders. See "Selling Securityholders" and "Plan of
Distribution." The shares were originally issued in private offerings made in
reliance on Regulation D and/or Section 4(2) of the Securities Act of 1933. In
connection with the acquisition of Nexabit and Kenan, we have agreed to register
the shares of our common stock offered by this prospectus. We will not receive
any of the proceeds from the sale of the shares by the selling securityholders.
The selling securityholders may sell all or a portion of the shares from
time to time on the New York Stock Exchange, in negotiated transactions or
otherwise, and at prices which will be determined by the prevailing market price
for the shares or in negotiated transactions.
Lucent's common stock is quoted on the New York Stock Exchange under the
symbol "LU." On October 19, 1999, the last sale price of Lucent's common stock
as reported on the New York Stock Exchange was $57 5/16.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is October , 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 3
Incorporation of Certain Documents by Reference............. 3
Special Note Regarding Forward-looking Statements........... 4
The Company................................................. 4
Selling Securityholders..................................... 5
Plan of Distribution........................................ 7
Use of Proceeds............................................. 9
Legal Matters............................................... 9
Experts..................................................... 9
</TABLE>
2
<PAGE> 4
WHERE YOU CAN FIND MORE INFORMATION
Lucent files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that Lucent files with the
Securities and Exchange Commission at the Securities and Exchange Commission's
public reference rooms at the following locations:
<TABLE>
<S> <C> <C>
PUBLIC REFERENCE ROOM NEW YORK REGIONAL OFFICE CHICAGO REGIONAL OFFICE
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, IL 60661-2511
</TABLE>
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
information on the operations of the public reference rooms. These Securities
and Exchange Commission filings are also available to the public from commercial
document retrieval services and at the Internet world wide web site maintained
by the Securities and Exchange Commission at "http://www.sec.gov." Reports,
proxy statements and other information concerning Lucent may also be inspected
at the offices of the New York Stock Exchange at 20 Broad Street, New York, New
York 10005.
Lucent filed a registration statement on Form S-3 with the Securities and
Exchange Commission to register the Lucent common stock to be sold by the
selling securityholders. This prospectus is a part of that registration
statement. As allowed by Securities and Exchange Commission rules, this
prospectus does not contain all the information you can find in Lucent's
registration statement or the exhibits to the registration statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows Lucent to "incorporate by
reference" information into this prospectus, which means that Lucent can
disclose important information to you by referring you to other documents filed
separately with the Securities and Exchange Commission. The information
incorporated by reference is considered part of this prospectus, except for any
information superseded by information contained directly in this prospectus or
in later filed documents incorporated by reference in this prospectus.
This prospectus incorporates by reference the documents set forth below
that Lucent has previously filed with the Securities and Exchange Commission.
These documents contain important business and financial information about
Lucent that is not included in or delivered with this prospectus.
<TABLE>
<CAPTION>
LUCENT SEC FILINGS (FILE NO. 1-11639) PERIOD
- ------------------------------------- ------
<S> <C>
1. Annual Report on Form 10-K Fiscal Year ended September 30, 1998, as
amended by Amendment No. 1 filed on Form
10-K/A on May 17, 1999
2. Quarterly Reports on Form 10-Q Quarters ended December 31, 1998, March 31,
1999 and June 30, 1999
3. Current Reports on Form 8-K Filed November 19, 1998, January 8, 1999,
January 15, 1999, March 5, 1999, as
amended by Amendment No. 1 filed on Form
8-K/A on May 18, 1999, June 28, 1999 and
August 2, 1999.
4. The description of Lucent common stock Filed under Section 12 of the Securities
and Lucent rights to acquire junior Exchange Act of 1934 on February 26, 1996,
preferred stock set forth in the Lucent as amended by Amendment No. 1 filed on
registration statement on Form 10 Form 10/A on March 12, 1996, Amendment No.
2 filed on March 22, 1996 and Amendment
No. 3 filed on Form 10/A on April 1, 1996,
including any amendments or reports filed
for the purpose of updating such
descriptions.
</TABLE>
3
<PAGE> 5
Lucent also incorporates by reference additional documents that may be
filed with the Securities and Exchange Commission under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act after the date of this prospectus and
prior to the time all of the securities offered by this prospectus are sold.
These include periodic reports, such as Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
If you are a Lucent stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through Lucent, the
Securities and Exchange Commission or the Securities and Exchange Commission's
Internet web site as described above. Documents incorporated by reference are
available from Lucent without charge, excluding all exhibits, except that if
Lucent has specifically incorporated by reference an exhibit in this prospectus,
the exhibit will also be provided without charge. You may obtain documents
incorporated by reference in this prospectus by requesting them in writing or by
telephone from Lucent at the following address:
Lucent Technologies
c/o The Bank of New York
Church Street Station
P.O. Box 11009
New York, New York 10286-1009
Telephone: 1-888-LUCENT6
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus is dated October , 1999. You should not assume that the information
contained in this prospectus is accurate as of any date other than that date.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents we incorporate by reference may contain
certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Statements in this prospectus that are not
historical facts are hereby identified as "forward-looking statements" for the
purpose of the safe harbor provided by Section 21E of the Securities Exchange
Act and Section 27A of the Securities Act. Words such as "estimate," "project,"
"plan," "intend," "expect," "believe" and similar expressions are intended to
identify forward-looking statements. These forward-looking statements are found
at various places throughout this prospectus and the other documents
incorporated by reference, including, but not limited to, Lucent's Annual Report
on Form 10-K for the year ended September 30, 1998, including any amendments.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. Lucent does not
undertake any obligation to publicly update or release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events.
THE COMPANY
Lucent designs, builds and delivers a wide range of public and private
networks, communications systems and software, data networking systems, business
telephone systems and microelectronic components. Lucent is a global leader in
the sale of public communications systems, and is a supplier of systems or
software to most of the world's largest network operators. Lucent is also a
global leader in the sale of business communications systems and in the sale of
microelectronic components for communications applications to manufacturers of
communications systems and computers. Lucent conducts its research and
development activities through Bell Laboratories, one of the world's foremost
industrial research and development organizations.
The principal executive offices of Lucent are located at 600 Mountain
Avenue, Murray Hill, New Jersey 07974 and its telephone number at that location
is (908) 582-8500.
4
<PAGE> 6
SELLING SECURITYHOLDERS
The following table sets forth (1) the number of shares of Lucent common
stock owned by each of the selling securityholders as of October 18, 1999; (2)
the percentage of outstanding shares of Lucent common stock represented by that
number of shares; and (3) the number of shares of Lucent common stock registered
for sale hereby. No estimate can be given as to the amount of shares that will
be held by the selling securityholders after completion of this offering because
the selling securityholders may offer all or some of the shares and because
there currently are no agreements, arrangements or understandings with respect
to the sale of any of the shares. The shares offered by this prospectus may be
offered from time to time by the selling securityholders named below.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF NUMBER OF SHARES
BENEFICIALLY OUTSTANDING REGISTERED FOR SALE
SELLING SECURITYHOLDER(1) OWNED(2) SHARES OWNED HEREBY(3)
- ------------------------- ------------ ------------- -------------------
<S> <C> <C> <C>
ACI Investment Group LLC 24,300 * 24,300
Mukesh Chatter(4) 2,915,016 * 2,915,016
Alexander Dingee(5) 408,474 * 408,474
Fidelity Investors II L.P. 288,462 * 288,462
FTT Ventures Limited 288,462 * 288,462
H&Q Nexabit Holdings, L.P. 1,017,000 * 1,017,000
Sigmund E. Herzstein 40,363 * 40,363
J.R. Fennell, L.P. 201,816 * 201,816
neoRam LLC 1,923,714 * 1,923,714
Nexabit Networks Incentive LLC 2,129,742 * 2,129,742
Kenan Sahin 25,757,576 * 3,093,436
Maria Stata Qualified Annuity Trust -- 1998 706,355 * 706,355
Raymond S. Stata 1,412,711 * 1,412,711
Raymond S. Stata Qualified Annuity Trust -- 1998 706,355 * 706,355
Thomvest Holdings Inc. 461,540 * 461,540
Vulcan Ventures Incorporated 1,153,850 * 1,153,850
</TABLE>
- ---------------
(1) The selling securityholders have sole voting and investment power with
respect to all shares of Lucent common stock shown as beneficially owned by
them, subject to community property laws, where applicable.
(2) 1,152,412 shares issued to the selling securityholders in connection with
the acquisition of Nexabit are being held in escrow until July 19, 2000 to
satisfy certain indemnification obligations of these selling
securityholders. If and to the extent any of the shares held in escrow are
returned to Lucent in satisfaction of such indemnification obligations of
these selling securityholders, the total number of shares beneficially owned
by these selling securityholders would be reduced accordingly, and the
number of shares beneficially owned by each of these selling securityholders
would be reduced according to his or her respective pro rata ownership of
the shares held in escrow.
(3) This registration statement also covers any additional shares of common
stock which become issuable in connection with the shares registered for
sale hereby by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of Lucent's outstanding shares of
common stock.
(4) Does not include (i) 2,129,742 shares of common stock owned by Nexabit
Networks Incentive LLC with respect to which Mukesh Chatter has sole voting
power and (ii) 1,923,714 shares of common stock owned by neoRam LLC with
respect to which Mukesh Chatter has shared voting power.
5
<PAGE> 7
(5) Does not include 1,923,714 shares of common stock owned by neoRam LLC with
respect to which, Alexander Dingee has shared voting power.
* Represents beneficial ownership of less than 1% of the outstanding shares of
Lucent after completion of the offering.
Kenan Sahin was a securityholder of Kenan prior to Lucent's acquisition of
Kenan. Each of the other selling securityholders was a securityholder of Nexabit
prior to Lucent's acquisition of Nexabit. Kenan Sahin is currently a Vice
President, Software Technologies, Bell Labs. Kenan Sahin was an officer and
director of Kenan prior to Lucent's acquisition of Kenan. Mukesh Chatter was the
President and Chief Executive Officer of Nexabit, Raymond S. Stata was the
Chairman of the Board of Directors of Nexabit and Alexander Dingee was the
Treasurer and a Director of Nexabit, in each case, prior to Lucent's acquisition
of Nexabit. None of the other selling securityholders were officers or directors
of Kenan or Nexabit prior to Lucent's acquisition of Kenan and Nexabit and none
of the other selling securityholders are officers or directors of Lucent. Except
as otherwise noted above, none of the selling securityholders has had a material
relationship with Lucent within the past three years other than as a result of
the ownership of the shares or other securities of Lucent.
6
<PAGE> 8
PLAN OF DISTRIBUTION
RESALES BY SELLING SECURITYHOLDERS
Lucent is registering the shares on behalf of the selling securityholders.
Any or all of the selling securityholders may offer the shares from time to
time, either in increments or in a single transaction. The selling
securityholders may also decide not to sell all the shares they are allowed to
sell under this prospectus. The selling securityholders will act independently
of Lucent in making decisions with respect to the timing, manner and size of
each sale.
DONEES, PLEDGEES AND DISTRIBUTEES
The term "selling securityholders" includes donees, persons who receive
shares from the selling securityholders after the date of this prospectus by
gift. The term also includes pledgees, persons who, upon contractual default by
the selling securityholders, may seize shares which the selling securityholders
pledged to such persons. The term also includes distributees who receive shares
from a selling securityholder after the date of this prospectus as a
distribution to members or partners of the selling securityholder.
COSTS AND COMMISSIONS
Lucent will pay all costs, expenses and fees in connection with the
registration of the shares. The selling securityholders will pay all brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares.
TYPES OF SALE TRANSACTIONS
The selling securityholders will act independently of Lucent in making
decisions with respect to the timing, manner and size of each sale. The selling
securityholders may sell the shares in one or more types of transactions (which
may include block transactions):
- on the NYSE,
- in negotiated transactions,
- through the writing of options on shares,
- short sales, or
- any combination of such methods of sale.
The shares may be sold at a fixed offering price, which may be changed, or
at market prices prevailing at the time of sale, or at negotiated prices. Such
transactions may or may not involve brokers or dealers.
SALES TO OR THROUGH BROKER-DEALERS
The selling securityholders may either sell shares directly to purchasers,
or sell shares to, or through, broker-dealers. These broker-dealers may act
either as an agent of the selling securityholders, or as a principal for the
broker-dealer's own account. Such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling securityholders
and/or the purchasers of shares. This compensation may be received both if the
broker-dealer acts as an agent or as a principal. This compensation might also
exceed customary commissions.
The selling securityholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling securityholders. The
selling securityholders also may sell shares short and re-deliver the shares to
close out such short positions. The selling securityholders may enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling securityholders
also may loan or pledge the shares to a broker-dealer. The
7
<PAGE> 9
broker-dealer may sell the shares so loaned, or upon a default the broker-dealer
may sell the pledged shares pursuant to this prospectus.
DEEMED UNDERWRITING COMPENSATION
The selling securityholders and any broker-dealers that act in connection
with the sale of shares might be deemed to be "underwriters" within the meaning
of Section 2(a)(11) of the Securities Act. Any commissions received by such
broker-dealers, and any profit on the resale of shares sold by them while acting
as principals, could be deemed to be underwriting discounts or commissions under
the Securities Act.
INDEMNIFICATION
The selling securityholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of shares
against certain liabilities, including liabilities arising under the Securities
Act.
PROSPECTUS DELIVERY REQUIREMENTS
Because a selling securityholder may be deemed an underwriter, the selling
securityholder must deliver this prospectus and any supplements to this
prospectus in the manner required by the Securities Act. This might include
delivery through the facilities of the NYSE in accordance with Rule 153 under
the Securities Act.
STATE REQUIREMENTS
Some states require that any shares sold in that state only be sold through
registered or licensed brokers or dealers. In addition, some states require that
the shares have been registered or qualified for sale in that state, or that
there exists an exemption from the registration or qualification requirements
and that the exemption has been complied with.
SALES UNDER RULE 144
The selling securityholders may also resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act.
To do so, the selling securityholders must meet the criteria and comply with the
requirements of Rule 144.
DISTRIBUTION ARRANGEMENTS WITH BROKER-DEALERS
If the selling securityholders notify Lucent that any material arrangement
has been entered into with a broker-dealer for the sale of shares through:
- a block trade,
- special offering,
- exchange distribution or secondary distribution, or
- a purchase by a broker or dealer,
then Lucent will file, if required, a supplement to this prospectus under Rule
424(b) under the Securities Act.
The supplement will disclose, to the extent required:
- the name of such selling securityholder and of the participating
broker-dealer(s),
- the number of shares involved,
- the price at which such shares were sold,
- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
8
<PAGE> 10
- that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this prospectus,
and any other facts material to the transaction.
USE OF PROCEEDS
Lucent will not receive any proceeds from the sale of the shares by the
selling securityholders.
LEGAL MATTERS
The legality of Lucent common stock offered by this prospectus will be
passed upon for Lucent by Pamela F. Craven, Vice President--Law and Secretary,
of Lucent. As of October 18, 1999, Pamela F. Craven owned 1,096 shares of Lucent
common stock and options and stock units for 282,400 shares of Lucent common
stock.
EXPERTS
The financial statements incorporated in this prospectus by reference in
Exhibit 99.1 to Lucent's Current Report on Form 8-K dated August 2, 1999, have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
9
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and the New York
Stock Exchange listing fee.
<TABLE>
<CAPTION>
TO BE PAID BY
THE REGISTRANT
--------------
<S> <C>
SEC Registration Fee........................................ $267,220
Accounting fees and expenses................................ $ 5,000
Legal fees and expenses..................................... $ 12,500
Printing Fees............................................... $ 2,000
Miscellaneous............................................... $ 3,280
--------
Total............................................. $290,000
</TABLE>
Lucent will pay all expenses of registration, issuance and distribution of the
shares being sold by the selling securityholders, excluding fees and expenses of
counsel to the selling securityholders and any underwriting commissions and
discounts, filing fees and transfer or other taxes, which shall be borne by the
selling securityholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The registrant's Certificate of Incorporation provides that a director of
the registrant shall not be personally liable to the registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except, if required by the Delaware General Corporation Law, for liability (1)
for any breach of the director's duty of loyalty to the registrant or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under Section 174 of
the Delaware General Corporation Law, which concerns unlawful payments of
dividends, stock purchases or redemptions or (4) for any transaction from which
the director derived an improper personal benefit. Neither the amendment nor
repeal of such provision shall eliminate or reduce the effect of such provision
in respect of any matter occurring, or any cause of action, suit or claim that,
but for such provision, would accrue or arise prior to such amendment or repeal.
While the registrant's Certificate of Incorporation provides directors with
protection from awards for monetary damages for breach of their duty of care, it
does not eliminate such duty. Accordingly, the registrant's Certificate of
Incorporation will have no effect on the availability of equitable remedies such
as an injunction or rescission based on a director's breach of his or her duty
of care.
The registrant's Certificate of Incorporation provides that each person who
was or is made a party to or is threatened to be made a party to or is involved
in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that such
person, or a person of whom such person is the legal representative, is or was a
director or officer of the registrant or is or was serving at the request of the
registrant as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the registrant to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the registrant to provide broader
indemnification rights than said law permitted the registrant to provide prior
to such amendment), against all expense, liability and loss reasonably incurred
or
II-1
<PAGE> 12
suffered by such person in connection therewith. Such right to indemnification
includes the right to have the registrant pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the Delaware General Corporation Law. Such rights are not
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the registrant's Certificate of Incorporation or
By-laws, agreement, vote of stockholders or disinterested directors or
otherwise. No repeal or modification of such provision will in any way diminish
or adversely affect the rights of any director, officer, employee or agent of
the registrant thereunder in respect of any occurrence or matter arising prior
to any such repeal or modification.
The registrant's Certificate of Incorporation also specifically authorizes
the registrant to maintain insurance and to grant similar indemnification rights
to employees or agents of the registrant. The directors and officers of the
registrant are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act,
which might be incurred by them in such capacities.
ITEM 16. EXHIBITS.
See exhibit index.
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission under Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
II-2
<PAGE> 13
Securities Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
D. The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Murray Hill, State of New Jersey on October 19, 1999.
LUCENT TECHNOLOGIES INC.
By: /s/ JAMES S. LUSK
-------------------------------------
Name: James S. Lusk
Title: Vice President and Comptroller
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<S> <C> <C> <C>
PRINCIPAL EXECUTIVE OFFICER: #
#
Richard A. McGinn Chairman of the Board and #
Chief Executive Officer #
#
PRINCIPAL FINANCIAL OFFICER: #
#
Donald K. Peterson Executive Vice President and #
Chief Financial Officer #
###### By: /s/ James S. Lusk
PRINCIPAL ACCOUNTING # ----------------------
OFFICER: # (James S. Lusk,
# attorney-in-fact)*
James S. Lusk Vice President and Controller #
#
DIRECTORS: # * by power of attorney
#
Paul A. Allaire #
Carla A. Hills # Date: October 19, 1999
Drew Lewis #
Richard A. McGinn #
Paul H. O'Neill #
Donald S. Perkins #
Henry B. Schacht #
Franklin A. Thomas #
John A. Young #
#
#
</TABLE>
II-4
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of June 24, 1999,
among Lucent, Neptune Acquisition Inc., and Nexabit.
2.2 Agreement and Plan of Merger, dated as of January 11, 1999,
among Lucent, Lando Acquisition, Inc., Kenan Sahin, and
Kenan.
4.1* Provisions of the Certificate of Incorporation of the
registrant, as amended effective February 17, 1999, that
define the rights of security holders of the registrant
(incorporated by reference to Exhibit (3)(i) to the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
4.2* Provisions of the By-Laws of the registrant, as amended
effective February 17, 1999, that define the rights of
security holders of the registrant (incorporated by
reference to Exhibit (3)(ii) to the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999).
4.3* Rights Agreement between the registrant and The Bank of New
York (successor to First Chicago Trust Company of New York),
as rights agent, dated as of April 4, 1996 (incorporated by
reference to Exhibit 4.2 to Registration Statement (No.
333-00703) on Form S-1).
4.4* Amendment to Rights Agreement between the registrant and The
Bank of New York (successor to First Chicago Trust Company
of New York), dated as of February 18, 1998 (incorporated by
reference to Exhibit (10)(i)5 to the registrant's Annual
Report on Form 10-K for the period ended September 30,
1998).
5.1 Opinion of Pamela F. Craven, Vice President -- Law and
Secretary of the registrant, as to the legality of the
securities to be issued.
23.1 Consent of Pamela F. Craven is contained in the opinion of
counsel filed as Exhibit 5.1.
23.2 Consent of PricewaterhouseCoopers LLP.
24.1 Powers of Attorney executed by officers and directors who
signed this registration statement.
</TABLE>
- ---------------
* Incorporated herein by reference.
II-5
<PAGE> 1
Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
NEPTUNE ACQUISITION INC.
AND
NEXABIT NETWORKS, INC.
Dated as of June 24, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. The Merger......................................................... 2
1.1 General................................................... 2
1.2 Certificate of Incorporation.............................. 2
1.3 By-Laws................................................... 3
1.4 Directors and Officers.................................... 3
1.5 Conversion of Securities.................................. 3
1.6 Adjustment of the Exchange Ratios......................... 4
1.7 Dissenting Shares......................................... 4
1.8 No Fractional Shares...................................... 4
1.9 Exchange Procedures; Distributions with Respect to
Unexchanged Shares; Stock Transfer Books.................. 5
1.10 Return of Exchange Fund................................... 7
1.11 No Further Ownership Rights in Company Capital Stock...... 7
1.12 Further Assurances........................................ 7
2. Approval by Stockholders........................................... 8
2.1 Approval by Stockholders.................................. 8
3. Representations and Warranties of the Company...................... 8
3.1 Organization.............................................. 8
3.2 Capitalization; Options and Other Rights.................. 8
3.3 Authority; Stockholder Vote............................... 9
3.4 Charter Documents......................................... 10
3.5 Financial Statements...................................... 11
3.6 Absence of Undisclosed Liabilities; Indebtedness.......... 11
3.7 Operations and Obligations................................ 11
3.8 Properties................................................ 13
3.9 Customers and Suppliers................................... 14
3.10 Contracts................................................. 14
3.11 Absence of Default........................................ 15
3.12 Litigation................................................ 15
3.13 Compliance with Law....................................... 16
3.14 Intellectual Property; Year 2000.......................... 16
3.15 Tax Matters............................................... 17
3.16 Employee Benefit Plans.................................... 18
3.17 Executive Employees....................................... 20
3.18 Employees................................................. 20
3.19 Environmental Laws........................................ 21
3.20 Bank Accounts, Letters of Credit and Powers of Attorney... 21
3.21 Subsidiaries.............................................. 21
3.22 Affiliate Transactions.................................... 21
3.23 Insurance................................................. 21
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.24 Leases............................................................ 22
3.25 Assets............................................................ 22
3.26 Minute Books...................................................... 22
3.27 Financial Projections............................................. 22
3.28 Complete Copies of Materials...................................... 22
3.29 Disclosure........................................................ 22
3.30 Pooling of Interests; Reorganization.............................. 23
3.31 Hart-Scott-Rodino Compliance...................................... 23
4. Representations and Warranties of Acquisition and Lucent................... 23
4.1 Organization...................................................... 23
4.2 Capital Structure................................................. 23
4.3 Authority......................................................... 23
4.4 Litigation........................................................ 24
4.5 SEC Filings; Lucent Financial Statements.......................... 25
4.6 Information Supplied.............................................. 25
4.7 Operations and Obligations........................................ 26
4.8 Interim Operations of Acquisition................................. 26
4.9 Pooling of Interests; Reorganization.............................. 26
5. Conduct Pending Closing.................................................... 26
5.1 Conduct of Business Pending Closing............................... 26
5.2 Prohibited Actions Pending Closing................................ 27
5.3 Access; Documents; Supplemental Information....................... 28
5.4 No Solicitation................................................... 29
5.5 Exemption from Registration; Other Actions........................ 30
5.6 Company Stock Options; Equity Incentive Plan...................... 30
5.7 Company Stock Plan................................................ 32
5.8 Employee Benefit Plans; Existing Agreement........................ 32
5.9 Indemnification................................................... 32
5.10 Preparation of Information Statement ............................. 33
5.11 Stock Exchange Listing............................................ 34
5.12 Affiliates........................................................ 34
5.13 Notification of Certain Matters................................... 34
5.14 Tax Returns; Cooperation.......................................... 34
5.15 Pooling of Interests; Reorganization.............................. 35
5.16 Working Capital Financing......................................... 35
5.17 Actions by the Parties............................................ 35
6. Conditions Precedent....................................................... 35
6.1 Conditions Precedent to Each Party's Obligation to
Effect the Merger................................................. 35
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
6.2 Conditions Precedent to Obligations of Acquisition and Lucent.. 36
6.3 Conditions Precedent to the Company's Obligations.............. 38
7. Survival of Representation and Warranties............................... 39
7.1 Representations and Warranties................................. 39
8. Indemnification......................................................... 40
8.1 Escrow Shares.................................................. 40
8.2 General Indemnification........................................ 40
8.3 Damages Threshold; Damages Cap................................. 40
8.4 Escrow Period; Release of Escrow Fund.......................... 40
8.5 Claims Upon Escrow Fund........................................ 41
8.6 Objections to Claims........................................... 41
8.7 Third-Party Claims............................................. 42
8.8 Company Stockholders' Representative........................... 42
9. Brokers' and Finders' Fees.............................................. 43
9.1 Company........................................................ 43
9.2 Acquisition and Lucent......................................... 43
10. Expenses................................................................ 43
11. Press Releases.......................................................... 44
12. Contents of Agreement; Parties in Interest; etc......................... 44
13. Assignment and Binding Effect........................................... 44
14. Termination............................................................. 44
15. Definitions............................................................. 45
16. Notices................................................................. 48
17. Amendment............................................................... 48
18. Governing Law........................................................... 49
19. No Benefit to Others.................................................... 49
20. Severability............................................................ 49
21. Section Headings........................................................ 49
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
22. Schedules and Exhibits..................................... 49
23. Extensions................................................. 49
24. Counterparts............................................... 49
</TABLE>
-iv-
<PAGE> 6
AGREEMENT AND
PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of June 24, 1999 by
and among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), NEPTUNE
ACQUISITION INC., a Delaware corporation ("Acquisition"), and NEXABIT NETWORKS,
INC., a Delaware corporation (the "Company").
BACKGROUND
A. The Company is a Delaware corporation with its registered office
located at 1013 Centre Road, Wilmington, Delaware and has authorized 124,000,000
shares of common stock, par value $.01 per share ("Company Common Stock"), and
1,000,000 shares of preferred stock, $.01 par value per share, of which 46,000
shares have been designated Series A Convertible Preferred Stock ("Series A
Preferred Stock"), 47,660 shares have been designated Series B Convertible
Preferred Stock ("Series B Preferred Stock"), 56,500 shares have been designated
Series C Convertible Preferred Stock ("Series C Preferred Stock") and 200,000
shares have been designated Series D Convertible Preferred Stock ("Series D
Preferred Stock"; the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock are collectively referred to
herein as the "Company Preferred Stock" and the Company Common Stock and the
Company Preferred Stock are collectively referred to herein as the "Company
Capital Stock"). The Company is engaged principally in the design, development,
production, marketing, distribution, maintenance and support of Internet
protocol switch/routers (the "Business").
B. Lucent is a Delaware corporation with its registered office located
at 1013 Centre Road, Wilmington, Delaware.
C. Acquisition is a wholly-owned subsidiary of Lucent and was formed to
merge with and into the Company so that as a result of the merger the Company
will survive and become a wholly-owned subsidiary of Lucent. Acquisition is a
Delaware corporation with its registered office located at 1013 Centre Road,
Wilmington, Delaware, and has authorized an aggregate of 1,000 shares of common
stock, no par value per share ("Acquisition Common Stock").
D. The Board of Directors of each of Acquisition and the Company has
determined that the merger of Acquisition with and into the Company (the
"Merger") in accordance with the provisions of the Delaware General Corporation
Law, as amended (the "DGCL"), and subject to the terms and conditions of this
Agreement and Plan of Merger, is in the best interests of Acquisition and the
Company and their respective stockholders.
E. The Boards of Directors of Acquisition and the Company have approved
this Agreement and the transactions contemplated hereby.
F. The parties intend that, for federal income tax purposes, the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code and that this Agreement shall constitute a plan of reorganization.
<PAGE> 7
G. The parties intend that, for financial accounting purposes, the
Merger shall be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. The Merger
1.1 General.
(a) Subject to the terms and conditions of this Agreement and
in accordance with the DGCL, at the Effective Time, (i) Acquisition shall be
merged with and into the Company, (ii) the separate corporate existence of
Acquisition shall cease and (iii) the Company shall be the surviving corporation
(the "Surviving Corporation") and shall continue its corporate existence under
the laws of the State of Delaware.
(b) The Merger shall become effective at the time of filing of
a Certificate of Merger, substantially in the form of Exhibit A attached hereto
(the "Certificate of Merger"), with the Secretary of State of the State of
Delaware in accordance with the provisions of Section 251 of the DGCL, or at
such later time as may be stated in the Certificate of Merger or such later date
as the parties may mutually agree (the "Effective Time"). Subject to the terms
and conditions of this Agreement, the Company and Acquisition shall duly execute
and file the Certificate of Merger with the Secretary of State of the State of
Delaware at the time of the Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Sidley & Austin, 875 Third Avenue, New York,
N.Y. at 10:00 A.M. two business days after the date on which the last of the
conditions set forth in Section 6 shall have been satisfied or waived, or on
such other date, time and place as the parties may mutually agree (the "Closing
Date").
(c) At the Effective Time, the effect of the Merger shall be
as provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and
Acquisition shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2 Certificate of Incorporation. The Certificate of
Incorporation of Acquisition, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided therein and by law except that Article I of
such Certificate of Incorporation shall be amended to read as follows:
"The name of the Corporation is: Nexabit Networks, Inc."
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<PAGE> 8
1.3 By-Laws. The By-laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided therein and by law.
1.4 Directors and Officers. From and after the Effective Time,
(a) the directors of Acquisition at the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving Corporation, and
(b) the officers of Acquisition at the Effective Time shall be the initial
officers of the Surviving Corporation, in each case, until their respective
successors are duly elected or appointed and qualified.
1.5 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Acquisition, the Company or
the holders of any of the following securities:
(a) Each issued and outstanding share of common stock of
Acquisition shall be converted into one validly issued, fully paid and
nonassessable share of Common Stock, no par value per share, of the Surviving
Corporation;
(b) Each share of Company Capital Stock held in the treasury
of the Company and each share of Company Capital Stock owned by Acquisition or
Lucent shall be canceled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Subject to the provisions of Sections 1.6 and 1.8, each
share of Company Capital Stock issued and outstanding immediately prior to the
Effective Time (other than (i) shares canceled in accordance with Section 1.5(b)
and (ii) Dissenting Shares) shall be converted into (A) in the case of each
share of Common Stock, 0.1800 (such number as adjusted in accordance with
Section 1.6 (the "Common Stock Exchange Ratio")), (B) in the case of each share
of Series A Preferred Stock, 40.3633 (such number as adjusted in accordance with
Section 1.6 (the "Series A Exchange Ratio")), (C) in the case of each share of
Series B Preferred Stock, 40.3633 (such number as adjusted in accordance with
Section 1.6 (the "Series B Exchange Ratio")), (D) in the case of each share of
Series C Preferred Stock, 18.0000 (such number as adjusted in accordance with
Section 1.6 (the "Series C Exchange Ratio")) and (E) in the case of each share
of Series D Preferred Stock, 11.5385 (such number as adjusted in accordance with
Section 1.6 (the "Series D Exchange Ratio"); each of the Common Stock Exchange
Ratio, the Series A Exchange Ratio, the Series B Exchange Ratio, the Series C
Exchange Ratio and the Series D Exchange Ratio is referred to as an "Exchange
Ratio" and collectively referred to as the "Exchange Ratios") of a validly
issued, fully paid and nonassessable share of Lucent Common Stock, including the
corresponding percentage right (the "Right") to purchase shares of junior
preferred stock, par value $1.00 per share, pursuant to the Rights Agreement
dated as of April 4, 1996 between Lucent and First Chicago Trust Company of New
York, as Rights Agent. All references in this Agreement to Lucent Common Stock
to be received in accordance with the Merger shall be deemed, from and after the
Effective Time, to include the Rights. As of the Effective Time, each share of
Company Capital Stock shall no longer be outstanding and shall
-3-
<PAGE> 9
automatically be canceled and retired, and each holder of a certificate
representing any shares of Company Capital Stock shall cease to have any rights
with respect thereto other than (i) the right to receive shares of Lucent Common
Stock to be issued in consideration therefor upon the surrender of such
certificate, (ii) any dividends and other distributions in accordance with
Section 1.9(c) and (iii) any cash, without interest, to be paid in lieu of any
fractional share of Lucent Common Stock in accordance with Section 1.8.
