<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
LUCENT TECHNOLOGIES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3661 22-3408857
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</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 AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ROBERT I. TOWNSEND, III, ESQ. JOHN M. HESSION, ESQ.
CRAVATH, SWAINE & MOORE GORDON H. HAYES, JR., ESQ.
WORLDWIDE PLAZA, 825 EIGHTH AVENUE TESTA, HURWITZ & THIBEAULT, LLP
NEW YORK, NEW YORK 10019 125 HIGH STREET
(212) 474-1000 BOSTON, MASSACHUSETTS 02110
(617) 248-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon consummation of the merger referred to herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER UNIT OFFERING PRICE(2) REGISTRATION FEE(3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share, and related preferred stock
purchase rights(4)................... 28,306,426 N/A $1,781,833,715 $495,350
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the maximum number of shares to be issued in connection with the
merger, calculated as the product of (a) 50,728,362, the aggregate number of
shares of Excel Switching Corporation ("Excel") common stock, par value
$0.01 per share, outstanding on September 28, 1999 (other than shares owned
by Excel, Dallas Merger Inc., a wholly owned subsidiary of the registrant,
or the registrant) or issuable pursuant to outstanding options prior to the
date the merger is expected to be consummated and (b) an exchange ratio of
0.558 shares of the registrant's common stock for each share of Excel common
stock.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act, and calculated pursuant to
Rule 457(f) under the Securities Act. Pursuant to Rule 457(f)(1) under the
Securities Act, the proposed maximum aggregate offering price of the
registrant's common stock was calculated in accordance with Rule 457(c)
under the Securities Act as: (a) $35.125, the average of the high and low
prices per share of Excel common stock on September 24, 1999 as reported on
The Nasdaq National Market, multiplied by (b) 50,728,362, the aggregate
number of shares of Excel common stock outstanding on September 28, 1999 or
issuable pursuant to outstanding options prior to the date the merger is
expected to be completed.
(3) Pursuant to Rule 457(b) under the Securities Act, $281,357 of the
registration fee was paid on September 13, 1999 in connection with the
filing of preliminary proxy materials of Excel on September 13, 1999 and
$213,993 of the registration fee was paid on September 30, 1999 in
connection with the filing of this registration statement by the registrant
on September 30, 1999.
(4) 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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[EXCEL SWITCHING CORP. LOGO]
EXCEL SWITCHING CORPORATION
255 INDEPENDENCE DRIVE
HYANNIS, MASSACHUSETTS 02601
September 30, 1999
Dear Stockholder:
You are cordially invited to attend our special meeting of stockholders on
Wednesday, November 3, 1999, at 9:00 a.m., local time, at Sheraton Hyannis
Resort, West End Circle, Hyannis, Massachusetts 02601.
At the special meeting, we will ask you to vote on the merger of Excel
Switching Corporation and Lucent Technologies Inc. In the merger, you will
receive 0.558 shares of Lucent common stock for each share of Excel common stock
that you own. Lucent common stock is listed on the New York Stock Exchange under
the trading symbol "LU" and on September 29, 1999, Lucent common stock closed at
$63 1/16 per share. You will receive cash for any fractional shares of Lucent
common stock which you would otherwise receive in the merger.
We cannot complete the merger unless the holders of two-thirds of the
outstanding shares of Excel common stock vote to approve the merger agreement.
Only stockholders who hold shares of Excel common stock at the close of business
on September 29, 1999 will be entitled to vote at the special meeting.
YOU SHOULD CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING TO
THE MERGER" COMMENCING ON PAGE 12 OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS
BEFORE VOTING. PLEASE REVIEW CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS.
AFTER CAREFUL CONSIDERATION, THE EXCEL BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT AND THE MERGER, HAS UNANIMOUSLY DETERMINED THAT
THE MERGER AGREEMENT AND THE MERGER ARE FAIR TO AND IN BEST INTERESTS OF EXCEL
AND YOU AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE MERGER
AGREEMENT.
Thank you for your cooperation.
Sincerely,
/s/ Robert P. Madonna
Robert P. Madonna
Chairman of the Board, President and
Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY.
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved the merger described in the proxy
statement/prospectus or the Lucent common stock to be issued in connection with
the merger, or determined if the proxy statement/prospectus is accurate or
adequate. Any representation to the contrary is a criminal offense.
THE PROXY STATEMENT/PROSPECTUS IS DATED SEPTEMBER 30, 1999,
AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT OCTOBER 4, 1999.
<PAGE> 3
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Excel and Lucent from documents that are not
included in or delivered with this proxy statement/prospectus. This information
is available to you without charge upon your written or oral request. You can
obtain those documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses and telephone numbers:
<TABLE>
<S> <C>
Excel Switching Corporation Lucent Technologies Inc.
255 Independence Drive c/o The Bank of New York
Hyannis, Massachusetts 02601 Church Street Station
Investor Relations P.O. Box 11009
Telephone: (508) 862-3000 New York, New York 10286-1009
Telephone: 1-888-LUCENT6
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY OCTOBER 27, 1999 IN
ORDER TO RECEIVE THEM BEFORE YOUR SPECIAL MEETING.
See "Where You Can Find More Information" on page 52.
<PAGE> 4
[EXCEL SWITCHING CORP. LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, NOVEMBER 3, 1999
To the Stockholders of Excel Switching Corporation:
We will hold a special meeting of the stockholders of Excel Switching
Corporation on Wednesday, November 3, 1999, at 9:00 a.m., local time, at
Sheraton Hyannis Resort, West End Circle, Hyannis, Massachusetts 02601, for the
following purpose:
To consider and vote upon a proposal to approve the merger agreement
among Lucent Technologies Inc., Dallas Merger Inc., a wholly owned
subsidiary of Lucent, and Excel. Under the merger agreement, each
outstanding share of Excel common stock will be converted into the right to
receive 0.558 shares of Lucent common stock.
We will transact no other business at the special meeting.
Only holders of record of shares of Excel common stock at the close of
business on September 29, 1999, the record date for the special meeting, are
entitled to notice of, and to vote at, the special meeting and any adjournments
or postponements of it.
We cannot complete the merger unless the holders of two-thirds of the
outstanding shares of Excel common stock vote to approve the merger agreement.
Excel stockholders who do not vote in favor of the approval of the merger
agreement have the right to demand appraisal of their shares of Excel common
stock and to receive payment in cash for the fair value of their shares
determined in accordance with Massachusetts law.
FOR MORE INFORMATION ABOUT THE MERGER, PLEASE REVIEW THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED AS ANNEX 1.
Whether or not you plan to attend the special meeting, please complete,
sign and date the enclosed proxy and return it promptly in the enclosed
postage-paid envelope. If you do not vote by proxy or in person at the special
meeting, it will count as a vote against the merger agreement.
Please do not send any stock certificates at this time.
By Order of the Board of Directors,
/s/ Christopher Stavros
Christopher Stavros
Vice President, General Counsel,
Director and Clerk
Hyannis, Massachusetts
September 30, 1999
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... iii
SUMMARY..................................................... 1
General................................................... 2
The Special Meeting....................................... 3
The Merger................................................ 4
The Companies............................................. 4
Comparative Per Share Information......................... 6
Selected Consolidated Historical Financial Data
Lucent................................................. 8
Excel.................................................. 10
RISK FACTORS RELATING TO THE MERGER......................... 12
The exchange ratio for Lucent common stock to be received
in the merger is fixed and will not be adjusted in the
event of any change in stock price..................... 12
The price of Lucent common stock may be affected by
factors different from those affecting the price of
Excel common stock..................................... 12
THE SPECIAL MEETING......................................... 13
Date, Time and Place...................................... 13
Purpose of Special Meeting................................ 13
Record Date; Stock Entitled to Vote; Quorum............... 13
Votes Required............................................ 13
Voting by Excel Directors and Executive Officers.......... 13
Voting of Proxies......................................... 14
Revocability of Proxies................................... 14
Solicitation of Proxies................................... 14
THE COMPANIES............................................... 15
Excel..................................................... 15
Lucent.................................................... 15
THE MERGER.................................................. 16
Background to the Merger.................................. 16
Reasons for the Merger and Board of Directors
Recommendation......................................... 18
Opinion of Morgan Stanley & Co. Incorporated.............. 20
Interests of Excel Directors and Management in the
Merger................................................. 25
Dissenters' Rights........................................ 27
Accounting Treatment...................................... 28
Form of the Merger........................................ 29
Merger Consideration...................................... 29
Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares........................ 29
Effective Time of the Merger.............................. 30
Stock Exchange Listing of Lucent Common Stock............. 30
Delisting and Deregistration of Excel Common Stock........ 30
</TABLE>
i
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Material United States Federal Income Tax Consequences of
the Merger............................................. 31
Regulatory Matters........................................ 33
Continuation of Excel Employee Benefits................... 33
Effect on Awards Outstanding Under Excel Stock Plans...... 34
Resale of Lucent Common Stock............................. 34
THE MERGER AGREEMENT AND STOCKHOLDERS AGREEMENT............. 35
The Merger Agreement...................................... 35
The Stockholders Agreement................................ 42
COMPARATIVE STOCK PRICES AND DIVIDENDS...................... 43
DESCRIPTION OF LUCENT CAPITAL STOCK......................... 44
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND
EXCEL..................................................... 44
Capitalization............................................ 44
Voting Rights............................................. 45
Number, Election, Vacancy and Removal of Directors........ 45
Amendments to Certificates of Incorporation and Articles
of Organization........................................ 46
Amendments to By-Laws..................................... 47
Stockholder Action........................................ 47
Notice of Certain Stockholder Actions..................... 47
Special Stockholder Meetings.............................. 48
Limitation of Personal Liability of Directors............. 48
Dividends................................................. 49
Conversion................................................ 49
Rights Plan............................................... 49
LEGAL MATTERS............................................... 51
EXPERTS..................................................... 51
STOCKHOLDER PROPOSALS....................................... 51
OTHER MATTERS............................................... 52
WHERE YOU CAN FIND MORE INFORMATION......................... 52
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 54
Annexes
Annex 1 Agreement and Plan of Merger
Annex 2 Stockholders Agreement
Annex 3 Opinion of Morgan Stanley & Co. Incorporated
Annex 4 Massachusetts Business Corporation
Law -- Dissenters' Appraisal Rights
</TABLE>
ii
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY ARE LUCENT AND EXCEL PROPOSING TO MERGE?
A: Service providers are increasingly demanding scalability and application
portability while continuing to demand product reliability and rich
operations support. Excel's open and scalable platforms provide the fastest,
most efficient way for service providers of all types to get custom
applications for their networks. Lucent is recognized as a leader in
reliability, services capabilities and sales and marketing support. Together
with Excel, Lucent will be able to offer all types of service providers the
level of enhanced network functionality they are demanding.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
proxy statement/prospectus, please complete and sign your proxy and return
it in the enclosed return envelope as soon as possible, so that your shares
may be represented at the special meeting. If you sign and send in your
proxy and do not indicate how you want to vote, we will count your proxy as
a vote in favor of the approval of the merger agreement. If you abstain from
voting or do not vote, it will have the effect of a vote against the
approval of the merger agreement.
The special meeting will take place on Wednesday, November 3, 1999. You may
attend the special meeting and vote your shares in person, rather than
signing and mailing your proxy.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at the
special meeting. You can do this in one of three ways. First, you can send a
written notice stating that you would like to revoke your proxy. Second, you
can complete and submit a new proxy. If you choose either of these two
methods, you must submit your notice of revocation or your new proxy to the
Secretary of Excel at the address set forth below. Third, you can attend the
special meeting and vote in person.
Q: IF MY EXCEL SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER
VOTE MY SHARES FOR ME?
A: Your broker will vote your Excel shares only if you provide instructions on
how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. Without
instructions, your shares will not be voted, which will have the effect of a
vote against the approval of the merger agreement.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written instructions for
exchanging your stock certificates. Please do not send in your stock
certificates with your proxy.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working to complete the merger as quickly as possible. We expect to
complete the merger during the fourth calendar quarter of 1999.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger or if you need additional copies
of this proxy statement/prospectus or the enclosed proxy, you should
contact:
Investor Relations
Excel Switching Corporation
255 Independence Drive
Hyannis, MA 02601
Telephone: (508) 862-3000
iii
<PAGE> 8
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and does not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the legal terms of the merger, you should carefully read this
entire proxy statement/prospectus and the other documents to which we have
referred you. See "Where You Can Find More Information" on page 52. We have
included page references parenthetically to direct you to a more complete
description of the topics presented in this summary.
GENERAL
WHAT EXCEL STOCKHOLDERS WILL RECEIVE IN THE MERGER (page 29)
In the merger, holders of Excel common stock will receive 0.558 shares of
Lucent common stock for each share of Excel common stock that they own.
Stockholders will receive cash for any fractional shares which they would
otherwise receive in the merger.
OWNERSHIP OF LUCENT FOLLOWING THE MERGER
Based on the number of outstanding shares of Excel common stock on the
record date, we anticipate that Excel stockholders will receive approximately
22,338,035 shares of Lucent common stock in the merger. Based on that number and
on the number of outstanding shares of Lucent common stock on the record date,
following the merger former Excel stockholders will own approximately 0.7% of
the outstanding shares of Lucent common stock.