1.6 Adjustment of the Exchange Ratios. In the event that,
prior to the Effective Time, any stock split, combination, reclassification or
stock dividend with respect to the Lucent Common Stock, any change or conversion
of Lucent Common Stock into other securities or any other dividend or
distribution with respect to the Lucent Common Stock (other than regular
quarterly dividends) should occur or, if a record date with respect to any of
the foregoing should occur, appropriate and proportionate adjustments shall be
made to each Exchange Ratio, and thereafter all references to an Exchange Ratio
shall be deemed to be to such Exchange Ratio as so adjusted.
1.7 Dissenting Shares. (a) Notwithstanding any provision of
this Agreement to the contrary, shares of Company Capital Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall not have voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the consideration set forth in Section 1.5(c). Such stockholders shall
be entitled to receive such consideration as is determined to be due with
respect to such Dissenting Shares in accordance with the provisions of Section
262, except that all Dissenting Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such shares under Section 262 shall thereupon be deemed to have
been converted into and to have become exchangeable for, as of the Effective
Time, the right to receive the shares of Lucent Common Stock specified in
Section 1.5(c), without any interest thereon, upon surrender, in the manner
provided in Section 1.9, of the certificate or certificates that formerly
evidenced by such Dissenting Shares less the number of shares of Lucent Common
Stock allocable to such stockholder that have been deposited in the Escrow Fund
in respect of Company Capital Stock pursuant to Sections 1.9(b) and 8.1.
(b) The Company shall give Lucent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Lucent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
1.8 No Fractional Shares. No certificates or scrip
representing fractional shares of Lucent Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share shall not
entitle the record or beneficial owner thereof to vote or to any other rights as
a stockholder of Lucent. In lieu of receiving any such fractional share, the
-4-
<PAGE> 10
stockholder shall receive cash (without interest) in an amount rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price on
the New York Stock Exchange, Inc. (the "NYSE") of Lucent Common Stock (as
reported on the NYSE Composite Transactions Tape as such Tape is reported in the
Wall Street Journal or another recognized business publication) on the date
immediately preceding the date on which the Effective Time shall occur (or, if
the Lucent Common Stock did not trade on the NYSE on such prior date, the last
day of trading in Lucent Common Stock on the NYSE prior to the Effective Time)
by (ii) the fractional share to which such holder would otherwise be entitled.
Lucent shall make available to the Exchange Agent the cash necessary for this
purpose.
1.9 Exchange Procedures; Distributions with Respect to
Unexchanged Shares; Stock Transfer Books. (a) As of the Effective Time, Lucent
shall deposit with the Exchange Agent for the benefit of the holders of shares
of Company Capital Stock, certificates representing shares of the Lucent Common
Stock to be issued pursuant to Section 1.5(c) in exchange for the shares of
Company Capital Stock less the number of shares of Lucent Common Stock to be
deposited in the Escrow Fund pursuant to Section 8.1. Such shares of Lucent
Common Stock, together with any dividends or distributions with respect thereto
pursuant to Sections 1.8 and 1.9(c), are referred to herein as the "Exchange
Fund".
(b) As soon as practicable after the Effective Time, Lucent
shall use its reasonable best efforts to cause the Exchange Agent to send to
each Person who was, at the Effective Time, a holder of record of certificates
which represented outstanding Company Capital Stock (the "Certificates") which
shares were converted into the right to receive Lucent Common Stock pursuant to
Section 1.5(c), a letter of transmittal which (i) shall specify that delivery
shall be effected and risk of loss and title to such Certificates shall pass,
only upon actual delivery thereof to the Exchange Agent and (ii) shall contain
instructions for use in effecting the surrender of the Certificates. Upon
surrender to the Exchange Agent of Certificates for cancellation, together with
such letter of transmittal duly executed and such other documents as the
Exchange Agent may reasonably require, such holder shall be entitled to receive
in exchange therefor (A) a certificate representing the number of whole shares
of Lucent Common Stock into which the Company Capital Stock represented by the
surrendered Certificate shall have been converted at the Effective Time less
such holder's pro rata portion of the number of shares of Lucent Common Stock to
be deposited in the Escrow Fund on such holder's behalf pursuant to Section 8.1,
(B) cash in lieu of any fractional share of Lucent Common Stock in accordance
with Section 1.8 and (C) certain dividends and distributions in accordance with
Section 1.9(c), and the Certificates so surrendered shall then be canceled.
Subject to Section 1.8 and Section 1.9(c), until surrendered as contemplated by
this Section 1.9(b), each Certificate, from and after the Effective Time shall
be deemed to represent only the right to receive, upon such surrender, the
number of shares of Lucent Common Stock into which such Company Capital Stock
shall have been converted. As soon as practicable after the Effective Time, and
subject to and in accordance with the provisions of Section 8, Lucent shall
cause to be distributed to the Escrow Agent certificates representing 1,152,412
shares of Lucent Common Stock which shall be registered in the name of the
Escrow Agent as nominee for the holders of Certificates canceled pursuant to
this Section 1.9. Such shares shall be beneficially owned by such holders, shall
be held in escrow and shall be
-5-
<PAGE> 11
available to compensate Lucent as provided in Section 8. To the extent not used
for such purpose, such shares shall be released, as provided in Section 8.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to the Lucent Common Stock with a record date
after the Effective Time shall be paid to any holder entitled by reason of the
Merger to receive certificates representing Lucent Common Stock and no cash
payment in lieu of a fractional share of Lucent Common Stock shall be paid to
any such holder pursuant to Section 1.8 until such holder shall have surrendered
its Certificates pursuant to this Section 1.9. Subject to applicable law,
following surrender of any such Certificate, such holder shall be paid, in each
case, without interest, (i) the amount of any dividends or other distributions
theretofore paid with respect to the shares of Lucent Common Stock represented
by the certificate received by such holder and having a record date on or after
the Effective Time and a payment date prior to such surrender and (ii) at the
appropriate payment date or as promptly as practicable thereafter, the amount of
any dividends or other distributions payable with respect to such shares of
Lucent Common Stock and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or after such surrender.
(d) If any certificate representing shares of Lucent Common
Stock or any cash is to be issued or paid to any Person other than the
registered holder of the Certificate surrendered in exchange therefor, it shall
be a condition to such exchange that such surrendered Certificate shall be
properly endorsed and otherwise in proper form for transfer and such Person
either (i) shall pay to the Exchange Agent any transfer or other taxes required
as a result of the issuance of such certificates of Lucent Common Stock and the
distribution of such cash payment to such Person or (ii) shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Lucent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Company Capital Stock such amounts as Lucent or the
Exchange Agent is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Lucent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of Company Capital Stock in respect
of which such deduction and withholding was made by Lucent or the Exchange
Agent. All amounts in respect of taxes received or withheld by Lucent shall be
disposed of by Lucent in accordance with the Code or such state, local or
foreign tax law, as applicable.
(e) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and subject to such other
conditions as the Board of Directors of the Surviving Corporation may impose,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
Certificate the shares of Lucent Common Stock as determined under Section 1.5(c)
and pay any cash, dividends or other distributions as determined in accordance
with Sections 1.8 and 1.9(c) in respect of such Certificate; provided, that
Lucent may, in its reasonable discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificate to deliver a bond in such sum as it may reasonably require as
indemnity against any
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<PAGE> 12
claim that may be made against Lucent, the Surviving Corporation or the Exchange
Agent with respect to the Certificate alleged to have been lost, stolen or
destroyed.
(f) At the close of business on the day on which the Effective
Time occurs, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of shares of
Company Capital Stock on the records of the Company. From and after the
Effective Time, the holders of shares of Company Capital Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares except as otherwise provided herein or by applicable law.
1.10 Return of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the former holders of Company Capital Stock for
six months after the Effective Time shall be delivered to Lucent, upon its
request, and any such former holders who have not theretofore surrendered to the
Exchange Agent their Certificates in compliance herewith shall thereafter look
only to Lucent for payment of their claim for shares of Lucent Common Stock, any
cash in lieu of fractional shares of Lucent Common Stock and any dividends or
distributions with respect to such shares of Lucent Common Stock, and Lucent
agrees to promptly pay any such claims. None of Lucent, Acquisition, the
Exchange Agent or the Company shall be liable to any former holder of Company
Capital Stock for any such shares of Lucent Common Stock held in the Exchange
Fund (and any cash, dividends and distributions payable in respect thereof)
which are delivered to a public official pursuant to an official request under
any applicable abandoned property, escheat or similar law.
1.11 No Further Ownership Rights in Company Capital Stock. All
certificates representing shares of Lucent Common Stock delivered upon the
surrender for exchange of any Certificate in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8 or Section 1.9) shall be deemed
to have been delivered (and paid) in full satisfaction of all rights pertaining
to the Company Capital Stock previously represented by such Certificate.
1.12 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either the Company or Acquisition or (b) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper officers and directors
or their designees shall be authorized to execute and deliver, in the name and
on behalf of either the Company or Acquisition, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Company or
Acquisition, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Company or
Acquisition, as applicable, and otherwise to carry out the purposes of this
Agreement.
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<PAGE> 13
2. Approval by Stockholders
2.1 Approval by Stockholders. Each of Acquisition and the
Company shall either (i) call a meeting of its respective stockholders to be
held as promptly as practicable after the date hereof or (ii) solicit written
consents of its respective stockholders in lieu thereof for purposes of voting
upon this Agreement. Each of the Company and Acquisition will, through their
respective boards of directors, recommend to their respective stockholders
approval of this Agreement. The Company shall provide Lucent with a copy of all
materials to be distributed to its stockholders describing the transactions
contemplated hereby not later than one day prior to distribution. The Company,
Acquisition and Lucent each agree to execute and deliver such further documents
and instruments and to do such other acts and things as may be required to
complete all requisite corporate action in connection with the transactions
contemplated by this Agreement. All materials distributed to the stockholders of
the Company with respect to this Agreement, including any description of the
transactions contemplated hereunder, the recommendation of the Board of
Directors of the Company that such stockholders approve the Merger, the vote by
such stockholders to approve this Agreement and the Merger and any description
of appraisal rights available to such stockholders shall be in form and
substance reasonably acceptable to Lucent and shall be in accordance with
applicable law.
3. Representations and Warranties of the Company. The Company
represents and warrants to Acquisition and Lucent as follows:
3.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority and all
necessary governmental approval to carry on its business as it has been and is
now being conducted. Except as set forth in Schedule 3.1, the Company is duly
qualified or licensed as a foreign corporation to do business and is in good
standing in each jurisdiction where the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed and in good
standing could not reasonably be expected to have a Material Adverse Effect on
the Company.
3.2 Capitalization; Options and Other Rights. (a) The total
authorized shares of capital stock of the Company consists of (i) 124,000,000
shares of Company Common Stock, of which 37,022,900 shares are issued and
outstanding (the "Outstanding Common Shares") and 38,831,836 shares have been
reserved for the conversion of the Company Preferred Stock (the "Reserved Common
Shares" and collectively with the Outstanding Common Shares, the "Common
Shares"); and (ii) 1,000,000 shares of Company Preferred Stock, of which (A)
46,000 shares have been designated as Series A Preferred Stock and 46,000 shares
are issued and outstanding, (B) 47,660 shares have been designated as Series B
Preferred Stock and 47,660 shares are issued and outstanding, (C) 56,500 shares
have been designated as Series C Preferred Stock and 56,500 shares are issued
and outstanding and (D) 200,000 shares have been designated as Series D
Preferred Stock and 190,000 shares are issued and outstanding (collectively, the
"Preferred Shares"; the Common Shares and the Preferred Shares are collectively
referred to herein as the "Shares"). All the Outstanding Common Shares have been
duly and validly
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<PAGE> 14
authorized and issued and are fully paid and nonassessable and all the Reserved
Common Shares, when issued upon the conversion of the Company Preferred Stock,
will be duly and validly authorized and issued and fully paid and nonassessable.
All the Preferred Shares have been duly and validly authorized and issued and
are fully paid and nonassessable. None of the Shares has been issued and none of
such Company Capital Stock will be issued in violation of the preemptive rights
of any stockholder of the Company. The Outstanding Common Shares and Preferred
Shares have been issued, and the shares of Company Common Stock to be issued
upon the conversion of the Company Preferred Stock will be issued, in compliance
in all material respects with all applicable Federal and state securities laws
and regulations.
(b) Except as set forth in Section 3.2(a) and in Schedule
3.2(b), there are no existing agreements, subscriptions, options, warrants,
calls, commitments, trusts (voting or otherwise), or rights of any kind
whatsoever granting to any Person any interest in or the right to purchase or
otherwise acquire from the Company or granting to the Company any interest in or
the right to purchase or otherwise acquire from any Person, at any time, or upon
the occurrence of any stated event, any securities of the Company, whether or
not presently issued or outstanding, nor are there any outstanding securities of
the Company or any other entity which are convertible into or exchangeable for
other securities of the Company, nor are there any agreements, subscriptions,
options, warrants, calls, commitments or rights of any kind granting to any
Person any interest in or the right to purchase or otherwise acquire from the
Company or any other Person any securities so convertible or exchangeable, nor,
to the Best Knowledge of the Company, are there any proxies, agreements or
understandings with respect to the voting of the Shares or the direction of the
business operations or conduct of the Company, except as contemplated by this
Agreement.
(c) Schedule 3.2(c) sets forth a true and complete list of all
holders of Company Capital Stock (including the amount and type of security held
by such holder).
3.3 Authority; Stockholder Vote. (a) The Company has full
power and authority to execute, deliver and perform this Agreement and the
transactions contemplated hereunder. The execution, delivery and performance of
this Agreement by the Company has been duly authorized and approved by all
necessary corporate or other action and, except for (i) the approval of this
Agreement by the stockholders of the Company and (ii) the filing and recordation
of appropriate merger documents as required by the DGCL, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by the Company and is the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(b) The execution, delivery and performance by the Company of
this Agreement and the consummation of the Merger do not, and will not, (i)
violate or conflict with any provision of the Certificate of Incorporation or
By-laws of the Company, (ii) violate any law,
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<PAGE> 15
rule, regulation, order, writ, injunction, judgment or decree of any court,
governmental authority or regulatory agency applicable to the Company, except
for violations which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company, or (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any note, bond, indenture, lien, mortgage, lease,
permit, guaranty or other agreement, instrument or obligation to which the
Company is a party or by which any of its properties may be bound, except (A) as
set forth on Schedule 3.3(b) and (B) for violations, breaches or defaults which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
(c) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of this Agreement will not,
require any consent, approval, authorization or permission of, or filing with or
notification to any governmental or regulatory authority, domestic or foreign,
or any other Person except for (i) the filing and recordation of appropriate
merger documents as required by the DGCL and (ii) any such consent, approval,
authorization, permission, notice or filing which if not obtained or made could
not reasonably be expected to have a Material Adverse Effect on the Company.
(d) The Board of Directors of the Company (i) has approved
this Agreement and the transactions contemplated hereby, (ii) has determined
that the terms of the Merger are in the best interests of the stockholders of
the Company, and (iii) has resolved to recommend the approval of the Merger and
the adoption of this Agreement and the consummation of the transactions
contemplated hereby to the stockholders of the Company.
(e) Pursuant to the provisions of the DGCL, the Certificate of
Incorporation of the Company, the By-laws of the Company and any other
applicable law, the only approval of holders of Company Capital Stock required
to approve the Merger and to approve and adopt this Agreement and the
transactions contemplated hereby is the approval of (i) a majority of the
outstanding shares of Company Common Stock, Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock voting
together as a single class and (ii) 66.15% of the outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock voting together as a single class, and prior to Closing this
Agreement and the transactions contemplated hereby shall have been so approved.
3.4 Charter Documents. The Company has previously furnished to
Lucent a true, complete and correct copy of the Certificate of Incorporation and
the By-laws of the Company. The Certificate of Incorporation and By-laws of the
Company are in full force and effect. The Company is not in violation of any
provision of its Certificate of Incorporation or By-laws.
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<PAGE> 16
3.5 Financial Statements. (a) The Company has previously
furnished to Lucent (or will have furnished prior to July 10, 1999) true and
complete copies of the following financial statements of the Company (the
"Financial Statements"):
(i) audited balance sheets of the Company as of December 31,
1998 (the "Balance Sheet") and December 31, 1997, such balance sheets audited
with reports by PricewaterhouseCoopers LLP and Ernst & Young LLP, respectively;
and
(ii) audited statements of operations, stockholders' equity
and cash flows of the Company for the fiscal year ended December 31, 1998 and
the period from January 3, 1997 to December 31, 1997, such financial statements
audited with reports by PricewaterhouseCoopers LLP and Ernst & Young LLP,
respectively; and
(iii) the unaudited balance sheet of the Company as of April
30, 1999 (the "Unaudited Balance Sheet"); and
(iv) unaudited statements of operations and stockholders'
equity and cash flows of the Company for the four-month period ended April 30,
1999.
(b) The Financial Statements were prepared in accordance with
GAAP (except, in the case of the unaudited financial statements, for normal and
recurring year-end adjustments and the omission of footnotes). The Financial
Statements were prepared on the basis of the books and records of the Company
(in each case, as of the date of such Financial Statements) and present fairly,
in all material respects, the financial position of the Company as of the dates
thereof and the results of its operations and changes in stockholders' equity
and cash flows for each of the periods then ended in conformity with GAAP.
3.6 Absence of Undisclosed Liabilities; Indebtedness. (a)
Except as disclosed on Schedule 3.6(a) or as set forth in the notes to the
Financial Statements, the Company has no liability or obligation of any nature
(whether absolute, accrued or contingent or otherwise) which is materially in
excess of amounts shown or reserved therefor in the Financial Statements other
than (a) liabilities or obligations not required under GAAP on a basis
consistent with that of preceding accounting periods to be reported on such
Financial Statements and (b) liabilities or obligations incurred after the date
of the Unaudited Balance Sheet incurred in the ordinary course of business and
consistent with past practice.
(b) Except as disclosed on Schedule 3.6(b), the Company does
not have any Indebtedness.
3.7 Operations and Obligations. (a) Except as set forth in
Schedule 3.7(a) or reflected on the Unaudited Balance Sheet, since December 31,
1998,
(i) there has been no event or condition that has had or
reasonably could be expected to have a Material Adverse Effect on the
Company (other than as a result of (i) general economic conditions,
(ii) business and economic conditions generally affecting the
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<PAGE> 17
data networking industry or (iii) the announcement of the transactions
contemplated hereunder); and
(ii) there has been no impairment, damage, destruction, loss
or claim, whether or not covered by insurance, or condemnation or other
taking which could reasonably be expected to have a Material Adverse
Effect on the Company.
(b) Except (i) as set forth in Schedule 3.7(b) and (ii) for
actions required to be taken hereunder or approved in advance thereof by Lucent
in writing, since December 31, 1998, the Company has conducted its business only
in the ordinary course and consistent with past practice. Without limiting the
generality of the foregoing, since December 31, 1998, except as set forth in
such Schedule, the Company has not:
(i) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver, or granted any option, warrant or
other right to purchase, any of its capital stock or other equity
interest or any security convertible into its capital stock or other
equity interest;
(ii) other than in the ordinary course of business consistent
with past practice, issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver any bonds, notes or other debt
securities, or borrowed or agreed to borrow any funds or entered into
any lease the obligations of which, in accordance with generally
accepted accounting principles, would be capitalized;
(iii) paid any obligation or liability (absolute or
contingent) other than liabilities reflected or reserved against in the
Balance Sheet and liabilities incurred since December 31, 1998 in the
ordinary course of business consistent with past practice;
(iv) declared or made, or agreed to declare or make, any
payment of dividends or distributions to its stockholders or purchased
or redeemed, or agreed to purchase or redeem, any Company Capital
Stock;
(v) except in the ordinary course of business consistent with
past practice, made or permitted any material amendment or termination
of any agreement to which the Company is a party and is or should be
set forth on Schedule 3.10;
(vi) undertaken or committed to undertake capital expenditures
exceeding $100,000 for any single project or related series of
projects;
(vii) sold, leased (as lessor), transferred or otherwise
disposed of, mortgaged or pledged, or imposed or suffered to be imposed
any Lien on, any of the assets reflected on the Balance Sheet or any
assets acquired by the Company after December 31, 1998, except for
inventory and personal property sold or otherwise disposed of for fair
value in the ordinary course of its business consistent with past
practice and except for Permitted Liens;
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<PAGE> 18
(viii) canceled any debts owed to or claims held by the
Company (including the settlement of any claims or litigation) other
than in the ordinary course of its business consistent with past
practice;
(ix) accelerated or delayed collection of accounts receivable
in advance of or beyond their regular due dates or the dates when the
same would have been collected except in the ordinary course of its
business consistent with past practice;
(x) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when
such liability would have been paid except in the ordinary course of
its business consistent with past practice;
(xi) entered into or become committed to enter into any other
material transaction except in the ordinary course of business;
(xii) allowed the levels of supplies or other materials
included in the inventory of the Company to vary materially from the
levels customarily maintained in accordance with past practice;
(xiii) except for increases in the ordinary course of business
consistent with past practice, instituted any increase in any
compensation payable to any employee of the Company, amended any
Benefit Plan or modified any other benefits made available to any such
employees;
(xiv) made any change in the accounting principles or made any
material change in accounting practices used by the Company, in each
case, from those applied in the preparation of the Financial
Statements; or
(xv) taken any of the actions which, under Section 5.2, it is
prohibited from taking between the date hereof and the Closing Date.
(c) Except as set forth in Schedule 3.7(c), there are no
accrued and unpaid dividends or distributions with respect to the Company
Capital Stock.
3.8 Properties. (a) The Company has good and valid title to
all its properties and assets (other than Intellectual Property Rights and
Patents to the extent qualified by Section 3.14 ) reflected on the Balance Sheet
or acquired after the date thereof except for (i) properties and assets sold or
otherwise disposed of in the ordinary course of business since the date of such
Balance Sheet, (ii) leasehold interests, in which event the Company has a valid
leasehold interest and (iii) properties and assets which individually or in the
aggregate are not material to the operations of the business of the Company.
(b) The Company does not own any real property.
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<PAGE> 19
3.9 Customers and Suppliers. None of the Company's customers
which individually account for more than 5% of the Company's gross revenues
during the 12-month period immediately preceding the date hereof has terminated
or indicated that it intends to terminate any agreement with the Company. During
the 12-month period immediately preceding the date hereof, no material supplier
of the Company has indicated that it will stop, or decrease the rate of,
supplying materials, products or services to the Company.
3.10 Contracts. Schedule 3.10 lists any of the following not
otherwise listed on any other Schedule:
(a) each written contract or commitment which creates an
obligation on the part of the Company in excess of $50,000;
(b) each written debt instrument, including, without
limitation, any loan agreement, line of credit, promissory note, security
agreement or other evidence of indebtedness, where the Company is a lender,
borrower or guarantor, in a principal amount in excess of $50,000;
(c) each written contract or commitment restricting the
Company from engaging in any line of business;
(d) each written contract to which the Company is a party
which contains a change of control provision;
(e) each written contract or commitment in excess of $50,000
to which the Company is a party for any charitable contribution;
(f) each written joint venture or partnership agreement to
which the Company is a party;
(g) each written distributorship, sales agency, sales
representative, reseller or marketing, value added reseller, original equipment
manufacturing, technology transfer, source code license or other license or
other agreement containing the right to sublicense software and/or technology,
in each case, to which the Company is a party;
(h) each written agreement in excess of $50,000 to which the
Company is a party with respect to any assignment, discounting or reduction of
any receivables of the Company;
(i) each agreement, option or commitment or right with, or
held by, any third party to acquire any assets or properties, or any interest
therein, of the Company, having a value in excess of $50,000, except for
contracts for the sale of inventory, machinery or equipment in the ordinary
course of business;
(j) each written employment or consulting contract entered
into by the Company; and
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<PAGE> 20
(k) each supply agreement to which the Company is a party that
the Company could not readily replace without a material impact on the Company.
Except as set forth on Schedule 3.10, (i) there are no oral
contracts or commitments of the types described in this Section 3.10 which
create an obligation on the part of the Company which are individually in excess
of $50,000 or in the aggregate in excess of $100,000, (ii) there are no
contracts or commitments between the Company and any Affiliate, (iii) there are
no contracts, commitments or arrangements between the Company and any employee
which require the payment of any compensation upon the occurrence of any
specified contingency, (iv) there are no contracts or arrangements to which the
Company is a party, except this Agreement, which require notice to, the consent
of, or any payment of any compensation (whether as a penalty, liquidated damages
or otherwise) to any party with respect to the Merger or any of the transactions
contemplated hereby or in the event of the termination of such contract or
arrangement on or following the Effective Time, and (v) there are no contracts
to which the Company is a party which would create rights to any Person against
Lucent or any of its Affiliates (other than rights against the Company as in
effect on the Closing Date).
3.11 Absence of Default. Except as set forth in Schedule 3.11,
(a) each of the agreements listed on Schedules 3.10, 3.14, 3.17 and 3.24 that
creates obligations of any Person in excess of $50,000 constitutes a valid and
binding obligation of the parties thereto and is in full force and effect and
will continue in full force and effect after giving effect to the Merger, in
each case, without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without notice to, the consent, approval
or act of, or the making of any filing with, any other Person; (b) the Company
has fulfilled and performed in all material respects its obligations under each
such agreement to which it is a party to the extent such obligations are
required by the terms thereof to have been fulfilled or performed through the
date hereof; (c) the Company is not alleged in writing to be, and each other
party to any such agreement is not, to the Best Knowledge of the Company, in
default under, nor is there alleged in writing to be any basis for termination
of, any such agreement; (d) no event has occurred and no condition or state of
facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by the Company or, to the Best
Knowledge of the Company, by any such other party, and (e) the Company is not
currently renegotiating any such agreement or paying liquidated damages in lieu
of performance thereunder. Except as set forth in Schedule 3.28, the Company has
previously delivered complete and correct copies of all such agreements
(including all amendments) to Lucent.
3.12 Litigation. Except as set forth in Schedule 3.12, (i)
there are no actions, suits, arbitrations, legal or administrative proceedings
or investigations pending or, to the Best Knowledge of the Company, threatened
against the Company; and (ii) neither the Company nor the assets, properties or
business of the Company, is subject to any judgment, order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal. Except as set
forth in Schedule 3.12, the Company is not the plaintiff in any such proceeding
nor is the Company contemplating commencing legal action against any other
Person.
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<PAGE> 21
3.13 Compliance with Law. Except as set forth in Schedule
3.13:
(a) the Company has complied in all material respects with,
and is not in violation of, in any material respect, any law, ordinance or
governmental rule or regulation (collectively, "Laws") which is material to the
business of the Company; and
(b) the Company has obtained all licenses, permits,
certificates or other governmental authorizations (collectively
"Authorizations") necessary for the ownership or use of its assets and
properties or the conduct of its business other than Authorizations (i) which
are ministerial in nature and which the Company has no reason to believe would
not be issued in due course and (ii) which, the failure of the Company to
possess, would not subject the Company to penalties other than fines not to
exceed $20,000 in the aggregate ("Immaterial Authorizations"); and
(c) the Company has not received written notice of violation
of, or to the Best Knowledge of the Company, has not materially violated any
Laws to which it or its business is subject or any Authorization necessary for
the ownership or use of its assets and properties or the conduct of its business
(other than Immaterial Authorizations).
3.14 Intellectual Property; Year 2000. (a) The Company owns,
or is validly licensed or otherwise has the right to use, all trademarks, trade
secrets, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights which are material to the conduct of the
Business (the "Intellectual Property Rights"). Schedule 3.14(a) contains a list
of (i) patents and patent applications ("Patents"), (ii) trademark registrations
and applications and (iii) copyright registrations and applications owned by the
Company.
(b) To the Best Knowledge of the Company, the Company has not
interfered with, infringed upon, misappropriated or otherwise come into conflict
with any Patent or Intellectual Property Rights of any other Person. Except as
disclosed on Schedule 3.14(b), the Company has not received any written charge,
complaint, claim, demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that the Company must license
or refrain from using any Patents or Intellectual Property Rights of any other
Person) which has not been settled or otherwise fully resolved. Except as
disclosed on Schedule 3.14(b), to the Best Knowledge of the Designated Group, no
other Person has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Patents or Intellectual Property Rights of the
Company.
(c) Except as disclosed on Schedule 3.14(c), assuming that
Lucent continues to operate the business of the Company as presently conducted
by the Company, then, to the Company's Best Knowledge, Lucent's use of the
Patents or Intellectual Property Rights which are material to the conduct of the
business by the Company will not interfere with, infringe upon, misappropriate
or otherwise come into conflict with the Patents or Intellectual Property Rights
of any other Person by virtue of any change of control or prohibition of
assignment provisions in agreements between the Company and any such Person.
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<PAGE> 22
(d) Except as disclosed on Schedule 3.14(d), each employee,
agent, consultant, officer, director or contractor who has materially
contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company or
any predecessor in interest thereto either: (i) is a party to a "work-for-hire"
agreement under which the Company is deemed to be the original owner/author of
all property rights therein; or (ii) has executed an assignment or an agreement
to assign in favor of the Company or such predecessor in interest, as
applicable, all right, title and interest in such material, a copy of which
assignment or agreement to assign has been made available to Lucent.
(e) Except as disclosed on Schedule 3.14(e), the Company has
taken all reasonable steps with the intent of ensuring that its products
(including prior and current products and technology and products and technology
currently under development) will, when used in accordance with associated
documentation on a specified platform or platforms, be capable upon installation
of (i) operating in the same manner on dates in both the Twentieth and
Twenty-First centuries, (ii) accurately processing, providing and receiving date
data from, into and between the Twentieth and Twenty-First centuries, including
the years 1999 and 2000, and (iii) recognizing year 2000 as a leap year;
provided that all non-Company products (e.g., hardware, software and firmware)
used in or in combination with the Company's products, properly exchange data
with the Company's products in the same manner on dates in both the Twentieth
and Twenty-First centuries. Except as disclosed on Schedule 3.14(e), the Company
has taken all reasonable steps to assure that the year 2000 date change will not
adversely affect its operations or the systems and facilities that support the
operations of the Company, except as could not reasonably be expected to have a
Material Adverse Effect on the Company.
(f) Except as set forth on Schedule 3.14(f), (i) the Company
has not sold, assigned, transferred, licensed or sublicensed, or entered into
any contract to sell, assign, transfer or sublicense its Patents or Intellectual
Property Rights other than, in connection with the Company's assets, in the
ordinary course of business, permitting its customers to use any Patents or
Intellectual Property Rights embedded in its products and (ii) the Company has
not entered into any contract (oral or written) or other arrangement pursuant to
which the Company has agreed or is obligated to license, transfer or place in
escrow the source code for any of its products (prior or current) or restrict
the use of any of its Patents or Intellectual Property Rights.
(g) To the Best Knowledge of the Company, no Company
Stockholder or employee of the Company has any interest in any Intellectual
Property Rights or Patents (other than as a stockholder of the Company) that is
material to the business or operations of the Company.
3.15 Tax Matters. (a) Except as set forth on Schedule 3.15,
(i) the Company has filed all Tax Returns required to be filed; (ii) all such
Tax Returns are complete and accurate in all material respects and all Taxes
shown to be due on such Tax Returns have been timely paid; (iii) all Taxes
(whether or not shown on any Tax Return) owed by the Company have been timely
paid or the Company has established adequate reserves therefor; (iv) the Company
has not waived or been requested to waive any statute of limitations in respect
of Taxes; (v) the Tax Returns referred to in clause (i) have been examined by
the Internal Revenue Service or the appropriate
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<PAGE> 23
state, local or foreign taxing authority or the period for assessment of the
Taxes in respect of which such Tax Returns were required to be filed has
expired; (vi) there is no action, suit, investigation, audit, claim or
assessment pending or, to the Best Knowledge of the Company, proposed or
threatened with respect to Taxes of the Company; (vii) all deficiencies asserted
or assessments made as a result of any examination of the Tax Returns referred
to in clause (i) have been paid in full; (viii) Tax indemnity arrangements, if
any, will terminate prior to Closing and the Surviving Corporation will not have
any liability thereunder on or after Closing; (ix) there are no liens for Taxes
upon the assets of the Company except liens relating to current Taxes not yet
due; (x) all Taxes which the Company is required by law to withhold or to
collect for payment have been duly withheld and collected, and have been paid or
accrued, reserved against and entered on the books of the Company in accordance
with GAAP; and (xi) the Company is not or has not been a member of any group of
corporations filing a consolidated tax return for United States federal income
tax purposes.
(b) No consent to the application of Section 341(f)(2) of the
Code has been filed with respect to any property or assets held or acquired or
to be acquired by the Company.
(c) The Company (i) has not agreed to and is not required to
make any adjustment pursuant to Section 481(a) of the Code, and, to the Best
Knowledge of the Company, the Internal Revenue Service ("IRS") has not proposed
any such adjustment or change in accounting method with respect to the Company.
The Company does not have any application pending with the IRS or any other tax
authority requesting permission for any change in accounting method.
(d) Except as set forth on Schedule 3.15, the Company does not
own an interest in any (i) domestic international sales corporation, (ii)
foreign sales corporation, (iii) controlled foreign corporation, or (iv) passive
foreign investment company.
(e) The Company is not a party (other than as an investor) to
any industrial development bond.
(f) The Company has never been and is not a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(g) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" in a distribution of stock qualifying
for tax-free treatment under Section 355 of the Code (i) in the two years prior
to the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
3.16 Employee Benefit Plans. (a) Schedule 3.16(a) contains a
list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA)
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<PAGE> 24
(sometimes referred to as "Welfare Plans") and all other Benefit Plans (together
with the Pension Plans and Welfare Plans, the "Plans") maintained, or
contributed to, by the Company or any Person that, together with the Company, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code
(the Company and each such other Person, a "Commonly Controlled Entity") for the
benefit of any current or any former employees, officers or directors of the
Company. The Company has made available to Lucent true, complete and correct
copies of (i) each Plan (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (ii) the most recent annual report on Form 5500 filed
with the IRS with respect to each Plan (if any such report was required), (iii)
the most recent summary plan description for each Plan for which such summary
plan description is required, (iv) each trust agreement and group annuity
contract relating to any Plan and (v) all correspondence with the IRS or the
United States Department of Labor relating to any outstanding controversy or
audit. Except as could not reasonably be expected to have a Material Adverse
Effect on the Company, (i) each Plan has been administered in accordance with
its terms, and (ii) the Company and all Plans are in compliance with applicable
provisions of ERISA and the Code.
(b) All Pension Plans that are intended to be qualified under
Section 401(a) of the Code have been the subject of a determination opinion,
notification or advisory letter from the IRS to the effect that such Pension
Plans is so qualified and the trust thereunder is exempt from Federal income
taxes under Section 501(a) of the Code, and no such determination letter has
been revoked nor has any event occurred since the date of such Plan's most
recent determination letter that would adversely affect its qualification or
materially increase its costs.
(c) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed to or been obligated to contribute to any Plan that is
subject to Title IV of ERISA.
(d) The Company has no liability or obligation under any
Welfare Plan to provide life insurance or medical benefits after termination of
employment to any employee or dependent other than as required by Part 6 of
Title I of ERISA.
(e) Schedule 3.16(e) lists all outstanding Company Stock
Options, showing for each such Option: (i) the name of the optionee, (ii) the
number of shares issuable, (iii) the number of vested shares as of the date
hereof and immediately after giving effect to the Merger, (iv) the date of
expiration and (v) the exercise price. Schedule 3.16(e) lists all outstanding
Award Interests under the Equity Incentive Plan, showing for each such Award
Interest: (i) the name of the holder, (ii) the shares of membership interests of
Incentive LLC and the number of shares of Company Common Stock represented by
such membership interests, (iii) the number of vested shares as of the date
hereof and immediately after giving effect to the Merger, (iv) the date of
expiration and (v) the exercise price.
(f) Except as set forth in Schedule 3.16(f) or as provided by
this Agreement, no employee of the Company will be entitled to any additional
compensation or benefits or any acceleration of the time of payment or vesting
of any compensation or benefits under any Plan as a result of the transactions
contemplated by this Agreement.
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<PAGE> 25
(g) The deduction of any amount payable pursuant to the terms
of the Plans will not be subject to disallowance under Section 162 (m) of the
Code.
(h) Except as set forth in Schedule 3.16(h), the Company has
not issued any Company Common Stock under any restricted stock purchase
arrangement and the Company is not a party to any restricted stock purchase
arrangement. After giving effect to the Merger, the Company shall be subject to
the restricted stock purchase arrangements set forth in Schedule 3.16(h), which
Schedule also lists (i) the number of shares of restricted stock issuable and
(ii) the vesting schedule for the shares of restricted stock.
3.17 Executive Employees. (a) Schedule 3.17 lists the names,
titles and current annual salary rates of and bonuses paid or payable to all
present officers and employees of the Company whose 1998 annual base salary
exceeded $75,000 ("Executive Employees").
(b) Except as set forth in Schedules 3.16 or 3.17, the Company
has no employment agreement with, or maintains any employee benefit plan (within
the meaning of Section 3(3) of ERISA) with respect to, any of its Executive
Employees. There are no agreements with respect to Executive Employees which
would obligate the Company to make any payment or provide any benefit the
deduction of which is limited by Section 280G of the Code or that could be
subject to tax under Section 4999 of the Code.
3.18 Employees. (a) The Company has complied with all
applicable laws, rules and regulations respecting employment and employment
practices, terms and conditions of employment, wages and hours, other than
instances of non-compliance which, individually or in the aggregate, could not
be reasonably expected to result in a Material Adverse Effect on the Company,
and the Company is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any such laws, rules or regulations; (b) the Company
believes that the Company's relations with its employees is satisfactory; (c)
there are no controversies pending or, to the Best Knowledge of the Company,
threatened between the Company and any of its employees, which controversies
have or could reasonably be expected to have a Material Adverse Effect on the
Company; (d) the Company is not a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by the Company,
nor, to the Best Knowledge of the Company, are there any activities or
proceedings of any labor union to organize any such employees; (e) there are no
unfair labor practice complaints pending against the Company before the National
Labor Relations Board or any current union representation questions involving
employees of the Company; (f) there is no strike, slowdown, work stoppage or
lockout existing, or, to the Best Knowledge of the Company, threatened, by or
with respect to any employees of the Company; (g) no charges are pending before
the Equal Employment Opportunity Commission or any state, local or foreign
agency responsible for the prevention of unlawful employment practices with
respect to the Company; (h) there are no claims pending against the Company
before any workers' compensation board; and (i) the Company has not received
written notice that any federal, state, local or foreign agency responsible for
the enforcement of labor or employment laws intends to conduct an investigation
of or relating to the Company and, to the Best Knowledge of the Company, no such
investigation is in progress.
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<PAGE> 26
3.19 Environmental Laws. The Company has not received any
notice or claim (and is not aware of any facts that would form a reasonable
basis for any claim), or entered into any negotiations or agreements with any
other Person, and, to the Best Knowledge of the Company, the Company is not the
subject of any investigation by any governmental or regulatory authority,
domestic or foreign, relating to any material or potentially material liability
or remedial action under any Environmental Laws. There are no pending or, to the
Best Knowledge of the Company, threatened, actions, suits or proceedings against
the Company or any of its properties, assets or operations asserting any such
material liability or seeking any material remedial action in connection with
any Environmental Laws.
3.20 Bank Accounts, Letters of Credit and Powers of Attorney.
Schedule 3.20 lists (a) all bank accounts, lock boxes and safe deposit boxes
relating to the business and operations of the Company (including the name of
the Bank or other institution where such account or box is located and the name
of each authorized signatory thereto), (b) all outstanding letters of credit
issued by financial institutions for the account of the Company (setting forth,
in each case, the financial institution issuing such letter of credit, the
maximum amount available under such letter of credit, the terms (including the
expiration date) of such letter of credit and the party or parties in whose
favor such letter of credit was issued), and (c) the name and address of each
Person who has a power of attorney to act on behalf of the Company. The Company
has heretofore delivered to Lucent true, correct and complete copies of each
letter of credit and each power of attorney described on Schedule 3.20.
3.21 Subsidiaries. The Company has no Subsidiaries.
3.22 Affiliate Transactions. Except for the individuals listed
on Schedule 3.22, (i) no officer or director of the Company has any significant
interest in any Person that is engaged in a business which is in competition
with the Business of the Company, and (ii) no officer or director of the Company
is a supplier to, or a customer of, the Company, or is a party to any contract
listed on Schedule 3.10, 3.14 or 3.24.
3.23 Insurance. Schedule 3.23 sets forth a list of all
policies of insurance maintained, owned or held by the Company as of the date
hereof and a brief description of any outstanding claims under any of such
insurance policies. The Company shall use all commercially reasonable efforts to
keep such insurance or comparable insurance in full force and effect through the
Closing Date. The Company has complied in all material respects with each such
insurance policy to which it is a party and has not failed to give any notice or
present any claim thereunder in a due and timely manner, other than instances
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed in Schedule
3.23, to the Best Knowledge of the Company, the full policy limits (subject to
deductibles provided in such policies) are available and unimpaired under each
such policy and no insurer under any of such policies has a basis to void such
policy on grounds of non-disclosure on the part of the Company thereunder. Each
such policy is in full force and effect and will not in any way be affected by
or terminate or lapse by reason of the transactions contemplated by this
Agreement.
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<PAGE> 27
3.24 Leases. Schedule 3.24 lists all outstanding leases, both
capital and operating, or licenses, pursuant to which the Company has (i)
obtained the right to use or occupy any real or personal property where the
value of such personal property exceeds $25,000 in the case of any single lease
or $50,000 in the aggregate, or (ii) granted to any other Person the right to
use any property described on Schedule 3.25.
3.25 Assets. (a) Schedule 3.25 lists each material item of
machinery, equipment, furniture, vehicles or other personal property owned by
the Company having an original cost of $50,000 or more.
(b) Except as set forth in Schedule 3.25, the assets and
properties owned or leased by the Company constitute all the material assets and
properties used by the Company in the operation of its business (including all
books, records, computers and computer programs and data processing systems but
excluding Intellectual Property Rights and Patents) and are in good and
serviceable condition (subject, in each case, to normal wear and tear and
obsolescence and except for assets the book value of which does not exceed
$50,000 in the aggregate; provided that the foregoing wear, tear and
obsolescence shall not materially disrupt the business of the Company as
presently being conducted) and are suitable for the uses for which intended.
3.26 Minute Books. The minute books of the Company made
available to Lucent contain, in all material respects, a complete and accurate
summary of all meetings of directors and stockholders or actions by written
resolutions since the time of incorporation of the Company through the date of
this Agreement, and reflect all transactions referred to in such minutes and
resolutions accurately, except for omissions which are not material.
3.27 Financial Projections. The Company has made available to
Lucent certain financial projections with respect to the Company's business,
which projections were prepared by the Company based upon the assumptions
reflected therein. The Company makes no representation or warranty regarding the
accuracy of such projections or as to whether such projections will be achieved
or otherwise, except that the Company represents and warrants that such
projections were prepared in good faith and are based on assumptions believed by
it at the time such projections were presented to Lucent to be reasonable and
accurate.
3.28 Complete Copies of Materials. Except as set forth in
Schedule 3.28, the Company has delivered or made available true and complete
copies of each document that has been requested by Lucent or its counsel in
connection with their legal and accounting review of the Company.
3.29 Disclosure. None of the representations or warranties of
the Company contained herein, none of the information contained in the Schedules
referred to in this Section 3, and none of the other information or documents
furnished or to be furnished to Lucent or Acquisition by the Company pursuant to
any provision of this Agreement, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact herein or
therein necessary in order to make the statements contained herein or therein
not misleading in any material respect.
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<PAGE> 28
3.30 Pooling of Interests; Reorganization. The Company has not
(i) taken any action or failed to take any action which action or failure would
jeopardize the treatment of the Merger as a pooling of interests in accordance
with GAAP and the regulations and interpretations of the Securities and Exchange
Commission (the "SEC") for accounting purposes or (ii) taken any action or
failed to take any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
3.31 Hart-Scott-Rodino Compliance. The Company is its own
"ultimate parent entity" (as defined in 16 CFR Section 801.1(a)(3)). The
"person" (as defined in 16 CFR Section 801.1(a)(1)) in which the Company is
included does not have annual net sales or "total assets" (as each such term is
defined in 16 CFR Section 801.11)) of $10,000,000 or more.
4. Representations and Warranties of Acquisition and Lucent. Each of
Acquisition and Lucent represents and warrants to the Company as follows:
4.1 Organization. Each of Lucent and Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority and
all necessary governmental approvals to enter into and perform this Agreement
and the transactions contemplated hereby to be performed by it.
4.2 Capital Structure. The authorized capital stock of Lucent
consists of (i) 6,000,000,000 shares of common stock, par value $.01 per share
(the "Lucent Common Stock"), of which as of June 4, 1999 approximately
2,700,000,000 shares were issued and outstanding, and (ii) 250,000,000 shares of
preferred stock, par value $1.00 per share ("Lucent Authorized Preferred
Stock"), of which 15,000,000 shares have been designated Series A Junior
Participating Preferred Stock (the "Lucent Junior Preferred Stock") and no
shares are issued or outstanding. All the outstanding shares of Lucent Common
Stock have been duly and validly authorized and issued and are fully paid and
nonassessable. None of the outstanding shares of Lucent Common Stock has been
issued in violation of the preemptive rights of any stockholder of Lucent. The
shares of outstanding Lucent Common Stock were issued in compliance in all
material respects with all applicable federal and state securities laws and
regulations. The shares of Lucent Common Stock to be issued pursuant to the
Merger and upon exercise of the Adjusted Options will be duly and validly
authorized and issued, will be fully paid and non-assessable and will not be
issued in violation of the preemptive rights of any stockholder of Lucent.
4.3 Authority. (a) Each of Lucent and Acquisition has full
corporate power and authority to execute, deliver and perform this Agreement and
the transactions contemplated hereunder. The Board of Directors of Acquisition
has declared the Merger advisable and approved this Agreement and resolved to
recommend the approval of the Merger and adoption of this Agreement and the
consummation of the transactions contemplated hereby to the sole stockholder of
Acquisition. The execution, delivery and performance of this Agreement by each
of Lucent and Acquisition has been duly authorized and approved (i) in the case
of Acquisition, by its Board of Directors and (ii) in the case of Lucent, by all
necessary corporate action and, except for (A) the adoption of this Agreement by
the stockholders of Acquisition and (B) the filing of appropriate merger
documents as required by the DGCL, no other corporate proceedings other
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<PAGE> 29
than actions previously taken on the part of either Lucent or Acquisition are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly authorized, executed and delivered by each of
Lucent and Acquisition and is the legal, valid and binding obligation of each of
Lucent and Acquisition, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). The filing of the Registration Statement has been duly authorized by
Lucent.
(b) The execution, delivery and performance by each of Lucent
and Acquisition of this Agreement and the consummation of the Merger do not, and
will not, (i) violate or conflict with any provision of the Certificate of
Incorporation or By-laws of either Lucent or Acquisition, (ii) violate any law,
rule, regulation, order, writ, injunction, judgement or decree of any court,
governmental authority, or regulatory agency, except for violations which,
individually or in the aggregate, will not have a Material Adverse Effect on
Lucent and Acquisition taken as a whole, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, indenture, lien, mortgage, lease, permit, guaranty or
other agreement, instrument or obligation, oral or written, to which Lucent or
Acquisition is a party or by which any of the properties of Lucent or
Acquisition may be bound, except for violations, breaches or defaults which,
individually or in the aggregate, will not have a Material Adverse Effect on
Lucent, its Subsidiaries and Acquisition taken as a whole.
(c) The execution and delivery of this Agreement by each of
Lucent and Acquisition does not, and the performance by each of Lucent and
Acquisition of this Agreement will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, or any other Person except for (i)
the filing and recordation of appropriate merger documents as required by the
DGCL; (ii) any such consent, approval, authorization, permission, notice or
filing which is required under the Securities Act of 1933 (together with the
rules and regulations thereunder, the "Securities Act"), the Securities Exchange
Act of 1934 (together with the rules and regulations promulgated thereunder, the
"Exchange Act") and applicable state securities laws; and (iii) any such
consent, approval, authorization, permission, notice or filing which if not
obtained or made would not have a Material Adverse Effect on Lucent, its
Subsidiaries and Acquisition taken as a whole.
4.4 Litigation. (a) Neither Lucent nor Acquisition is a party
to any suit, action, arbitration or legal, administrative, governmental or other
proceeding or investigation pending or, to its knowledge threatened, which
reasonably could adversely affect or restrict its ability to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
(b) There is no judgment, order, writ, injunction or decree of
any court, governmental agency or arbitration tribunal to which Lucent or
Acquisition is subject which might
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<PAGE> 30
adversely affect or restrict its ability to consummate the transactions
contemplated by this Agreement or to perform its obligations hereunder.
4.5 SEC Filings; Lucent Financial Statements. (a) Since
October 1, 1997, Lucent has filed with the SEC all required reports, schedules,
forms, statements and other documents (including exhibits and all other
information incorporated therein) required under the Securities Act and the
Exchange Act (the "Lucent SEC Documents"). As of their respective dates, the
Lucent SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Lucent SEC
Documents and, except to the extent that information contained in any Lucent SEC
Document has been revised or superseded by a later filed Lucent SEC Document,
none of the Lucent SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Lucent included in the Lucent SEC Documents comply as to form, as
of their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of Lucent
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal recurring year-end audit
adjustments) and are consistent in all material respects with the books and
records of Lucent.
(b) Except for liabilities (i) reflected in such financial
statements or in the notes thereto, (ii) incurred in the ordinary course of
business consistent with past practice since September 30, 1998, the date of the
most recent audited financial statements of Lucent included in the Lucent SEC
Documents, (iii) incurred in connection with this Agreement or the transactions
contemplated hereby, or (iv) disclosed in Schedule 4.5, neither Lucent nor any
of its Subsidiaries has any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on
Lucent and its Subsidiaries taken as a whole.
4.6 Information Supplied. None of the information supplied or
to be supplied by Lucent specifically for inclusion or incorporation by
reference in the Registration Statement, at the time the Registration Statement
becomes effective under the Securities Act, will contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. The Registration
Statement will comply as to form in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Lucent with
respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference in the Registration Statement.
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<PAGE> 31
4.7 Operations and Obligations. Except as described in the
Lucent SEC Documents, since September 30, 1998, the date of the most recent
audited balance sheet of Lucent contained in the Lucent SEC Documents, (i)
except as a result of the transactions contemplated by this Agreement or in
connection with the acquisition by Lucent or any of its Subsidiaries of all or
substantially all the capital stock or all or substantially all the assets of
another Person, there has not been any development that has had or reasonably
would be expected to have a Material Adverse Effect on Lucent and its
Subsidiaries taken as a whole; (ii) there has not been any material change by
Lucent in its accounting methods, principles or practices, except as required by
changes in GAAP or any other change provided such other change could not
reasonably be expected to have a Material Adverse Effect on Lucent and its
Subsidiaries; or (iii) except as a result of the transactions contemplated by
this Agreement or in connection with the acquisition by Lucent or any of its
Subsidiaries of all or substantially all the capital stock or all or
substantially all the assets of another Person, there has not been any material
revaluation by Lucent of any of its assets including, without limitation,
writing down the value of capitalized software or inventory or writing off notes
or accounts receivable which would have a Material Adverse Effect.
4.8 Interim Operations of Acquisition. Acquisition was formed
solely for the purpose of engaging in the transactions contemplated hereby, has
engaged in no other business activities and has conducted its operations only as
contemplated hereby.
4.9 Pooling of Interests; Reorganization. Neither Lucent nor
any of its Subsidiaries has (i) taken any action or failed to take any action
which action or failure would jeopardize the treatment of the Merger as a
pooling of interests in accordance with GAAP and the regulations and
interpretations of the SEC for accounting purposes or (ii) taken any action or
failed to take any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
5. Conduct Pending Closing.
5.1 Conduct of Business Pending Closing. From the date hereof
until the Closing, the Company will:
(a) maintain its existence in good standing;
(b) maintain the general character of its business and
properties and conduct its business in the ordinary and usual manner consistent
with past practices, except as expressly permitted by this Agreement;
(c) maintain business and accounting records consistent with
past practices; and
(d) use its reasonable best efforts (i) to preserve its
business intact, (ii) to keep available to the Company the services of its
present officers and employees, and (iii) to preserve
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<PAGE> 32
for the Company the goodwill of its suppliers, customers and others having
business relations with the Company.
5.2 Prohibited Actions Pending Closing. Unless otherwise
provided for herein, approved by Lucent in writing or set forth in Schedule 5.2,
from the date hereof until the Closing, the Company shall not:
(a) amend or otherwise change its Certificate of Incorporation
or By-laws;
(b) issue or sell or authorize for issuance or sale, or grant
any options or make other agreements with respect to, any shares of its capital
stock or any other of its securities, except for the grant of stock options to
purchase up to 200,000 shares of Company Common Stock granted to employees of
the Company hired after the date hereof consistent with past practice and with
an exercise price reflecting such Company Common Stock's fair market value and
which were granted in the ordinary course of business and except for those
provisions of the agreement with the Exchange Agent which provisions are in
furtherance of this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
assets; (ii) incur any indebtedness for borrowed money (other than as
contemplated by Section 5.16) or issue any debt securities or assume, guarantee
or endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances, except for interest
and fees on Indebtedness set forth on Schedule 3.6 incurred in the ordinary
course of business and consistent with past practice; (iii) enter into any
contract or agreement (or series of related contracts or agreements) in excess
of $100,000 other than in the ordinary course of business, consistent with past
practice; (iv) authorize any capital commitment which is in excess of $25,000 or
capital expenditures which are, in the aggregate, in excess of $100,000; or (v)
enter into or amend any contract, agreement, commitment or arrangement with
respect to any matter set forth in this Section 5.2(e);
(f) mortgage, pledge or subject to Lien, any of its assets or
properties or agree to do so except for Permitted Liens;
(g) assume, guarantee or otherwise become responsible for the
obligations of any other Person or agree to so do;
(h) enter into or agree to enter into or terminate (prior to
the expiration date thereof) any employment agreement;
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(i) increase the compensation or benefits payable or to become
payable to its officers or employees, except for increases to employees of the
Company who are not officers in the ordinary course of business and in
accordance with past practices in salaries or wages of employees of the Company
who are not officers of the Company, or grant any severance or termination pay
to, or enter into any severance agreement with any director, officer or other
employee of the Company, or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any such director, officer or employee;
(j) take any action, other than in the ordinary course of
business and consistent with past practice, with respect to accounting policies
or procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivables);
(k) make any material Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
(l) settle or compromise any pending or threatened suit,
action or claim which is material or which relates to any of the transactions
contemplated by this Agreement;
(m) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),
other than (i) the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or reserved
against in the Balance Sheet or subsequently incurred in the ordinary course of
business and consistent with past practice and (ii) other claims, liabilities or
obligations (qualified as aforesaid) that in the aggregate do not exceed $25,000
and as to which the Company's failure to so pay, discharge or satisfy could not
reasonably be expected to have a Material Adverse Effect on the Company;
(n) except in connection with the sale of the Company's
products in the ordinary course of business and consistent with past practice,
sell, assign, transfer, license, sublicense, pledge or otherwise encumber any of
the Intellectual Property Rights; or
(o) announce an intention, commit or agree to do any of the
foregoing.
5.3 Access; Documents; Supplemental Information. (a) From and
after the date hereof until the Closing, the Company shall afford and, with
respect to clause (ii) below, shall use its reasonable best efforts to cause the
independent certified public accountants for the Company to afford, (i) to the
officers, independent certified public accountants, counsel and other
representatives of Acquisition and Lucent, upon reasonable notice free and full
access at all reasonable times to the properties, books and records, including
tax returns filed and those in preparation of the Company, and the right to
consult with the officers, employees, accountants, counsel and other
representatives of the Company in order that Acquisition and Lucent may have
full opportunity to make such investigations as they shall reasonably desire to
make of the
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operations, properties, business, financial condition and prospects of the
Company, (ii) to the independent certified public accountants of Acquisition and
Lucent, free and full access at all reasonable times to the work papers and
other records of the accountants relating to the Company, and (iii) to
Acquisition and Lucent and their representatives, such additional financial and
operating data and other information as to the properties, operations, business,
financial condition and prospects of the Company as Acquisition and Lucent shall
from time to time reasonably require.
(b) From the date of this Agreement through and including the
Closing, Acquisition, Lucent and the Company agree to furnish to each other
copies of any notices, documents, requests, court papers, or other materials
received from any governmental agency or any other third party with respect to
the transactions contemplated by this Agreement, except where it is obvious from
such notice, document, request, court paper or other material that the other
party was already furnished with a copy thereof.
(c) The Company shall deliver to Lucent, without charge, the
following financial information (the "Supplemental Financial Information"): (i)
within 45 days after each fiscal quarter ending after the date hereof and prior
to the Effective Time, the unaudited balance sheet of the Company as of the end
of such quarter and the unaudited statements of income, stockholders' equity and
cash flows of the Company for such quarter and for the portion of the fiscal
year then completed, (ii) within 90 days after each fiscal year ending after the
date hereof and prior to the Effective Time, the audited balance sheet of the
Company as of the end of such year and the audited statements of income,
stockholders' equity and cash flows of the Company for such year, in each case
prepared in accordance with GAAP certified by PricewaterhouseCoopers LLP, and
(iii) promptly upon the reasonable request by Lucent, such additional financial
information as may be required in connection with any filing by Lucent pursuant
to the requirements of federal or state securities laws. Such Supplemental
Financial Information shall present fairly, in all material respects, the
financial position of the Company for the period covered, subject in the case of
unaudited financials to normal year-end adjustments.
(d) Lucent shall deliver to the Company, without charge a copy
of any filing made by Lucent with the SEC under the Exchange Act, including,
without limitation, any Form 10-Q, 8-K, 10-K or amendments thereto, not later
than five business days after the date of such filing with the SEC.
5.4 No Solicitation. The Company shall not, nor shall it
authorize or permit any of its Affiliates over which the Company exercises
control or any officer, director, employee, investment banker, attorney or other
adviser or representative of the Company or any of its Affiliates to (i)
solicit, initiate, or encourage the submission of, any Acquisition Proposal (as
hereinafter defined) or (ii) participate in any discussions or negotiations
regarding, or furnish to any Person any information for the purpose of
facilitating the making of, or take any other action to facilitate any inquiries
or the making of, any proposal that constitutes, or may reasonably be expected
to lead to, any Acquisition Proposal. Without limiting the foregoing, it is
understood that any violation, of which the Company or any of its Affiliates had
knowledge at the time of such violation, of the restrictions set forth in the
immediately preceding sentence by any officer,
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director, employee, investment banker, attorney, employee, or other adviser or
representative of the Company or any of its Affiliates, whether or not such
Person is purporting to act on behalf of the Company or any of its Affiliates or
otherwise, shall be deemed to be a breach of this Section 5.4 by the Company and
its Affiliates. The Company promptly shall advise Lucent of any Acquisition
Proposal and inquiries with respect to any Acquisition Proposal. "Acquisition
Proposal" means any proposal for a merger or other business combination
involving the Company or any of its Affiliates or any proposal or offer to
acquire in any manner, directly or indirectly, an equity interest in the Company
or any of its Affiliates, any voting securities of the Company or any of its
Affiliates or a substantial portion of the assets of the Company (other than
sales of the Company's products in the ordinary course of business consistent
with past practice).
5.5 Exemption from Registration; Other Actions. (a) The shares
of Lucent Common Stock to be issued in connection with the Merger will be issued
in a transaction exempt from registration under the Securities Act by reason of
Section 4(2) thereof. Lucent shall use its reasonable best efforts to prepare,
file and cause to become effective, on or as promptly as practicable after the
Pooling Date, a registration statement on Form S-3 or such other form as may be
appropriate to be filed with the SEC by Lucent under the Securities Act
(together with any amendments or supplements thereto, whether prior to or after
the effective date thereof, the "Registration Statement") covering the public
resale of such shares of Lucent Common Stock to be issued in connection with the
Merger, and Lucent shall use its reasonable best efforts to keep the
Registration Statement effective until the first anniversary of the Effective
Time (such anniversary date being referred to herein as the "Termination Date").
Any such registration shall be subject to the customary terms and conditions
used in connection with resale prospectuses; provided that if Lucent determines
that sales under the Registration Statement would require disclosure of
non-public information material to Lucent at a time when Lucent desires not to
disclose such information, Lucent may, upon written notice to the Company
Stockholders, suspend on one occasion only and for a period not to exceed 30
consecutive days the right of the Company Stockholders to effect resales,
pursuant to such Registration Statement, of such shares of Lucent Common Stock
issued in connection with the Merger, and Lucent agrees to promptly notify the
Company Stockholders prior to the expiration of such period of the date on which
they may again effect resales under the Registration Statement (it being
understood by the parties that in such event the Termination Date shall be
extended by the amount of time the Company Stockholders' ability to use the
Registration Statement was so suspended).
(b) Each party hereto agrees, subject to applicable laws
relating to the exchange of information, promptly to furnish the other parties
hereto with copies of written communications (and memoranda setting forth the
substance of all oral communications) received by such party, or any of its
Subsidiaries, affiliates or associates (as such terms are defined in Rule 12b-2
under the Exchange Act as in effect on the date hereof), from, or delivered by
any of the foregoing to, any governmental or regulatory authority, domestic or
foreign, relating to or in respect of the transactions contemplated under this
Agreement.
5.6 Company Stock Options; Equity Incentive Plan. (a) As soon
as practicable following the date of this Agreement, the Board of Directors of
the Company (or, if appropriate, any committee administering the Nexabit 1998
Equity Incentive Plan (the "Company
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Stock Plan")) shall adopt such resolutions or take such other actions as may be
required to effect the following:
(i) adjust the terms of all outstanding options to
purchase shares of Company Capital Stock under the Company
Stock Plan (the "Company Stock Options"), whether vested or
unvested, as necessary to provide that, at the Effective Time,
each Company Stock Option outstanding immediately prior to the
Effective Time shall be amended and converted into an option
to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, the number of
shares of Lucent Common Stock (rounded down to the nearest
whole share) equal to (A) the number of shares of Company
Common Stock subject to such Company Stock Option immediately
prior to the Effective Time multiplied by (B) the Common Stock
Exchange Ratio, at an exercise price per share of Lucent
Common Stock (rounded to the nearest 1/100th of a whole cent)
equal to (x) the exercise price per share of such Company
Common Stock immediately prior to the Effective Time divided
by (y) the Common Stock Exchange Ratio (each Company Stock
Option as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Company Stock
Plan as the Company and Lucent may agree are appropriate to
give effect to the Merger, including as provided in Section
5.7.
(b) As soon as practicable after the Effective Time, Lucent
shall deliver to the holders of Company Stock Options appropriate notices (the
"Company Stock Option Notices") setting forth (i) such holders' rights pursuant
to the respective Company Stock Plan and the agreements evidencing the grants of
such Company Stock Options and that such Company Stock Options and agreements
shall be assumed by Lucent and shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.6 after giving
effect to the Merger) and (ii) the procedures for the exercise of the Adjusted
Options. The term, exercisability, vesting schedule (including any acceleration
provisions therein), status as an "incentive stock option" under Section 422 of
the Code, if applicable, and all of the other terms of the Company Stock Options
shall otherwise remain unchanged.
(c) A holder of an Adjusted Option may exercise such Adjusted
Option in whole or in part by (i) following the exercise procedures to be
delivered by Lucent as set forth in the Company Stock Option Notice and (ii)
concurrently delivering to Lucent the consideration therefor and the federal
withholding tax information, if any, required in accordance with the related
Company Stock Plan.
(d) Except as otherwise contemplated by this Section 5.6 and
except to the extent required under the respective terms of the Company Stock
Options all restrictions or limitations on transfer and vesting with respect to
Company Stock Options awarded under the Company Stock Plan or any other plan,
program or arrangement of the Company, to the extent that such restrictions or
limitations shall not have already lapsed, shall remain in full force and
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effect with respect to such options after giving effect to the Merger and the
assumption by Lucent as set forth above.
(e) Effective as of two business days prior to the Effective
Date, the Company shall amend the Company Stock Plan to terminate all current
and future offering periods.
(f) No later than 30 days after the Effective Time, Lucent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares subject to the Adjusted
Options. Such registration statement shall be kept effective (and the current
status of the prospectus required thereby shall be maintained in accordance with
the relevant requirements of the Securities Act and the Exchange Act) at least
for so long as any Adjusted Options remain outstanding.