DISSENTERS' RIGHTS (page 27)
Excel stockholders have the right under Massachusetts law to exercise
appraisal rights and to receive payment in cash for the fair value of their
shares of Excel common stock determined in accordance with Massachusetts law. To
preserve their rights, stockholders who wish to exercise appraisal rights must
not vote in favor of the approval of the merger agreement and must follow
specific procedures. These procedures are described in this proxy
statement/prospectus, and the provisions of Massachusetts law that grant
appraisal rights and govern such procedures are attached as Annex 4.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (page 31)
The merger is intended to qualify as a reorganization within the meaning of
the Internal Revenue Code of 1986. Assuming that the merger qualifies as a
reorganization, holders of Excel common stock generally will not recognize gain
or loss for United States federal income tax purposes as a result of the
exchange of their Excel common stock for Lucent common stock in the merger,
except for cash received instead of fractional shares of Lucent common stock.
Holders of Excel common stock who exercise their statutory appraisal rights
and receive payment in cash for the fair value of their shares of Excel common
stock will, provided that the receipt of cash is not treated as the receipt of a
dividend for United States federal income tax purposes and certain other
conditions are satisfied, generally recognize gain or loss upon the receipt of
such cash. Interest, if any, awarded by a court will be taxable as ordinary
income.
TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO
YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN
TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO
YOU.
BOARD OF DIRECTORS RECOMMENDATION TO
STOCKHOLDERS (page 20)
The Excel board of directors believes that the terms of the merger
agreement and the
1
<PAGE> 9
merger are fair to and in the best interests of
Excel and its stockholders and unanimously recommends that the stockholders vote
FOR the approval of the merger agreement.
To review the background and reasons for the merger in greater detail, as
well as certain risks related to the merger, see pages 10, 14 and 15.
FAIRNESS OPINION OF FINANCIAL ADVISOR (page 20)
In deciding to approve the merger, the Excel board of directors considered
the opinion, dated as of August 17, 1999, of its financial advisor, Morgan
Stanley & Co. Incorporated, as to the fairness, from a financial point of view,
of the exchange ratio in the merger to Excel stockholders. This opinion is
attached as Annex 3 to this proxy statement/prospectus. WE ENCOURAGE
STOCKHOLDERS TO READ THIS OPINION CAREFULLY.
INTERESTS OF EXCEL DIRECTORS AND MANAGEMENT IN THE MERGER (page 25)
Excel stockholders should note that a number of directors and officers of
Excel have interests in the merger as directors or officers that are different
from, or in addition to, those of a stockholder. If we complete the merger,
indemnification arrangements for current directors and officers of Excel will be
continued. In addition, directors, officers and employees with stock options to
acquire Excel common stock will have these options converted to stock options to
acquire Lucent common stock, and certain stock options held by certain executive
officers will vest and become exercisable as a result of the merger.
THE SPECIAL MEETING (page 13)
The special meeting of Excel stockholders will be held at Sheraton Hyannis
Resort, West End Circle, Hyannis, Massachusetts 02601, at 9:00 a.m., local time,
on Wednesday, November 3, 1999. At the special meeting, stockholders will be
asked to approve the merger agreement.
RECORD DATE; VOTING POWER
Excel stockholders are entitled to vote at the special meeting if they
owned shares as of the close of business on September 29, 1999, the record date.
On the record date, there were 40,032,322 shares of Excel common stock
entitled to vote at the special meeting. Stockholders will have one vote at the
special meeting for each share of Excel common stock that they owned on the
record date.
VOTE REQUIRED
The affirmative vote of two-thirds of the shares of Excel common stock
outstanding on the record date is required to approve the merger agreement.
VOTING BY EXCEL DIRECTORS AND EXECUTIVE OFFICERS
On the record date, directors and executive officers of Excel and their
affiliates owned and were entitled to vote 28,622,433 shares of Excel common
stock, or approximately 72% of the shares of Excel common stock outstanding on
the record date. The directors and executive officers of Excel have indicated
that they intend to vote the Excel common stock owned by them for the approval
of the merger agreement. Under the terms of a stockholders agreement with
Lucent, Robert P. Madonna, Chairman of the Board, President and Chief Executive
Officer of Excel, has agreed to vote his shares of Excel common stock, and the
shares over which he has voting control, for approval of the merger agreement.
On the record date, Mr. Madonna owned and was entitled to vote 26,883,150 shares
of Excel common stock, or approximately 67% of the shares of Excel common stock
outstanding on the record date. As a result, Mr. Madonna's vote will be
sufficient to approve the merger agreement.
2
<PAGE> 10
THE MERGER (page 16)
The merger agreement is attached as Annex 1 to this proxy
statement/prospectus. We encourage you to read the merger agreement. It is the
principal document governing the merger.
CONDITIONS TO THE MERGER (page 35)
Lucent and Excel will complete the merger only if they satisfy or, in some
cases, waive several conditions, including the following:
- holders of two-thirds of the outstanding shares of Excel common stock
must approve the merger agreement
- the waiting period required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 must have expired or been terminated
- no legal restraints or prohibitions may exist which prevent the
completion of the merger or are reasonably likely to have a material
adverse effect on Excel or Lucent
- Lucent common stock issuable to Excel stockholders must have been
approved for listing on the New York Stock Exchange
- Lucent and Excel must receive letters from PricewaterhouseCoopers LLP and
Arthur Andersen LLP regarding those firms' agreement with Lucent
management's and Excel management's conclusions, respectively, that no
condition exists that would prevent accounting for the merger as a
pooling of interests transaction under Accounting Principles Board
Opinion No. 16
- Testa, Hurwitz & Thibeault, LLP, counsel to Excel, must deliver an
opinion to Excel, and Cravath, Swaine & Moore, counsel to Lucent, must
deliver an opinion to Lucent, in each case stating that the merger will
qualify for United States federal income tax purposes as a reorganization
within the meaning of the Internal Revenue Code
- Lucent and Excel must satisfy the representations, warranties and
covenants contained in the merger agreement in all material respects.
TERMINATION OF THE MERGER AGREEMENT (page 38)
1. Lucent and Excel can jointly agree to terminate the merger agreement at
any time without completing the merger.
2. Lucent or Excel can terminate the merger agreement if:
- Lucent and Excel do not complete the merger by March 31, 2000
- a governmental authority or other legal action permanently prohibits the
completion of the merger or is reasonably likely to have a material
adverse effect on either Lucent or Excel
- the other party breached in any material respect any of its
representations, warranties or obligations under the merger agreement and
has not cured the breach within 30 days after written notice.
STOCKHOLDERS AGREEMENT (page 42)
Mr. Madonna and his affiliated entities, who on the record date together
held approximately 67% of Excel common stock then outstanding, have agreed to
vote the shares of Excel common stock over which they have voting power or
control in favor of the approval of the merger agreement.
REGULATORY MATTERS (page 33)
United States antitrust laws prohibit Lucent and Excel from completing the
merger until after they have furnished certain information and materials to the
Antitrust Division of the Department of Justice and the Federal Trade Commission
and a required waiting period has ended. Lucent and Excel each filed the
required notification and report forms with the Antitrust Division of the
Department of
3
<PAGE> 11
Justice and the Federal Trade Commission on August 30, 1999. The waiting period
with respect to each of Lucent and Excel was terminated on September 22, 1999.
Lucent and Excel do not currently expect that other filings or approvals
will be required in other jurisdictions in connection with the merger. However,
if any such filings or approvals become necessary, Lucent and Excel intend to
take all necessary actions to comply with such filing requirements or obtain
such approvals.
ACCOUNTING TREATMENT (page 28)
Lucent and Excel expect the merger to qualify as a pooling of interests,
which means that the merger of Lucent and Excel will be accounted for as if
Lucent and Excel had always been combined for accounting purposes. As a result,
the basis of assets and liabilities of Excel will be reflected in the
consolidated financial statements of Lucent at Excel's historical book values.
EXPENSES (page 40)
Each of Lucent and Excel will bear all expenses it incurs in connection
with the merger, except that Lucent and Excel will share equally the costs of
filing with the Securities and Exchange Commission the registration statement of
which this proxy statement/ prospectus is a part, printing and mailing this
proxy statement/prospectus and the filing fees incurred in connection with
obtaining regulatory approval for the merger in the United States.
THE COMPANIES (page 15)
Excel Switching Corporation
255 Independence Drive
Hyannis, MA 02601
(508) 862-3000
Excel is a leading provider of open switching platforms for
telecommunications networks worldwide. Excel develops, manufactures, markets and
supports a family of open, programmable, carrier-class switches that address the
complex enhanced services and wireless and wireline infrastructure needs of
network providers. Excel's products offer network providers the flexibility to
address multiple market applications and the scalability to deploy a variety of
system capacities. Excel's programmable switching platforms enable network
providers to deliver improved networking functionality at a lower cost than
purchasing, upgrading or reprogramming traditional, closed, central office
switches. Excel's products are currently deployed in telecommunications networks
in countries throughout the world.
LUCENT TECHNOLOGIES INC.
600 Mountain Avenue
Murray Hill, NJ 07974
(908) 582-8500
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.
MARKET PRICE AND DIVIDEND INFORMATION (page 43)
Shares of Lucent common stock are listed on the New York Stock Exchange.
Shares of Excel common stock are quoted on The Nasdaq National Market. The
following table presents:
- the last reported sale price of one share of Lucent common stock, as
reported on the New York Stock Exchange Composite Transaction Tape
4
<PAGE> 12
- the last reported sale price of one share of Excel common stock, as
reported on The Nasdaq National Market
- the market value of one share of Excel common stock on an equivalent per
share basis,
in each case as if the merger had been completed on August 17, 1999, the last
full trading day prior to the public announcement of the proposed merger, and on
September 29, 1999, the last day for which such information could be calculated
prior to the date of this proxy statement/prospectus. The equivalent price per
share data for Excel common stock has been determined by multiplying the last
reported sale price of one share of Lucent common stock on each of these dates
by the exchange ratio of 0.558.
<TABLE>
<CAPTION>
EQUIVALENT
PRICE PER
SHARE OF
LUCENT EXCEL EXCEL
COMMON COMMON COMMON
DATE STOCK STOCK STOCK
- ---- ------ ------ ----------
<S> <C> <C> <C>
August 17, 1999........ $66 1/2 $27 9/16 $37.11
September 29, 1999..... $63 1/16 $34 15/16 $35.19
</TABLE>
Lucent has historically paid a regular quarterly dividend, currently $0.02
per share, to its stockholders. The payment of dividends by Lucent in the future
will depend on business conditions, its financial position, earnings and other
factors. Excel has never paid cash dividends to its stockholders.
5
<PAGE> 13
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per common share information for Lucent on a
consolidated basis, for Lucent and Excel on a pro forma combined basis and for
Excel on an historical basis. Lucent's consolidated results were restated to
include the results of Kenan Systems Corporation and Ascend Communications, Inc.
which merged with Lucent on February 26, 1999 and June 24, 1999, respectively.
Each of the Kenan and Ascend mergers was accounted for as a pooling of
interests. Excel's consolidated results were restated to include the results of
RAScom, Inc., which merged with Excel on May 10, 1999. The RAScom merger was
accounted for as a pooling of interests. All per share data has been restated to
account for Lucent's two-for-one stock splits effective on April 1, 1999 and on
April 1, 1998. Lucent's fiscal year ends on September 30 and Excel's fiscal year
ends on December 31.
The unaudited "pro forma combined" and the unaudited "pro forma
equivalent -- Excel" information assumes that the merger of Excel and Lucent is
accounted for as a pooling of interests and had occurred at the beginning of the
earliest period presented. The unaudited "pro forma combined" information
combines the financial information of Lucent for the six months ended March 31,
1999 and 1998, for each of the two years in the period ended September 30, 1998
and for the nine-month period ended September 30, 1996, with the financial
information of Excel for the six months ended June 30, 1999 and June 27, 1998,
for each of the two years in the period ended December 31, 1998 and for a
nine-month period ended December 28, 1996. Beginning September 30, 1996, Lucent
changed its fiscal year end from December 31 to September 30 and reported
results for the nine-month transition period ended September 30, 1996. Lucent's
results for the nine-month period ended June 30, 1999 and the six-month period
ended March 31, 1999 and Excel's results for the six-month period ended June 30,
1999 may not be indicative of the results for the full year.
The unaudited "pro forma equivalent -- Excel" information was calculated by
multiplying the corresponding pro forma combined data by the exchange ratio of
0.558. This information shows how each share of Excel common stock would have
participated in net earnings, cash dividends and book value of Lucent if the
merger had been completed at the beginning of the earliest period presented.
However, these amounts do not necessarily reflect future per share levels of net
earnings, cash dividends or book value of Lucent. The following unaudited
comparative and unaudited pro forma per share data is calculated from the
consolidated historical financial statements of Lucent and the consolidated
historical financial statements of Excel.
6
<PAGE> 14
STOCKHOLDERS SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH
LUCENT'S CONSOLIDATED HISTORICAL FINANCIAL STATEMENTS AND EXCEL'S CONSOLIDATED
HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCLUDED IN THE DOCUMENTS
DESCRIBED UNDER "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 52.