5.7 Company Stock Plan. At the Effective Time, by virtue of
the Merger, the Company Stock Plan and the Company Stock Options granted
thereunder shall be assumed by Lucent, with the result that all obligations of
the Company under the Company Stock Plan, including with respect to awards
outstanding at the Effective Time under the Company Stock Plan, shall be
obligations of Lucent following the Effective Time; provided, that in the case
of any Company Stock Option to which Section 421 of the Code applies by reason
of its qualification under Section 422 or Section 423 of the Code, the option
price, number of shares purchasable pursuant to such Company Stock Option and
the terms and conditions of exercise of such Company Stock Option shall be
determined in order to comply with Section 424 of the Code. Prior to the
Effective Time, Lucent shall take all necessary actions (including, if required
to comply with Section 162(m) of the Code (and the regulations thereunder) or
applicable law or rule of the NYSE, obtaining the approval of its shareholders
at the next regularly scheduled annual meeting of Lucent following the Effective
Time) for the assumption of the Company Stock Plan, including the reservation,
issuance and listing of Lucent Common Stock in a number at least equal to the
number of shares of Lucent Common Stock that will be subject to the Adjusted
Options.
5.8 Employee Benefit Plans; Existing Agreement. As soon as
practicable after the Effective Time (the "Benefits Date"), Lucent shall
provide, or cause to be provided, employee benefit plans, programs and
arrangements to employees of the Company that are the same as those made
generally available to similarly situated employees of Lucent's Internetworking
Systems Group who are hired by Lucent after July 1, 1999. From the Effective
Time to the Benefits Date (which the parties acknowledge may occur on different
dates with respect to different plans, programs or arrangements of the Company)
(the "Continuation Period"), Lucent shall provide, or cause to be provided, the
employee benefit plans, programs and arrangements of the Company provided to
employees of the Company as of the date hereof.
5.9 Indemnification. (a) From and after the Effective Time,
Lucent shall, or shall cause the Surviving Corporation to, fulfill and honor in
all respects the obligations of the Company to indemnify each Person who is or
was a director or officer (an "Indemnified Party") of the Company pursuant to
any indemnifications provision of the Company's Certificate of Incorporation or
By-laws as each is in effect on the date hereof.
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(b) For a period of six years after the Effective Time, Lucent
shall cause to be maintained in effect the current officers' and directors'
liability insurance maintained by the Company with respect to the Indemnified
Parties (provided that Lucent may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are no less
advantageous to the Indemnified Parties than such existing insurance) covering
acts or omissions occurring prior to the Effective Time; provided, that Lucent
shall not be required in order to maintain or procure such coverage to pay an
annual premium in excess of 200% of the current annual premium paid by the
Company for its existing coverage (the "Cap"); and provided, further, that if
existing coverage cannot be maintained or equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, Lucent shall only be required to obtain as much coverage as can be obtained
by paying an annual premium equal to the Cap. The current annual premium paid by
the Company for its existing coverage is set forth in Schedule 5.9.
(c) This Section 5.9 shall survive the closing of all the
transactions contemplated hereby, is intended to benefit the Indemnified Parties
and their respective heirs and personal representative (each of which shall be
entitled to enforce this Section 5.9 against Lucent and the Surviving
Corporation, as the case may be, as a third-party beneficiary of this
Agreement).
5.10 Preparation of Information Statement. As soon as
practicable after the date hereof, the Company shall prepare, with the
cooperation of Lucent, an information statement for the stockholders of the
Company (the "Information Statement") to approve this Agreement, the Merger and
the transactions contemplated hereby and thereby. The Information Statement
shall constitute a disclosure document for the offer and issuance of the shares
of Lucent Common Stock to be received by the Company Stockholders in the Merger.
Lucent and the Company shall each use its reasonable best efforts to cause the
Information Statement to comply with applicable federal and state securities
laws requirements. Each of Lucent and the Company agrees to provide promptly to
the other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of the providing party or its counsel,
may be required or appropriate for inclusion in the Information Statement, or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other's counsel and auditors in the preparation of the
Information Statement. The Company shall promptly advise Lucent, and Lucent
shall promptly advise the Company, in writing if at any time prior to the
Effective Time either the Company or Lucent shall obtain knowledge of any facts
that might make it necessary or appropriate to amend or supplement the
Information Statement in order to make the statements contained or incorporated
by reference therein not misleading or to comply with applicable law. The
Information Statement shall contain the recommendation of the Board of Directors
of the Company that the Company Stockholders approve the Merger and this
Agreement and the conclusion of the Board of Directors of the Company that the
Merger, this Agreement and the transactions contemplated hereby are advisable
and in the best interest of the Company Stockholders. Notwithstanding anything
to the contrary contained herein, the Company shall not include in the
Information Statement any information with respect to Lucent or its Affiliates
which information shall not have been approved by Lucent prior to such
inclusion.
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5.11 Stock Exchange Listing. Lucent shall use all reasonable
best efforts to list on the NYSE, upon official notice of issuance, the shares
of Lucent Common Stock to be issued in connection with the Merger and upon
exercise of Adjusted Options.
5.12 Affiliates. As soon as practicable after the date hereof,
the Company shall deliver to Lucent a letter identifying all Persons who are, at
the time this Agreement is submitted for adoption by the stockholders of the
Company, "affiliates" of the Company for purposes of qualifying the Merger for
pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations. The Company shall use
its reasonable best efforts to cause each such Person to deliver to Lucent as of
the Closing Date, a written agreement substantially in the form attached as
Exhibit B hereto. Lucent shall use its reasonable best efforts to cause all
Persons who are "affiliates" of Lucent for purposes of qualifying the Merger for
pooling of interests accounting treatment under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations to deliver to the
Company as of the Closing Date a written agreement substantially in the form
attached as Exhibit C hereto; provided that Lucent and its "affiliates" may
deliver a letter substantially in the form of Exhibit C hereto which covers the
same period even if such letter was previously executed.
5.13 Notification of Certain Matters. The Company shall give
prompt notice to Lucent, and Lucent shall give prompt notice to the Company, of
(a) the occurrence, or non-occurrence, of any event which would be likely to
cause (i) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied; and
(ii) any failure of the Company, Lucent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided that the delivery of any notice pursuant
to this Section 5.13 shall not limit or otherwise affect the remedies available
to the party receiving such notice.
5.14 Tax Returns; Cooperation. The Company on the one hand and
Lucent on the other will cooperate with each other and provide such information
as any party may require in order to file any return to determine Tax liability
or a right to a Tax refund or to conduct a Tax audit or other Tax proceeding.
Such cooperation shall include, but not be limited to, making employees
available on a mutually convenient basis to explain any documents or information
provided hereunder or otherwise as required in the conduct of any audit or other
proceeding. The Company and Lucent will retain until the expiration of any
applicable statutes of limitations (including any extensions thereof) all Tax
Returns, schedules and workpapers and all other material records or documents
relating to the Company for all Tax periods through the first Tax period ending
after the Closing Date. At the expiration of such statutory period (including
any extensions thereof), each party shall have the right to dispose of any such
Returns and other documents or records on thirty (30) days written notice to the
other party. Any information, documents or records obtained under this Section
5.14 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding.
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5.15 Pooling of Interests; Reorganization. Each of Lucent and
the Company shall cooperate and work together with its respective accountants,
with the objective that the Merger shall qualify as a pooling of interests under
Opinion 16 of the Accounting Principles Board and the applicable SEC rule and
regulations and Lucent's and the Company's conclusion that such accounting
treatment is appropriate for the Merger to be concurred with by each of the
Company's and Lucent's auditors and the SEC, respectively, and each of the
Company and Lucent agrees that it shall voluntarily take no action that would
cause such accounting treatment not to be obtained. Neither Lucent or any of its
Subsidiaries nor the Company shall take any action which could reasonably be
expected to jeopardize such qualification. Each of Lucent and the Company shall
use its reasonable best efforts to cause the business combination of the Merger
to be qualified as a reorganization under Section 368(a) of the Code.
5.16 Working Capital Financing. Lucent agrees, at the request
of the Company, to provide prior to the Closing Date up to $30,000,000 in
working capital financing to the Company for a term of one year on commercially
reasonable terms and conditions consistent with past practice and reasonably
acceptable to Lucent and the Company.
5.17 Actions by the Parties. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties hereto will use its
reasonable best efforts to take or cause to be taken all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable law
and regulations to consummate and make effective in the most expeditious manner
practicable, the transactions contemplated by this Agreement including (i) the
obtaining of all necessary actions and non-actions, waivers and consents, if
any, from any governmental agency or authority and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any governmental agency or authority; (ii) the obtaining of all
necessary consents, approvals or waivers from any other Person; (iii) the
defending of any claim, investigation, action, suit or other legal proceeding,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby; and (iv) the execution of
additional instruments necessary to consummate the transactions contemplated by
this Agreement. Each party will promptly consult with the other and provide
necessary information (including copies thereof) with respect to all filings
made by such party with the any agency or authority in connection with this
Agreement and the transactions contemplated hereby.
6. Conditions Precedent.
6.1 Conditions Precedent to Each Party's Obligation to Effect
the Merger. The respective obligations of each party hereto to effect the Merger
shall be subject to the fulfillment or satisfaction, prior to or on the Closing
Date of the following conditions:
(a) Stockholder Approval. The Merger shall have been duly
approved by the requisite vote of the outstanding shares of Company Capital
Stock and the common stock, $.01 par value per share, of Acquisition entitled to
vote thereon in accordance with the DGCL and the Certificate of Incorporation
and By-laws of each of the Company and Acquisition, respectively.
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Each holder of Company Preferred Stock shall have agreed to waive any rights to
receive any liquidation premium payable in cash in lieu of shares of Lucent
Common Stock.
(b) Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any governmental or regulatory authority, domestic
or foreign, which the failure to obtain, make or occur would have the effect of
making the Merger or any of the transactions contemplated hereby illegal or
would have a Material Adverse Effect on Lucent or the Company (as Surviving
Corporation), assuming the Merger had taken place, shall have been obtained,
made or occurred.
(c) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued
by any court or other Governmental Entity of competent jurisdiction or other
legal restraint or prohibition (collectively, "Restraints") shall be in effect
specifically referencing any of the parties hereto or the transactions
contemplated by this Agreement which (i) prevents or materially delays the
consummation of the Merger or (ii) otherwise would materially impair the ability
of the Company or Lucent to perform its obligations under this Agreement. No
action or proceeding shall have been commenced seeking any temporary restraining
order, preliminary or permanent injunction or other order from any court of
competent jurisdiction or seeking any other legal restraint or prohibition
preventing or materially delaying the consummation of the Merger or which would
materially impair the ability of the Company or Lucent to perform its
obligations under this Agreement other than any of the foregoing which shall
have been dismissed with prejudice.
(d) Escrow Agreement. Each of Lucent, the Company, the Escrow
Agent and the Company Stockholders' Representative shall have entered into the
Escrow Agreement substantially in the form of Exhibit D hereto (the "Escrow
Agreement").
(e) Representation Letters. Each of the Company and Lucent
shall have executed and delivered a letter of representation relating to certain
tax matters in form and substance reasonably acceptable to the other party.
(f) Affiliate Letters. Each of the Company and its Affiliates
and Lucent and its Affiliates shall have executed and delivered a letter
relating to pooling of interests substantially in the form of Exhibits B and C
hereto, respectively, and each such letter shall be true and correct in all
respects and in full force and effect; provided that Lucent and its Affiliates
may deliver a letter substantially in the form of Exhibit C hereto which covers
the same period even if such letter was previously executed.
(g) Stock Exchange Listing. The shares of Lucent Common Stock
issued in accordance with the Merger and issuable upon exercise of the Adjusted
Options shall have been authorized for listing on the NYSE, subject to official
notice of issuance.
6.2 Conditions Precedent to Obligations of Acquisition and
Lucent. All obligations of Acquisition and Lucent under this Agreement are
subject to the fulfillment or satisfaction, prior to or on the Closing Date, of
each of the following conditions precedent:
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(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement that are
required to be performed or complied with by it prior to or at the Closing. Each
of the Company's representations and warranties contained in Section 3 of this
Agreement to the extent it is qualified by Material Adverse Effect or
materiality and the Company's representations and warranties contained in
Section 3.14 shall be true and correct and each of the Company's representations
and warranties to the extent it is not so qualified by Material Adverse Effect
or materiality, shall be true and correct in all material respects, in each
case, on and as of the Closing with the same effect as though such
representations and warranties were made on and as of the Closing, except for
changes permitted by this Agreement and except to the extent that any
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be as of such earlier date.
Lucent and Acquisition shall have received a certificate dated the Closing Date
and signed by the Chairman, President or a Vice-President of the Company,
certifying that, the conditions specified in this Section 6.2(a) have been
satisfied.
(b) Opinion of Counsel. Lucent and Acquisition shall have
received the favorable written opinions dated the Closing Date of Hale and Dorr
LLP and Goulston & Storrs, PC, counsels to the Company, in forms satisfactory to
Lucent and Acquisition.
(c) Pooling Letter. Lucent shall have received a letter, dated
as of the Closing Date, from PricewaterhouseCoopers LLP, in form and substance
satisfactory to Lucent stating in substance that PricewaterhouseCoopers LLP
concurs with the conclusion of the Company's management that no condition exists
at the Company that would preclude accounting of the Merger as a pooling of
interests under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations.
(d) Officer and Director Terminations. In accordance with
Section 1.4, each director and officer of the Company shall cease to act in such
capacity.
(e) No Material Adverse Change. There shall have been no
material adverse change in the assets, business, financial condition or
operations of the Company and no event or events shall have occurred that could
reasonably be expected to have a Material Adverse Effect (other than (i)
conditions generally affecting the data networking industry or (ii) resulting
from the announcement of the Merger) on the Company, and Lucent shall have
received a certificate signed on behalf of the Company by its Chief Executive
Officer and Chief Financial Officer to such effect.
(f) Consents. The Company shall have received all necessary
consents, in form and substance satisfactory to Lucent and Acquisition, from the
other parties to each contract, lease or agreement to which the Company is a
party, except where the failure to receive such consent would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
the Company.
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(g) Non-Competition and Non-Disclosure Agreements. Each of
Zbigniew Opalka, Mukesh Chatter, Peter Marconi and Satish Soman shall have
entered into Non-Competition and Non-Disclosure Agreements with the Surviving
Corporation, each substantially in the form of Exhibit E hereto, and such
agreements shall be in full force and effect.
(h) Substitute Form W-9. Acquisition and Lucent shall have
received a substitute Form W-9 under the Code in form and substance acceptable
to Acquisition and Lucent executed by each stockholder.
(i) Real Property Certificate. Lucent shall have received a
certificate from the Company certifying that the Company has never been and is
not a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code pursuant to Treas. Reg. Sec. 1.897-2(h) and Treas.
Reg. Sec. 1.1445-2(c)(3)(i) at the Closing.
(j) Incentive LLC. Prior to the Effective Time, Nexabit
Networks Incentive LLC ("Incentive LLC"), to the extent necessary, (i) shall
have amended the Nexabit Networks LLC 1997 Equity Incentive Plan (the "Equity
Incentive Plan") to provide that (A) any awards under the Equity Incentive Plan
representing member interests in Incentive LLC (with respect to each individual,
an "Award Interest") shall be converted into the right to receive such number of
shares of Lucent Common Stock to which such individual would be entitled upon
exchange of the Company Common Stock held by Incentive LLC (such number of
shares of Lucent Common Stock to be calculated based on the Common Stock
Exchange Ratio multiplied by the applicable Award Interest) and (B) Incentive
LLC shall not distribute any shares of Lucent Common Stock until after the
Pooling Date and (ii) shall undertake to interpret and enforce the Equity
Incentive Plan as so amended in accordance with its terms and not to otherwise
amend the Equity Incentive Plan.
(k) Shareholder Agreement. Each of the shareholder agreements
entered into by the Company Stockholders shall have been terminated by the
Company and each of the other parties thereto.
(l) Registration Rights Agreement. Each of the registration
rights agreements entered into by the Company and other parties thereto shall
have been terminated by the Company and such parties.
(m) Stockholder Representation Letters. Lucent shall have
received a letter, dated as of the Closing Date, from each Company Stockholder
relating to certain securities matters in form and substance reasonably
acceptable to Lucent.
6.3 Conditions Precedent to the Company's Obligations. All
obligations of the Company under this Agreement are subject to the fulfillment
or satisfaction, prior to or on the Closing Date, of each of the following
conditions precedent:
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(a) Performance of Obligations; Representations and
Warranties. Acquisition and Lucent shall have performed and complied in all
material respects with all agreements and conditions contained in this Agreement
that are required to be performed or complied with by them prior to or at the
Closing. Each of the representations and warranties of Acquisition and Lucent
contained in Section 4 of this Agreement to the extent it is qualified by
Material Adverse Effect shall be true and correct and each of the
representations and warranties of Acquisition and Lucent to the extent it is not
so qualified by Material Adverse Effect shall be true and correct in all
material respects, in each case, on and as of the Closing with the same effect
as though such representations and warranties were made on and as of the
Closing, except for changes permitted by this Agreement and except to the extent
that such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall be as of such earlier date.
The Company shall have received certificates dated the Closing Date and signed
by the President or a Vice-President of Acquisition and an authorized signatory
of Lucent, certifying that the conditions specified in this Section 6.3(a) have
been satisfied.
(b) Opinion of Counsel. The Company shall have received the
favorable written opinion dated the Closing Date of Sidley & Austin, special
counsel to Acquisition and Lucent, and internal counsel to Acquisition and
Lucent, each in form satisfactory to the Company. The Company shall have
received a written opinion dated the Closing Date of Hale and Dorr LLP, counsel
to the Company, that the Merger should be treated, for federal income tax
purposes, as a reorganization within the meaning of Section 368(a) of the Code.
(c) Pooling Letter. The Company shall have received a letter,
dated as of the Closing Date, from PricewaterhouseCoopers LLP, in form and
substance satisfactory to the Company, stating in substance that
PricewaterhouseCoopers LLP concurs with the conclusion of Lucent's management
that no condition exists at Lucent that would preclude accounting of the Merger
as a pooling of interests under Opinion 16 of the Accounting Principles Board
and applicable SEC rules and regulations.
(d) No Material Adverse Change. There shall have been no
material adverse change in the assets, business, financial condition or
operations of Lucent and no event or events shall have occurred that could
reasonably be expected to have a Material Adverse Effect (other than (i)
conditions generally affecting the data networking industry or (ii) resulting
from the announcement of the Merger) on Lucent and the Company shall have
received a certificate signed on behalf of Lucent by an authorized signatory
thereof.
7. Survival of Representation and Warranties.
7.1 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (including the schedules
to the Agreement which are hereby incorporated by reference) or in any
instrument delivered pursuant to this Agreement shall survive for 12 months
following the Effective Time. This Section shall not limit any claim for fraud
or any covenant or agreement by the parties which contemplates performance after
the Effective Time.
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8. Indemnification.
8.1 Escrow Shares. As soon as practicable after the Closing
Date, a total of 1,152,412 shares of Lucent Common Stock (the "Escrow Fund")
shall be deposited with The Bank of New York (or another institution selected by
Lucent), as escrow agent (the "Escrow Agent"), such deposit to be governed by
the terms set forth herein and in the Escrow Agreement. The Escrow Fund shall be
the sole and exclusive source available to compensate Lucent for the
indemnification obligations of each holder of Company Capital Stock (each, a
"Company Stockholder" and collectively, the "Company Stockholders") under
Section 8.2 except that Lucent may elect not to have recourse to the Escrow Fund
for any claim of fraud.
8.2 General Indemnification. (a) Subject to the limitations
set forth in this Section 8, the Company Stockholders will indemnify and hold
harmless Lucent and each Person, if any, who controls, may control or is
controlled by Lucent within the meaning of the Securities Act and their
respective officers, directors, employees, agents and advisors (each such
indemnitee being referred to herein as an "Indemnified Person"), from and
against any and all losses, costs, damages, liabilities, obligations,
impositions, inspections, assessments, fines, deficiencies and expenses arising
from claims, demands, actions, causes of action, including, without limitation,
reasonable legal fees (collectively, "Damages"), arising out of (i) any
inaccuracy in any representation or warranty made by the Company in this
Agreement or in any exhibit or schedule to this Agreement, and (ii) any breach
or default by the Company of any of the covenants or agreements given or made by
it in this Agreement or any exhibit or schedule to this Agreement.
(b) Lucent and the Company Stockholders each acknowledge that
such Damages, if any, would relate to unresolved contingencies existing at the
Closing Date, which if resolved at the Closing Date would have led to a
reduction in the total consideration that Lucent would have agreed to pay in
connection with the transactions contemplated hereby.
8.3 Damages Threshold; Damages Cap. (a) Notwithstanding
anything to the contrary contained in this Agreement, solely with respect to any
claim by Lucent for indemnification under Section 8.2(a)(i), Lucent may not seek
indemnification with respect to any claim for Damages until the aggregate amount
of all Damages for which Lucent is seeking indemnification under Section
8.2(a)(i) equals or exceeds $1,000,000 (the "Threshold"), whereupon Lucent shall
be entitled to seek indemnification with respect to all such Damages that exceed
the Threshold.
(b) In determining the amount of any Damage for which Lucent
may seek indemnification under Section 8.2(a)(i) or Section 8.2(a)(ii), any
materiality standard contained in a representation, warranty or covenant shall
be disregarded.
(c) The liability of the Company Stockholders to Lucent for
all Damages for which indemnification is provided hereunder shall not exceed the
Escrow Fund.
8.4 Escrow Period; Release of Escrow Fund. The Escrow Fund
shall commence on the date hereof and terminate on the first anniversary of the
Closing Date (the
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"Escrow Period"). On such first anniversary, all shares of Lucent Common Stock
then remaining in the Escrow Fund shall be released; provided that the amount of
any claim made pursuant to Section 8.5 during the Escrow Period shall be
withheld and remain in the Escrow Fund pending resolution of such claim;
provided further that the number of shares of Lucent Common Stock in the Escrow
Fund which is necessary to satisfy any unsatisfied claims specified in any
Lucent Notice theretofore delivered to the Escrow Agent prior to the termination
of the Escrow Period with respect to facts and circumstances existing prior to
the expiration of the Escrow Period, shall remain in the Escrow Fund until such
claims have been resolved. Any portion of the Escrow Fund for which there is no
claim pursuant to this Section 8 shall be promptly distributed by the Escrow
Agent to the Company Stockholders' Representative for distribution by the Escrow
Agent to the Company Stockholders in accordance with each Company Stockholder's
percentage of the Escrow Fund as set forth in the Escrow Agreement.
8.5 Claims Upon Escrow Fund. Subject to the provisions of this
Section 8, Lucent shall make claims upon the Escrow Fund by delivering to the
Escrow Agent on or before the last day of the Escrow Period of a notice signed
by an authorized representative of Lucent (a "Lucent Notice") specifying in
reasonable detail the individual items of Damages for which indemnification is
being sought, the date each such item was paid, or properly accrued or arose and
the nature of the misrepresentation, breach of warranty or claim to which such
item is related. Lucent shall, concurrently with the sending of any Lucent
Notice to the Escrow Agent, provide a copy of such Lucent Notice to the Company
Stockholders' Representative. Within 20 days after the receipt of any Lucent
Notice, the Company Stockholders' Representative, on behalf of the Company
Stockholders, shall deliver a notice to Lucent and the Escrow Agent (a "Company
Stockholders' Representative Notice") certifying that the Company Stockholders
either agree with the Lucent Notice or object to the Lucent Notice. If the
Company Stockholders agree with the Lucent Notice, the Escrow Agent shall
deliver to Lucent out of the Escrow Fund, as promptly as practicable after
receipt of the Company Stockholders' Representative Notice, the number of Shares
held in the Escrow Fund having a fair market value on the Closing Date equal to
such Damages. If the Company Stockholders' Representative objects to the Lucent
Notice within the 20-day period after receipt of the Lucent Notice, Lucent and
the Company Stockholders' Representative shall resolve such dispute in
accordance with Section 8.6. If the Company Stockholders' Representative fails
to deliver a Company Stockholders' Representative Notice within such 20-day
period, the Company Stockholders' Representative shall be deemed to have
consented to the Lucent Notice and given a Company Stockholders' Representative
Notice to Lucent and the Escrow Agent, and the Escrow Agent shall deliver to
Lucent out of the Escrow Fund, as promptly as practicable after such 20-day
period, the number of Shares held in the Escrow Fund having a fair market value
on the Closing Date equal to such Damages.
8.6 Objections to Claims. (a) If the Company Stockholders'
Representative shall object to a Lucent Notice within the twenty-day period
after receipt thereof, then Lucent and the Company Stockholders' Representative
shall use their good faith efforts to resolve such dispute. If Lucent and the
Company Stockholders' Representative resolve such dispute, the parties shall
deliver a written notice to the Escrow Agent directing the delivery of the
Escrow Fund based upon such resolution.
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(b) If Lucent and the Company Stockholders' Representative are
unable to resolve such dispute within 30 days after the Company Stockholders'
Representative objects to such Lucent Notice, either Lucent or the Company
Stockholders' Representative may, by written notice to the other and the Escrow
Agent, demand arbitration of such dispute. Any such arbitration shall be
conducted by JAMS/Endispute, Inc. or such other alternative dispute service
("Arbitration Service") as shall be reasonably acceptable to Lucent and the
Company Stockholders' Representative. The Arbitration Service shall select one
arbitrator reasonably acceptable to Lucent and the Company Stockholders'
Representative who shall be expert in the area of development and production of
data networking products. The decision by the arbitrator shall be binding and
conclusive and, notwithstanding any other provisions of this Section 8, the
Escrow Agent shall be entitled to act in accordance with such decision and make
delivery of the Escrow Fund in accordance therewith.
(c) The arbitration shall be held in New York, New York. The
costs of any such arbitration shall be borne one-half for the account of Lucent
and one-half by the Company Stockholders. Judgment upon any award rendered by
the arbitrator may be entered in any court of competent jurisdiction.
8.7 Third-Party Claims. In the event Lucent becomes aware of a
third-party claim which Lucent believes may result in a demand pursuant to this
Section 8, Lucent shall promptly notify the Company Stockholders' Representative
of such claim, and the Company Stockholders' Representative shall be entitled,
at the Company Stockholders' expense (but not out of the Escrow Fund), to
participate in any defense of such claim; provided that Lucent shall control
such defense, and shall have the right with the consent of the Company
Stockholders' Representative (which consent shall not be unreasonably withheld)
to settle any such claim (it being understood that no such consent of the
Company Stockholders' Representative shall be required where the third-party
claim, which Lucent proposes to settle involves the business reputation of
Lucent or its Affiliates in any material adverse respect, or the possible
criminal liability of Lucent or its Affiliates or any of their respective
officers, directors or employees). In the event that the Company Stockholders'
Representative has consented to any such settlement, the Company Stockholders
shall have no power or authority to object under any provision of this Section 8
to the amount of any claim by Lucent for indemnity with respect to such
settlement.
8.8 Company Stockholders' Representative. (a) Mukesh Chatter
is hereby appointed as representatives (the "Company Stockholders'
Representative") for and on behalf of the Company Stockholders to take all
actions necessary or appropriate in the judgment of the Company Stockholders'
Representative for the accomplishment of the terms of this Agreement. The
holders of a majority in interest of the shares of Lucent Common Stock held in
the Escrow Fund may replace the Company Stockholders' Representative upon not
less than 10 days' prior written notice to Lucent. No bond shall be required of
the Company Stockholders' Representative and the Company Stockholders'
Representative shall receive no compensation for his services. Notices of
communications to or from the Company Stockholders' Representative shall
constitute notice to or from each of the Company Stockholders. If Mukesh Chatter
dies or is otherwise no longer able or willing to serve as the Company
Stockholders' Representative, a
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new Company Stockholders' Representative shall be chosen by Company Stockholders
holding a majority of the shares of Lucent Common Stock issued in connection
with the Merger.
(b) The Company Stockholders' Representative shall not be
liable for any act done or omitted in such capacity while acting in good faith
and in the exercise of reasonable judgment, and any act done or omitted pursuant
to the advise of counsel shall be conclusive evidence of such good faith. The
Company Stockholders shall severally indemnify the Company Stockholders'
Representative and hold him harmless against any loss, liability or expense
incurred without gross negligence or bad faith on the part of the Company
Stockholders' Representative and arising out of or in connection with the
acceptance or administration of his duties hereunder.
(c) Any decision, act, consent or instruction of the Company
Stockholders' Representative shall constitute a decision of all and shall be
final, binding and conclusive upon every Company Stockholder and the Escrow
Agent and Lucent may rely upon any decision, act, consent or instruction of each
and every Company Stockholder. The Escrow Agent and Lucent are hereby relieved
from any liability to any person for acts done by them in accordance with such
decision, act, consent or instruction of the Company Stockholders'
Representative.
9. Brokers' and Finders' Fees.
9.1 Company. The Company represents and warrants to
Acquisition and Lucent that, except as set forth in Schedule 9.1, no broker,
investment banker or financial advisor is entitled to receive a brokerage fee,
financing commission or other commission from the Company in respect of the
execution of this Agreement or the consummation of the transactions contemplated
hereby. The Company agrees that if the transactions contemplated by this
Agreement are not consummated (other than as a result of a breach or default by
Lucent or Acquisition), it shall indemnify and hold Acquisition and Lucent
harmless against any and all claims, losses, liabilities, costs or expenses
which may be asserted against them as a result of the Company's or any of its
Affiliates' dealings, arrangements or agreements with any such Person.
9.2 Acquisition and Lucent. Acquisition and Lucent represent
and warrant to the Company that no broker, investment banker or financial
advisor is entitled to receive any brokerage fee, financing commission or other
commission from Lucent in respect of the execution of this Agreement or the
consummation of the transactions contemplated hereby. Acquisition and Lucent
agree that if the transactions contemplated hereby are not consummated (other
than as a result of a breach or default by the Company), they shall jointly and
severally indemnify and hold the Company harmless against any and all claims,
losses, liabilities, costs or expenses which may be asserted against them, as a
result of Acquisition's or Lucent's or any of their respective Affiliates'
dealings, arrangements or agreements with any such Person.
10. Expenses. Lucent and the Company shall each pay its own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby, whether or not the Merger is consummated.
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11. Press Releases. Except as required by law or Lucent's listing
agreement with the New York Stock Exchange, Lucent, Acquisition and the Company
shall not issue any press release or otherwise make public any information with
respect to this Agreement nor the transactions contemplated hereby, prior to the
Closing, without the prior written consent of the other parties to this
Agreement.
12. Contents of Agreement; Parties in Interest; etc. This Agreement and
the agreements referred to or contemplated herein and the letter agreement
between Lucent and the Company concerning confidentiality (the "Confidentiality
Agreement") set forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and, except as set forth in
this Agreement, such other agreements and the Exhibits hereto and the
Confidentiality Agreement, there are no representations or warranties, express
or implied, made by any party to this Agreement with respect to the subject
matter of this Agreement and the Confidentiality Agreement. Except for the
matters set forth in the Confidentiality Agreement, any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement and the
agreements referred to or contemplated herein. All statements contained in
schedules, exhibits, certificates and other instruments attached hereto shall be
deemed representations and warranties (or exceptions thereto) by the Company,
Acquisition or Lucent, as the case may be.
13. Assignment and Binding Effect. This Agreement may not be assigned
by either party hereto without the prior written consent of the other parties;
provided, that Acquisition may assign its rights and obligations under this
Agreement to any directly or indirectly wholly-owned Subsidiary of Lucent, upon
written notice to the Company if the assignee shall assume the obligations of
Acquisition hereunder and Lucent shall remain liable for its obligations
hereunder. All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
14. Termination. This Agreement may be terminated, and the Merger may
be abandoned at any time prior to the Effective Time whether before or after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the stockholders of the Company or the stockholders of Acquisition:
(a) by the mutual agreement of the Boards of Directors of
Acquisition and the Company and the appropriate corporate authority of Lucent;
(b) by Lucent, Acquisition or the Company if (i) the Effective
Time shall not have occurred by November 30, 1999; provided that the right to
terminate this Agreement under this Section 14(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur on or
before such date; or (ii) any court of competent jurisdiction in the United
States or other United States governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
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(c) by the Company, in the event Lucent or Acquisition
materially breaches its obligations under this Agreement, unless such breach is
cured within 15 days after notice to Lucent by the Company; or
(d) by Lucent or Acquisition, in the event the Company
materially breaches its obligations under this Agreement unless such breach is
cured within 15 days after notice by Lucent or Acquisition.
15. Definitions. As used in this Agreement the terms set forth below
shall have the following meanings:
(a) "Affiliate" of a Person shall mean any other Person who
(i) directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, such Person or (ii) owns more
than 5% of the capital stock or equity interest in such Person. "Control" means
the possession of the power, directly or indirectly, to direct or cause the
direction of the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise.
(b) "Benefit Plan" shall mean any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other material plan,
arrangement or understanding (whether or not legally binding) providing material
benefits to any current or former employee, officer or director of the Company.
(c) "Best Knowledge" in respect of (i) any representation and
warranty of the Company set forth in this Agreement (other than Section 3.14)
shall mean the actual and constructive knowledge of Mukesh Chatter, Zbigniew
Opalka, Gene Wahlberg and Michael Hannon to the extent such knowledge would have
been obtained by due inquiry of the officers and directors of the Company and
employees charged with responsibility for the particular matter which is the
subject of such representation or warranty and (ii) the representations and
warranties of the Company set forth in Section 3.14 shall mean the actual and
constructive knowledge (to the extent such knowledge would have been obtained by
the reasonable exercise of due diligence in the ordinary course of business) of
the Designated Group; provided, that with respect to Patents, such term shall
only mean the actual knowledge of the Designated Group.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Designated Group" shall mean Mukesh Chatter, Zbigniew
Opalka, Peter Marconi, Satish Soman, Kenneth Schroder, Alec Dingee, Roger Slyk,
Dimitry Haskin, Tim Wright, Ray Miller, Ram Krishnan, Sub Pal, Rajib Ray and
Gerry Merchessault.
(f) "Environmental Laws" shall mean all applicable federal,
state, local or foreign laws, rules and regulations, orders, decrees, judgments,
permits, filings and licenses relating (i) to protection and clean-up of the
environment and activities or conditions related thereto, including those
relating to the generation, handling, disposal, transportation or release of
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Hazardous Substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
(g) "Exchange Agent" shall mean a bank or trust company
designated as the exchange agent by Lucent (which designation shall be
reasonably acceptable to the Company).
(h) "Final Determination" shall mean (i) a decision of the
United States Tax Court, or a decision, judgment, decree or other order by
another court of competent jurisdiction, which has become final and is either no
longer subject to appeal or for which a determination not to appeal has been
made; (ii) a closing agreement made under Section 7121 of the Code or any
comparable foreign, state, local or municipal Tax statute; (iii) any
disallowance of a claim for refund or credit in respect of an overpayment of Tax
unless a suit related thereto is filed on a timely basis; (iv) any final
disposition by reason of the expiration of the applicable statute of
limitations; or (v) the actual payment by the Company of Taxes.
(i) "GAAP" shall mean United States generally accepted
accounting principles.
(j) "Hazardous Substances" shall mean any and all hazardous
and toxic substances, wastes or materials, any pollutants, contaminants, or
dangerous materials (including, but not limited to, polychlorinated biphenyls,
PCBs, friable asbestos, volatile and semi-volatile organic compounds, oil,
petroleum products and fractions, and any materials which include hazardous
constituents or become hazardous, toxic, or dangerous when their composition or
state is changed), or any other similar substances or materials which are
included under or regulated by any Environmental Laws.
(k) "Indebtedness" shall mean as at any date of determination,
the sum of the following items of the Company, without duplication: (i)
obligations created, issued or incurred for borrowed money, including all fees
and obligations thereunder (including, without limitation, any prepayment or
termination fees arising or which will arise out of the prepayment of such
Indebtedness prior to its maturity and termination), (ii) obligations to pay the
deferred purchase price or acquisition price of property or services, other than
trade or accounts payable arising, and accrued expenses incurred, in the
ordinary course of business consistent with past practice, (iii) the face amount
of all letters of credit issued for the account of the Company and all drafts
thereunder, (iv) capital lease obligations, if any, and (v) any obligation
guaranteeing any Indebtedness or other obligations of any other Person
(including any obligations under any keep well or support agreements).
(l) "Liens" shall mean any mortgage, pledge, lien, security
interest, conditional or installment sale agreement, encumbrance, charge or
other claims of third parties of any kind.
(m) "Material Adverse Effect" on a Person shall mean (unless
otherwise specified) any condition or event that may: (a) have a material
adverse effect on the assets,
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business, financial condition or operations of such Person and its Subsidiaries,
if any; (b) materially impair the ability of the such Person to perform its
obligations under this Agreement; or (c) prevent or delay the consummation of
the transactions contemplated under this Agreement.
(n) "Permitted Liens" shall mean (a) Liens for taxes,
assessments, or similar charges, incurred in the ordinary course of business
that are not yet due and payable or are being contested in good faith; (b)
pledges or deposits made in the ordinary course of business; (c) Liens of
mechanics, materialmen, warehousemen or other like Liens securing obligations
incurred in the ordinary course of business that are not yet due and payable or
are being contested in good faith; and (d) similar Liens and encumbrances which
are incurred in the ordinary course of business and which do not in the
aggregate materially detract from the value of such assets or properties or
materially impair the use thereof in the operation of such business.
(o) "Person" shall mean any individual, corporation,
partnership, limited partnership, limited liability company, trust, association
or entity or government agency or authority.
(p) "Pooling Date" shall mean the date on which Lucent
publishes in the form of a quarterly earnings report, an effective registration
statement flied with the SEC, a report to the SEC on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement, the combined results of
post-acquisition operations of Lucent and the Company for a period of not less
than 30 days, which publication, filing or announcement satisfies the
requirements of Accounting Series Release 135.
(q) "reasonable best efforts" shall mean prompt, substantial
and persistent efforts as a prudent Person desirous of achieving a result would
use in similar circumstances; provided that the Company, Lucent or Acquisition,
as applicable, shall be required to expend only such resources as are
commercially reasonable in the applicable circumstances.
(r) "Subsidiary" of a Person shall mean any corporation,
partnership, joint venture or other entity in which such Person (a) owns,
directly or indirectly, 50% or more of the outstanding voting securities or
equity interests or (b) is a general partner.
(s) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean any federal, state, local, municipal or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value-added, transfer,
stamp, or environmental tax, or any other tax, custom, duty, tariff levy,
import, governmental fee or other like assessment or charge, together with any
interest or penalty, addition to tax or additional amount imposed by any
governmental authority.
(t) "Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
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16. Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered to the
party personally or sent to the party by facsimile transmission (promptly
followed by a hard-copy delivered in accordance with this Section 16) or by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to Acquisition or Lucent:
Lucent Technologies Inc.
c/o Data Networking Systems
211 Mount Airy Road
Basking Ridge, New Jersey 07920-2332
Att: President - Data Networking
with copies to:
Lucent Technologies Inc.
c/o Data Networking Systems
211 Mount Airy Road
Basking Ridge, New Jersey 07920-2332
Att: General Counsel - Data Networking
If to the Company:
Nexabit Networks, Inc.
200 Nickerson Road
Marlborough, MA 01752
Att: Mukesh Chatter
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn: Paul P. Brountas, Esq.
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.
17. Amendment. This Agreement may be amended, modified or supplemented
at any time prior to the Effective Time by the respective Boards of Directors of
the parties hereto notwithstanding the approval hereof by the stockholders of
the Company or the stockholders of
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<PAGE> 54
Acquisition, as applicable, except as provided in Section 251(d) of the DGCL.
Any amendment, modification or revision of this Agreement and any waiver of
compliance or consent with respect hereto shall be effective only if in a
written instrument executed by the parties hereto.
18. Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of New York as applied to
contracts made and fully performed in such state, except insofar as the DGCL
shall be mandatorily applicable to the Merger and the rights of the stockholders
of the Company in connection therewith.
19. No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto, and their respective successors and assigns, and they shall not
be construed as conferring, and are not intended to confer, any rights on any
other Person.
20. Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.
21. Section Headings. All section headings are for convenience only and
shall in no way modify or restrict any of the terms or provisions hereof.
22. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
23. Extensions. At any time prior to the Effective Time, any party may
by corporate action, extend the time for compliance by or waive performance of
any representation, warranty, condition or obligation of any other party.
24. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and the Company,
Acquisition and Lucent may become a party hereto by executing a counterpart
hereof. This Agreement and any counterpart so executed shall be deemed to be one
and the same instrument.
[Remainder of page intentionally left blank]
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<PAGE> 55
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have duly executed this Agreement as of the date first
above written.
LUCENT TECHNOLOGIES INC.
By:/s/ Harry J.Carr
----------------------------------
Name: Harry J. Carr
Title: Vice President and COO,
Broadband Carrier Networks
NEPTUNE ACQUISITION INC.
By:/s/ Harry J.Carr
----------------------------------
Name: Harry J. Carr
Title: Vice President and COO,
Broadband Carrier Networks
NEXABIT NETWORKS, INC.
By:/s/ Mukesh Chatter
----------------------------------
Name: Mukesh Chatter
Title: CEO and President
<PAGE> 56
<TABLE>
<CAPTION>
GLOSSARY OF DEFINED TERMS
Defined Term Location of Definition
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Acquisition......................................................... Preamble
Acquisition Common Stock ........................................... Recitals
Acquisition Proposal................................................ Section 5.4
Adjusted Option..................................................... Section 5.6
Affiliate........................................................... Preamble
Agreement........................................................... Preamble
Authorizations...................................................... Section 3.13(b)
Award Interest...................................................... Section 6.2(j)
Balance Sheet....................................................... Section 3.5(a)
Benefit Plan........................................................ Section 15(b)
Best Knowledge...................................................... Section 15(c)
Certificate of Merger............................................... Section 1.1(b)
Certificates........................................................ Section 1.9(b)
Closing............................................................. Section 1.1(b)
Closing Date........................................................ Section 1.1(b)
Code................................................................ Section 15(d)
Common Shares....................................................... Section 3.2(a)
Common Stock Exchange Ratio......................................... Section 1.5(c)
Commonly Controlled Entity.......................................... Section 3.16(a)
Company............................................................. Preamble
Company Capital Stock............................................... Recitals
Company Common Stock................................................ Recitals
Company Preferred Stock............................................. Recitals
Company Stockholder Section 8.1
Company Stockholders' Representative Notice......................... Section 8.5
Company Stock Option................................................ Section 5.6(a)
Company Stock Plan.................................................. Section 5.6(a)
Confidentiality Agreement........................................... Section 12
DGCL................................................................ Recitals
Designated Group.................................................... Section 15(e)
Effective Time...................................................... Section 1.1(b)
Environmental Laws.................................................. Section 15(f)
Equity Incentive Plan............................................... Section 6.2(j)
ERISA............................................................... Section 3.16(a)
Exchange Act........................................................ Section 4.3(c)
Exchange Agent...................................................... Section 15(g)
Exchange Ratio...................................................... Section 1.5(c)
Executive Employees................................................. Section 3.17(a)
Final Determination................................................. Section 15(h)
Financial Statements................................................ Section 3.5(a)
GAAP................................................................ Section 15(i)
</TABLE>
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<TABLE>
<S> <C>
Hazardous Substances................................................ Section 15(j)
Immaterial Authorizations........................................... Section 3.13(b)
Incentive LLC....................................................... Section 6.2(j)
Indebtedness........................................................ Section 15(k)
Intellectual Property Rights........................................ Section 3.14(a)
IRS................................................................. Section 3.15(c)
Laws................................................................ Section 3.13(a)
Liens............................................................... Section 15(l)
Lucent.............................................................. Preamble
Lucent Common Stock................................................. Section 4.2
Lucent Authorized Preferred Stock................................... Section 4.2
Lucent SEC Documents................................................ Section 4.5(a)
Material Adverse Effect............................................. Section 15(m)
Merger.............................................................. Recitals
NYSE................................................................ Section 1.8
Outstanding Common Shares........................................... Section 3.2(a)
Pension Plans....................................................... Section 3.16(a)
Permitted Liens..................................................... Section 15(n)
Person.............................................................. Section 15(o)
Plans............................................................... Section 3.16(a)
Preferred Shares.................................................... Section 3.2(a)
Reasonable Best Efforts............................................. Section 15(q)
Registration Statement.............................................. Section 5.5(a)
Reserved Common Shares.............................................. Section 3.2(a)
Right............................................................... Section 1.5(c)
SEC................................................................. Section 3.30
Securities Act...................................................... Section 4.3(c)
Series A Exchange Ratio............................................. Section 1.5(c)
Series A Preferred Stock............................................ Recitals
Series B Exchange Ratio............................................. Section 1.5(c)
Series B Preferred Stock............................................ Recitals
Series C Exchange Ratio............................................. Section 1.5(c)
Series C Preferred Stock............................................ Recitals
Series D Exchange Ratio............................................. Section 1.5(c)
Series D Preferred Stock............................................ Recitals
Shares.............................................................. Section 3.2(a)
Subsidiary.......................................................... Section 15(r)
Supplemental Financial Information.................................. Section 5.3(c)
Surviving Corporation............................................... Section 1.1(a)
Tax................................................................. Section 15(s)
Tax Return.......................................................... Section 15(t)
Welfare Plans....................................................... Section 3.16(a)
</TABLE>
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Exhibit 2.2
EXECUTION COPY
-----------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
LANDO ACQUISITION, INC.,
KENAN SAHIN
AND
KENAN SYSTEMS CORPORATION
-------------------------------------------
Dated as of January 11, 1999
-------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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1. The Merger......................................................................................2
1.1. General................................................................................2
1.2. Articles of Organization...............................................................2
1.3. By-Laws................................................................................2
1.4. Directors and Officers.................................................................2
1.5. Conversion of Securities...............................................................3
1.6. Adjustment of the Exchange Ratio.......................................................3
1.7. Exchange Procedures; Stock Transfer Books..............................................4
1.8. No Fractional Shares...................................................................4
1.9. No Further Ownership Rights in Company Common Stock....................................5
1.10. Other Agreements. ....................................................................5
1.11. Further Assurances.....................................................................5
2. Approval by Stockholders of the Company and Acquisition; Further Corporate
Action..........................................................................................5
2.1. Approval by Stockholders of the Company and Acquisition................................5
3. Representations and Warranties of the Company...................................................5
3.1. Organization...........................................................................6
3.2. Capitalization; Options and Other Rights...............................................6
3.3. Authority..............................................................................6
3.4. Charter Documents......................................................................8
3.5. Financial Statements...................................................................8
3.6. Absence of Undisclosed Liabilities.....................................................8
3.7. Operations and Obligations.............................................................9
3.8. Properties............................................................................11
3.9. Leases................................................................................11
3.10. Assets................................................................................11
3.11. Accounts Receivable...................................................................11
3.12. Customers and Suppliers...............................................................11
3.13. Contracts.............................................................................12
3.14. Absence of Default....................................................................13
3.15. Insurance.............................................................................13
3.16. Financial Projections.................................................................14
3.17. Litigation............................................................................14
3.18. Compliance with Law...................................................................14
3.19. Intellectual Property.................................................................15
3.20. Tax Matters...........................................................................16
3.21. Employee Benefit Plans................................................................17
3.22. Employees.............................................................................19
3.23. Employment Matters....................................................................19
</TABLE>
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<TABLE>
<CAPTION>
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3.24. Environmental Laws....................................................................19
3.25. Export Control Laws...................................................................20
3.26. Bank Accounts, Letters of Credit and Powers of Attorney...............................20
3.27. Subsidiaries..........................................................................20
3.28. Minute Books..........................................................................20
3.29. Complete Copies of Materials..........................................................21
3.30. Disclosure............................................................................21
3.31. Pooling of Interests; Reorganization..................................................21
3.32. Investment Matters....................................................................21
3.33. Regulation D..........................................................................22
4. Representations and Warranties of Acquisition and Lucent.......................................23
4.1. Organization..........................................................................23
4.2. Capitalization........................................................................23
4.3. Authority.............................................................................24
4.4. Litigation............................................................................26
4.5. SEC Filings; Lucent Financial Statements..............................................26
4.6. Operations and Obligations............................................................27
4.7. Pooling of Interests; Reorganization..................................................27
5. Covenants......................................................................................27
5.1. Conduct of Business Pending Closing...................................................27
5.2. Prohibited Actions Pending Closing....................................................27
5.3. Access; Documents; Supplemental Information...........................................29
5.4. No Solicitation.......................................................................30
5.5. Filings; Other Actions................................................................31
5.6. Notification of Certain Matters.......................................................31
5.7. Employee Matters......................................................................31
5.8. Tax Returns; Cooperation..............................................................32
5.9. Actions by the Parties................................................................32
5.10. Pooling of Interests; Reorganization..................................................33
5.11. Stock Exchange Listing................................................................33
5.12. Actions by the Stockholder............................................................33
5.13. Use of the Company's Name.............................................................33
5.14. Relocation of the Company.............................................................34
5.15. Indemnification.......................................................................34
5.16. Securities Matters....................................................................34
6. Conditions Precedent...........................................................................34
6.1. Conditions Precedent to Each Party's Obligation to Close..............................34
6.2. Conditions Precedent to Obligations of Acquisition
and Lucent............................................................................35
6.3. Conditions Precedent to the Obligations of the Company and the
Stockholder...........................................................................37
</TABLE>
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<TABLE>
<CAPTION>
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7. Survival of Representations and Warranties.....................................................38
7.1. Representations and Warranties........................................................38
8. Indemnification................................................................................38
8.1. Escrow Shares.........................................................................38
8.2. General Indemnification...............................................................38
8.3. Damage Threshold......................................................................39
8.4. Escrow Period.........................................................................39
8.5. Claims Upon Escrow Fund...............................................................39
8.6. Stockholder's Tax Indemnity...........................................................40
8.7. Objections to Claims..................................................................41
8.8. Third-Party Claims....................................................................42
9. Brokers' and Finders' Fees.....................................................................42
9.1. Stockholders..........................................................................42
9.2. Acquisition and Lucent................................................................43
10. Expenses, Taxes................................................................................43
11. Press Releases.................................................................................43
12. Contents of Agreement; Parties in Interest; etc................................................43
13. Assignment and Binding Effect..................................................................43
14. Termination....................................................................................44
15. Definitions....................................................................................44
16. Notices........................................................................................47
17. Amendment......................................................................................48
18. Governing Law..................................................................................48
19. No Benefit to Others...........................................................................48
20. Severability...................................................................................48
21. Section Headings...............................................................................48
22. Schedules and Exhibits.........................................................................49
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
23. Counterparts...................................................................................49
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of January 11, 1999
by and among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), LANDO
ACQUISITION, INC., a Massachusetts corporation ("Acquisition"), KENAN SAHIN (the
"Stockholder"), and KENAN SYSTEMS CORPORATION, a Massachusetts corporation (the
"Company").
BACKGROUND
A. The Company is a Massachusetts corporation with its registered
office located at One Main Street, Cambridge, MA 02142 and has authorized
191,560 shares of common stock, par value $.01 per share (the "Company Common
Stock"), of which 187,500 shares of Company Common Stock are issued and
outstanding. The Company is engaged principally in the business of providing
network billing, customer care and customer analysis software (the "Business").
B. Lucent is a Delaware corporation with its registered office located
at 1013 Centre Road, Wilmington, Delaware.
C. Acquisition is a wholly-owned subsidiary of Lucent and was formed to
merge with and into the Company so that, as a result of the merger, the Company
will survive and become a wholly-owned subsidiary of Lucent. Acquisition is a
Massachusetts corporation with its registered office located at 300 Baker
Avenue, Concord, Massachusetts 01742 and has authorized an aggregate of 200,000
shares of common stock, no par value per share (the "Acquisition Common Stock").
D. The Board of Directors of each of Acquisition and the Company has
determined that the merger of Acquisition with and into the Company (the
"Merger") in accordance with the provisions of the Massachusetts Business
Corporation Law, as amended (the "MBCL"), and subject to the terms and
conditions of this Agreement, is in the best interests of Acquisition and the
Company and their respective stockholders. The Board of Directors of each of
Acquisition and the Company have approved this Agreement.
E. The parties intend that, for federal income tax purposes, the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Code and that this Agreement shall qualify as a "Plan of Reorganization".
F. The Stockholder owns all the issued and outstanding shares of
capital stock of the Company and will derive substantial benefits from the
consummation of the transactions contemplated thereunder.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable
<PAGE> 7
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto intending to be legally bound do hereby agree as follows:
1. The Merger.
1.1. General. (a) Subject to the terms and conditions of this
Agreement and in accordance with the MBCL, at the Effective Time (as defined
below), (i) Acquisition shall be merged with and into the Company, (ii) the
separate corporate existence of Acquisition shall cease and (iii) the Company
shall be the surviving corporation (the "Surviving Corporation") and shall
continue its corporate existence under the laws of the Commonwealth of
Massachusetts.
(b) The Merger shall become effective at the time of filing of
Articles of Merger with the Secretary of State of the Commonwealth of
Massachusetts substantially in the form of Exhibit A attached hereto ("Articles
of Merger") in accordance with the provisions of Section 78 of the MBCL and at
such later time as may be stated in the Articles of Merger or such later date as
the parties may mutually agree (the "Effective Time"); provided that such date
shall not be more than 30 days after the date of such filing. Subject to the
terms and conditions of this Agreement, the Company and Acquisition shall duly
execute and file the Articles of Merger with the Secretary of State of the
Commonwealth of Massachusetts at the time of the Closing. The closing of the
Merger (the "Closing") shall take place at the offices of Sidley & Austin, 875
Third Avenue, New York, N.Y. at 10:00 A.M., two business days after the date on
which the last of the conditions set forth in Section 6 shall have been
satisfied or waived, or on such other date, time and place as the parties may
mutually agree (the "Closing Date").
(c) At the Effective Time, the effect of the Merger shall be
as provided in the applicable provisions of the MBCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and
Acquisition shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2. Articles of Organization. The Articles of Organization of
Acquisition, as in effect immediately prior to the Effective Time, shall be the
Articles of Organization of the Surviving Corporation until thereafter amended
as provided therein and by law except that Article I of such Articles of
Organization shall be amended to read as follows: "The name of the Corporation
is: Kenan Systems Corporation."
1.3. By-Laws. The By-laws of Acquisition, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided therein and by law.
1.4. Directors and Officers. From and after the Effective
Time, (a) the directors of Acquisition at the Effective Time shall be the
initial directors of the Surviving Corporation,
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<PAGE> 8
each to hold office in accordance with the Articles of Organization and By-laws
of the Surviving Corporation, and (b) the officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case, until their respective successors are duly elected or appointed and
qualified.
1.5. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquisition, the
Company or the holders of any of the following securities:
(a) Each issued and outstanding share of common stock of
Acquisition shall be converted into one validly issued, fully paid and
nonassessable share of Common Stock, $.01 par value per share, of the
Surviving Corporation;
(b) Each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock owned by Acquisition
or Lucent shall be canceled without any conversion thereof and no
payment or distribution shall be made with respect thereto; and
(c) Subject to the provisions of Sections 1.6 and 1.8, each
share of Company Common Stock shall be converted into 68.69 (such
number as adjusted in accordance with Section 1.6 (the "Exchange
Ratio")) validly issued, fully paid and nonassessable shares of Lucent
Common Stock, including the corresponding percentage right (the
"Right") to purchase junior preferred stock, par value $1.00 per share,
pursuant to the Rights Agreement dated as of April 4, 1996, between
Lucent and First Chicago Trust Company of New York as Rights Agent so
that the 187,500 issued and outstanding shares of Company Common Stock
shall be converted into 12,878,788 shares of Lucent Common Stock. All
references in the Agreement to Lucent Common Stock to be received in
accordance with the Merger shall be deemed from and after the Effective
Time to include the Rights. Each share of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired,
and each holder of record of a certificate (representing any shares of
Company Common Stock) shall cease to have any rights with respect
thereto other than (i) the right to receive shares of Common Stock of
Lucent to be issued in consideration therefor upon the surrender of
such certificate and (ii) any cash, without interest, to be paid in
lieu of any fractional share of Lucent Common Stock in accordance with
Section 1.8.
1.6. Adjustment of the Exchange Ratio. In the event that,
prior to the Effective Date, any stock split, combination, reclassification or
stock dividend with respect to the Lucent Common Stock, any change or conversion
of Lucent Common Stock into other securities or any other dividend or
distribution with respect to the Lucent Common Stock (other than regular
quarterly dividends) should occur or, if a record date with respect to any of
the foregoing should occur, appropriate and proportionate adjustments shall be
made to the Exchange Ratio, and
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<PAGE> 9
thereafter all references to the Exchange Ratio shall be deemed to be to the
Exchange Ratio as so adjusted.
1.7. Exchange Procedures; Stock Transfer Books. (a) On the
Closing Date, Lucent shall deliver to the Stockholder, or cause to be delivered,
in exchange for certificates representing the shares of Company Common Stock
held by the Stockholder and surrendered to Lucent or the Surviving Corporation
at the Closing (the "Certificates") (i) a certificate representing the number of
whole shares of Lucent Common Stock into which such shares of the Company
Capital Stock will be converted at the Effective Time pursuant to Section 1.5(c)
less the number of shares of Lucent Common Stock to be deposited in escrow (the
"Escrow Fund") pursuant to Section 8, and (ii) cash in lieu of any fractional
share of Lucent Common Stock in accordance with Section 1.8. In addition, Lucent
shall cause to be distributed to the Escrow Agent 505,050 shares of Lucent
Common Stock which shares shall be registered in the name of the Escrow Agent as
nominee for the Stockholder, shall be held in the Escrow Fund and shall be
available to compensate Lucent as provided in Section 8.
(b) Lucent shall be entitled to deduct and withhold from the
consideration otherwise payable to the Stockholder pursuant to this Agreement
such amounts as Lucent is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Lucent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Stockholder in respect of which such deduction and withholding
was made by Lucent. All amounts in respect of taxes received or withheld by
Lucent shall be disposed of by Lucent in accordance with the Code or such state,
local or foreign tax law, as applicable.
(c) At the close of business on the day on which the Effective
Time occurs, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of shares of
Company Common Stock in the records of the Company. From and after the Effective
Time, the Stockholder shall cease to have any rights with respect to the shares
of Company Common Stock except as otherwise provided herein or by applicable
law.
1.8. No Fractional Shares. No certificates or scrip
representing fractional shares of Lucent Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share shall not
entitle the record or beneficial owner thereof to vote or to any other rights as
a stockholder of Lucent. In lieu of receiving any such fractional share, the
Stockholder shall receive cash (without interest) in an amount rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price on
the New York Stock Exchange, Inc. (the "NYSE") of Lucent Common Stock (as
reported in the NYSE Composite Transactions) on the date immediately preceding
the date on which the Effective Time shall occur (or, if the Lucent Common Stock
did not trade on the NYSE on such prior date, the last day of trading in Lucent
Common Stock on the NYSE prior to the Effective Time) by (ii) the fractional
share to which such holder would otherwise be entitled. Lucent shall deliver
such cash amount to the Stockholder on the Closing Date.
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<PAGE> 10
1.9. No Further Ownership Rights in Company Common Stock. All
certificates representing shares of Lucent Common Stock delivered upon the
surrender for exchange of the Certificates in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8) shall be deemed to have been
delivered (and paid) in full satisfaction of all rights pertaining to the
Company Common Stock previously represented by such Certificates.
1.10. Other Agreements. Each of the parties hereto agrees
that, in accordance with Section 78 of the MBCL, the Surviving Corporation (i)
shall keep a copy of this Agreement in one of the offices specified in Section
32 of the MBCL for inspection by any of its stockholders or by the Stockholder
and (ii) shall furnish a copy of this Agreement to any such stockholders or the
Stockholder upon written request and without charge.
1.11. Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either the Company or Acquisition or (b) otherwise to carry out the purposes of
this Agreement, the Surviving Corporation and its proper officers and directors
or their designees shall be authorized to execute and deliver, in the name and
on behalf of either the Company or Acquisition, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Company or
Acquisition, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Company or
Acquisition, as applicable, and otherwise to carry out the purposes of this
Agreement.
2. Approval by Stockholders of the Company and Acquisition; Further
Corporate Action.
2.1. Approval by Stockholders of the Company and Acquisition.
The Company and the Stockholder represent that the Board of Directors of the
Company has recommended approval to the Stockholder of, and the Stockholder has
approved, this Agreement and the Merger. Lucent and Acquisition represent that
the Board of Directors of Acquisition has recommended approval to Lucent of, and
Lucent has approved, this Agreement and the Merger. The Stockholder, the
Company, Acquisition and Lucent each agree to execute and deliver such further
documents and instruments and to do such other acts and things as may be
required to complete all requisite corporate action in connection with the
transactions contemplated by this Agreement.
3. Representations and Warranties of the Company. The Stockholder
represents and warrants to Lucent and Acquisition with respect to the matters
set forth in the last sentence of Section 3.2(a) and in Sections 3.3, 3.32 and
3.33 as such representations relate to the
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<PAGE> 11
Stockholder and each of the Company and the Stockholder jointly represent and
warrant to Lucent with respect to all other matters contained in this Section 3
as follows:
3.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority and
all necessary governmental approval to carry on its business as it has been and
is now being conducted. The Company is duly qualified or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of its business or the ownership, leasing or operation of its
properties makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed and in good standing, would not have a
Material Adverse Effect.
3.2. Capitalization; Options and Other Rights. (a) The total
authorized shares of capital stock of the Company consists solely of 191,560
shares of Company Common Stock, of which 187,500 shares are issued and
outstanding ("Shares"). All the Shares have been duly and validly authorized and
issued and are fully paid and nonassessable. None of the Shares has been issued
in violation of the preemptive rights of any stockholder of the Company. The
Shares were issued in compliance in all material respects with all applicable
federal and state securities laws and regulations. There are no options,
warrants or other rights to acquire or convert any debt or equity security into
Shares or any other capital stock of the Company. The Stockholder owns all the
Shares free and clear of all Liens.
(b) There are no existing agreements, subscriptions, options,
warrants, calls, commitments, trusts (voting or otherwise), or rights of any
kind whatsoever granting to any Person any interest in or the right to purchase
or otherwise acquire from the Company or granting to the Company any interest in
or the right to purchase or otherwise acquire from any Person, at any time, or
upon the occurrence of any stated event, any securities of the Company, whether
or not presently issued or outstanding, nor are there any outstanding securities
of the Company or any other entity which are convertible into or exchangeable
for other securities of the Company, nor are there any agreements,
subscriptions, options, warrants, calls, commitments or rights of any kind
granting to any Person any interest in or the right to purchase or otherwise
acquire from the Company or any other Person any securities so convertible or
exchangeable, nor are there any proxies, agreements or understandings with
respect to the voting of the Shares.
3.3. Authority. (a) Each of the Stockholder and the Company
has full power and authority to execute, deliver and perform this Agreement and
the Stockholder has full power and authority to execute, deliver and perform the
Registration Rights Agreement. The execution, delivery and performance of this
Agreement by the Company has been duly authorized and approved by the Company's
Board of Directors and the Stockholder and, except for (i) the requirements of
the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and the
rules and regulations promulgated thereunder ("HSR Act") and (ii) the filing of
appropriate merger documents as required by the MBCL, no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
and the transactions contemplated hereby.
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This Agreement has been duly authorized, executed and delivered by the
Stockholder and the Company and is the legal, valid and binding obligation of
the Stockholder and the Company enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law). The Registration Rights Agreement has been duly authorized, executed and
delivered by the Stockholder and is the legal, valid and binding obligation of
the Stockholder enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(b) The execution, delivery and performance by the Stockholder
and the Company of this Agreement and the consummation of the transactions
contemplated hereunder do not, and will not, (i) violate or conflict with any
provision of the Articles of Organization or By-laws, as amended, of the
Company, (ii) violate any law, rule, regulation, order, writ, injunction,
judgment or decree of any court, governmental authority or regulatory agency
applicable to the Stockholder or the Company, except in each case, for
violations which, individually or in the aggregate, will not have a Material
Adverse Effect, or (iii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any note, bond,
indenture, lien, mortgage, lease, permit, guaranty or other agreement,
instrument or obligation to which the Company is a party or by which any of its
properties may be bound, except for violations, breaches or defaults which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(c) The execution, delivery and performance by the Stockholder
of the Registration Rights Agreement and the consummation of the transactions
contemplated thereunder do not, and will not, (i) violate any law, rule,
regulation, order, writ, injunction, judgment or decree of any court,
governmental authority or regulatory agency applicable to the Stockholder,
except for violations which, individually or in the aggregate, will not have a
Material Adverse Effect, or (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
note, bond, indenture, lien, mortgage, lease, permit, guaranty or other
agreement, instrument or obligation to which the Stockholder is a party, except
for violations, breaches or defaults which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(d) The execution and delivery of this Agreement by the
Stockholder and the Company does not, and the performance by the Stockholder and
the Company of this Agreement will not, require any consent, approval,
authorization or permission of, or filing with or notification to any
governmental or regulatory authority, domestic or foreign, except (i) in
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connection with the requirements of the HSR Act, (ii) the filing and recording
of appropriate merger documents as required by the MBCL and (iii) any such
consent, approval, authorization, permission, notice or filing which if not
obtained or made would not have a Material Adverse Effect.