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
NINE MONTHS AT OR FOR THE TWELVE MONTHS AT OR FOR THE
ENDED SIX MONTHS ENDED ENDED NINE MONTHS
JUNE 30, MARCH 31, SEPTEMBER 30, ENDED
------------- ----------------- --------------- SEPTEMBER 30,
1999 1998 1999 1998 1998 1997 1996
----- ----- ------- ------- ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
LUCENT -- HISTORICAL
Basic earnings per share........... $1.26 $0.28 $ 1.01 $ 0.33 $0.35 $0.16 $0.14
Diluted earnings per share......... 1.22 0.27 0.98 0.32 0.34 0.15 0.14
Cash dividends declared per
share........................... 0.06 0.06 0.04 0.038 0.078 0.056 0.038
Book value per share............... 4.07 2.37 3.73 2.37 2.55 1.51 1.20
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS SIX MONTHS TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, JUNE 27, DECEMBER 31, DECEMBER 27, DECEMBER 28, DECEMBER 28,
1999 1998 1998 1997 1996 1996
------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
EXCEL -- HISTORICAL
Basic earnings per
share.............. $0.26 $0.26 $0.41 $0.48 $0.21 $0.18
Diluted earnings per
share.............. 0.24 0.23 0.38 0.42 0.18 0.16
Cash dividends
declared per
share.............. N/A N/A N/A N/A N/A N/A
Book value per
share.............. 5.03 4.02 4.30 3.63 0.64 0.64
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS ENDED TWELVE MONTHS ENDED NINE MONTHS
MARCH 31, SEPTEMBER 30, ENDED
----------------- -------------------- SEPTEMBER 30,
1999 1998 1998 1997 1996
------ ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED
Basic earnings per share................. $1.01 $ 0.33 $0.35 $0.16 $0.14
Diluted earnings per share............... 0.98 0.32 0.34 0.16 0.14
Cash dividends declared per share........ 0.04 0.038 0.078 0.056 0.038
Book value per share..................... 3.76 2.40 2.58 1.54 1.20
PRO FORMA EQUIVALENT -- EXCEL
Basic earnings per share................. $0.56 $ 0.18 $0.20 $0.09 $0.08
Diluted earnings per share............... 0.55 0.18 0.19 0.09 0.08
Cash dividends declared per share........ 0.02 0.02 0.04 0.03 0.02
Book value per share..................... 2.10 1.34 1.44 0.86 0.67
</TABLE>
- ---------------
N/A -- Not applicable
7
<PAGE> 15
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
LUCENT
Lucent was spun off from AT&T Corp. in 1996. On February 1, 1996, AT&T
began transferring to Lucent the assets and liabilities relating to Lucent's
operations. Lucent's historical financial data for periods prior to that date
reflect the results of operations and the financial position of the business
that was transferred to Lucent from AT&T in the separation as if Lucent had been
a stand-alone entity and have been prepared using the historical basis in the
assets and liabilities and historical results of operations related to the
Lucent business. Lucent's historical financial data for periods prior to that
date also include an allocation of certain AT&T corporate headquarters assets,
liabilities and expenses related to the Lucent business. The calculation of
earnings (loss) per common share on a historical basis includes the retroactive
recognition to January 1, 1995 of the 524,624,894 shares on a pre-split basis,
or 2,098,499,576 shares on a post-split basis, owned by AT&T on April 10, 1996.
Beginning September 30, 1996, Lucent changed its fiscal year end from
December 31 to September 30 and reported results for the nine-month transition
period ended September 30, 1996. All per share data has been restated to account
for Lucent's two-for-one stock splits effective on April 1, 1999 and on April 1,
1998.
Effective October 1, 1998, Lucent changed its method of accounting for
pension and post-retirement benefits to allow it to better represent the related
expenses in its financial statements. As a result, Lucent recorded a one-time,
after-tax gain from the cumulative effect of the accounting change of $1,308
million net of tax of $842 million, or $0.42 per share, for the first fiscal
quarter of 1999. Included in net income as a result of the accounting change is
$195 million, or $0.06 per diluted share for the nine months ended June 30, 1999
and $130 million, or $0.04 per diluted share, for the six months ended March 31,
1999.
Lucent's consolidated results were restated to include the results of Kenan
Systems Corporation and Ascend Communications, Inc. which merged with Lucent on
February 26, 1999 and June 24, 1999, respectively. Each of the Kenan and Ascend
mergers was accounted for as a pooling of interests.
The following selected consolidated financial data of Lucent at September
30, 1998 and 1997, for each of the two years in the period ended September 30,
1998 and for the nine-month period ended September 30, 1996 is derived from
audited consolidated financial statements incorporated by reference in this
proxy statement/prospectus. The selected consolidated financial data of Lucent
at September 30, 1996, December 31, 1995 and 1994, and for each of the two years
in the period ended December 31, 1995 is derived from unaudited consolidated
financial statements not incorporated by reference in this proxy
statement/prospectus and, in the opinion of Lucent's management, includes all
necessary adjustments for a fair presentation of such data in conformity with
generally accepted accounting principles.
The selected consolidated financial data of Lucent at and for the nine
months ended June 30, 1999 and 1998, at and for the six months ended March 31,
1999 and 1998, and for the twelve months ended September 30, 1996 is derived
from unaudited condensed consolidated financial statements incorporated by
reference in this proxy statement/prospectus and, in the opinion of Lucent's
management, includes all necessary adjustments for a fair presentation of such
data in conformity with generally accepted accounting principles. Results for
the nine-month period ended June 30, 1999 and for the six-month period ended
March 31, 1999, may not be indicative of the results for the full year.
8
<PAGE> 16
THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH LUCENT'S
CONSOLIDATED HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/ PROSPECTUS. SEE "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 52.
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
NINE MONTHS AT OR FOR THE TWELVE MONTHS
ENDED SIX MONTHS ENDED ENDED
JUNE 30, MARCH 31, SEPTEMBER 30,
----------------- ----------------- -----------------
1999 1998 1999 1998 1998 1997
------- ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................... $27,728 $23,232 $18,413 $15,590 $31,806 $27,611
Operating income (loss)..... 4,177 1,960 2,900 1,748 2,638 1,599
Net income (loss)........... 3,818 815 3,068 965 1,035 449
Basic earnings (loss) per
share..................... 1.26 0.28 1.01 0.33 0.35 0.16
Diluted earnings (loss) per
share..................... 1.22 0.27 0.98 0.32 0.34 0.15
Dividends declared per
share..................... 0.06 0.06 0.04 0.038 0.078 0.056
BALANCE SHEET DATA:
Total assets................ $37,156 $26,919 $35,560 $26,124 $29,363 $25,006
Total debt.................. 6,792 4,322 6,901 3,816 4,640 4,203
Shareowners' equity......... 12,403 6,296 11,328 6,276 7,709 4,379
<CAPTION>
AT OR FOR THE
AT OR FOR AT OR FOR TWELVE MONTHS
THE TWELVE THE NINE ENDED
MONTHS ENDED MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, -----------------
1996 1996 1995 1994
------------- ------------- ------- -------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................... $24,215 $16,639 $21,718 $19,867
Operating income (loss)..... (656) 734 (921) 985
Net income (loss)........... (604) 382 (813) 497
Basic earnings (loss) per
share..................... (0.23) 0.14 (0.34) N/A
Diluted earnings (loss) per
share..................... (0.23) 0.14 (0.34) N/A
Dividends declared per
share..................... 0.038 0.038 -- N/A
BALANCE SHEET DATA:
Total assets................ $23,572 $23,572 $20,217 $17,475
Total debt.................. 3,997 3,997 4,018 3,164
Shareowners' equity......... 3,462 3,462 1,917 2,583
</TABLE>
- ---------------
N/A -- Not applicable
9
<PAGE> 17
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
EXCEL
The following selected historical financial data of Excel at December 31,
1998 and December 27, 1997, and for each of the three fiscal years in the period
ended December 31, 1998 is derived from audited consolidated financial
statements incorporated by reference in this proxy statement/prospectus.
The selected historical financial data of Excel at December 28, 1996,
December 31, 1995 and December 31, 1994, and for each of the two years in the
period ended December 31, 1995 is derived from unaudited consolidated financial
statements not incorporated by reference in this proxy statement/prospectus.
The selected historical financial data of Excel at and for the six months
ended June 30, 1999 and June 27, 1998 is derived from unaudited condensed
consolidated financial statements incorporated by reference in this proxy
statement/prospectus and, in the opinion of Excel's management, includes all
necessary adjustments for a fair presentation of such data in conformity with
generally accepted accounting principles.
The selected historical financial data of Excel at or for the nine months
ended December 28, 1996 was calculated by subtracting the three-month period
ended March 31, 1996 from the twelve-month period ended December 28, 1996. In
the opinion of Excel's management, this selected historical financial data
includes all necessary adjustments for a fair presentation of such data in
conformity with generally accepted accounting principles. Results for the
six-month period ended June 30, 1999 may not be indicative of the results for
the full year.
On May 10, 1999, Excel completed an acquisition of RAScom, Inc. The RAScom
merger was accounted for as a pooling of interests. Accordingly, Excel's
financial statements for the period ended June 30, 1999 reflect the combined
results of both entities. In addition, financial results for previous periods
have been restated to reflect the combined operations for both entities since
inception. During the second quarter of 1999, Excel recorded a one-time charge
for acquisition related expenses of approximately $2.1 million.
10
<PAGE> 18
THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH EXCEL'S
CONSOLIDATED HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED
BY REFERENCE IN THIS PROXY STATEMENT/ PROSPECTUS. SEE "WHERE YOU CAN FIND MORE
INFORMATION" ON PAGE 52.
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS SIX MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 27, DECEMBER 31, DECEMBER 27,
1999 1998 1998 1997
------------- ------------- ------------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................. $ 81 $ 58 $129 $ 92
Operating income.......... 14 12 20 23
Net income................ 10 9 15 15
Basic earnings per
share................... 0.26 0.26 0.41 0.48
Diluted earnings per
share................... 0.24 0.23 0.38 0.42
Dividends declared per
share................... N/A N/A N/A N/A
BALANCE SHEET DATA:
Total assets.............. $231 $180 $207 $164
Total debt................ 8 1 8 5
Shareowners' equity....... 184 132 147 119
<CAPTION>
AT OR FOR THE AT AND FOR THE AT OR FOR THE AT OR FOR THE
TWELVE MONTHS NINE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
DECEMBER 28, DECEMBER 28, DECEMBER 31, DECEMBER 31,
1996 1996 1995 1994
------------- -------------- ------------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................. $62 $50 $36 $21
Operating income.......... 10 9 9 7
Net income................ 6 5 5 4
Basic earnings per
share................... 0.21 0.18 0.19 0.15
Diluted earnings per
share................... 0.18 0.16 0.17 0.13
Dividends declared per
share................... N/A N/A N/A N/A
BALANCE SHEET DATA:
Total assets.............. $42 $42 $23 $10
Total debt................ 5 5 4 0
Shareowners' equity....... 18 18 12 6
</TABLE>
- ---------------
N/A -- Not applicable
11
<PAGE> 19
RISK FACTORS RELATING TO THE MERGER
In addition to the other information included and incorporated by reference
in this proxy statement/ prospectus, Excel stockholders should consider
carefully the matters described below in determining whether to approve the
merger agreement.
- THE EXCHANGE RATIO FOR LUCENT COMMON STOCK TO BE RECEIVED IN THE MERGER
IS FIXED AND WILL NOT BE ADJUSTED IN THE EVENT OF ANY CHANGE IN STOCK
PRICE. Under the merger agreement, each share of Excel common stock will
be converted into the right to receive 0.558 shares of Lucent common
stock. This exchange ratio is a fixed number and will not be adjusted in
the event of any increase or decrease in the price of Lucent common stock
or Excel common stock. The prices of Lucent common stock and Excel common
stock at the closing of the merger may vary from their respective prices
on the date of this proxy statement/prospectus and on the date of the
special meeting. These prices may vary because of changes in the
business, operations or prospects of Lucent or Excel, market assessments
of the likelihood that the merger will be completed, the timing of the
completion of the merger, the prospects of post-merger operations,
regulatory considerations, general market and economic conditions and
other factors. Because the date that the merger is completed may be later
than the date of the special meeting, the prices of Lucent common stock
and Excel common stock on the date of the special meeting may not be
indicative of their respective prices on the date the merger is
completed. We urge Excel stockholders to obtain current market quotations
for Lucent common stock and Excel common stock.
- THE PRICE OF LUCENT COMMON STOCK MAY BE AFFECTED BY FACTORS DIFFERENT
FROM THOSE AFFECTING THE PRICE OF EXCEL COMMON STOCK. Upon completion of
the merger, holders of Excel common stock will become holders of Lucent
common stock. Lucent's business differs from that of Excel, and Lucent's
results of operations, as well as the price of Lucent common stock, may
be affected by factors different from those affecting Excel's results of
operations and the price of Excel common stock. For a discussion of
Lucent's and Excel's businesses and certain factors to consider in
connection with such businesses, see Lucent's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998, as amended, Lucent's Form
8-K dated August 2, 1999, filed to restate Lucent's financial results for
the merger of Lucent and Ascend, and Excel's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 and Excel's Form 8-K/A dated
August 27, 1999, filed to restate Excel's financial results for the
merger of Excel and RAScom, which are incorporated by reference in this
proxy statement/prospectus.
12
<PAGE> 20
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to stockholders of Excel
as part of the solicitation of proxies by the Excel board of directors for use
at the special meeting.
DATE, TIME AND PLACE
We will hold the special meeting at Sheraton Hyannis Resort, West End
Circle, Hyannis, Massachusetts 02601, at 9:00 a.m., local time, on Wednesday,
November 3, 1999.
PURPOSE OF SPECIAL MEETING
At the special meeting, we are asking holders of Excel common stock to
approve the merger agreement. The Excel board of directors has unanimously
approved the merger agreement and the merger, has unanimously determined that
the merger agreement and the merger are fair to and in the best interests of
Excel and its stockholders and unanimously recommends that Excel stockholders
vote FOR the approval of the merger agreement.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of Excel common stock at the close of business on
September 29, 1999, the record date, are entitled to notice of and to vote at
the special meeting. On the record date, 40,032,322 shares of Excel common stock
were issued and outstanding and held by approximately 199 holders of record. A
quorum is present at the special meeting if a majority of the shares of Excel
common stock issued and outstanding and entitled to vote on the record date are
represented in person or by proxy. In the event that a quorum is not present at
the special meeting, it is expected that the meeting will be adjourned or
postponed to solicit additional proxies. Holders of record of Excel common stock
on the record date are entitled to one vote per share at the special meeting on
the proposal to approve the merger agreement.
VOTES REQUIRED
The approval of the merger agreement requires the affirmative vote of
two-thirds of the shares of Excel common stock outstanding on the record date.
IF AN EXCEL STOCKHOLDER ABSTAINS FROM VOTING OR DOES NOT VOTE, EITHER IN PERSON
OR BY PROXY, IT WILL COUNT AS A VOTE AGAINST THE APPROVAL OF THE MERGER
AGREEMENT.
VOTING BY EXCEL DIRECTORS AND EXECUTIVE OFFICERS
At the close of business on the record date, directors and executive
officers of Excel and their affiliates owned and were entitled to vote
28,622,433 shares of Excel common stock, which represented approximately 72% of
the shares of Excel common stock outstanding on that date. Each Excel director
and executive officer has indicated his or her present intention to vote, or
cause to be voted, the Excel common stock owned by him or her for the approval
of the merger agreement. Under the terms of a stockholders agreement, Mr.
Madonna has agreed to vote his shares of Excel common stock, and the shares over
which he has voting control, for the approval of the merger agreement. On the
record date, Mr. Madonna owned and was entitled to vote 26,883,150 shares of
Excel common stock or approximately 67% of the shares of Excel common stock
outstanding on the record date. As a result, Mr. Madonna's vote will be
sufficient to approve the merger agreement.
13
<PAGE> 21
VOTING OF PROXIES
All shares represented by properly executed proxies received in time for
the special meeting will be voted at the special meeting in the manner specified
by the holders. Properly executed proxies that do not contain voting
instructions will be voted for the approval of the merger agreement.
Shares of Excel common stock represented at the special meeting but not
voting, including shares of Excel common stock for which proxies have been
received but for which holders of shares have abstained, will be treated as
present at the special meeting for purposes of determining the presence or
absence of a quorum for the transaction of all business.
Only shares affirmatively voted for the approval of the merger agreement,
including properly executed proxies that do not contain voting instructions,
will be counted as favorable votes for that proposal. If an Excel stockholder
abstains from voting or does not vote, either in person or by proxy, it will
count as a vote against the approval of the merger agreement. Brokers who hold
shares of Excel common stock in street name for customers who are the beneficial
owners of such shares may not give a proxy to vote those customers' shares in
the absence of specific instructions from those customers. These non-voted
shares are referred to as broker non-votes and count as votes against the
approval of the merger agreement.
The persons named as proxies by a stockholder may propose and vote for one
or more adjournments of the special meeting, including adjournments to permit
further solicitations of proxies. No proxy voted against the proposal to approve
the merger agreement will be voted in favor of any such adjournment or
postponement.
Excel does not expect that any matter other than the proposal to approve
the merger agreement will be brought before the special meeting. If, however,
the Excel board of directors properly presents other matters, the persons named
as proxies will vote in accordance with their judgment.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
stockholder from voting in person at the special meeting. A stockholder may
revoke a proxy at any time prior to its exercise by filing with the Secretary of
Excel a duly executed revocation of proxy, by submitting a duly executed proxy
to the Secretary of Excel bearing a later date or by appearing at the special
meeting and voting in person. Attendance at the special meeting will not itself
constitute revocation of a proxy.
SOLICITATION OF PROXIES
Excel will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by mail, the directors, officers and
employees of Excel and its subsidiaries may solicit proxies from stockholders by
telephone or other electronic means or in person. Excel will cause brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of stock held of record by such persons.
Excel will reimburse such custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in doing so.
STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXIES. A
transmittal form with instructions for the surrender of Excel common stock
certificates will be mailed to Excel stockholders as soon as practicable after
completion of the merger.
14
<PAGE> 22
THE COMPANIES
EXCEL
Excel is a leading provider of open switching platforms for
telecommunications networks worldwide. Excel develops, manufactures, markets and
supports a family of open, programmable, carrier-class switches that address the
complex enhanced services and wireless and wireline infrastructure needs of
network providers. Excel's products offer network providers the flexibility to
address multiple market applications and the scalability to deploy a variety of
system capacities. Excel's programmable switching platforms enable network
providers to deliver improved networking functionality at a lower cost than
purchasing, upgrading or reprogramming traditional, closed, central office
switches. Excel's products are currently deployed in telecommunications networks
in countries throughout the world.
Excel was incorporated in Massachusetts in January 1988. Additional
information regarding Excel is contained in Excel's filings with the Securities
and Exchange Commission. See "Where You Can Find More Information" on page 52.
LUCENT
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.
Lucent was incorporated in Delaware in November 1995. Lucent was a wholly
owned subsidiary of AT&T prior to its initial public offering of common stock in
April 1996, and became completely separate from AT&T when the remaining shares
of Lucent common stock held by AT&T were distributed to AT&T's stockholders in
September 1996. Additional information regarding Lucent is contained in Lucent's
filings with the Securities and Exchange Commission. See "Where You Can Find
More Information" on page 52.
15
<PAGE> 23
THE MERGER
The following discussion summarizes the material terms of the merger, the
merger agreement and the stockholders agreement. Stockholders should read
carefully the merger agreement and the stockholders agreement, which are
attached as Annexes 1 and 2 to this proxy statement/prospectus.
BACKGROUND TO THE MERGER
On September 3, 1998, representatives from Lucent, including Gerald
Zielinski, Switching and Access Director of Business Development, Suzanne
Rajchel, Manager of Business Development, Robert Richardson, Technical Manager,
and Diane Nolte, a Distinguished Member of the Technical Staff, and Mr. Madonna
of Excel met to explore a potential business relationship.
On September 8, 1998, Lucent and Excel executed a non-disclosure agreement.
On November 11, 1998, representatives of Lucent, including Messrs.
Zielinski and Richardson, and Eric Sumner, Switching and Access Ventures Vice
President, and Colin Golder, Switching and Access Strategy and Business
Development Vice President, and Mr. Madonna met to further explore potential
cooperative business activities including a possible original equipment
manufacturer relationship.
On December 8, 1998, Lucent and Excel executed an additional non-disclosure
agreement.
On December 16, 1998, Lucent and Excel representatives engaged in a
conference call to understand the technical aspects of Excel's platform and
programmability.
On February 5, 1999, representatives of Lucent, including Robert Holder,
Group President of Lucent's Switching and Access Solutions business unit, Frank
D'Amelio, Switching and Access Solutions Vice President of Marketing and
Management, and Mr. Sumner met with Mr. Madonna, Russell M. Levesque, Vice
President, Product Management of Excel, Christopher Stavros, Vice President,
General Counsel of Excel, and Bruce Myers, Controller of Excel. They began
discussions regarding a broader business relationship including a possible
strategic business combination. They also talked about the process for further
discussions.
On February 26, 1999, Lucent and Excel representatives engaged in a second
conference call to gain a further understanding of the technical aspects of
Excel's platform and programmability.
On March 11, 1999, Messrs. Holder and Madonna had a telephone call to
discuss a possible business combination between Lucent and Excel. On April 7,
1999, Messrs. Holder, Sumner, Golder and D'Amelio and William Viqueria,
Corporate Business Development Vice President, met with Messrs. Madonna, Stavros
and Myers, Gadi Tamari, Chief Operating Officer of Excel, and Cordell G.
Spencer, Managing Director of Morgan Stanley, Excel's financial advisor, to
discuss certain aspects of a potential business combination between Lucent and
Excel. On April 16, 1999, Mr. D'Amelio continued discussions with Mr. Madonna.
On May 10, 1999, Richard A. McGinn, Chairman and Chief Executive Officer of
Lucent, and Messrs. Holder, D'Amelio, Madonna, Levesque and David C.
Brajczewski, Vice President, Research and Development and Engineering of Excel,
met to discuss certain significant terms of a potential business combination
between Lucent and Excel, including senior management roles and employee
matters.
From May 10 through May 17, 1999, representatives of Lucent and Excel
continued discussions regarding the aspects of a potential business combination
including price, form of transaction, roles and responsibilities of Excel senior
management following a business combination and timing.
On May 17, 1999, representatives of Lucent, including Messrs. Holder,
D'Amelio, Sumner, Golder and Viqueira met with Messrs. Madonna and Spencer to
discuss the aspects of a potential
16
<PAGE> 24
relationship including each company's operations, their respective complementary
strengths and the possible advantages of a strategic business combination. They
also discussed certain significant terms of a potential strategic business
combination, including, among others, the appropriate price, certain senior
management roles and other integration issues. Messrs. Holder and Madonna also
discussed the price and general framework for a proposed merger. This proposed
framework was contingent upon additional due diligence inquiries and negotiation
of definitive agreements.
During the period from May 21, 1999 to June 3, 1999, the companies
continued to conduct additional technical, legal and financial due diligence.
The companies also discussed senior management roles and integration. Throughout
this period, representatives of Lucent and Excel and their financial advisors
exchanged and discussed business, personnel, legal and financial information
relating to Lucent and Excel.
On June 4, 1999, Lucent's discussions with Excel about a potential merger
were terminated due to business and due diligence concerns of Lucent with
respect to Excel.
On July 21, 1999, Messrs. Holder and Madonna recommenced merger discussions
including Excel's recent financial performance and other operational issues.
During early August 1999, Messrs. Holder and Madonna continued discussions
on the terms of a potential merger including price, structure and timing.
On August 6, 1999, the Lucent board considered the terms of the proposed
merger and, after deliberation, approved a merger with Excel pending appropriate
agreement on terms and conditions of the merger agreement and stockholders
agreement.
From August 7 through August 16, 1999, representatives of Lucent and Excel,
together with their financial and legal advisors, had numerous meetings and
telephone calls to discuss and negotiate the terms and conditions of the merger
agreement and the stockholders agreement and various other legal, financial and
regulatory issues, including, among other things, the treatment of employee
benefit plans, the tax treatment of the proposed transaction and the proper
accounting treatment of the proposed transaction.
On August 13, 1999, the Excel board of directors held a special meeting
attended by members of Excel's senior management and representatives of Excel's
financial and legal advisors to review the status of negotiations with Lucent,
the potential benefits of the transaction with Lucent and the principal terms of
the merger agreement and related documents. Excel's legal advisors further
discussed the terms of the merger agreement and related documents. Excel's
financial advisors reviewed the strategic rationale for, and financial analyses
relating to, the proposed merger. In addition, at the meeting Morgan Stanley
provided its opinion that the exchange ratio pursuant to the merger agreement
was fair, from a financial point of view, to holders of Excel common stock.
On August 17, 1999, the Excel board of directors held a special meeting
attended by Excel's senior management and representatives of Excel's legal
advisors to review the terms of the final drafts of the merger agreement and
related documents. Following the discussion, the Excel board of directors
unanimously determined that the proposed merger was advisable and unanimously
approved the merger agreement and resolved to recommend that Excel stockholders
approve the merger agreement.
17
<PAGE> 25
The merger agreement was signed by both parties on the night of August 17,
1999. On the morning of August 18, 1999, prior to the commencement of trading,
Lucent and Excel issued a joint press release announcing the execution of the
merger agreement.
REASONS FOR THE MERGER AND BOARD OF DIRECTORS RECOMMENDATION
REASONS FOR THE MERGER. In reaching its decision to approve the merger
agreement and the merger and to recommend adoption of the merger agreement by
Excel stockholders, the Excel board of directors consulted with its management
team and advisors and independently considered the proposed merger agreement and
the transactions contemplated by the merger agreement. The following discussion
of the factors considered by the Excel board of directors in making its decision
is not intended to be exhaustive but includes all material factors considered by
the Excel board of directors.