(e) The execution and delivery of the Registration Rights
Agreement by the Stockholder does not, and the performance by the Stockholder of
the Registration Rights Agreement will not, require any consent, approval,
authorization or permission of, or filing with or notification to any
governmental or regulatory authority, domestic or foreign.
(f) The Stockholder has performed all necessary shareholder
action to permit the Company to execute, deliver and perform this Agreement.
3.4. Charter Documents. The Company has previously furnished
to Lucent a true, complete and correct copy of the Articles of Organization and
the By-laws, as amended, of the Company and such Articles of Organization and
By-laws are in full force and effect. The Company is not in violation of any
provision of its Articles of Organization or its By-laws.
3.5. Financial Statements. (a) The Company has previously
furnished to Lucent true and complete copies of the following financial
statements of the Company (the "Financial Statements"):
(i) audited balance sheet of the Company as of December 31,
1997 (the "Balance Sheet") and the audited statements of operations and
stockholders' equity of the Company for the fiscal year ended December
31, 1997, each audited and with a report thereon by Ernst & Young LLP;
and
(ii) unaudited balance sheet of the Company as of December 31,
1998 and the unaudited statements of operations and stockholders'
equity of the Company for the period ended December 31, 1998, each
certified by the President and the Director of Accounting of the
Company.
(b) The Financial Statements were prepared in accordance with
GAAP. The Financial Statements were prepared on the basis of the books and
records of the Company and present fairly, in all material respects, the
financial position of the Company as of the dates thereof and the results of its
operations, cash flow and changes in stockholders' equity for the period then
ended in conformity with GAAP except that the Financial Statements referred to
in clause (a)(ii) above (i) do not contain footnotes ordinarily included in
audited financial statements and (ii) are subject to normal audit adjustments.
3.6. Absence of Undisclosed Liabilities. Except as disclosed
on Schedule 3.6 or as set forth in the notes to the Financial Statements, the
Company does not have any material liability or obligation of any nature
(whether absolute, accrued or contingent or otherwise) which
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<PAGE> 14
is in excess of amounts shown or reserved therefor in the Financial Statements
other than (a) liabilities or obligations not required under GAAP on a basis
consistent with that of preceding accounting periods to be reported on such
Financial Statements and (b) liabilities or obligations incurred after the date
of the Balance Sheet reasonably incurred in the ordinary course of business and
consistent with past practice.
3.7. Operations and Obligations. (a) Except as set forth in
Schedule 3.7, since December 31, 1997:
(i) there has been no event or condition that has had or
reasonably could be expected to have a Material Adverse Effect (other
than as a result of business and economic conditions generally
affecting the billing and customer care industry); and
(ii) there has been no impairment, damage, destruction, loss
or claim, whether or not covered by insurance, or condemnation or other
taking which reasonably could be expected to have a Material Adverse
Effect.
(b) Except as set forth in Schedule 3.7, since December 31,
1997, the Company has conducted its business only in the ordinary course and
consistent with past practice. Without limiting the generality of the foregoing,
since December 31, 1997, except as set forth in such Schedule, the Company has
not:
(i) issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver, or granted any option, warrant or
other right to purchase, any of its capital stock or other equity
interest or any security convertible into its capital stock or other
equity interest;
(ii) other than in the ordinary course of business consistent
with past practice, issued, delivered or agreed (conditionally or
unconditionally) to issue or deliver any bonds, notes or other debt
securities, or borrowed or agreed to borrow any funds, or entered into
any lease the obligations of which, in accordance with generally
accepted accounting principles, would be capitalized;
(iii) paid any obligation or liability (absolute or
contingent) other than current liabilities reflected on the Balance
Sheet and current liabilities incurred since December 31, 1997 in the
ordinary course of business consistent with past practice;
(iv) declared or made, or agreed to declare or make, any
payment of dividends or distributions to its stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock;
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<PAGE> 15
(v) except in the ordinary course of business consistent with
past practice, made or permitted any material amendment or termination
of any agreement to which the Company is a party and is or should be
set forth on Schedule 3.13;
(vi) undertaken or committed to undertake capital expenditures
exceeding $25,000 for any single project or related series of projects;
(vii) sold, leased (as lessor), transferred or otherwise
disposed of, mortgaged or pledged, or imposed or suffered to be imposed
any Lien on, any of the material assets reflected on the Balance Sheet
or any material assets acquired by the Company after December 31, 1997,
except for inventory and personal property sold or otherwise disposed
of for fair value in the ordinary course of its business consistent
with past practice and except for Permitted Liens;
(viii) canceled any debts owed to or claims held by the
Company (including the settlement of any claims or litigation) other
than in the ordinary course of its business consistent with past
practice;
(ix) accelerated or delayed collection of accounts receivable
in advance of or beyond their regular due dates or the dates when the
same would have been collected except in the ordinary course of its
business consistent with past practice;
(x) delayed or accelerated payment of any account payable or
other liability beyond or in advance of its due date or the date when
such liability would have been paid except in the ordinary course of
its business consistent with past practice;
(xi) entered into or become committed to enter into any other
material transaction except in the ordinary course of business;
(xii) allowed the levels of supplies or other materials
included in the inventory of the Company to vary materially from the
levels customarily maintained in accordance with past practice;
(xiii) except for increases in the ordinary course of business
consistent with past practice, instituted any increase in any
compensation payable to any employee of the Company, amended any
Benefit Plan or modified any other benefits made available to any such
employees; or
(xiv) made any change in the accounting principles or made any
material change in accounting practices used by the Company, in each
case, from those applied in the preparation of the Financial
Statements.
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<PAGE> 16
3.8. Properties. (a) The Company has good and valid title to
all its properties and assets reflected on the Balance Sheet or acquired after
the date thereof except for (i) properties and assets sold or otherwise disposed
of in the ordinary course of business since the date of such Balance Sheet, (ii)
leasehold interests, in which event the Company has a valid leasehold interest
and (iii) properties and assets which individually or in the aggregate are not
material.
(b) The Company does not own any real property.
3.9. Leases. Schedule 3.9 lists all outstanding leases, both
capital and operating, or licenses, pursuant to which the Company has (i)
obtained the right to use or occupy any real or personal property, or (ii)
granted to any other Person the right to use any property described on Schedule
3.10.
3.10. Assets. (a) Schedule 3.10 lists each material item of
machinery, equipment, furniture, vehicles or other personal property owned by
the Company having an original cost of $25,000 or more.
(b) Except as set forth in Schedule 3.10, the assets and
properties owned or leased by the Company constitute all the material assets and
properties used by the Company in the operation of its business (including all
books, records, computers and computer programs and data processing systems) and
are in good and serviceable condition (subject, in each case, to normal wear and
tear and obsolescence and except for assets the book value of which does not
exceed $25,000 in the aggregate) and are suitable for the uses for which
intended.
3.11. Accounts Receivable. Except as set forth in Schedule
3.11, all accounts receivable of the Company (i) have arisen from bona fide
transactions by the Company in the ordinary course of its business and represent
bona fide claims against debtors for sales and other charges and (ii) are not
subject to discount except for normal cash and immaterial trade discounts. The
amount carried for doubtful accounts and allowances accrued on the books of the
Company, based on past loss experience, is sufficient to provide for any losses
that may be sustained on realization of the accounts receivable.
3.12. Customers and Suppliers. None of the Company's customers
which individually accounted for more than 5% of the Company's gross revenues
during the year ended December 31, 1998 has terminated or indicated that it
intends to terminate any agreement with the Company. As of the date hereof, no
material supplier of the Company has indicated that it will stop, or decrease
the rate of, supplying materials, products or services to the Company. The
Company has not knowingly breached, so as to provide a benefit to the Company
that was not intended by the parties, any agreement with, or engaged in any
fraudulent conduct with respect to, any customer or supplier of the Company.
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<PAGE> 17
3.13. Contracts. Schedule 3.13 lists any of the following not
otherwise listed on any other Schedule:
(a) each written contract or commitment which creates an
obligation on the part of the Company in excess of $100,000;
(b) each written debt instrument, including, without
limitation, any loan agreement, line of credit, promissory note,
security agreement or other evidence of indebtedness, where the Company
is a lender, borrower or guarantor, in a principal amount in excess of
$25,000;
(c) each written contract or commitment restricting the
Company from engaging in any line of business;
(d) each written contract or commitment containing a change of
control provision;
(e) each written contract or commitment in excess of $10,000
to which the Company is a party for any charitable contribution;
(f) each written joint development, joint venture or
partnership agreement to which the Company is a party;
(g) each written agreement in excess of $10,000 to which the
Company is a party with respect to any assignment, discounting or
reduction of any receivables of the Company;
(h) each written distributorship, sales agency, sales
representative, reseller or marketing, value added reseller, original
equipment manufacturing, technology transfer, source code license or
other agreement containing the right to sublicense software and/or
technology, in each case, to which the Company is a party (other than
any object code licenses granted to customers in the ordinary course of
its business in connection with the sale of the Company's products);
(i) each agreement, option or commitment or right with, or
held by, any third party to acquire any assets or properties, or any
interest therein, of the Company, having a value in excess of $25,000,
except for contracts for the sale of inventory, machinery or equipment
in the ordinary course of business;
(j) each written employment contract entered into by the
Company and each written consulting contract agreement obligating the
Company to make payments in excess of $50,000; and
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<PAGE> 18
(k) each supply agreement to which the Company is a party that
the Company could not readily replace without a Material Adverse
Effect.
Except as set forth on Schedule 3.13, (i) there are no oral
contracts or commitments of the types described in this Section 3.13 which
create an obligation on the part of the Company in excess of $50,000, (ii) there
are no contracts or commitments between the Company and any Affiliate and (iii)
there are no contracts, commitments or arrangements with any employee which
require the payment of any compensation upon the occurrence of any specified
contingency.
3.14. Absence of Default. Except as set forth in Schedule
3.14, each of the leases, contracts and other agreements listed or required to
be listed in Schedules 3.9, 3.13, 3.19 and 3.22 that create obligations on any
Person in excess of $50,000 constitutes a valid and binding obligation of the
parties thereto and is in full force and effect and will continue in full force
and effect after the Closing Date, in each case, without breaching the terms
thereof or resulting in the forfeiture or impairment of any rights thereunder
and without the consent, approval or act of, or the making of any filing with,
any other Person. The Company has fulfilled and performed in all material
respects its obligations under each such lease, contract or other agreement to
which it is a party to the extent such obligations are required by the terms
thereof to have been fulfilled or performed through the date hereof and the
Company is not, and, except as set forth in Schedule 3.14, the Company is not
alleged in writing to be, in breach or default under, nor, except as set forth
in Schedule 3.14, is there or is there alleged in writing to be any basis for
termination of, any such lease, contract or other agreement. To the best
knowledge of the Company, no other party to any such lease, contract or other
agreement has breached or defaulted thereunder. No event has occurred and no
condition or state of facts exists which, with the passage of time or the giving
of notice or both, would constitute such a default or breach by the Company or,
to the best knowledge of the Company, by any such other party. The Company is
not currently renegotiating any such lease, contract or other agreement or
paying liquidated damages in lieu of performance thereunder. Complete and
correct copies of each such lease, contract or other agreement and any
amendments thereto have heretofore been delivered to Lucent.
3.15. Insurance. Schedule 3.15 sets forth a list and brief
description (including nature of coverage, limits, deductibles, premiums and the
loss experience for the past five years with respect to each type of coverage)
of all policies of insurance maintained, owned or held by the Company during the
period from inception up to and including the date hereof. The Company shall use
all commercially reasonable efforts to keep such insurance or comparable
insurance in full force and effect through the Closing Date. The Company has
complied in all material respects with each such insurance policy to which it is
a party and has not failed to give any notice or present any claim thereunder in
a due and timely manner. Except as disclosed in Schedule 3.15, the full policy
limits (subject to deductibles provided in such policies) are available and
unimpaired under each such policy and, to the best knowledge of the Company, no
insurer under any of such policies has a basis to void such policy on grounds of
non-disclosure on the part of the Company
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<PAGE> 19
thereunder. Each such policy is in full force and effect and will not in any way
be affected by or terminate or lapse by reason of the transactions contemplated
by this Agreement.
3.16. Financial Projections. The Company has prepared and made
available to Lucent certain financial projections with respect to the business
of the Company which projections were prepared by the Company based upon the
assumptions reflected therein. The Company makes no representation or warranty
regarding the accuracy of such projections or as to whether such projections
will be achieved or otherwise, except that the Company represents and warrants
that such projections were prepared in good faith and are based on assumptions
believed by it to be reasonable and accurate.
3.17. Litigation. (a) Except as set forth in Schedule 3.17,
(i) there are no actions, suits, arbitrations, legal or administrative
proceedings or investigations pending or, to the best knowledge of the Company,
threatened against the Company; and (ii) neither the Company nor any assets,
properties or business of the Company, is subject to any judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal.
Except as set forth in Schedule 3.17, the Company is not the plaintiff in any
such proceeding and the Company is not contemplating commencing legal action
against any other Person.
(b) The Company is not a party to any suit, action,
arbitration or legal, administrative, governmental or other proceeding or
investigation pending or, to the best of its knowledge, threatened, which
reasonably could have a Material Adverse Effect.
(c) There is no judgment, order, writ, injunction or decree of
any court, governmental agency or arbitration tribunal to which the Company is
subject which reasonably could have a Material Adverse Effect.
3.18. Compliance with Law. Except as set forth in Schedule
3.18:
(a) The Company has complied in all material respects with,
and is not in violation of, in any material respect, any law, ordinance
or governmental rule or regulation (collectively, "Laws") to which it
or its business is subject; and
(b) The Company has obtained all licenses, permits,
certificates or other governmental authorizations (collectively
"Authorizations") necessary for the ownership or use of its assets and
properties or the conduct of its business other than Authorizations (i)
which are ministerial in nature and which the Company has no reason to
believe would not be issued in due course and (ii) which, the failure
of the Company to possess, would not subject the Company to penalties
other than fines not to exceed $25,000 in the aggregate ("Immaterial
Authorizations"); and
(c) The Company has not received notice of violation of, or
knows of any violation of, any Laws to which it or its business is
subject or any Authorization necessary
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<PAGE> 20
for the ownership or use of its assets and properties or the conduct of
its business (other than Immaterial Authorizations).
3.19. Intellectual Property. (a) The Company owns or is
validly licensed or otherwise has the right to use, all patents, trademarks,
trade secrets, trade names, service marks, copyrights and other proprietary
intellectual property rights and computer programs which are material to the
conduct of the business of the Company (the "Intellectual Property Rights").
(b) Other than as disclosed on Schedule 3.19(b), the Company
has not interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property Rights or other proprietary information
of any other Person; provided that the foregoing representation with respect to
patents is only to the Company's best knowledge. The Company has not received
any written charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation (including any claim
that the Company must license or refrain from using any Intellectual Property
Rights or other proprietary information of any other Person) which has not been
settled or otherwise fully resolved. To the Company's best knowledge, no other
Person has interfered with, infringed upon, misappropriated or otherwise come
into conflict with any Intellectual Property Rights or other proprietary
information of the Company.
(c) Except as disclosed on Schedule 3.19(c), assuming that
Lucent continues to operate the business of the Company as presently conducted
and proposed to be conducted, to the Company's best knowledge Lucent will not
interfere with, infringe upon, misappropriate or otherwise come into conflict
with the Intellectual Property Rights or other proprietary information of any
other Person.
(d) Each employee, agent, consultant or contractor who has
contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company or
any predecessor in interest thereto either: (i) is a party to a "work-for-hire"
agreement under which the Company is deemed to be the owner/author of all
property rights therein; or (ii) has executed an assignment or an agreement to
assign in favor of the Company or such predecessor in interest, as applicable,
all right, title and interest in such material, a copy of which assignment or
agreement to assign has been made available to Lucent.
(e) Except as set forth on Schedule 3.19(e), the Company has
not entered into any contract (oral or written) or other arrangement pursuant to
which the Company has agreed or is obligated to license, transfer or place in
escrow the source code for any of its products (prior or current).
(f) Except as disclosed on Schedule 3.19(f), the Company has
taken reasonable steps with the intent of ensuring that its products (including
prior and current products and technology and products and technology currently
under development) will, when used in accordance with associated documentation
on a specified platform or platforms, be capable upon
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<PAGE> 21
installation of (i) operating in the same manner on dates in both the Twentieth
and Twenty-First Centuries and (ii) accurately processing, providing, and
receiving date data from, into, and between the Twentieth and Twenty-First
centuries, including the years 1999 and 2000, and making leap-year calculations
and that all other non-Company products (e.g., hardware, software and firmware)
used in or in combination with the Company's products, properly exchange data
with the Company's products. The Company further represents and warrants that it
has taken reasonable steps to assure that the year 2000 date change or any other
date change will not adversely effect in any significant respect the systems and
facilities that support the operations of the Company.
3.20. Tax Matters. (a) Except as set forth on Schedule 3.20,
(i) each of the Company and the Stockholder has filed all Tax Returns required
to be filed; (ii) all such Tax Returns are complete and accurate in all material
respects and all Taxes shown to be due on such Tax Returns have been timely
paid; (iii) all Taxes (whether or not shown on any Tax Return) owed by the
Company and the Stockholder have been timely paid or the Company has established
adequate reserves therefor in accordance with GAAP; (iv) neither the Company nor
the Stockholder has waived or been requested to waive any statute of limitations
in respect of Taxes; (v) the Tax Returns referred to in clause (i) have not been
examined by the Internal Revenue Service ("IRS") or the appropriate state, local
or foreign taxing authority or the period for assessment of the Taxes in respect
of which such Tax Returns were required to be filed has expired; (vi) there is
no action, suit, investigation, audit, claim or assessment pending, proposed or
threatened with respect to Taxes of either the Company or the Stockholder; (vii)
all deficiencies asserted or assessments made as a result of any examination of
the Tax Returns referred to in clause (i) have been paid in full or the Company
has established adequate reserves therefore in accordance with GAAP; (viii) any
Tax indemnity arrangements will terminate prior to Closing and the Surviving
Corporation will not have any liability thereunder on or after Closing; (ix)
there are no Liens for Taxes upon the assets of the Company except Liens
relating to current Taxes not yet due; (x) all Taxes which the Company is
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued, reserved against and entered on
the books of the Company in accordance with GAAP ; (xi) except as may be limited
as a result of the transactions contemplated by this Agreement, the Company has
not taken any action prior to the Closing Date that would limit Lucent's or the
Surviving Corporation's ability to utilize any net operating carryforwards
("NOLs") of the Company; and (xii) the Company is not and has never been a
member of any group of corporations filing a consolidated tax return for United
States federal income tax purposes.
(b) No consent to the application of Section 341(f)(2) of the
Code has been filed with respect to any property or assets held or acquired or
to be acquired by the Company.
(c) The Company (i) has not agreed to nor is it required to
make any adjustment pursuant to Section 481(a) of the Code; (ii) does not have
any knowledge that the IRS has proposed any such adjustment or change in
accounting method with respect to the Company;
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<PAGE> 22
and (iii) does not have any application pending with the IRS or any other tax
authority requesting permission for any change in accounting method.
(d) The Company does not own an interest in any (i) domestic
international sales corporation, (ii) foreign sales corporation, (iii)
controlled foreign corporation, or (iv) passive foreign investment company.
(e) The Company is not a party (other than as an investor) to
any industrial development bond.
(f) The Company has never been and is not a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
and the Company shall provide a certification to such effect to Lucent pursuant
to Treas. Reg. Sec. 1.897-2(h) and Treas. Reg.
Sec. 1.1445-2(c)(3)(i) at the Closing.
(g) The Company has been a validly electing S corporation
within the meaning of Sections 1361 and 1362 of the Code at all times since
January 1, 1997 and the Company will be an S corporation up to and including the
Closing Date.
(h) Neither the Company nor the Stockholder has any knowledge
that the IRS has proposed to revoke the Company's election to be treated as an S
corporation.
(i) Except as set forth in Schedule 3.20, the Company has not
been, nor will it be, liable for any Tax under Section 1374 of the Code. The
Company has not, in the past 10 years, (i) acquired assets from another
corporation in a transactions in which the Company's Tax basis for the acquired
assets was determined, in whole or in part, by reference to the Tax basis of the
acquired assets (or any other property) in the hands of the transferor or (ii)
acquired the stock of any corporation which is a qualified subchapter S
subsidiary.
(j) Except as set forth in Schedule 3.20, the Company has not
had any earnings and profits during a taxable year with respect to which an
election under Section 1362(a) of the Code to be treated as an S corporation
under Section 1361 through 1379 of the Code was not in effect.
3.21. Employee Benefit Plans. (a) Schedule 3.21 contains a
list and brief description of all "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to as "Pension Plans"), "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) (sometimes referred to as
"Welfare Plans") and all other Benefit Plans (together with the Pension Plans
and Welfare Plans, the "Plans") maintained, or contributed to, by the Company or
any Person that, together with the Company, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code (the Company and each such
other Person, a "Commonly Controlled
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<PAGE> 23
Entity") for the benefit of any current or any former employees, officers or
directors of the Company. The Company has made available to Lucent true,
complete and correct copies of (i) each Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (ii) the most recent annual report on Form
5500 filed with the IRS with respect to each Plan (if any such report was
required), (iii) the most recent summary plan description for each Plan for
which such summary plan description is required, (iv) each trust agreement and
group annuity contract relating to any Plan and (v) all correspondence with the
IRS or the United States Department of Labor relating to any outstanding
controversy or audit. Except as would not have a Material Adverse Effect on the
Company, (i) each Plan has been administered in accordance with its terms and
(ii) the Company and all Plans are in compliance with applicable provisions of
ERISA and the Code.
(b) Each Pension Plan that is intended to be qualified under
Section 401(a) of the Code has been the subject of a determination letter from
the IRS to the effect that such Pension Plan is so qualified and the trust
thereunder is exempt from federal income taxes under Section 501(a) of the Code,
and no such determination letter has been revoked nor has any event occurred
since the date of such Plan's most recent determination letter that would
adversely affect its qualification or materially increase its costs.
(c) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed to or been obligated to contribute to any Plan that is
subject to Title IV of ERISA.
(d) The Company does not have any liability or obligation
under any Welfare Plan to provide life insurance or medical benefits after
termination of employment to any employee or dependent other than as required by
Part 6 of Title I of ERISA.
(e) The Company has no stock option plans and no options to
purchase shares of Common Stock of the Company have been issued or are
outstanding.
(f) The Company has not issued any shares of Company capital
stock to any employee of the Company other than (i) the Stockholder and (ii)
shares previously issued to employees of the Company which have been repurchased
by the Company and are no longer outstanding.
(g) Except for ordinary compensation paid to each employee and
any benefits to be received by such employee as set forth on Schedule 3.21, no
employee of the Company will be entitled to any additional compensation or other
benefits from the Company after the date hereof. In addition, except as set
forth on Schedule 3.21, no employee of the Company will be entitled to any
acceleration of the time of payment or vesting of any compensation or benefits
under any Plan as a result of the transactions contemplated by this Agreement.
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<PAGE> 24
3.22. Employees. (a) Schedule 3.22 lists the names, titles and
current annual salary rates of and bonuses paid or payable in 1998 or 1999 to
all employees whose 1999 annual base salary exceeds $100,000 ("Executive
Employees") of the Company.
(b) Except as set forth in Schedule 3.21 or 3.22, the Company
does not have any employment agreement with, or maintain any employee benefit
plan (within the meaning of Section 3(3) of ERISA) with respect to, any
Executive Employee. There are no agreements with respect to Executive Employees
which are subject to Section 280G of the Code or which would obligate the
Company to make any payment or provide any benefit that could be subject to tax
under Section 4999 of the Code.
3.23. Employment Matters. (a) The Company has complied in all
material respects with all applicable laws, rules and regulations respecting
employment and employment practices, terms and conditions of employment, wages
and hours, and the Company is not liable for any arrears of wages or any taxes
or penalties for failure to comply with any such laws, rules or regulations; (b)
the Company believes that the Company's relations with its employees are
satisfactory; (c) there are no controversies pending or, to the best knowledge
of the Company, threatened between the Company and any of its employees, which
controversies have or could have a Material Adverse Effect; (d) the Company is
not a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company, nor, to the best knowledge of the
Company, are there any activities or proceedings of any labor union to organize
any such employees; (e) there are no unfair labor practice complaints pending
against the Company before the National Labor Relations Board or any current
union representation questions involving employees of the Company; (f) there is
no strike, slowdown, work stoppage or lockout existing, or, to the best
knowledge of the Company, threatened, by or with respect to any employees of the
Company; (g) no charges are pending before the Equal Employment Opportunity
Commission or any state, local or foreign agency responsible for the prevention
of unlawful employment practices with respect to the Company; (h) there are no
claims pending against the Company before any workers' compensation board; and
(i) the Company has not received notice that any federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws
intends to conduct an investigation of or relating to the Company and, to the
best knowledge of the Company, no such investigation is in progress.
3.24. Environmental Laws. The Company has not received any
notice or claim (and is not aware of any facts that would form a reasonable
basis for any claim), or entered into any negotiations or agreements with any
other Person, and, to the knowledge of the Company, the Company is not the
subject of any investigation by any governmental or regulatory authority,
domestic or foreign, relating to any material or potentially material liability
or remedial action under any Environmental Laws. There are no pending or, to the
best knowledge of the Company, threatened, actions, suits or proceedings against
the Company or any of its respective properties, assets or operations asserting
any such material liability or seeking any material remedial action in
connection with any Environmental Laws.
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<PAGE> 25
3.25. Export Control Laws. The Company has conducted its
export transactions in accordance with applicable provisions of United States
export control laws and regulations, including but not limited to the Export
Administration Act and implementing Export Administration Regulations, except
for such violations which would not have a Material Adverse Effect on the
Company. Without limiting the foregoing, the Company represents and warrants
that:
(a) The Company has obtained all export licenses and other
approvals required for its exports of products, software and
technologies from the United States except where the failure to obtain
such export licenses and other approvals would not subject the Company
to penalties other than fines not to exceed $50,000 in the aggregate;
(b) The Company is in compliance with the terms of all
applicable export licenses or other approvals;
(c) There are no pending or, to the Company's knowledge,
threatened claims against the Company with respect to such export
licenses or other approvals;
(d) There are no actions, conditions or circumstances
pertaining to the Company's export transactions that may give rise to
any future claims; and
(e) No consents or approvals for the transfer of export
licenses to Lucent are required, or such consents and approvals can be
obtained expeditiously without material cost.
3.26. Bank Accounts, Letters of Credit and Powers of Attorney.
Schedule 3.26 lists (a) all bank accounts, lock boxes and safe deposit boxes
relating to the business and operations of the Company (including the name of
the Bank or other institution where such account or box is located and the name
of each authorized signatory thereto), (b) all outstanding letters of credit
issued by financial institutions for the account of the Company (setting forth,
in each case, the financial institution issuing such letter of credit, the
maximum amount available under such letter of credit, the terms (including the
expiration date) of such letter of credit and the party or parties in whose
favor such letter of credit was issued), and (c) the name and address of each
Person who has a power of attorney to act on behalf of the Company. The Company
has heretofore delivered to Lucent true, correct and complete copies of each
letter of credit and each power of attorney described on Schedule 3.26.
3.27. Subsidiaries. The Company has no Subsidiaries.
3.28. Minute Books. The minute books of the Company made
available to Lucent contain a complete and accurate summary of all meetings of
directors and stockholders or actions by written resolutions since the time of
incorporation of the Company through the date of
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<PAGE> 26
this Agreement, and reflect all transactions referred to in such minutes and
resolutions accurately, except for omissions which are not material.
3.29. Complete Copies of Materials. The Company has delivered
or made available true and complete copies of each document that has been
requested by Lucent or its counsel in connection with their legal and accounting
review of the Company.
3.30. Disclosure. None of the representations or warranties of
the Stockholder or the Company contained herein, none of the information
contained in the Schedules referred to in this Section 3, and none of the other
information or documents furnished or to be furnished to Lucent by the
Stockholder or the Company or pursuant to the terms of this Agreement, is false
or misleading in any material respect or omits to state a fact herein or therein
necessary to make the statements herein or therein not misleading in any
material respect.
3.31. Pooling of Interests; Reorganization. The Company has
not (i) taken any action or failed to take any action which action or failure
would jeopardize the treatment of the Merger as a pooling of interests in
accordance with GAAP and the regulations and interpretations of the Securities
and Exchange Commission for accounting purposes or (ii) taken any action or
failed to take any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
3.32. Investment Matters. (a) The Stockholder agrees not to
engage in any hedging transactions with regard to the Consideration Shares
unless in compliance with the Securities Act.
(b) The Stockholder acknowledges and agrees that the
Consideration Shares are being offered and sold to the Stockholder in reliance
on specific exemptions from the registration requirements of the United States
federal and state securities laws and that Lucent is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of the Stockholder set forth herein in order to determine the
applicability of such exemptions and the suitability of the Stockholder to
acquire the Consideration Shares.
(c) The Stockholder has received and has had an opportunity to
review Lucent's Annual Report on Form 10-K for the fiscal years ended September
30, 1998 and September 30, 1997, Lucent's 1998 Annual Report to Shareowners for
fiscal 1998, Lucent's Proxy Statement for the 1999 annual meeting of
stockholders and Lucent's Current Reports on Form 8-K dated November 19, 1998
and January 8, 1999 and the Stockholder has had a reasonable opportunity to ask
questions of and receive answers from Lucent concerning Lucent, and to obtain
any additional information reasonably necessary to verify the accuracy of the
information furnished to the Stockholder concerning Lucent and all such
questions, if any, have been answered to the full satisfaction of the
Stockholder.
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<PAGE> 27
(d) The Stockholder acknowledges that no representations or
warranties have been made with respect to the Consideration Shares to the
Stockholder by Lucent or any agent, employee or Affiliate of Lucent other than
those contained in this Agreement, and in entering into the transactions
contemplated hereunder the Stockholder is not relying upon any information,
other than that referred to in the foregoing paragraph, contained in this
Agreement, and the results of independent investigations by the Stockholder and
its representatives; provided that the Stockholder acknowledges and agrees that
the only representations or warranties that Lucent has made with respect to such
information are as set forth in this Agreement.
3.33. Regulation D. (a) The Stockholder acknowledges that each
certificate representing the Consideration Shares delivered to or on behalf of
the Stockholder and the Escrow Agent shall include the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY
STATE OF THE UNITED STATES OR OTHER JURISDICTION. NEITHER THE SHARES
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION, EXCEPT PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS. BY
THE ACQUISITION HEREOF, THE HOLDER AGREES THAT SUCH HOLDER WILL GIVE
EACH PERSON TO WHOM THE SHARES ARE TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN THE CASE OF ANY TRANSFER OR OTHER
DISPOSITION MADE OTHERWISE THAN PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, THE HOLDER HEREOF SHALL BE REQUIRED TO PROVIDE
TO THE COMPANY, PRIOR TO SUCH TRANSFER, AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE ACT AND IN COMPLIANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS.
(b) The Stockholder understands that the Consideration Shares
are being issued to the Stockholder and the Escrow Agent in reliance on an
exemption from the registration requirements of the Securities Act for an offer
and sale of securities that does not involve a public offering and have not been
registered under the Securities Act or with any securities regulatory authority
of any state of the United States or other jurisdiction and, therefore, that
such Consideration Shares (and all securities issued in exchange therefor or in
substitution thereof) cannot be resold in the absence of such registration
except pursuant to an exemption from, or in a
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<PAGE> 28
transaction not subject to, such registration requirements. The Stockholder
agrees that he shall not transfer any of the Consideration Shares except in a
transaction registered under the Securities Act or unless the Stockholder shall
have delivered to Lucent an opinion of United States counsel, which counsel and
opinion shall be reasonably satisfactory to Lucent, that such transfer is being
effected in accordance with an available exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act. Except as set
forth in the Registration Rights Agreement, the Stockholder is aware that Lucent
is under no obligation to effect any such registration under the Securities Act
or otherwise with respect to such Consideration Shares (or any securities issued
in exchange therefor or in substitution thereof), or to file for or comply with
any exemption from such registration.