The Excel board of directors considered the following factors as reasons
that the merger will be beneficial to Excel and its stockholders:
- the need for Excel to expand its sales and distribution channels, offer
competitive financing alternatives for the purchase of telecommunications
products and attract additional qualified personnel
- access to Lucent's distribution channels, technology, manufacturing
resources, global services and marketing and sales support, and access to
Bell Laboratories' technology and their advanced work in voice processing
and speech recognition
- Excel's ability to leverage its existing relationships with application
developers, original equipment manufacturers and network carriers by
offering a broad range of products and services with enhanced financing
capabilities and extensive manufacturing and support services
- the potential of the combined companies to offer customers more complete
communications networking capabilities, including voice and data
networking as well as software and service solutions
- Excel's ability to integrate its open, programmable switching technology
with Lucent's existing product offerings, providing flexibility for Excel
and Lucent to address multiple markets and to meet technology
requirements
- the ability of Excel to utilize Lucent's manufacturing expertise and
strong ability to provide financing to customers due to Lucent's size and
financial position
- the ability of Excel to expand its sales and marketing infrastructure by
leveraging Lucent's extensive sales and marketing resources
- the ongoing consolidation in the telecommunications equipment sector
generally and the belief that combining with Lucent presents improved
business prospects as opposed to remaining independent
- the complementary nature of the companies' product offerings across a
range of products and possible synergies from combining Excel and Lucent
- the terms and conditions of the Merger Agreement, including closing
conditions
- the expected qualification of the merger as a tax-free reorganization
under Section 368(a) of the Internal Revenue Code
18
<PAGE> 26
- the transaction being accounted for as a pooling of interests, so that
Lucent would not be incurring charges to earnings associated with the
application of purchase accounting
- the opinion of Morgan Stanley Dean Witter that, as of the date of the
Merger Agreement and subject to the considerations set forth in the
opinion, the 0.558 exchange ratio is fair to the stockholders of Excel,
other than Lucent and its affiliates, from a financial point of view.
In the course of deliberations, the Excel board of directors also
considered a number of additional factors relevant to the merger, including:
- the need for Excel to facilitate third-party financing of customers'
equipment purchases
- information relating to the business, assets, management, competitive
position, operating performance, trading performance and prospects of
each of Excel and Lucent, including the prospects of Excel if it were to
continue as an independent company
- current industry, market and economic conditions
- the possibility of strategic alternatives to the merger for enhancing
long-term stockholder value
- the impact of the merger on Excel's and Lucent's customers, suppliers and
employees
- the likelihood that the merger would be completed
- the difficulty of increasing Excel's public stock price due to limited
public float, limited daily trading volume and concentration of ownership
- the need for Excel to significantly enhance sales, marketing and
distribution channels, both foreign and domestic.
The Excel board of directors also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including:
- a recognition that Lucent common stock has traded at high valuation
multiples, and the risk that such multiples might not be sustained in the
future
- the risk that, despite the efforts of Excel and Lucent after the merger,
key personnel might leave Excel
- the risk that a significant number of Excel's customers and suppliers
might cease doing business with Excel
- the difficulty of managing operations in the different geographic
locations in which Excel and Lucent operate
- the risk that the potential benefits of the merger might not be fully
realized.
The Excel board of directors believed that certain of these risks were
unlikely to occur, that Excel could avoid or mitigate others, and that, overall,
these risks were outweighed by the potential benefits of the merger.
In view of the variety of factors considered in connection with its
evaluation of the merger agreement and the merger, the Excel board of directors
did not find it practicable to and did not quantify or otherwise assign relative
weight to the specific factors considered in reaching its determination. In
addition, individual members of the Excel board of directors may have given
different weight to different factors.
19
<PAGE> 27
RECOMMENDATION OF THE EXCEL BOARD OF DIRECTORS. After careful
consideration, the Excel board of directors has unanimously determined that the
terms of the merger agreement and the merger are fair to, and in the best
interests of, Excel and its stockholders and has approved the merger agreement
and the merger. The Excel board of directors unanimously recommends that the
stockholders of Excel vote FOR the adoption of the merger agreement.
OPINION OF MORGAN STANLEY & CO. INCORPORATED
Pursuant to a letter dated as of May 1, 1999, Morgan Stanley was engaged to
provide financial advisory services and a financial fairness opinion in
connection with the merger. Morgan Stanley was selected by the Excel board of
directors to act as Excel's financial advisor based on Morgan Stanley's
qualifications, expertise and reputation and its knowledge of the business and
affairs of Excel and the industry in general.
At the August 13, 1999 meeting of the Excel board of directors, Morgan
Stanley rendered its oral opinion that, as of such date and based upon and
subject to the various considerations set forth in its opinion, the exchange
ratio pursuant to the merger agreement is fair from a financial point of view to
holders of Excel common stock. Morgan Stanley confirmed its opinion in writing
by delivery to the Excel board of directors of a written opinion dated August
17, 1999.
The full text of Morgan Stanley's written opinion dated August 17, 1999,
which sets forth, among other things, assumptions made, procedures followed,
matters considered and the limits of the review undertaken, is attached as Annex
3 to this proxy statement/prospectus and is incorporated herein by reference.
Holders of Excel common stock are urged to, and should, read the opinion
carefully and in its entirety. Morgan Stanley's opinion is addressed to the
Excel board of directors and addresses the fairness of the exchange ratio
pursuant to the merger agreement from a financial point of view to the holders
of Excel common stock and it does not address any other aspect of the merger nor
does it constitute a recommendation to any holder of Excel common stock as to
how Excel common stockholders should vote at the special meeting. The summary of
the opinion of Morgan Stanley set forth in this proxy statement/prospectus is
qualified in its entirety by reference to the full text of its opinion.
In rendering its opinion, Morgan Stanley, among other things:
- reviewed certain publicly available financial statements and other
information of Excel and Lucent
- reviewed certain internal financial statements and other financial and
operating data concerning Excel prepared by the management of Excel
- analyzed certain financial projections prepared by the management of
Excel
- discussed with senior executives of Excel the past and current operations
and financial condition and the prospects of Excel, including information
relating to certain strategic, financial and operational benefits
anticipated from the merger
- discussed with senior executives of Lucent the past and current
operations and financial condition and the prospects of Lucent, including
information relating to certain strategic, financial and operational
benefits anticipated from the merger
- reviewed the pro forma impact of the merger on Lucent's earnings per
share and other financial ratios
20
<PAGE> 28
- reviewed the reported prices and trading activity for the Excel common
stock and the Lucent common stock
- discussed with the senior management of Excel and representatives of
Lucent certain research analyst projections for Excel and Lucent,
respectively
- compared the financial performance of Excel and Lucent and the prices and
trading activity of Excel common stock and Lucent common stock with that
of certain other publicly-traded companies and their securities
- reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions
- participated in discussions and negotiations among representatives of
Excel and Lucent and their respective financial and legal advisors
- reviewed the draft merger agreement and certain related documents
- performed such other analyses and considered such other factors as Morgan
Stanley has deemed appropriate.
In arriving at its opinion, Morgan Stanley assumed and relied upon without
independent verification the accuracy and completeness of the information
reviewed by it for the purposes of this opinion. With respect to the financial
projections, including the information relating to certain strategic, financial
and operational benefits anticipated from the merger, Morgan Stanley assumed
that they were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the prospects of Excel. In addition, Morgan
Stanley assumed that the merger will be completed in accordance with the terms
of the merger agreement, including, among other things, that the merger will be
accounted for as a pooling of interests business combination in accordance with
United States generally accepted accounting principles and that the merger will
be treated as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code. Morgan Stanley has not made any independent valuation or
appraisal of the assets or liabilities of Excel, nor has it been furnished with
any such appraisals. As the Excel board of directors was aware, Lucent did not
make available its forecasts of future financial performance. Instead, for
purposes of its analysis, Morgan Stanley relied upon, with the consent of the
Excel board of directors, the publicly available estimates of certain research
analysts for Lucent. The Morgan Stanley opinion was necessarily based on
financial, economic, market and other conditions as in effect on, and the
information made available to it as of, the date of the Morgan Stanley opinion.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with its oral opinion and the Morgan Stanley opinion.
Certain of these summaries of financial analyses include information presented
in tabular format. In order to fully understand the financial analyses used by
Morgan Stanley, the tables must be read together with the text of each summary.
The tables alone do not constitute a complete description of the financial
analyses.
HISTORICAL COMMON STOCK PERFORMANCE. Morgan Stanley's analysis of Excel
common stock's performance consisted of an historical analysis of closing prices
and trading volumes over the period from November 5, 1997 to August 12, 1999.
During that period, based on closing prices on The Nasdaq National Market, Excel
common stock achieved a high closing price of $38.00 on December 31, 1998 and a
low closing price of $15.00 on December 19, 1997. Additionally, Morgan Stanley
noted that Excel common stock closed at a price of $26.00 on August 12, 1999.
Morgan Stanley's analysis of Lucent common stock's performance consisted of
an historical analysis of closing prices and trading volumes over the period
from August 12, 1998 to August 12,
21
<PAGE> 29
1999. During that period, based on closing prices on the New York Stock
Exchange, Lucent common stock achieved a high closing price of $78.44 on July
16, 1999 and a low closing price of $28.50 on October 7, 1998. Additionally,
Morgan Stanley noted that Lucent common stock closed at a price of $63.75 on
August 12, 1999.
COMPARATIVE STOCK PRICE PERFORMANCE. Morgan Stanley performed an
historical analysis of closing prices from August 12, 1998 to August 12, 1999
of: Excel common stock; Lucent common stock; the S&P 500 Index; and an index of
comparable networking companies, consisting of Nortel Networks Corporation,
Tellabs Inc., ADC Telecommunications, Newbridge Networks Corporation, Ciena
Corporation, Pairgain Technologies Inc., ADTRAN Inc., Advanced Fibre
Communication, Cisco Systems Inc., 3Com Corporation, Cabletron Systems Inc.,
Comverse Technology Inc. and Dialogic Corporation (unaffected trading price
pre-merger announcement)(1) (the "Networking Companies"). Morgan Stanley
compared the performance of such companies and indices to the performance of
Excel common stock and Lucent common stock during such period. Morgan Stanley
observed that over the period from August 12, 1998 to August 12, 1999, the
Networking Companies Index increased 55%, Lucent common stock increased 38%, the
S&P 500 increased 22%, and Excel common stock increased 17%.
PEER GROUP COMPARISON. Morgan Stanley also compared certain financial
information of Excel and Lucent with publicly available information of the
Networking Companies. The following table presents, as of August 12, 1999, the
median for the Networking Companies of share price to projected calendar year
1999 and 2000 earnings multiples, calendar year 1999 earnings multiples divided
by long term growth rates and aggregate value, defined as market capitalization
plus total debt less cash and cash equivalents, to estimated calendar year 1999
revenues, compared to the values indicated for the Excel and Lucent estimates.
All earnings and growth estimates are based on the median estimates from
securities research analysts.
<TABLE>
<CAPTION>
SHARE PRICE TO
PROJECTED
CALENDAR YEAR
SHARE PRICE TO PROJECTED 1999 EARNINGS AGGREGATE VALUE
CALENDAR YEAR DIVIDED BY LONG TO ESTIMATED
----------------------------- TERM GROWTH CALENDAR YEAR
1999 EARNINGS 2000 EARNINGS RATES 1999 REVENUES
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Excel.................................... 33.3x 23.2x 95% 5.9x
Lucent................................... 49.4x 40.1x 247% 33.0x
Networking Companies..................... 41.3x 30.6x 180% 3.3x
</TABLE>
No company utilized in the peer group comparison analysis as a comparison
is identical to Excel or Lucent. In evaluating the peer groups, Morgan Stanley
made judgements and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Excel or Lucent, such as the impact of
competition on the business of Excel or Lucent and the industry generally,
industry growth and the absence of any material adverse change in the financial
condition and prospects of Excel or Lucent or the industry or in the financial
markets in general. Mathematical analysis (such as determining the average or
median) is not in itself a meaningful method of using peer group data.
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS. Using publicly available
information, Morgan Stanley reviewed the terms of certain announced, pending or
completed networking industry
- ---------------
(1)Announced a transaction with Intel Corporation on June 1, 1999. Analysis
based on unaffected trading price prior to the transaction announcement.
Dialogic is not included in Comparative Stock Price Performance analysis.
22
<PAGE> 30
transactions and compared certain statistics for these transactions to the
relevant financial statistics for Excel based on the value of Excel implied by
the exchange ratio and the closing price for Excel common stock and Lucent
common stock as of August 12, 1999. The following table presents the implied
multiples and premiums to trading price, using the low, median and high
multiples of aggregate value divided by forward revenue estimates, forward
estimated earnings, price to projected forward earnings divided by the estimated
long term growth rate, and the one trading day and 30-day average to
announcement offer price premiums for the selected precedent transactions,
compared to the respective earnings and revenue multiples and offer price
premium for the transaction implied by the offer as of August 12, 1999.
<TABLE>
<CAPTION>
IMPLIED OFFER PRICE TO IMPLIED OFFER PRICE PREMIUMS
--------------------------- ------------------------------
FORWARD
IMPLIED AGGREGATE VALUE EARNINGS 30-DAY
(BASED ON OFFER PRICE) FORWARD DIVIDED BY EST. 1 TRADING DAY AVERAGE
TO ESTIMATES ESTIMATED LONG TERM PRIOR TO PRIOR TO
FORWARD REVENUE EARNINGS GROWTH RATE ANNOUNCEMENT ANNOUNCEMENT
----------------------- --------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Networking Transactions
Low..................... 2.0x 26.7x 79% (0.3)% 9.2%
Median.................. 3.1x 38.2x 180% 18.8% 49.8%
High.................... 9.4x 229.4x 1,454% 37.4% 85.3%
Excel(1).................. 8.7x 47.4x 135% 42.3% 27.0%
</TABLE>
- ---------------
(1) Based on analysts' estimates.
No transaction utilized as a comparison in the precedent transactions
analysis is identical to the merger. In evaluating the precedent transactions,
Morgan Stanley made judgments and assumptions regarding industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Excel or Lucent, such as the impact of
competition on Excel or Lucent and the industry generally, industry growth and
the absence of any material adverse change in the financial condition and
prospects of Excel or Lucent or the industry or in the financial markets in
general. Mathematical analysis (such as determining the average or median) is
not in itself a meaningful method of using comparable transaction data.
DISCOUNTED EQUITY ANALYSIS. Morgan Stanley performed an analysis of the
present value per share of Excel's respective future trading prices based on
ranges of the following assumptions: earnings per share estimates for the
calendar year 2000, 2001 and 2002; illustrative multiples of earnings per share,
ranging from 20.0 to 30.0; and an illustrative discount rate range of 15-20%.
Based on these assumptions, Morgan Stanley calculated the present value of
future theoretical trading values, ranging from approximately $25.00 to $33.00
per Excel share.
EXCHANGE RATIO ANALYSIS. Morgan Stanley reviewed the ratios of the closing
prices of Excel common stock divided by the corresponding prices of Lucent
common stock over various periods during the period from August 12, 1998 to
August 12, 1999 and computed the premiums represented by the exchange ratio over
the averages of these daily ratios over various periods. The
23
<PAGE> 31
following table presents the range of average implied exchange ratios over the
period covered as of August 12, 1999, compared to the exchange ratio.
<TABLE>
<CAPTION>
AVERAGE
IMPLIED PREMIUM REPRESENTED
EXCHANGE BY EXCHANGE RATIO
RATIO OVER OVER AVERAGE IMPLIED
PERIOD ENDING AUGUST 12, 1999 PERIOD EXCHANGE RATIO
- ----------------------------- ---------- ----------------------
<S> <C> <C>
As of August 12, 1999....................................... 0.408x 43.9%
10 Trading Days............................................. 0.395x 48.4%
30 Trading Days............................................. 0.424x 38.4%
60 Trading Days............................................. 0.421x 39.5%
90 Trading Days............................................. 0.402x 46.1%
Latest Twelve Month Average................................. 0.487x 20.5%
</TABLE>
PRO FORMA ANALYSIS OF THE MERGER. Morgan Stanley analyzed the pro forma
impact of the merger on earnings per share for Lucent for the fiscal years 2000
and 2001. The pro forma results were calculated as if the merger had closed at
the beginning of Lucent's fiscal 2000, and were based on projected earnings
derived from First Call Estimates for Excel and Lucent. The pro forma analysis
also took into account the pooling accounting assumptions and followed United
States generally accepted accounting principles in deriving earnings. Morgan
Stanley noted that, without including synergies, on a United States generally
accepted accounting principles basis, the merger would be neutral to Lucent's
earnings per share in fiscal 2000 and slightly accretive to Lucent's earnings
per share in fiscal 2001.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, Morgan Stanley
believes that selecting any portion of Morgan Stanley's analyses, without
considering all its analyses, would create an incomplete view of the process
underlying the Morgan Stanley opinion. In addition, Morgan Stanley may have
deemed various assumptions more or less probable than other assumptions, so that
the ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of Excel or
Lucent.
In performing its analysis, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Excel or Lucent. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
values, which may be significantly more or less favorable than those suggested
by such analyses. Such analyses were prepared solely as a part of Morgan
Stanley's analysis of the fairness from a financial point of view of the
exchange ratio pursuant to the merger agreement and were provided to the Excel
board of directors in connection with the delivery of the Morgan Stanley
opinion. The analyses do not purport to be appraisals of value or to reflect the
prices at which Excel or Lucent might actually be sold. In addition, as
described above, the Morgan Stanley opinion was one of the many factors taken
into consideration by the Excel board of directors in making its determination
to approve the merger. The exchange ratio pursuant to the merger agreement was
determined through arm's-length negotiations between Excel and Lucent and was
approved by the Excel board of directors. Consequently, the Morgan Stanley
analyses as described above should not be viewed as determinative of the opinion
of the Excel board of directors with respect to the value of Excel or of whether
the Excel board of directors would have been willing to agree to different
consideration.
24
<PAGE> 32
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking business, is
regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate, estate and other purposes. Morgan
Stanley may continue to provide investment banking services to the combined
entity in the future. In the ordinary course of its trading, brokerage and
financing activities, Morgan Stanley and its affiliates may, at any time, have a
long or short position in, and buy and sell the debt or equity securities and
senior loans of Excel or Lucent for its account or the account of its customers.
Morgan Stanley and its affiliates have, in the past, provided financial advisory
and financing services to Excel and Lucent and their affiliates and have
received fees for the rendering of such services.
Pursuant to an engagement letter dated May 1, 1999, Morgan Stanley provided
financial advisory services and a financial fairness opinion in connection with
the merger, and Excel agreed to pay Morgan Stanley a fee of approximately $8.1
million if the merger is completed. Excel also agreed to reimburse Morgan
Stanley for expenses incurred by Morgan Stanley in performing its services. In
addition, Excel has also agreed to indemnify Morgan Stanley and its affiliates,
their respective directors, officers, agents and employees and each person, if
any, controlling Morgan Stanley or any of its affiliates against certain
liabilities and expenses, including liabilities under the federal securities
laws, related to or arising out of Morgan Stanley's engagement and any related
transactions.
INTERESTS OF EXCEL DIRECTORS AND MANAGEMENT IN THE MERGER
In considering the recommendation of the Excel board of directors in favor
of the merger, stockholders of Excel should be aware that members of the Excel
board of directors and executive officers of Excel have interests in the merger
that are different from, or in addition to, the interests of stockholders of
Excel. Such interests relate to or arise from, among other things,
- the terms of the merger agreement providing for the continued
indemnification of current directors and officers of Excel
- directors and employees with options to acquire Excel common stock will
have these options converted to options to acquire Lucent common stock
pursuant to the merger agreement and certain stock options held by
certain executive officers will vest as a result of the merger.
All such additional interests are described below, to the extent material, and
except as described below such persons have, to the knowledge of Lucent and
Excel, no material interest in the merger apart from those of stockholders
generally. The Excel board of directors was aware of, and considered the
interests of, their directors and executive officers in approving the merger
agreement and the merger.
INDEMNIFICATION AND INSURANCE. The merger agreement provides that all
rights of indemnification and exculpation from liabilities existing in favor of
the current and former directors or officers of Excel and its subsidiaries as
provided in their respective articles of organization or by-laws or other
comparable organizational documents and existing indemnification agreements of
Excel shall be assumed by the surviving corporation in the merger, and will
continue in full force and effect in accordance with their terms. The merger
agreement provides that for six years after the effective time of the merger,
Lucent will maintain directors' and officers' liability insurance for acts or
omissions occurring prior to the effective time of the merger covering those
persons who were, as of the date of the merger agreement, covered by Excel's
directors' and officers' liability insurance policy, on terms no less favorable
than those in effect on the date of the merger agreement. Lucent's obligation to
provide this insurance coverage is subject to a cap of 200% of the current
annual
25
<PAGE> 33
premium paid by Excel for its existing insurance coverage. If Lucent cannot
maintain the existing or equivalent insurance coverage without exceeding the
200% cap, Lucent is required to maintain only that amount of insurance coverage
which can be obtained by paying an annual premium equal to the 200% cap.
EMPLOYEE BENEFITS. Lucent has agreed to provide employee benefit plans,
programs and arrangements to those individuals who will continue to be employees
of Excel after the merger that are the same as those made generally available to
non-represented employees of Lucent hired after December 31, 1998. These plans,
programs and arrangements will be made available as soon as practicable after
the merger. From the merger until that time, Lucent has agreed that it will
provide the same benefit plans, programs and arrangement of Excel that were
provided to employees of Excel as were in effect as of August 17, 1999. See
"-- Continuation of Excel Employee Benefits" on page 32.
STOCK OPTIONS. Under the merger agreement, at the effective time of the
merger, Lucent will assume each stock option plan of Excel and all stock options
granted under those plans to acquire shares of Excel common stock. Each stock
option under those plans will be converted into a stock option to acquire Lucent
common stock on the same terms and conditions. The number of shares of Lucent
common stock to be subject to any option will be equal to the number of shares
of Excel common stock subject to that Excel option multiplied by the 0.558
exchange ratio and rounded down to the nearest whole share. The exercise price
per share of Lucent common stock under any option will be equal to the exercise
price per share of Excel common stock subject to that Excel option divided by
the 0.558 exchange ratio and rounded to the nearest one hundredth of a cent.
Within 30 days after the completion of the merger, Lucent will prepare and file
with the Securities and Exchange Commission an appropriate registration
statement registering the shares of Lucent common stock subject to the assumed
Excel stock options. That registration statement will be kept effective, and the
current status of the prospectus or prospectuses required by the SEC shall be
maintained, for so long as any assumed Excel options remain outstanding. See
"-- Effect on Awards Outstanding Under Excel Stock Plans" on page 33. Also,
certain stock options held by certain executive officers will vest as a result
of the merger.
INCREASED LIQUIDITY OF PRINCIPAL STOCKHOLDER. Prior to the merger, Mr.
Madonna and an affiliated entity held approximately 67% of the outstanding Excel
common stock, and after the merger, these persons will hold less than 0.5% of
the outstanding Lucent common stock. As a result, Mr. Madonna and an affiliated
entity will have increased liquidity and more flexibility to sell shares of
Lucent common stock owned by them in the open market than the shares of Excel
common stock owned by them prior to the merger.
NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS. In order to induce Lucent
to enter into the merger agreement, each of Mr. Madonna, Mr. Levesque, Mark P.
Hebert and Kevin C. Kicklighter, each a key employee of Excel, has agreed that
until the later of 18 months after the merger and one year after the termination
of his employment, he will not, directly or indirectly:
- engage in or meaningfully assist, each without the prior written consent
of Lucent, any business or activity if he knows or reasonably should know
that such business or activity, directly or indirectly, competes with or
is competitive in any material manner with (1) the provision of switching
platforms for telecommunications networks worldwide and (2) the
development, manufacture, marketing and service of a family of open,
programmable, carrier-class switches that address the complex enhanced
services and wireless and wireline infrastructure needs of network
providers
- take any action to solicit or divert business or potential business away
from Lucent
26
<PAGE> 34
- induce customers or potential customers associated or doing business with
respect to (1) the provision of switching platforms for
telecommunications networks worldwide and (2) the development,
manufacture, marketing and service of a family of open, programmable,
carrier-class switches that address the complex enhanced services and
wireless and wireline infrastructure needs of network providers with
Lucent or any of its affiliates to terminate, reduce or alter such
association with Lucent or any of its affiliates
- disclose to any person, or use or otherwise exploit for his own benefit
or for the benefit of any person, other than Lucent or its affiliates,
any confidential information or trade secrets other than those which
become public information without any breach of the agreement.
DISSENTERS' RIGHTS
Under Section 85 of Chapter 156B of the Massachusetts Business Corporation
Laws, stockholders of Excel who object to the merger agreement may demand
payment from the surviving corporation of the proposed merger and an appraisal
of the value of their shares in accordance with the provisions of Sections 85
through 98, inclusive, of Chapter 156B of the MBCL in lieu of accepting the
consideration provided for under the merger agreement.
THE DISCUSSION OF THESE PROVISIONS SET FORTH BELOW IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE TEXT OF THESE PROVISIONS WHICH IS ATTACHED TO THIS
PROXY STATEMENT/PROSPECTUS AT ANNEX 4. STOCKHOLDERS INTENDING TO EXERCISE
DISSENTERS' APPRAISAL RIGHTS SHOULD CAREFULLY REVIEW ANNEX 4. FAILURE TO FOLLOW
PRECISELY ANY OF THE STATUTORY PROCEDURES SET FORTH IN ANNEX 4 MAY RESULT IN A
TERMINATION OR WAIVER OF THESE RIGHTS.
In order to exercise the right to demand appraisal and payment of the value
of his or her shares of Excel common stock, a stockholder:
- must file with Excel prior to the taking of the vote on the merger
agreement a written objection stating that he or she intends to demand
payment for his or her shares if the merger is consummated and
- not vote his or her shares for approval of the merger agreement.
THOSE WRITTEN OBJECTIONS MAY BE FILED WITH EXCEL SWITCHING CORPORATION AT
255 INDEPENDENCE DRIVE, HYANNIS, MA 02601, ATTENTION: INVESTOR RELATIONS.
In order to not vote in favor of the approval of the merger agreement, a
stockholder must either:
- vote all of his or her shares against approval of the merger agreement
- abstain from voting on the merger agreement with respect to his or her
shares.
A proxy signed but not marked will, unless revoked, be voted for approval of the
merger agreement and may result in the loss of dissenters' appraisal rights.
Within 10 days after the consummation of the merger, the surviving
corporation will notify by registered or certified mail each stockholder who has
satisfied the requirements for demanding the appraisal of his or her shares that
the merger has become effective. The giving of this notice does not create any
rights in the recipient of the notice to demand payment for his or her shares of
Excel common stock.
If, within 20 days after the date such notice is mailed, any stockholder to
whom the surviving corporation was required to give such notice demands in
writing payment from the surviving corporation for his or her shares of Excel
common stock, the surviving corporation will pay to such objecting stockholder
the fair value of his or her Excel common stock within 30 days after the
expiration of the period during which such demand may be made.