(c) The Stockholder is either an Accredited Investor or,
immediately prior to receipt of any information regarding Lucent, had such
knowledge and experience (alone or with a Purchaser Representative) in financial
and business matters as to be able to evaluate the merits and risks of an
investment in Lucent.
(d) The Stockholder will acquire the Consideration Shares for
his own account and not with a view to any distribution (within the meaning of
the Securities Act) thereof or with any present intention of offering or selling
any of the Consideration Shares in a transaction that would violate the
Securities Act or the securities Laws of any state of the United States or any
other applicable jurisdiction.
(e) The Stockholder is not in the business of buying and
selling securities.
(f) The Stockholder acknowledges and agrees that any resale or
other transfer, or attempted resale or other transfer, which Lucent determines
in good faith was made other than in compliance with the restrictions stated
herein shall not be recognized by Lucent in respect of the Consideration Shares,
and that Lucent may deliver a corresponding stop-transfer order to Lucent's
transfer agent to that effect.
4. Representations and Warranties of Acquisition and Lucent. Each of
Acquisition and Lucent represents and warrants to the Stockholder as follows:
4.1. Organization. Each of Acquisition and Lucent is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to enter into and perform this Agreement and the transactions
contemplated hereby to be performed by it.
4.2. Capitalization. (a) The total authorized shares of
capital stock of Lucent consists of (i) 3,000,000,000 shares of common stock,
par value $.01 per share (the "Lucent
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<PAGE> 29
Common Stock"),(1) and (ii) 250,000,000 shares of Lucent Preferred Stock, par
value $1.00 per share (the "Lucent Preferred Stock"). At the close of business
on November 30, 1998, 1,318,615,011 shares of Lucent Common Stock were
outstanding and no shares of Lucent Preferred Stock were outstanding. All the
outstanding shares of Lucent Common Stock have been duly and validly authorized
and issued and are fully paid and nonassessable. None of the outstanding shares
of Lucent Common Stock has been issued in violation of the preemptive rights of
any stockholder of Lucent. The shares of outstanding Lucent Common Stock were
issued in compliance in all material respects with all applicable federal and
state securities laws and regulations. The shares of Lucent Common Stock to be
issued pursuant to the Merger will be duly and validly authorized and issued,
will be fully paid and non-assessable and will not be issued in violation of the
preemptive rights of any stockholder of Lucent.
(b) Except for Lucent plans providing for the issuance of
Lucent Common Stock to officers, directors and employees of Lucent (and awards
outstanding under such plans) or in connection with the acquisition by Lucent or
any of its Subsidiaries of all or substantially all the capital stock or all or
substantially all the assets of another Person or as set forth in Schedule 4.2,
there are no existing agreements, subscriptions, options, warrants, calls,
commitments, trusts (voting or otherwise), or rights of any kind whatsoever
granting to any Person any interest in or the right to purchase or otherwise
acquire from Lucent or granting to Lucent any interest in or the right to
purchase or otherwise acquire from any Person, at any time, or upon the
occurrence of any stated event, any securities of Lucent, whether or not
presently issued or outstanding, nor are there any outstanding securities of
Lucent or of any other entity which are convertible into or exchangeable for
other securities of Lucent, nor are there any agreements, subscriptions,
options, warrants, calls, commitments or rights of any kind granting to any
Person any interest in or the right to purchase or otherwise acquire from Lucent
any securities so convertible or exchangeable.
4.3. Authority. (a) Each of Acquisition and Lucent has full
corporate power and authority to execute, deliver and perform this Agreement and
Lucent has full corporate power and authority to execute, deliver and perform
the Registration Rights Agreement. The execution, delivery and performance of
this Agreement by each of Lucent and Acquisition has been duly authorized and
approved (i) in the case of Acquisition, by its Board of Directors and (ii) in
the case of Lucent, by all necessary corporate action and, except for (A) the
adoption of this Agreement by the stockholders of Acquisition, (B) the filing of
appropriate merger documents as required by the MBCL, and (C) the requirements
of the HSR Act, no other corporate proceedings other than actions previously
taken on the part of Acquisition or Lucent are necessary to authorize this
Agreement and the transactions contemplated hereby. The execution, delivery and
performance of the Registration Rights Agreement by Lucent has been duly
authorized and approved by all necessary corporate action and no other corporate
proceedings other than actions previously taken on the part of Lucent are
necessary to authorize the Registration Rights Agreement and the transactions
contemplated hereby. This Agreement has been duly authorized,
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(1) Lucent is considering increasing the number of authorized shares to
6,000,000,000 after the February 17, 1999 annual meeting.
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<PAGE> 30
executed and delivered by Acquisition and Lucent and is the legal, valid and
binding obligation of each of Acquisition and Lucent enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally and by the effect of general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law). The Registration Rights Agreement has been duly
authorized, executed and delivered by Lucent and is the legal, valid and binding
obligation of Lucent enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and by the effect of general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or at
law).
(b) The execution, delivery, performance by each of
Acquisition and Lucent of this Agreement and the consummation of the
transactions hereunder do not, and will not, (i) violate or conflict with any
provision of the Certificate of Incorporation or By-laws of Lucent or the
Articles of Organization or By-Laws of Acquisition, (ii) violate any law, rule,
regulation, order, writ, injunction, judgement or decree of any court,
governmental authority, or regulatory agency, except for violations which,
individually or in the aggregate, will not have a Material Adverse Effect on
Acquisition and Lucent taken as a whole, or (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any note, bond, indenture, lien, mortgage, lease, permit, guaranty or
other agreement, instrument or obligation, oral or written, to which Lucent is a
party or by which any of the properties of Acquisition or Lucent may be bound,
except for violations, breaches or defaults which, individually or in the
aggregate, will not have a Material Adverse Effect on Acquisition or Lucent and
its Subsidiaries taken as a whole.
(c) The execution, delivery, performance by Lucent of the
Registration Rights Agreement and the consummation of the transactions
thereunder do not, and will not, (i) violate or conflict with any provision of
the Certificate of Incorporation or By-laws of Lucent, (ii) violate any law,
rule, regulation, order, writ, injunction, judgement or decree of any court,
governmental authority, or regulatory agency, except for violations which,
individually or in the aggregate, will not have a Material Adverse Effect on
Lucent, or (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any note, bond,
indenture, lien, mortgage, lease, permit, guaranty or other agreement,
instrument or obligation, oral or written, to which Lucent is a party or by
which any of the properties of Lucent may be bound, except for violations,
breaches or defaults which, individually or in the aggregate, will not have a
Material Adverse Effect on Lucent and its Subsidiaries taken as a whole.
(d) The execution and delivery of this Agreement by Lucent and
Acquisition does not, and the performance by Lucent and Acquisition of this
Agreement will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) in connection with the requirements of the
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HSR Act, (ii) the filing and recording of appropriate merger documents as
required by the MBCL and (iii) any such consent, approval, authorization,
permission, notice or filing which if not obtained or made would not have a
Material Adverse Effect on Lucent.
(e) The execution and delivery of the Registration Rights
Agreement by Lucent does not, and the performance by Lucent or the Registration
Rights Agreement will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign.
4.4. Litigation. (a) Neither Acquisition nor Lucent is a party
to any suit, action, arbitration or legal, administrative, governmental or other
proceeding or investigation pending or, to its knowledge threatened, which
reasonably could adversely affect or restrict its ability to consummate the
transactions contemplated by this Agreement or to perform its obligations
hereunder.
(b) There is no judgment, order, writ, injunction or decree of
any court, governmental agency or arbitration tribunal to which Acquisition or
Lucent is subject which might adversely affect or restrict its ability to
consummate the transactions contemplated by this Agreement or to perform its
obligations hereunder.
4.5. SEC Filings; Lucent Financial Statements. (a) Since
October 1, 1997, Lucent and each of its Subsidiaries has filed all forms,
reports and documents required to be filed with the SEC under the Securities Act
or the Exchange Act. All such required forms, reports and documents are referred
to herein as the "Lucent SEC Reports." [As of their respective dates, the Lucent
SEC Documents (i) were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Lucent SEC Documents and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to made the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Except as disclosed in the Lucent SEC Documents, the
financial statements (including, in each case, any related notes thereto)
contained in the Lucent SEC Documents, including any Lucent SEC Documents filed
after the date hereof but before the Closing, (i) comply as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (ii) were prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and (iii) fairly presented the consolidated financial
position of Lucent and its Subsidiaries as at the respective dates thereof and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments and to any other
adjustments described therein. The balance sheet of Lucent contained in the
Lucent SEC Documents, as of _________ is hereinafter referred to as
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the "Lucent Balance Sheet." As of _________, neither Lucent nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed under GAAP on the Lucent Balance Sheet or in
the related notes which, if not so disclosed, individually or in the aggregate,
would result in a Material Adverse Effect.]
4.6. Operations and Obligations. Except as described in the
Lucent SEC Reports, since the date of the Lucent Balance Sheet, (i) except as a
result of the transactions contemplated by this Agreement or in connection with
the acquisition by Lucent or any of its Subsidiaries of all or substantially all
the capital stock or all or substantially all the assets of another Person,
there has not been any development that has had or reasonably would be expected
to have a Material Adverse Effect on Lucent and its Subsidiaries taken as a
whole; (ii) there has not been any material change by Lucent in its accounting
methods, principles or practices, except as required by changes in GAAP or any
other change provided such other change could not reasonably be expected to have
a Material Adverse Effect; or (iii) except as a result of the transactions
contemplated by this Agreement or in connection with the acquisition by Lucent
or any of its Subsidiaries of all or substantially all the capital stock or all
or substantially all the assets of another Person, there has not been any
material revaluation by Lucent of any of its assets including, without
limitation, writing down the value of capitalized software or inventory or
writing off notes or accounts receivable which would have a Material Adverse
Effect.
4.7. Pooling of Interests; Reorganization. Neither Lucent nor
any of its Subsidiaries has (i) taken any action or failed to take any action
which action or failure would jeopardize the treatment of the Merger as a
pooling of interests in accordance with GAAP and the regulations and
interpretations of the SEC for accounting purposes or (ii) taken any action or
failed to take any action which action or failure would jeopardize the
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
5. Covenants.
5.1. Conduct of Business Pending Closing. From the date hereof
until the Closing, the Company shall:
(a) maintain its existence in good standing;
(b) maintain the general character of its business and
properties and conduct its business in the ordinary course consistent
with past practices, except as expressly permitted by this Agreement;
(c) maintain business and accounting records consistent with
past practices; and
(d) use its reasonable best efforts (i) to preserve its
business intact, (ii) to keep available to the Company the services of
its present officers and employees, and (iii) to
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preserve for the Company the goodwill of its suppliers, customers and
others having business relations with the Company.
5.2. Prohibited Actions Pending Closing. Unless otherwise
provided for herein or approved by Lucent in writing, from the date hereof until
the Closing, the Company shall not:
(a) amend or otherwise change its Articles of Organization or
By-laws;
(b) issue or sell or authorize for issuance or sale, or grant
any options, warrants or make other agreements with respect to, any
shares of its capital stock or any other of its securities or warrants;
(c) except as described in Schedule 5.2(c), declare, set
aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise with respect to any of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any Person, or make any loans or advances, except in the ordinary
course of business and consistent with past practice; (iii) enter into
any contract or agreement other than in the ordinary course of
business, consistent with past practice; (iv) authorize any capital
commitment which is in excess of $20,000 or capital expenditures which
are, in the aggregate, in excess of $50,000; or (v) enter into or amend
any contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 5.2(e);
(f) mortgage, pledge or subject to Lien, any of its assets or
properties or agree to do so except for Permitted Liens;
(g) assume, guarantee or otherwise become responsible for the
obligations of any other Person or agree to so do;
(h) enter into or agree to enter into any employment
agreement;
(i) enter into any compensation arrangement or increase the
compensation or benefits payable or to become payable to its officers
or employees except for increases in accordance with past practices in
salaries or wages of officers or employees which increases for all
officers and employees in the aggregate shall not exceed 9% of the
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aggregate base salary for all officers and employees and, for any
officer or employee, shall not exceed 15% of such officer's or
employee's base salary, or grant any severance or termination pay to,
or enter into any severance agreement with any director, officer or
other employee of the Company, or establish, adopt or enter into any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
such director, officer or employee or, to the extent any of the
foregoing exist, any amendment with respect thereto;
(j) take any action, other than in the ordinary course of
business and consistent with past practice, with respect to accounting
policies or procedures (including, without limitation, procedures with
respect to the payment of accounts payable and collection of accounts
receivables);
(k) make any Tax election or settle or compromise any material
federal, state, local or foreign income Tax liability;
(l) settle or compromise any pending or threatened suit,
action or claim which is material or which relates to any of the
transactions contemplated by this Agreement;
(m) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice;
(n) except in connection with the sale of the Company's
products in the ordinary course of business and consistent with past
practice, sell, assign, transfer, license, sublicense, pledge or
otherwise encumber any of the Intellectual Property Rights; or
(o) announce an intention, commit or agree to do any of the
foregoing.
5.3. Access; Documents; Supplemental Information. (a) From and
after the date hereof until the Closing, the Company shall afford and, with
respect to clause (ii) below, shall use its reasonable best efforts to cause the
independent certified public accountants for the Company to afford, (i) to the
officers, independent certified public accountants, counsel and other
representatives of Acquisition and Lucent, upon reasonable notice free and full
access at all reasonable times to the properties, books and records including
tax returns filed and those in preparation of the Company and the right to
consult with the officers, employees, accountants, counsel and other
representatives of the Company in order that Acquisition and Lucent may have
full opportunity to make such investigations as they shall reasonably desire to
make of the operations, properties, business, financial condition and prospects
of the Company, (ii) to the
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independent certified public accountants of Acquisition and Lucent, free and
full access at all reasonable times to the work papers and other records of the
accountants relating to the Company, and (iii) to Acquisition and Lucent and its
representatives, such additional financial and operating data and other
information as to the properties, operations, business, financial condition and
prospects of the Company as Acquisition and Lucent shall from time to time
reasonably request.
(b) From the date of this Agreement through and including the
Closing, Acquisition, Lucent and the Company agree to furnish to each other
copies of any notices, documents, requests, court papers, or other materials
received from any governmental agency or any other third party with respect to
the transactions contemplated by this Agreement, except where it is obvious from
such notice, document, request, court paper or other material that the other
party was already furnished with a copy thereof.
(c) The Company shall deliver to Lucent, without charge, the
following financial information (the "Supplemental Financial Information"): (i)
within 45 days after each fiscal quarter ending after the date hereof until the
Closing, the unaudited balance sheet of the Company as of the end of such
quarter and the unaudited consolidated and consolidating statements of
operations, cash flow and stockholders' equity of the Company for such quarter
and for the portion of the fiscal year then completed, (ii) within 90 days after
each fiscal year ending after the date hereof until the Closing, the audited
balance sheet of the Company as of the end of such year and the audited
consolidated statements of operations and stockholders' equity of the Company
for such year, in each case prepared in accordance with GAAP audited and with a
report thereon by Ernst & Young LLP and (iii) promptly upon the reasonable
request by Lucent, such additional financial information as may be required in
connection with any filing by Lucent pursuant to the requirements of federal or
state securities laws. Such Supplemental Financial Information shall present
fairly, in all material respects, the consolidated financial position of the
Company for the period covered, subject in the case of unaudited financials to
normal year-end adjustments.
5.4. No Solicitation. The Company shall not authorize or
permit any of its affiliates or any officer, director, employee, investment
banker, attorney or other adviser or representative of the Company or any of its
affiliates to (a) solicit, initiate, or encourage the submission of, any
Acquisition Proposal (as hereinafter defined) or (b) participate in any
discussions or negotiations regarding, or furnish to any Person any information
for the purpose of facilitating the making of, or take any other action to
facilitate any inquiries or the making of, any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal. Without limiting
the foregoing, it is understood that any violation, of which, the Company or any
of its Affiliates had knowledge at the time of such violation, of the
restrictions set forth in the immediately preceding sentence by any officer,
director, employee, investment banker, attorney, employee, or other adviser or
representative of the Company or any of its affiliates, whether or not such
Person is purporting to act on behalf of the Company or any of its affiliates or
otherwise, shall be deemed to be a breach of this Section 5.4 by the Company and
its affiliates. The
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Company promptly shall advise Lucent of any Acquisition Proposal and inquiries
with respect to any Acquisition Proposal. "Acquisition Proposal" means any
proposal for a merger or other business combination involving the Company or any
of its Affiliates or any proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in the Company or any of its Affiliates, any
voting securities of the Company or any of its Affiliates or a substantial
portion of the assets of the Company (other than sales of the Company's products
in the ordinary course of business consistent with past practice).
5.5. Filings; Other Actions. (a) As promptly as practicable
after the date hereof, Lucent, the Stockholder and the Company shall file, with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice the notifications and other information required to be filed under the
HSR Act with respect to the transactions contemplated hereby. Each of Lucent,
the Stockholder and the Company will use its reasonable best efforts to ensure
that all such filings by it shall be, as of the date filed, true and accurate
and in accordance with the requirements of the HSR Act and any such rules and
regulations. Each of Lucent and the Company agrees to make available, or cause
to be made available, to the other such information as each of them may
reasonably request relative to its business, assets and property as may be
required of each of them to file any additional information requested by such
agencies under the HSR Act and any such rules and regulations; provided that the
parties shall have entered into mutually acceptable arrangements to ensure the
continued confidentiality of any such information.
(b) Each party hereto agrees, subject to applicable laws
relating to the exchange of information, promptly to furnish the other parties
hereto with copies of written communications (and memoranda setting forth the
substance of all oral communications) received by such party, or any of its
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act) as in effect on the date hereof), from, or delivered by any of the
foregoing to, any governmental or regulatory authority, domestic or foreign,
relating to or in respect of the transactions contemplated under this Agreement.
5.6. Notification of Certain Matters. The Company shall give
prompt notice to Lucent, and Lucent shall give prompt notice to the Company, of
(a) the occurrence, or non-occurrence, of any event which would be likely to
cause (i) any representation or warranty contained in this Agreement to be
untrue or inaccurate in any material respect or (ii) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied; and
(ii) any failure of the Company or Lucent, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided that the delivery of any notice pursuant to this Section
5.6 shall not limit or otherwise affect the remedies available to the party
receiving such notice.
5.7. Employee Matters. Lucent shall cause the Surviving
Corporation to make an offer of employment to each employee of the Company who
on the Closing Date is actively employed by the Company or who was actively
employed by the Company but is on authorized leave of absence. The foregoing
undertaking shall not apply to any inactive or former employee
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including any person on short-term or long-term disability or who has terminated
his or her employment, retired or died on or before the Closing Date; provided
that each employee of the Company on short-term disability leave on the Closing
Date shall be offered employment by the Surviving Corporation upon such employee
being able to return to active service. Lucent agrees that, as soon as
practicable, each employee of the Company shall be eligible to participate in
any generally available welfare benefit or fringe benefit plans maintained by
Lucent for new hires and that Lucent will recognize such employee's cumulative
prior service to the Company solely for purposes of determining eligibility to
participate in and for the vesting of benefits under such welfare benefit or
fringe benefit plans; provided that such recognition shall not be for the
purpose of determining retirement benefits and accrual.
5.8. The Company on the one hand and Lucent on the other will
cooperate with each other and provide such information as any party may require
in order to file any return to determine Tax liability or a right to a Tax
refund or to conduct a Tax audit or other Tax proceeding. Such cooperation shall
include, but not be limited to, making employees available on a mutually
convenient basis to explain any documents or information provided hereunder or
otherwise as required in the conduct of any audit or other proceeding. The
Company and Lucent will retain until the expiration of any applicable statutes
of limitations (including any extensions thereof) all Tax Returns, schedules and
workpapers and all other material records or documents relating to the Company
for all Tax periods through the first Tax period ending after the Closing Date.
At the expiration of such statutory period (including any extensions thereof),
each party shall have the right to dispose of any such Returns and other
documents or records on thirty (30) days written notice to the other party. Any
information, documents or records obtained under this Section 5.15 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of Tax Returns or claims for refund or in conducting an audit or other
proceeding.]
5.9. Actions by the Parties. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties hereto will use its
reasonable best efforts to take or cause to be taken all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable law
and regulations to consummate and make effective in the most expeditious manner
practicable, the transactions contemplated by this Agreement including (i) the
obtaining of all necessary actions and non-actions, waivers and consents, if
any, from any governmental agency or authority and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by any governmental agency or authority; (ii) the obtaining of all
necessary consents, approvals or waivers from any other Person; (iii) the
defending of any claim, investigation, action, suit or other legal proceeding,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby; and (iv) the execution of
additional instruments necessary to consummate the transactions contemplated by
this Agreement. Each party will promptly consult with the other and provide
necessary information (including copies thereof) with respect to all filings
made by such party with the any agency or authority in connection with this
Agreement and the transactions contemplated hereby.
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5.10. Pooling of Interests; Reorganization. Each of Lucent and
the Company shall cooperate and work together with its respective accountants,
with the objective that the transactions contemplated hereunder shall qualify as
a pooling of interests under GAAP. Neither Lucent or any of its Subsidiaries nor
the Stockholder or the Company shall take any action which could reasonably be
expected to jeopardize such qualification. Neither Lucent or its Subsidiaries
nor the Company or the Stockholder shall take any action which could reasonably
be expected to jeopardize the qualification of the transactions contemplated
hereby as a reorganization within the meaning of Section 368(a) of the Code.
5.11. Stock Exchange Listing. Lucent shall use all reasonable
best efforts to list on the NYSE, upon official notice of issuance, the shares
of Lucent Common Stock to be issued in connection with the Merger.
5.12. Actions by the Stockholder. The Stockholder shall cause
the Company to fulfill all its obligations under this Agreement.
5.13. Use of the Company's Name. (a) Lucent shall permit the
Stockholder to use the name "Kenan" for eleemosynary purposes at any time
following the Closing.
(b) At any time after the fifth annual anniversary of the
Closing, the Stockholder may request in writing that Lucent permit him to use
the name "Kenan" in connection with a business which, at the time of such
request, does not compete or propose to compete with any business that Lucent is
then engaged in or has publicly announced that it will be engaged in within the
next 24 months. Lucent will consider such request in good faith and, if Lucent
is not using such name for any external business purpose at the time of such
request, Lucent determines in its reasonable business judgment that it will not
use such name for any external business purpose in the foreseeable future and
that use of such name pursuant to the Stockholder's request will not mislead or
otherwise confuse its customers, then Lucent shall permit the Stockholder to use
such name solely in connection with such business.
5.14. Relocation of the Company. Lucent acknowledges that it
has no present intention to relocate the operations of the Company from
Cambridge, Massachusetts, and Lucent agrees that unless it concludes in the
reasonable exercise of its business judgment that such a relocation is
reasonably necessary for Lucent, it shall not relocate such operation from
Cambridge, Massachusetts for a period of 1 year following the Closing
5.15. Indemnification. From and after the Effective Time,
Lucent shall, or shall cause the Surviving Corporation to, fulfill and honor in
all respects the obligations of the Company to indemnify each person who is or
was a director or officer (an "Indemnified Party") of the Company pursuant to
any indemnifications provision of the Company's Articles of Organization or
By-laws as each is in effect on the date hereof. All rights to such
indemnification in favor or any Indemnified Party, as provided in the Company's
Articles of Organization and By-
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laws in effect on the date hereof shall survive the Merger and shall continue in
full force and effect, without amendment thereto, for a period of six years from
the Effective Time.
5.16. Securities Matters. The Stockholder will not sell,
assign, transfer or otherwise dispose of any of the Consideration Shares other
than in accordance with applicable federal and state securities laws or an
exemption therefrom.
6. Conditions Precedent.
6.1. Conditions Precedent to Each Party's Obligation to Close.
The respective obligations of each party hereto to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment or
satisfaction, prior to or on the Closing Date of the following conditions:
(a) Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any governmental or regulatory authority, domestic
or foreign, which the failure to obtain, make or occur would have the effect of
making any of the transactions contemplated hereby illegal or would have a
Material Adverse Effect on Lucent or the Company, assuming the transactions are
consummated, shall have been obtained, made or occurred.
(b) HSR and Other Approvals. The waiting period (and any
extension thereof) applicable to the consummation of the transactions
contemplated hereby under the HSR Act shall have expired or been terminated. All
authorizations, consents, orders, declarations or approvals of, or filings with,
or terminations or expirations of waiting periods imposed by, any governmental
or regulatory authority, domestic or foreign, which the failure to obtain, make
or occur would have the effect of making any of the transactions contemplated
hereby illegal or would have a Material Adverse Effect on Lucent or the Company
shall have been obtained, made or occurred.
(c) No Injunction. No temporary restraining order, preliminary
or permanent injunction or other order from any court of competent jurisdiction
prohibiting or preventing the consummation of any of the transactions
contemplated hereunder shall be in effect.
(d) Escrow Agreement. Each of Lucent, the Company, the Escrow
Agent and the Stockholder shall have entered into the Escrow Agreement
substantially in the form of Exhibit B\ hereto (the "Escrow Agreement").
(e) Registration Rights Agreement. Lucent and the Stockholder
shall have entered into the Registration Rights Agreement.
(f) Representation Letters. Each of the Company and Lucent
shall have executed and delivered a letter of representation relating to certain
tax matters substantially in the form of Exhibits C and D hereto.
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(g) Pooling Letter. Each of the Stockholder, the Company and
its affiliates and Lucent and its affiliates shall have executed and delivered a
letter relating to pooling of interests substantially in the form of Exhibit
E-1, E-2 and E-3 hereto, respectively and each such letter shall be true and
correct in all respects and in full force and effect.
(h) Stock Exchange Listing. The shares of Lucent Common Stock
issued in accordance with the Merger shall have been authorized for listing on
the NYSE, subject to official notice of issuance.
6.2. Conditions Precedent to Obligations of Acquisition and
Lucent. All obligations of Acquisition and Lucent under this Agreement are
subject to the fulfillment or satisfaction, prior to or on the Closing Date, of
each of the following conditions precedent:
(a) Performance of Obligations; Representations and
Warranties. The Company and the Stockholder shall have performed and
complied in all material respects with all agreements and conditions
contained in this Agreement that are required to be performed or
complied with by them prior to or at the Closing. Each of the Company's
and the Stockholder's representations and warranties contained in
Section 3 of this Agreement to the extent it is qualified by Material
Adverse Effect or materiality and the representations contained in
Sections 3.19 and 3.31 shall be true and correct and each of the
Company's and the Stockholder's representations and warranties to the
extent it is not so qualified by Material Adverse Effect or
materiality, shall be true and correct in all material respects, in
each case, on and as of the Closing with the same effect as though such
representations and warranties were made on and as of the Closing,
except for changes permitted by this Agreement and except to the extent
that such representations and warranties expressly relate to an earlier
date, in which case such representations and warranties shall be as of
such earlier date. Acquisition and Lucent shall have received a
certificate dated the Closing Date and signed by the Stockholder and
the President of the Company, certifying that, the conditions specified
in this Section 6.2(a) have been satisfied.
(b) Opinion of Counsel. Acquisition and Lucent shall have
received the favorable written opinion dated the Closing Date of Hale
and Dorr LLP, counsel to the Company, in form and substance
satisfactory to Acquisition and Lucent.
(c) Accounting. Lucent shall have received an opinion of
PricewaterhouseCoopers LLP, in form and substance satisfactory to
Lucent that, based on such procedures as were deemed relevant, the
transactions contemplated hereunder will qualify as a pooling of
interests under GAAP.
(d) Resignations. The Company shall have delivered to
Acquisition and Lucent the written resignation of each director and
officer of the Company as shall be
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requested in writing by Acquisition and Lucent. The Company also shall
have delivered to Lucent the written resignation of all Trustees of all
the benefit plans of the Company as shall be requested in writing by
Acquisition and Lucent.
(e) No Material Adverse Change. There shall have been no
material adverse change in the assets, business, financial condition,
operations or prospects of the Company and no event or events shall
have occurred that could reasonably be expected to have a Material
Adverse Effect (other than, in each case, as a result of business and
economic conditions affecting the United States economy generally or
affecting the billing and customer care industry in particular or as a
result of the announcement of the Merger) on the Company and Lucent
shall have received a certificate signed on behalf of the Company by
its President and its Director of Accounting to such effect.
(f) Consents. The Company shall have received all necessary
consents, in form and substance satisfactory to Acquisition and Lucent,
from the other parties to all contracts, leases or agreements to which
the Company is a party, except where the failure to receive such
consent would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(g) Employment Agreement. The Stockholder shall have entered
into an employment agreement with Lucent, substantially in the form of
Exhibit F hereto (the "Employment Agreement"), and such agreement shall
be in full force and effect.
(h) Non-Competition Agreements. The Stockholder shall have
entered into a non-competition agreement with Lucent, substantially in
the form of Exhibit G hereto, and such agreement shall be in full force
and effect.
(i) Substitute Form W-9. Acquisition and Lucent shall have
received a substitute Form W-9 under the Code in form and substance
acceptable to Acquisition and Lucent executed by the Stockholder.
6.3. Conditions Precedent to the Obligations of the Company
and the Stockholder. All obligations of the Company and the Stockholder under
this Agreement are subject to the fulfillment or satisfaction, prior to or on
the Closing Date, of each of the following conditions precedent:
(a) Performance of Obligations; Representations and
Warranties. Acquisition and Lucent shall have performed and complied in
all material respects with all agreements and conditions contained in
this Agreement that are required to be performed or complied with by
them prior to or at the Closing. Each of the representations and
warranties of Acquisition and Lucent contained in Section 4 of this
Agreement to the extent it is qualified by Material Adverse Effect or
materiality shall be true and correct and each of the representations
and warranties of Acquisition and Lucent to the extent it is not so
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qualified by Material Adverse Effect or materiality shall be true and
correct in all material respects, in each case, on and as of the
Closing with the same effect as though such representations and
warranties were made on and as of the Closing except for changes
permitted by this Agreement and except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall be as of such
earlier date. The Company shall have received certificates dated the
Closing Date and signed by the President or a Vice-President of
Acquisition and Lucent and an authorized signatory of Acquisition and
Lucent, respectively, certifying that the conditions specified in this
Section 6.3(a) have been satisfied.
(b) Opinion of Counsel. The Company and the Stockholder shall
have received the favorable written opinion dated the Closing Date of
Sidley & Austin, special counsel to Acquisition and Lucent, and of
internal counsel to Acquisition and Lucent, each in form and substance
satisfactory to the Company.
(c) Accounting. The Company shall have received an opinion of
Ernst & Young LLP, in form and substance satisfactory to the Company
that, based on such procedures as were deemed relevant, the
transactions contemplated hereunder will qualify as a pooling of
interests under GAAP.
(d) No Material Adverse Change. There shall have been no
material adverse change in the assets, business, financial condition,
operations or prospects of Lucent and no event or events shall have
occurred that could reasonably be expected to have a Material Adverse
Effect (other than, in each case, as a result of business and economic
conditions affecting the United States economy generally or affecting
the billing and customer care industry in particular or as a result of
the announcement of the Merger) on Lucent, and the Company and the
Stockholder shall have received a certificate signed on behalf of
Lucent by an authorized signatory thereof.
(e) Employment Agreement. Lucent shall have executed the
Employment Agreement and such Agreement shall be in full force and
effect.
(f) Tax-Free Reorganization. The Company and the Stockholder
shall have received the opinion of Hale and Dorr LLP, that the Merger
should be treated, for federal income tax purposes, as a tax-free
reorganization with the meaning of Section 368(a) of the Code.
7. Survival of Representations and Warranties.
7.1. Representations and Warranties. The representations and
warranties of the Stockholders contained in this Agreement (including the
schedules to the Agreement which are hereby incorporated by reference) or in any
instrument delivered pursuant to this Agreement shall survive for four (4)
months following the Closing Date except that the representations and
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warranties contained in the last sentence of Section 3.2(a), Section 3.19,
Section 3.20, Section 3.21(f) and Section 3.31 shall survive for twelve (12)
months following the Closing Date. This Section shall not limit any claim for
fraud or any covenant or agreement by the parties which contemplates performance
after the Effective Time.