27
<PAGE> 35
THOSE WRITTEN DEMANDS MAY BE FILED WITH EXCEL SWITCHING CORPORATION AT 255
INDEPENDENCE DRIVE, HYANNIS, MA 02601, ATTENTION: INVESTOR RELATIONS.
If during this 30-day period the surviving corporation and the objecting
stockholder are unable to agree as to the value of the Excel common stock,
either party may, within four months after the expiration of such 30-day period,
demand a determination of the value of the shares of Excel common stock of all
objecting stockholders by filing a bill in equity in the Superior Court in
Barnstable County in the Commonwealth of Massachusetts. Any objecting
stockholder who decides to file a bill in equity must do so on his or her own
behalf and on behalf of all other objecting stockholders who have demanded
payment for their shares and with whom the surviving corporation has not reached
an agreement as to the value of Excel common stock.
Service of the bill must be made upon the surviving corporation by subpoena
with a copy of the bill attached. The surviving corporation will file with its
answer a duly verified list of all objecting stockholders and such objecting
stockholders will be added as parties to the bill. The surviving corporation
will then give notice in such form and returnable on such date as the court will
order to each such stockholder by registered or certified mail to the last known
address as shown in the records of the surviving corporation and by publication
or otherwise as the court may order.
After a hearing, the court will enter a decree determining the fair value
of Excel common stock of those objecting stockholders who have become entitled
to the valuation of and payment for their shares and will order the surviving
corporation to make payment of such value, together with interest, if any, to
the objecting stockholders. The value of such shares will be determined as of
the day preceding the date of the stockholder vote approving the merger
agreement and exclude any element of value arising from the expectation or
accomplishment of the merger.
The costs associated with the bill in equity, excluding fees for counsel
and experts retained by any party, will be taxed upon the parties to the bill as
the court deems equitable. All costs associated with giving notice to
stockholders, however, will be borne by the surviving corporation. Interest will
be paid on any award from the date of the vote approving the merger agreement
and the court may, upon application of any party, determine the amount of
interest to be paid.
Any objecting stockholder who has demanded payment for his or her Excel
common stock will not be entitled to notice of any stockholders' meeting, to
vote such stock for any purpose or to receive any dividends or distributions on
the stock (except dividends or distributions payable to stockholders of record
as of a date prior to the date of the vote approving the merger agreement)
unless:
- a bill in equity to determine the fair value of the Excel common stock is
not filed within the statutory time period
- a bill in equity, if filed, has been dismissed as to such stockholder
- such stockholder has, with the written approval of the surviving
corporation, delivered a written withdrawal of his or her objections and
an acceptance of such corporate action.
The enforcement by an objecting stockholder of his or her right to receive
payment for his or her shares in this manner is an exclusive remedy except that
the stockholder may still bring or maintain an appropriate proceeding to obtain
relief on the ground that the corporate action giving rise to such right will be
or is illegal or fraudulent.
ACCOUNTING TREATMENT
Completion of the merger is conditioned upon its being accounted for on a
pooling of interests accounting basis and the receipt by Lucent and Excel of
letters from PricewaterhouseCoopers LLP
28
<PAGE> 36
and Arthur Andersen LLP regarding those firms' agreement with Lucent
management's and Excel management's conclusions, respectively, that no condition
exists that would prevent accounting for the merger as a pooling of interests
transaction under Accounting Principles Board Opinion No. 16 if completed in
accordance with the merger agreement. Under this accounting method, the
historical financial statements of Lucent and Excel will be combined for all
historical periods as if they had always been merged and, as of the effective
time of the merger, the historical assets and liabilities of Excel will be
combined with those of Lucent at their recorded book values.
FORM OF THE MERGER
Subject to the terms and conditions of the merger agreement and in
accordance with Massachusetts law, at the effective time of the merger, Dallas
Merger Inc., a wholly owned subsidiary of Lucent and a party to the merger
agreement, will merge with and into Excel. Excel will survive the merger as a
wholly owned Massachusetts subsidiary of Lucent, and will continue under the
name "Excel Switching Corporation."
MERGER CONSIDERATION
At the effective time of the merger, each outstanding share of Excel common
stock, other than those shares held by stockholders who perfect their
dissenter's rights and shares held by Excel, Lucent or Dallas Merger Inc., will
be converted into the right to receive 0.558 shares of Lucent common stock.
Treasury shares and stock held by Lucent or Dallas Merger Inc. will be canceled.
Stockholders will receive cash for any fractional shares which they would
otherwise receive in the merger. As of the effective time of the merger, all
shares of Excel common stock will no longer be outstanding and will
automatically be canceled and will cease to exist and each holder of a
certificate representing any shares of Excel common stock will cease to have any
rights as a stockholder except the right to receive Lucent common stock in the
merger. The exchange ratio of 0.558 was determined through arm's-length
negotiations between Lucent and Excel.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
The conversion of Excel common stock into the right to receive Lucent
common stock will occur automatically at the effective time of the merger. As
soon as practicable after the effective time of the merger, The Bank of New
York, the exchange agent, will send a transmittal letter to each former Excel
stockholder. The transmittal letter will contain instructions for obtaining
shares of Lucent common stock in exchange for shares of Excel common stock.
PLEASE DO NOT SEND STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
After the effective time of the merger, each certificate that previously
represented shares of Excel common stock will represent only the right to
receive the Lucent common stock into which such shares were converted in the
merger (or, in the case of shares subject to dissenters' rights, the right to
receive the amount in cash determined under Massachusetts law) and the right to
receive cash for any fractional shares of Lucent common stock as described
below.
Until holders of certificates previously representing Excel common stock
have surrendered those certificates to the exchange agent for exchange, holders
will not receive dividends or distributions on the Lucent common stock into
which such shares have been converted with a record date after the effective
time of the merger, and will not receive cash for any fractional shares of
Lucent common stock. When holders surrender such certificates, they will receive
any unpaid dividends and any cash for fractional shares of Lucent common stock
without interest.
In the event of a transfer of ownership of Excel common stock which is not
registered in the records of Excel's transfer agent, a certificate representing
the proper number of shares of Lucent
29
<PAGE> 37
common stock may be issued to a person other than the person in whose name the
certificate so surrendered is registered if:
- such certificate is properly endorsed or otherwise is in proper form for
transfer
- the person requesting such issuance will (1) pay any transfer or other
taxes resulting from the issuance of shares of Lucent common stock to a
person other than the registered holder of such certificate or (2)
establish to Lucent that such tax has been paid or is not applicable.
All shares of Lucent common stock issued upon conversion of shares of Excel
common stock, including any cash paid instead of any fractional shares of Lucent
common stock, will be issued in full satisfaction of all rights relating to such
shares of Excel common stock. Lucent will remain obligated, however, to pay any
dividends or make any other distributions declared or made by Excel with a
record date prior to the effective time of the merger and which remain unpaid at
the effective time of the merger.
No fractional shares of Lucent common stock will be issued to any Excel
stockholder upon surrender of certificates previously representing Excel common
stock. Promptly after the effective time of the merger, the exchange agent will
determine the excess of (1) the number of whole shares of Lucent common stock
delivered to the exchange agent by Lucent over (2) the aggregate number of whole
shares of Lucent common stock to be distributed to former holders of Excel
common stock. The exchange agent will sell such excess shares on the New York
Stock Exchange and will hold the proceeds in trust for the former holders of
Excel common stock. The exchange agent shall determine the portion of such
proceeds to which each former holder of Excel common stock is entitled, if any,
by multiplying (1) the amount of net aggregate proceeds held in trust by (2) a
fraction, the numerator of which is the amount of the fractional share interest
to which such holder would otherwise be entitled and the denominator of which is
the aggregate amount of fractional share interests to which all former holders
of Excel common stock are entitled.
As an alternative to the issuance and sale of excess shares described
above, Lucent may elect to pay each such stockholder an amount in cash equal to
the product obtained by multiplying (1) the fractional share interest to which
such holder would otherwise be entitled by (2) the closing price for a share of
Lucent common stock on the New York Stock Exchange Composite Transaction Tape on
the date on which the merger is completed.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of the Articles of Merger
with the Massachusetts Secretary of State or such later time as is agreed upon
by Lucent and Excel and specified in the Articles of Merger, except that such
date may not be more than 30 days after the date of the filing. The filing of
the Articles of Merger will occur as soon as practicable after satisfaction or
waiver of the conditions to the completion of the merger described in the merger
agreement.
STOCK EXCHANGE LISTING OF LUCENT COMMON STOCK
It is a condition to the completion of the merger that Lucent common stock
issuable to Excel stockholders in the merger be approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF EXCEL COMMON STOCK
If the merger is completed, Excel common stock will be delisted from The
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934.
30
<PAGE> 38
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following general discussion summarizes the anticipated material United
States federal income tax consequences of the merger to holders of Excel common
stock who exchange such stock for Lucent common stock in the merger. No ruling
has been, or will be, sought from the Internal Revenue Service as to the United
States federal income tax consequences of the merger. The following discussion
addresses only such stockholders who hold their Excel common stock as a capital
asset, and does not address all of the United States federal income tax
consequences that may be relevant to particular stockholders in light of their
individual circumstances or to stockholders who are subject to special rules,
such as financial institutions, tax-exempt organizations, insurance companies,
dealers in securities or foreign currencies, foreign holders, persons who hold
such shares as a hedge against currency risk, or as part of a constructive sale
or conversion transaction, or holders who acquired their shares upon the
exercise of employee stock options or otherwise as compensation. This discussion
is not binding on the Internal Revenue Service. It is based upon the Internal
Revenue Code, laws, regulations, rulings and decisions in effect as of the date
of this proxy statement/prospectus, all of which are subject to change, possibly
with retroactive effect. The discussion also does not address non-income tax
aspects of the merger, the consequences of the receipt of rights, options or
warrants to acquire Lucent common stock or the exercise of options or warrants
to acquire Excel common stock or any other aspect of the transactions,
agreements or arrangements summarized herein other than the merger. For purposes
of this discussion, it is assumed that Excel is not a "collapsible corporation"
within the meaning of Section 341 of the Internal Revenue Code or a "personal
holding company" within the meaning of Section 542 of the Internal Revenue Code.
Tax consequences under state, local and foreign laws, and alternative minimum
tax consequences, are not addressed.
The obligations of the parties to consummate the merger are conditioned
upon the receipt by Lucent of an opinion from Cravath, Swaine & Moore, and the
receipt by Excel of an opinion from Testa, Hurwitz & Thibeault, LLP, in each
case subject to the qualifications discussed below, regarding the
characterization of the merger as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code.
Cravath, Swaine & Moore and Testa, Hurwitz & Thibeault, LLP will render
their opinions as to the tax-free treatment of the merger on the basis of facts,
representations and assumptions set forth or referred to in the opinions that
are intended to be consistent with the state of facts existing at the time the
merger is consummated. Holders of Excel common stock should be aware that an
opinion of counsel is not binding on the Internal Revenue Service or the courts.
Holders should also be aware that the opinions of Cravath, Swaine & Moore and
Testa, Hurwitz & Thibeault, LLP will be based on current law and on
representations regarding factual matters and covenants as to future actions
made by Lucent and Excel. If these representations are incorrect in one or more
material respects or the covenants are not complied with, the conclusions
reached by counsel in their opinions might be jeopardized.
Provided that the merger qualifies as a reorganization, subject to the
assumptions and qualifications set forth herein and in the opinion of Testa,
Hurwitz & Thibeault, LLP, the merger will, in general, have the following
principal United States federal income tax consequences to holders of Excel
common stock who exchange such stock for Lucent common stock in the merger:
- no gain or loss will be recognized by the holders of Excel common stock
who exchange their Excel common stock for Lucent common stock pursuant to
the merger, except with respect to cash received instead of a fractional
share of Lucent common stock
31
<PAGE> 39
- the aggregate tax basis of the Lucent common stock received in the merger
by each holder of Excel common stock will be the same as the aggregate
tax basis of the Excel common stock surrendered in exchange therefor,
reduced by the amount of tax basis allocable to any fractional share of
Lucent common stock for which cash is received
- the holding period of the Lucent common stock received in the merger will
include the holding period of the Excel common stock surrendered in
exchange therefor
- a holder of Excel common stock who receives cash instead of a fractional
share of Lucent common stock will recognize gain or loss in connection
with the disposition of such fractional share measured by the difference
between the amount of cash received and the portion of the tax basis of
the Lucent common stock allocable to the fractional share. Such gain or
loss generally will be long-term capital gain or loss if the holding
period of the Excel common stock exchanged is more than one year.
Holders of Excel common stock should be aware that the opinion of counsel
summarized above represents counsel's legal judgment and will not be binding on
the Internal Revenue Service or any court, and therefore, there can be no
assurance that the Internal Revenue Service will not challenge the statements of
law summarized above or that a court would not sustain such challenge.
If the merger is not treated as a tax-free reorganization (either as a
result of a successful Internal Revenue Service challenge to the status of the
merger or otherwise), each holder of Excel common stock would generally
recognize gain or loss with respect to the Excel common stock surrendered,
measured by the difference between the fair market value of the Lucent common
stock received in the merger and such holder's tax basis in the Excel common
stock surrendered in exchange therefor. In such event, a holder's aggregate tax
basis in the Lucent common stock received would equal its fair market value as
of the time of the merger and the holding period for such stock would begin the
day after the merger.