8. Indemnification.
8.1. Escrow Shares. As soon as practicable after the Closing
Date, a total of 505,050 shares of Lucent Common Stock (the "Escrow Shares")
shall be deposited with The Bank of New York (or another institution selected by
Lucent), as escrow agent (the "Escrow Agent"), such deposit to be governed by
the terms set forth herein and in the Escrow Agreement. The Escrow Shares shall
be the sole source available to compensate Lucent for the indemnification
obligations of the Stockholder under Section 8.2 except for any claim of fraud.
8.2. General Indemnification. (a) Subject to the limitations
set forth in this Section 8, the Stockholder will indemnify and hold harmless
Lucent and each Person, if any, who controls or may control Lucent within the
meaning of the Securities Act of 1933 (and the rules and regulations
thereunder), and their respective officers, directors, employees, agents and
advisors (each such indemnitee being referred to herein as an "Indemnified
Person"), from and against any and all losses, costs, damages, liabilities,
obligations, impositions, inspections, assessments, fines, deficiencies and
expenses arising from claims, demands, actions, causes of action, including,
without limitation, reasonable legal fees (collectively, "Damages"), arising out
of (i) any inaccuracy in any representation or warranty made by the Stockholder
or the Company in this Agreement or in any exhibit or schedule to this
Agreement, and (ii) any breach or default by the Stockholder or the Company of
any of the covenants or agreements given or made by any of them in this
Agreement or any exhibit or schedule to this Agreement; provided that any
indemnification sought by Lucent in respect of Taxes (or any representation or
warranty made in respect thereof) will be governed by the tax indemnity set
forth in Section 8.6 and will not be subject to the provisions of this Section
8.2, Section 8.3 or Section 8.8.
(b) Lucent and the Stockholder each acknowledge that such
Damages, if any, would relate to unresolved contingencies existing at the
Closing Date, which if resolved at the Closing Date would have led to a
reduction in the total consideration that Lucent would have agreed to pay in
connection with the transactions contemplated hereby.
8.3. Damage Threshold. (a) Notwithstanding the foregoing, with
respect to any claim by Lucent for indemnification under Section 8.2(a)(i)
(other than any claim by Lucent covered by the tax indemnity set forth in
Section 8.6 and any claim for any inaccuracy in Section 3.19) or in the last
sentence in Section 3.2(a), Lucent may not seek indemnification with respect to
any claim for Damages until the sum of all Damages for which Lucent is seeking
indemnification under Section 8.1(a)(i) equals or exceeds $500,000 (the
"Threshold"), whereupon Lucent shall be entitled to seek indemnification with
respect to all such Damages exceeding the Threshold.
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(b) In determining the amount of any Damage for which Lucent
may seek indemnification under Section 8.2(a)(i) or Section 8.2(a)(ii), any
materiality standard contained in a representation, warranty or covenant shall
be disregarded.
8.4. Escrow Period. The Escrow Period shall terminate at the
expiration of 12 months after the Closing Date; provided, that any claim made
pursuant to Section 8.5 during such period shall be withheld pending resolution
of such claim; provided further, that the number of Escrow Shares which is
necessary to satisfy any unsatisfied claims specified in any Lucent Notice
theretofore delivered to the Escrow Agent prior to termination of the Escrow
Period with respect to facts and circumstances existing prior to expiration of
the Escrow Period, shall remain in escrow until such claims have been resolved.
8.5. Claims Upon Escrow Fund. Upon receipt by the Escrow Agent
on or before the last day of the Escrow Period of a certificate signed by any
officer of Lucent (a "Lucent Notice") specifying in reasonable detail the
individual items of Damages for which indemnification is being sought, the date
each such item was paid, or properly accrued or arose, the nature of the
misrepresentation, breach of warranty or claim to which such item is related,
the Escrow Agent shall, subject to the provisions of Section 8.7, deliver to
Lucent, as promptly as practicable, the number of Escrow Shares held in the
Escrow Fund having a fair market value on the Closing Date equal to such
Damages. Lucent shall, concurrent with the sending of any Lucent Notice to the
Escrow Agent, provide a copy of such Lucent Notice to the Stockholder.
8.6. Stockholder's Tax Indemnity.
(a) Stockholder's Tax Indemnity. (i) The Stockholder agrees to
indemnify, defend and hold harmless the Indemnified Parties from and against any
and all Damages, with respect to all Taxes of the Company and the Stockholder
pertaining to any taxable period or portion thereof that ends on or before the
Closing Date (a "Pre-Closing Tax Period"), including any Damages with respect to
such Taxes for a Pre-Closing Tax Period which the Company is liable under joint
and several liability concepts but excluding any Taxes attributable to
transactions not in the ordinary course of business that occur on the Closing
Date but after the Closing. In the case of Taxes pertaining to any taxable
period that does not end on or prior to the Closing Date, the Tax apportionable
to the Pre-Closing Tax Period shall be determined in accordance with Section
8.6(a)(ii) hereof.
(ii) The Stockholder and Lucent will, to the extent permitted
by applicable law, elect with the relevant Taxing Authority to close the taxable
year of the Company on the Closing Date. In any case where applicable law does
not permit the Company to close its taxable year on the Closing Date, in the
case of any Taxes that are imposed on a periodic basis and that are payable for
a taxable period that begins before the Closing Date and ends after the Closing
Date, the portion of such Tax that is payable for the Pre-Closing Tax Period
shall (x) in the case of any such Taxes not based upon or related to income or
receipts, be deemed to be the amount of such
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Taxes for the entire taxable period multiplied by a fraction, the numerator of
which is the number of days in the period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period; and (y)
in the case of any such Taxes based upon or related to income or receipts, be
determined on the basis of an interim closing of the books of the Company at the
close of business on the Closing Date in accordance with paragraph (iv) of this
Section 8.6(a).
(iii) For purposes of clause (x) of paragraph (ii) of this
Section 8.6(a), any credits against any Tax (other than credits for payments of
estimated taxes and foreign tax credits) shall be prorated based on the fraction
employed in such clause (x).
(iv) For purposes of clause (y) of paragraph (ii) of this
Section 8.6(a), a liability for any Tax with respect to a Pre-Closing Tax Period
shall be the product of (x) the Tax for the entire taxable period multiplied by
(y) a fraction, the numerator of which is the hypothetical Tax for the
Pre-Closing Tax Period (determined on the basis of an interim closing of the
books, without annualization) and the denominator of which is the sum of such
numerator plus the hypothetical Tax for the balance of the taxable period
(determined on the basis of such interim closing of the books, without
annualization). The hypothetical Tax for any period shall in no case be less
than zero.
(v) Payment by the Stockholder of any amount due under this
Section 8.6(a) shall be made within ten (10) business days following written
notice by Lucent that payment of such amount to the appropriate Taxing Authority
is due or will be due within ten (10) days. In the case of a Tax that is
contested in accordance with the provisions of Section 8.6(b), payment of that
Tax to the appropriate Taxing Authority will not be considered to be due earlier
than the time of a Final Determination with respect to such tax.
(b) Contest Rights. (i) Lucent shall, or shall cause the
Company to, promptly notify the Stockholder in writing upon receipt by Lucent or
the Company or any affiliate of each thereof of each written communication with
respect to any pending or threatened audit of, assessment against or court or
other proceeding against the Company for any taxable period which could give
rise to a claim for indemnity under Section 8.6(a) (an "Indemnified Tax
Liability"). The Stockholder shall have the sole right to represent the
interests of the Company in any audit, administrative, court or other proceeding
relating to an Indemnified Tax Liability, to employ counsel or other
representatives of its choice and to otherwise control the conduct of such audit
or proceeding in such manner as it deems fit in its sole discretion including,
without limitation, to contest, litigate, compromise and settle any adjustment
or assessment made or proposed therein. The Stockholder agrees to keep Lucent
informed of the progress of any such audits or proceedings and to consult in
good faith with Lucent in connection therewith. If the Stockholder elects to so
represent the Company's interests, he shall within thirty (30) days of delivery
of the notice by Lucent (or sooner, if the nature of the Indemnified Tax
Liability so requires) notify Lucent in writing of his intent to do so, and
Lucent agrees, and shall cause the Company to agree, to cooperate, at the
Stockholder's sole expense, with the Stockholder and its
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counsel or other representatives in the defense against or compromise of any
adjustment or assessment made or proposed in any such audit or proceeding. If
the Stockholder elects not to represent the Company's interests, Lucent may pay,
compromise or contest such Indemnified Tax Liability in such manner as it deems
appropriate (in its sole discretion); and the Stockholder shall be deemed to
have conceded Lucent's rights to indemnification from the Stockholder pursuant
to Section 8.6(a) hereof with respect to such Indemnified Tax Liability.
(ii) Notwithstanding paragraph (i) hereof, in respect of any
Indemnified Tax Liability, the Stockholder may not settle, compromise or
otherwise dispose of any such liability without the consent of Lucent, if such
settlement, compromise or other disposition would have a material adverse effect
on the Company for taxable periods beginning on or after the Closing Date. In
that event, the Stockholder shall permit the Company, through counsel of its own
choosing and at its sole expense, to participate in the settlement, compromise
or other disposition of such Indemnified Tax Liability.
8.7. Objections to Claims. (a) If the Stockholder shall object
to a Lucent Notice within the 10-day period after receipt thereof, then Lucent
and the Stockholder shall use their good faith efforts to resolve such dispute.
If Lucent and the Stockholder resolve such dispute, the parties shall deliver a
written notice to the Escrow Agent directing the delivery of the Escrow Shares,
if applicable.
(b) If Lucent and the Stockholder are unable to resolve such
dispute within 30 days after the Stockholder objects to such Lucent Notice,
either Lucent or the Stockholder may, by written notice to the other, demand
arbitration of such dispute. Any such arbitration shall be conducted by
JAMS/Endispute, Inc. or such other alternative dispute service ("Arbitration
Service") as shall be reasonably acceptable to Lucent and the Stockholder. The
Arbitration Service shall select one arbitrator reasonable acceptable to Lucent
and the Stockholder who shall be expert in the area of development and
production of data networking products. The decision by the arbitrator shall be
binding and conclusive and, notwithstanding any other provisions of this Section
8, the Escrow Agent shall be entitled to act in accordance with such decision
and make delivery of the Escrow Shares in accordance therewith.
(c) The arbitration shall be held in New York, New York. The
costs of any such arbitration shall be borne one-half for the account of Lucent
and one-half by the Stockholder. Judgment upon any award rendered by the
arbitrator may be entered in any court of competent jurisdiction.
8.8. Third-Party Claims. In the event Lucent becomes aware of
a third-party claim which Lucent believes may result in a demand pursuant to
this Section 8, Lucent shall promptly notify the Stockholder of such claim, and
the Stockholder shall be entitled, at the Stockholder's expense, to participate
in any defense of such claim; provided that Lucent shall control such defense,
and shall have the right to settle such claim with the consent of the
Stockholder (which consent shall not be unreasonably withheld, it being
understood that the
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withholding of such consent by the Stockholder shall not be unreasonable if the
Stockholder's payment obligations under such settlement would exceed its
indemnification obligations under this Section 8 to settle any such claim);
provided that no such consent of the Stockholder shall be required where the
third-party claim which Lucent proposes to settle involves the business
reputation of Lucent or its Affiliates, or the possible criminal liability of
Lucent or its Affiliates or any of their respective officers, directors or
employees. In the event that the Stockholder has consented to any such
settlement, the Stockholder shall have no power or authority to object under any
provision of this Section 8 to the amount of any claim by Lucent for indemnity
with respect to such settlement.
9. Brokers' and Finders' Fees.
9.1. Stockholders. The Stockholder represents and warrants to
Acquisition and Lucent that no broker, investment banker or financial advisor
other than J.P. Morgan is entitled to a brokerage fee, financing commission or
other commission from the Stockholder in respect of the execution of this
Agreement or the consummation of the transactions contemplated hereby. The
Stockholder agrees that if the transactions contemplated by this Agreement are
not consummated (other than as a result of a breach or default by Acquisition or
Lucent), it shall indemnify and hold Acquisition and Lucent harmless against any
and all claims, losses, liabilities, costs or expenses which may be asserted
against it as a result of the Company's or any of its Affiliates' dealings,
arrangements or agreements with any such Person.
9.2. Acquisition and Lucent. Acquisition and Lucent represent
and warrant to the Stockholder that no broker, investment banker or financial
advisor is entitled to any brokerage fee, financing commission or other
commission from Acquisition and Lucent in respect of the execution of this
Agreement or the consummation of the transactions contemplated hereby.
Acquisition and Lucent agree that if the transactions contemplated hereby are
not consummated (other than as a result of a breach or default by the Company),
they shall jointly and severally indemnify and hold the Stockholder harmless
against any and all claims, losses, liabilities, costs or expenses which may be
asserted against the Stockholder, as a result of Acquisition's or Lucent's or
any of their respective Affiliates' dealings, arrangements or agreements with
any such Person.
10. Expenses; Taxes. The Surviving Corporation shall pay the expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby. Any Tax, including but not limited to sales, use, stamp or
transfer taxes, and any other filing or recording fees, if any, which may be
payable with respect to the consummation of the transactions contemplated hereby
shall be payable as prescribed by applicable law or regulation.
11. Press Releases. Except as required by law or SEC regulations (in
each case, as determined by each party in its reasonable judgment) or Lucent's
listing agreement with the New York Stock Exchange, neither Lucent nor the
Stockholder shall issue any press release or otherwise make public any
information with respect to this Agreement nor the transactions
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<PAGE> 48
contemplated hereby, prior to the Closing, without the prior written consent of
the other parties to this Agreement. The Stockholder shall cause the Company to
comply with its obligations under this Section 11.
12. Contents of Agreement; Parties in Interest; etc. This Agreement and
the agreements referred to or contemplated herein and executed simultaneously
herewith and the letter agreement dated May 8, 1998 concerning confidentiality
(the "Confidentiality Agreement") set forth the entire understanding of the
parties hereto with respect to the transactions contemplated hereby, and, except
as set forth in this Agreement, such other agreements and the Exhibits hereto
and the Confidentiality Agreement, there are no representations or warranties,
express or implied, made by any party to this Agreement with respect to the
subject matter of this Agreement and the Confidentiality Agreement. Except for
the matters set forth in the Confidentiality Agreement, any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement and the
agreements referred to or contemplated herein.
13. Assignment and Binding Effect. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties;
provided, that Lucent may assign its rights and obligations under this Agreement
to any directly or indirectly wholly-owned Subsidiary of Lucent, upon written
notice to the Company if the assignee shall assume the obligations of Lucent
hereunder and Lucent shall remain liable for its obligations hereunder. All the
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto.
14. Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned:
(a) by the mutual agreement of the Stockholder, Acquisition
and Lucent;
(b) by Acquisition or Lucent, on the one hand, or the
Stockholder, on the other hand if (i) the Closing Date shall not have
occurred by April 30, 1999; provided that the right to terminate this
Agreement under this Section 14(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing Date to occur
on or before such date; or (ii) any court of competent jurisdiction in
the United States or other United States governmental authority shall
have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable;
(c) by the Stockholder, in the event Acquisition or Lucent
materially breaches its obligations under this Agreement, unless such
breach is cured within 15 days after notice to Lucent by the
Stockholder; or
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<PAGE> 49
(d) by Acquisition or Lucent, in the event the Stockholder
materially breaches its obligations under this Agreement unless such
breach is cured within 15 days after notice to the Stockholder by
Acquisition or Lucent.
15. Definitions. As used in this Agreement the terms set forth below
shall have the following meanings:
(a) "Accredited Investor shall have the meaning set forth in
Rule 501 of Regulation D under the Securities Act.
(b) "Affiliate" of a Person means any other Person who (i)
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, such Person or (ii) owns
more than 5% of the capital stock or equity interest in such Person.
"Control" means the possession of the power, directly or indirectly, to
direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, by contract
or otherwise.
(c) "Benefit Plan" shall mean any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
medical or other material plan, program, arrangement or understanding
(whether or not legally binding) providing material benefits or
compensation to any current or former employee, officer or director of
the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Consideration Shares" shall mean the shares of Lucent
Common Stock received by the Stockholder in exchange for all the shares
of Company Common Stock issued and outstanding pursuant to Section
1.5(c).
(f) "Environmental Laws" shall mean all applicable federal,
state, local or foreign laws, rules and regulations, orders, decrees,
judgments, permits, filings and licenses relating (i) to protection and
clean-up of the environment and activities or conditions related
thereto, including those relating to the generation, handling,
disposal, transportation or release of Hazardous Substances and (ii)
the health or safety of employees in the workplace environment, all as
amended from time to time, and shall also include any common law theory
based on nuisance, trespass, negligence or other tortious conduct.
(g) "Exchange Act" shall mean the Securities and Exchange Act
of 1934, and any successor statute, and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
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<PAGE> 50
(h) "Final Determination" shall mean (i) a decision of the
United States Tax Court, or a decision, judgment, decree or other order
by another court of competent jurisdiction, which has become final and
is either no longer subject to appeal or for which a determination not
to appeal has been made; (ii) a closing agreement made under Section
7121 of the Code or any comparable foreign, state, local or municipal
Tax statute; (iii) any disallowance of a claim for refund or credit in
respect of an overpayment of Tax unless a suit related thereto is filed
on a timely basis; (iv) any final disposition by reason of the
expiration of the applicable statute of limitations; or (v) the actual
payment by the Company of Taxes.
(i) "GAAP" shall mean generally accepted accounting
principles.
(j) "Hazardous Substances" shall mean any and all hazardous
and toxic substances, wastes or materials, any pollutants,
contaminants, or dangerous materials (including, but not limited to,
polychlorinated biphenyls, PCBs, friable asbestos, volatile and
semi-volatile organic compounds, oil, petroleum products and fractions,
and any materials which include hazardous constituents or become
hazardous, toxic, or dangerous when their composition or state is
changed), or any other similar substances or materials which are
included under or regulated by any Environmental Laws.
(k) "Liens" shall mean any mortgage, pledge, lien, security
interest, conditional or installment sale agreement, encumbrance,
charge or other claims of third parties of any kind.
(l) "Material Adverse Effect" shall mean (unless otherwise
specified) any condition or event that could reasonably be expected:
(a) to have a material adverse effect on the assets, business,
financial condition, operations or prospects of the Company, (b) to
materially impair the ability of the Stockholder to perform its
obligations under this Agreement or (c) to prevent or delay the
consummation of transactions contemplated under this Agreement.
(m) "Permitted Liens" shall mean (a) Liens for taxes,
assessments, or similar charges, incurred in the ordinary course of
business that are not yet due and payable or are being contested in
good faith; (b) pledges or deposits made in the ordinary course of
business; (c) Liens of mechanics, materialmen, warehousemen or other
like Liens securing obligations incurred in the ordinary course of
business that are not yet due and payable or are being contested in
good faith; and (d) similar Liens and encumbrances which are incurred
in the ordinary course of business and which do not in the aggregate
materially detract from the value of such assets or properties or
materially impair the use thereof in the operation of such business.
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<PAGE> 51
(n) "Person" shall mean any individual, corporation,
partnership, limited partnership, limited liability company, trust,
association or entity or government agency or authority.
(o) "Purchaser Representative" shall mean any Person who
satisfies all of the conditions set forth in Rule 501 of Regulation D
under the Securities Act.
(p) "reasonable best efforts" shall mean prompt, substantial
and persistent efforts as a prudent Person desirous of achieving a
result would use in similar circumstances; provided that the Company,
the Stockholder, Lucent or Acquisition, as applicable, shall be
required to expend only such resources as are commercially reasonable
in the applicable circumstances.
(q) "Registration Rights Agreement" shall mean the
Registration Rights Agreement dated as of January 11, 1999 between the
Stockholder and Lucent.
(r) "Regulation D" shall mean Regulation D under the
Securities Act.
(s) "Securities Act" shall mean the Securities Act of 1933,
and any successor statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
(t) "SEC" shall mean the Securities and Exchange Commission.
(u) "Subsidiary" of a Person shall mean any corporation,
partnership, joint venture or other entity in which such Person (a)
owns, directly or indirectly, 50% or more of the outstanding voting
securities or equity interests or (b) is a general partner.
(v) "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") shall mean any federal, state, local or foreign net income,
gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment,
payroll, withholding, alternative or add-on minimum, ad valorem,
value-added, transfer, stamp, or environmental tax, or any custom,
duty, governmental fee or other like assessment or charge in the nature
of a tax, together with any interest or penalty, addition to tax or
additional amount imposed by any governmental authority.
(w) "Tax Return" shall mean any return, report or similar
statement required to be filed with respect to any Tax (including any
attached schedules), including, without limitation, any information
return, claim for refund, amended return or declaration of estimated
Tax.
16. Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted to be given to any party
hereunder shall be in
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writing and shall be deemed given only if delivered to the party personally or
sent to the party by facsimile transmission (promptly followed by a hard-copy
delivered in accordance with this Section 16) or by overnight courier or
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to Acquisition or Lucent:
Lucent Technologies Inc.
c/o Communications Software Group
184 Liberty Corner Road
Warren, New Jersey 07059
Attn: President
with copy to:
Lucent Technologies Inc.
c/o Communications Software Group
184 Liberty Corner Road
Warren, New Jersey 07059
Attn: General Counsel, Communications Software Group
If to the Company or the Stockholder:
Kenan Systems Corporation
One Main Street
Cambridge, Massachusetts 02142
Attn: Kenan Sahin
with a copy to:
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attn: David A. Westenberg, Esq.
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.
17. Amendment. This Agreement may be amended, modified or supplemented
at any time prior to the Closing Date by mutual agreement of the parties hereto.
Any amendment,
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modification or revision of this Agreement and any waiver of compliance or
consent with respect hereto shall be effective only if in a written instrument
executed by the parties hereto.
18. Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of New York as applied to
contracts made and fully performed in such state, except insofar as the MBCL
shall be mandatorily applicable to the Merger and the rights of the Stockholder
in connection therewith.
19. No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto, and their respective successors and assigns, and they shall not
be construed as conferring, and are not intended to confer, any rights on any
other Person.
20. Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.
21. Section Headings. All section headings are for convenience only and
shall in no way modify or restrict any of the terms or provisions hereof.
22. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement. The Schedules and Exhibits referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and the Stockholder and
Lucent may become a party hereto by executing a counterpart hereof. This
Agreement and any counterpart so executed shall be deemed to be one and the same
instrument.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have duly executed this Agreement as of the date first
above written.
LUCENT TECHNOLOGIES INC.
By: /s/ Lance B. Boxer
Name: Lance B. Boxer
Title: Group President Communications Software
LANDO ACQUISITION, INC.
By: /s/ Lance B. Boxer
Name: Lance B. Boxer
Title: President
LANDO ACQUISITION, INC.
By: /s/ Kevin G. DaSilva
Name: Kevin G. DaSilva
Title: Treasurer
KENAN SYSTEMS CORPORATION
By: /s/ Kenan Sahin
Name: Kenan Sahin
Title: President
KENAN SYSTEMS CORPORATION
By: /s/ Kenan Sahin
Name: Kenan Sahin
Title: Treasurer
KENAN SAHIN
/s/ Kenan Sahin
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<PAGE> 55
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Location of Definition
<S> <C>
Accredited Investor................................................................Section 15
Acquisition........................................................................Preamble
Acquisition Common Stock...........................................................Recitals
Acquisition Proposal...............................................................Section 5.4
Affiliate..........................................................................Section 15
Agreement..........................................................................Preamble
Arbitration Service................................................................Section 8.7(b)
Articles of Merger.................................................................Section 1.1(b)
Authorizations.....................................................................Section 3.18(b)
Balance Sheet......................................................................Section 3.5(a)
Benefit Plan.......................................................................Section 15
Business...........................................................................Recitals
Certificates.......................................................................Section 1.7
Closing............................................................................Section 1.1(b)
Closing Date.......................................................................Section 1.1(b)
Code...............................................................................Section 15
Commonly Controlled Entity.........................................................Section 3.21(a)
Company............................................................................Preamble
Company Common Stock...............................................................Recitals
Confidentiality Agreement..........................................................Section 12
Consideration Shares...............................................................Section 15
Damages............................................................................Section 8.2(a)
Effective Time.....................................................................Section 1.1(b)
Employment Agreement...............................................................Section 6.2
Environmental Laws.................................................................Section 15
ERISA..............................................................................Section 3.21(a)
Escrow Agent.......................................................................Section 8.1
Escrow Agreement...................................................................Section 6.1(d)
Escrow Fund........................................................................Section 1.7
Escrow Shares......................................................................Section 8.1
Exchange Act.......................................................................Section 15
Exchange Ratio.....................................................................Section 1.5(c)
Executive Employees................................................................Section 3.22(a)
Final Determination................................................................Section 15
Financial Statements...............................................................Section 3.5(a)
GAAP...............................................................................Section 15
Hazardous Substances...............................................................Section 15
HSR Act............................................................................Section 3.3(a)
Immaterial Authorizations..........................................................Section 3.18(b)
Indemnified Party..................................................................Section 5.15
Indemnified Person.................................................................Section 8.2
</TABLE>
-i-
<PAGE> 56
<TABLE>
<S> <C>
Indemnified Tax Liability..........................................................Section 8.6(b)
Intellectual Property Rights.......................................................Section 3.19(a)
IRS................................................................................Section 3.20(a)
Laws...............................................................................Section 3.18(a)
Liens..............................................................................Section 15
Lucent.............................................................................Preamble
Lucent Balance Sheet...............................................................Section 4.5(b)
Lucent Common Stock................................................................Section 4.2(a)
Lucent Notice......................................................................Section 8.5
Lucent Preferred Stock.............................................................Section 4.2(a)
Lucent SEC Reports.................................................................Section 4.5(a)
Material Adverse Effect............................................................Section 15
MBCL...............................................................................Recitals
Merger.............................................................................Recitals
NOLS...............................................................................Section 3.20(a)
NYSE...............................................................................Section 1.8
Pension Plans......................................................................Section 3.21(a)
Permitted Liens....................................................................Section 15
Person.............................................................................Section 15
Plans..............................................................................Section 3.21(a)
Pre-Closing Plans..................................................................Section 8.6(a)
Purchaser Representative...........................................................Section 15
reasonable best efforts............................................................Section 15
Registration Rights Agreement......................................................Section 15
Regulation D.......................................................................Section 15
Right..............................................................................Section 1.5(c)
SEC................................................................................Section 15
Securities Act.....................................................................Section 15
Stockholder........................................................................Preamble
Shares.............................................................................Section 3.2(a)
Subsidiary.........................................................................Section 15
Supplemental Financial Information.................................................Section 5.3(c)
Surviving Corporation..............................................................Section 1.1(a)
Tax................................................................................Section 15
Tax Return.........................................................................Section 15
Threshold..........................................................................Section 8.3(a)
Welfare Plans......................................................................Section 3.21(a)
</TABLE>
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<PAGE> 1
EXHIBIT 5.1
October 19, 1999
Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, New Jersey 07974
Ladies and Gentlemen:
I have acted as counsel for Lucent Technologies Inc., a Delaware
corporation ("Lucent"), in connection with the preparation of a Registration
Statement on Form S-3 (the "Registration Statement") to be filed by Lucent with
the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933 (the "Act"). The Registration Statement relates to up to
16,771,596 shares (the "Shares") of common stock, par value $0.01 per share (the
"Common Stock"), which were issued by Lucent pursuant to (i) the Agreement and
Plan of Merger, dated as of June 24, 1999, among Lucent, Neptune Acquisition
Inc., a Delaware corporation and a wholly owned subsidiary of Lucent ("Neptune
Acquisition"), and Nexabit Networks, Inc., a Delaware corporation, and (ii) the
Agreement and Plan of Merger, dated as of January 11, 1999, among Lucent, Lando
Acquisition, Inc., a Massachusetts corporation and a wholly owned subsidiary of
Lucent ("Lando Acquisition"), Kenan Sahin, and Kenan Systems Corporation, a
Massachusetts corporation.
I have examined such corporate records, certificates and other
documents as I have considered necessary or appropriate for the purposes of this
opinion. In such examination, I have assumed the genuineness of all signatures
and the authenticity of all documents submitted to me as copies. In examining
agreements executed by parties other than Lucent, Neptune Acquisition and Lando
Acquisition, I have assumed that such parties had the power, corporate or other,
to enter into and perform all obligations thereunder and also have assumed the
due authorization by all requisite action, corporate or other, and execution and
delivery by such parties of such documents, and the validity and binding effect
thereof. As to any facts material to the opinion expressed herein which I have
not independently verified or established, I have relied upon statements and
representations of officers and representatives of Lucent and others.
Based on such examination, I am of the opinion that the Shares have
been duly authorized for issuance and are validly issued, fully paid and
non-assessable.
I hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement and to the reference to me and this opinion in the proxy
statement/prospectus that forms a part of the Registration Statement. In giving
such consent, I do not hereby admit that I am in the category of persons whose
consent is required under Section 7 of the Act.
Very truly yours,
/s/ Pamela F. Craven
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated June 24, 1999, except for the seventh
and eighth paragraphs of Note 15, as to which the date is July 15, 1999 and July
19, 1999, respectively, relating to the consolidated financial statements and
financial statement schedule at September 30, 1998 and 1997 and for each of the
two years in the period ended September 30, 1998 and for the nine-month period
ended September 30, 1996, which appears in Exhibit 99.1 to Lucent Technologies
Inc. Current Report on Form 8-K dated August 2, 1999. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
October 19, 1999
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ PAUL A. ALLAIRE
-------------------
Paul A. Allaire
Director
<PAGE> 2
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ CARLA A. HILLS
------------------
Carla A. Hills
Director
<PAGE> 3
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of February, 1999.
By: /s/ DREW LEWIS
--------------
Drew Lewis
Director
<PAGE> 4
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of March, 1999.
By: /s/ RICHARD A. McGINN
---------------------
Richard A. McGinn
Chairman of the Board and
Chief Executive Officer
<PAGE> 5
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ PAUL H. O'NEILL
-------------------
Paul H. O'Neill
Director
<PAGE> 6
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 14th day of February, 1999.
By: /s/ DONALD S. PERKINS
---------------------
Donald S. Perkins
Director
<PAGE> 7
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 16th day of February, 1999.
By: /s/ HENRY B. SCHACHT
--------------------
Henry B. Schacht
Director
<PAGE> 8
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ FRANKLIN A. THOMAS
----------------------
Franklin A. Thomas
Director
<PAGE> 9
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ JOHN A. YOUNG
-----------------
John A. Young
Director
<PAGE> 10
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ DONALD K. PETERSON
----------------------
Donald K. Peterson
Executive Vice President and
Chief Financial Officer
<PAGE> 11
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Kenan Systems Corporation; and
WHEREAS, the Company proposes to file with the Securities and
Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance of
common shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Ascend Communications, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 17th day of February, 1999.
By: /s/ JAMES S. LUSK
-----------------
James S. Lusk
Vice President and Controller
<PAGE> 12
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 12th day of July, 1999.
By: /s/ PAUL A. ALLAIRE
-------------------
Paul A. Allaire
Director
<PAGE> 13
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ CARLA A. HILLS
------------------
Carla A. Hills
Director
<PAGE> 14
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ DREW LEWIS
--------------
Drew Lewis
Director
<PAGE> 15
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ RICHARD A. McGINN
---------------------
Richard A. McGinn
Chairman of the Board and
Chief Executive Officer
<PAGE> 16
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ PAUL H. O'NEILL
-------------------
Paul H. O'Neill
Director
<PAGE> 17
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 9th day of July, 1999.
By: /s/ DONALD S. PERKINS
---------------------
Donald S. Perkins
Director
<PAGE> 18
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ HENRY B. SCHACHT
--------------------
Henry B. Schacht
Director
<PAGE> 19
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ FRANKLIN A. THOMAS
----------------------
Franklin A. Thomas
Director
<PAGE> 20
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ JOHN A. YOUNG
-----------------
John A. Young
Director
<PAGE> 21
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ DONALD K. PETERSON
----------------------
Donald K. Peterson
Executive Vice President and
Chief Financial Officer
<PAGE> 22
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation
(hereinafter referred to as the "Company"), proposes to file with the Securities
and Exchange Commission, under the provisions of the Securities Act of 1933, as
amended, a registration statement or registration statements (on Form S-3, Form
S-4, Form S-8 or any other appropriate Form) with respect to the issuance and/or
resale of common shares, par value $.01 per share, of the Company (including the
related Preferred Share Purchase Rights), in connection with the acquisition by
the Company of Nexabit Networks, Inc.; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above-described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of
Attorney this 7th day of July, 1999.
By: /s/ JAMES S. LUSK
-----------------
James S. Lusk
Vice President and Controller