A holder of Excel common stock who exercises appraisal rights with respect
to the merger and receives cash in exchange for shares of Excel common stock
will generally recognize gain or loss measured by the difference between the
amount of cash treated as received in exchange for such stock and the holder's
tax basis in the shares of Excel common stock exchanged, provided that the
payment is not treated as a dividend for United States federal income tax
purposes. A sale of shares pursuant to the exercise of appraisal rights
generally will not be treated as a dividend if the holder exercising appraisal
rights owns no shares of Lucent common stock after the merger, after giving
effect to constructive ownership rules, or certain other conditions are
satisfied. Such gain or loss may be long-term capital gain or loss if the
holding period of the shares of the Excel common stock exchanged exceeds one
year. Interest, if any, awarded by a court will be taxable as ordinary income.
Under the U.S. backup withholding rules, a holder of Excel common stock may
be subject to backup withholding tax at the rate of 31%, unless the holder (1)
is a corporation or comes within other exempt categories and, when required,
demonstrates this fact or (2) provides a correct taxpayer identification number,
certifies that such holder is not subject to backup withholding and otherwise
complies with applicable requirements of the backup withholding rules. Any
amount withheld under these rules will be credited against the holder's federal
income tax liability.
Holders of Excel common stock will be required to attach a statement to
their United States federal income tax returns for the year of the merger that
contains the information listed in Treasury Regulation Section 1.368-3(b). The
statement must include the holder's tax basis in the Excel common stock
exchanged and a description of the Lucent common stock received in the
32
<PAGE> 40
merger. Holders should discuss this information return, and any other tax
reporting requirements, with their tax advisors.
WE INTEND THIS DISCUSSION TO PROVIDE ONLY A SUMMARY OF CERTAIN OF THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. WE DO NOT INTEND
THAT IT BE A COMPLETE ANALYSIS OR DESCRIPTION OF ALL POTENTIAL UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. WE DO NOT ADDRESS CERTAIN
CATEGORIES OF STOCKHOLDERS, AND WE DO NOT ADDRESS NON-INCOME TAX MATTERS OR
STATE, LOCAL OR FOREIGN TAX CONSEQUENCES. IN ADDITION, AS NOTED ABOVE, WE DO NOT
ADDRESS TAX CONSEQUENCES THAT MAY VARY WITH, OR ARE CONTINGENT UPON, INDIVIDUAL
CIRCUMSTANCES. WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISOR TO DETERMINE
YOUR PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER
TAX CONSEQUENCES RESULTING FROM THE MERGER, IN LIGHT OF YOUR INDIVIDUAL
CIRCUMSTANCES.
REGULATORY MATTERS
UNITED STATES ANTITRUST. Under the Hart-Scott-Rodino Act and the rules
promulgated thereunder, certain transactions, including the merger, may not be
completed unless certain waiting period requirements have been satisfied. On
August 30, 1999, Lucent and Excel each filed a Notification and Report Form with
the Antitrust Division of the Department of Justice and the Federal Trade
Commission. On September 22, 1999, the waiting period with respect to each of
Lucent and Excel was terminated. At any time before or after the effective time
of the merger, the Antitrust Division, the Federal Trade Commission or others
could take action under the antitrust laws, including seeking to prevent the
merger, to rescind the merger or to conditionally approve the merger upon the
divestiture of substantial assets of Lucent or Excel. There can be no assurance
that a challenge to the merger on antitrust grounds will not be made or, if such
a challenge is made, that it would not be successful.
OTHERS FILINGS AND APPROVALS. Lucent and Excel do not currently expect
that other filings or approvals will be required in other jurisdictions in
connection with the merger. However, if any such filings or approvals become
necessary, Lucent and Excel intend to take all necessary actions to comply with
such filing requirements or obtain such approvals.
GENERAL. It is possible that any of the governmental entities with which
filings are made may seek, as conditions for granting approval of the merger,
various regulatory concessions. There can be no assurance that Lucent or Excel
will be able to satisfy or comply with such conditions or be able to cause their
respective subsidiaries to satisfy or comply with any such conditions, or that
compliance or noncompliance will not have adverse consequences for Lucent after
completion of the merger, or that the required regulatory approvals will be
obtained within the time frame contemplated by Lucent and Excel and referred to
in this proxy statement/prospectus or on terms that will be satisfactory to
Lucent and Excel. See "The Merger Agreement and Stockholders Agreement -- The
Merger Agreement -- Conditions to the Completion of the Merger."
CONTINUATION OF EXCEL EMPLOYEE BENEFITS
Lucent has agreed that as soon as practicable after the closing date of the
merger, it will provide, or cause to be provided, employee benefit plans,
programs and arrangements to employees of Excel that are the same as those made
generally available to non-represented employees of Lucent hired after December
31, 1998. Until that time, Lucent has agreed that it will provide, or cause to
be provided, employee benefit plans, programs and arrangements provided to
employees of Excel as of the effective time of the merger.
33
<PAGE> 41
Lucent has agreed that:
- continuing employees of Excel will be credited with their service to
Excel and its affiliates for purposes of service and waiting period
requirements in Lucent's employee benefits plans, programs or
arrangements in which they subsequently participate after the effective
time of the merger, but not for retirement benefits under Lucent's
defined benefit plans or any subsidy under Lucent's retiree health plans
- it will waive pre-existing condition limitations to any employee benefits
plans, programs or arrangements maintained by Lucent
- continuing employees will be given credit for amounts paid under a
corresponding benefit plan during the plan year in which the merger
occurs for purposes of applying deductibles, copayments and out-of-pocket
maximums as though those amounts had been paid in accordance with the
terms and conditions of employee benefits plans, programs or arrangements
maintained by Lucent.
EFFECT ON AWARDS OUTSTANDING UNDER EXCEL STOCK PLANS
Under the merger agreement, as soon as practicable after the date of the
merger agreement, each Excel stock option will be amended and converted into an
option to acquire Lucent common stock on the same terms and conditions as under
the Excel stock plans. The number of Lucent common stock, rounded down to the
nearest whole share, to be subject to any such option will be equal to the
number of shares of Excel common stock subject to such Excel stock option
multiplied by the 0.558 exchange ratio, at an exercise price per share of Lucent
common stock, rounded to the nearest one-hundredth of a cent, equal to the
exercise price per share of Excel common stock under such stock option divided
by the 0.558 exchange ratio.
RESALE OF LUCENT COMMON STOCK
Lucent common stock issued in the merger will not be subject to any
restrictions on transfer arising under the Securities Act of 1933, except for
shares issued to any Excel stockholder who may be deemed to be an affiliate of
Excel or Lucent for purposes of Rule 145 under the Securities Act or for
purposes of qualifying the merger for pooling of interests accounting treatment.
It is expected that each such affiliate will agree not to transfer any Lucent
common stock received in the merger except in compliance with the resale
provisions of Rule 144 or 145 under the Securities Act or as otherwise permitted
under the Securities Act and will make no disposition of any Lucent common stock
received in connection with the merger. In addition, it is expected that each
such affiliate will agree not to make any such disposition within 30 days prior
to the effective time of the merger, and, until after such time as financial
results covering at least 30 days of combined operations of Lucent and Excel
after the merger have been published. The merger agreement requires Excel to use
reasonable efforts to cause its affiliates to enter into such agreements, and
Lucent has agreed to use reasonable efforts to cause its affiliates to comply
with the transfer restrictions referred to in the preceding sentence. This proxy
statement/prospectus does not cover resales of Lucent common stock received by
any person upon completion of the merger, and no person is authorized to make
any use of this proxy statement/prospectus in connection with any such resale.
34
<PAGE> 42
THE MERGER AGREEMENT AND STOCKHOLDERS AGREEMENT
The following description summarizes the material provisions of the merger
agreement and the stockholders agreement. Stockholders should read carefully the
merger agreement and the stockholders agreement, which are attached as Annexes 1
and 2 to this proxy statement/prospectus.
THE MERGER AGREEMENT
CONDITIONS TO THE COMPLETION OF THE MERGER. Each party's obligation to
effect the merger is subject to the satisfaction or waiver of various conditions
which include, in addition to other customary closing conditions, the following:
- holders of two-thirds of the outstanding shares of Excel common stock
having approved the merger agreement
- the waiting period applicable to the merger under the Hart-Scott-Rodino
Act having expired or been terminated
- no judgment, order, statute, law or regulation entered, enacted, enforced
or issued by any court or other governmental entity of competent
jurisdiction or other legal restraint or prohibition being in effect, and
no suit, action or proceeding by any governmental entity being pending or
threatened that (1) would prevent the completion of the merger or (2)
otherwise would be reasonably likely to have a material adverse effect,
as described below, on Lucent or Excel; provided, however, that each of
the parties shall have used its reasonable efforts to prevent the entry
of any such legal restraint or prohibition and to appeal as promptly as
possible any such legal restraint or prohibition that may be entered
- the registration statement on Form S-4, of which this proxy
statement/prospectus forms a part, having become effective under the
Securities Act and not being the subject of any stop order or proceedings
seeking a stop order
- the shares of Lucent common stock issuable to Excel stockholders in the
merger having been approved for listing on the New York Stock Exchange,
subject to official notice of issuance
- Lucent and Excel each having received letters dated as of the date on
which the merger is to be completed from PricewaterhouseCoopers LLP and
Arthur Andersen LLP regarding those firms' agreement with Lucent
management's and Excel management's conclusions, respectively, that no
condition exists that would prevent the merger from being accounted for
as a pooling of interests transaction under Accounting Principles Board
Opinion No. 16.
In addition, each party's obligation to effect the merger is further
subject to the satisfaction or waiver of the following additional conditions:
- the representations and warranties of each other party set forth in the
merger agreement that are qualified as to materiality being true and
correct, and the representations and warranties that are not qualified as
to materiality being true and correct in all material respects, in each
case as of the date of the merger agreement and as of the date on which
the merger is to be completed with the same effect as though made on and
as of the date on which the merger is to be completed, or, if such
representations and warranties expressly relate to an earlier date, then
as of such date
- each other party to the merger agreement having performed in all material
respects all obligations required to be performed by it under the merger
agreement on or prior to the date on which the merger is to be completed
35
<PAGE> 43
- Excel having received from Testa, Hurwitz & Thibeault, LLP and Lucent
having received from Cravath, Swaine & Moore on the date on which the
registration statement is declared effective by the Securities and
Exchange Commission and on the date on which the merger is to be
completed, an opinion in each case dated as of such respective date and
stating that the merger will qualify for United States federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. The issuance of such opinions will be conditioned
upon the receipt by such tax counsel of customary representation letters
from each of Excel and Lucent, in each case, in form and substance
reasonably satisfactory to such counsel.
The merger agreement provides that a "material adverse change" or "material
adverse effect" means, when used in connection with Excel or Lucent, any change,
effect, event, occurrence, condition, development or state of facts that is
materially adverse to the long-term business prospects, business, assets,
results of operations or financial condition of Excel and its subsidiaries taken
as a whole, or Lucent and its subsidiaries taken as a whole, provided, however,
that no change, effect, event, occurrence, condition, development or state of
facts shall be deemed, individually or in the aggregate, to constitute a
material adverse change or material adverse effect to the extent:
- relating to or resulting from the telephony and telecommunications
markets generally, or the United States economy as a whole or the
international economy as a whole or any political, economic or social
instability in any such market or economy
- relating to or resulting from United States or international securities
markets in general
- solely with respect to Excel and its subsidiaries, arising as a result of
the merger agreement or the related transactions in connection with the
merger agreement or the announcement of the merger agreement, including
one or more of the following:
- the market price of Excel common stock
- the bookings, revenues, gross margins or earnings of Excel
- and delay of, reduction in or cancelation or change in the term or
timing of product orders or project implementations by customers of
Excel
- any attrition of Excel employees
- any termination or modification of any existing contract, or any
negotiations regarding any such contract, between Excel and any of its
customers
- any litigation brought or threatened against Excel, any principal
stockholder of Excel or any member of its board of directors after the
date of the merger agreement
- any material litigation existing on the date of the merger agreement
involving Excel's intellectual property rights or any change in
strategy, position or status of any such pending litigation
- any refusal by any of Excel's suppliers to continue to do business
with Excel.
Excel can provide no assurance that all of the conditions precedent to the
merger will be satisfied or waived by the party permitted to do so. Excel cannot
at this point determine whether it would resolicit proxies in the event that it
decides to waive any of the items listed above, including among other things,
the requirement that it receive letters that the merger will qualify for pooling
of interests accounting treatment. This decision would depend upon the facts and
circumstances
36
<PAGE> 44
leading to Excel's decision to complete the merger and whether Excel believes
there has been a material change in the terms of the merger and its effect on
Excel stockholders. In making its determination, Excel would consider, among
other factors, the reasons for the waiver, the effect of the waiver on the terms
of the merger, whether the requirement being waived, including the requirement
that the merger be treated as pooling of interests for accounting purposes, was
necessary in order to make the deal fair to the stockholders from a financial
point of view, the availability of alternative transactions and the prospects of
Excel as an independent entity. If Excel determines that a waiver of a condition
would materially change the terms of the merger, including the expected
qualification of the merger as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, it will resolicit proxies.
NO SOLICITATION. The merger agreement provides that Excel will not, nor
will it permit any of its subsidiaries to, nor will it authorize or permit any
of its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its subsidiaries to, directly or indirectly through another person:
- solicit, initiate or encourage, including by way of furnishing
information, or take any other action to facilitate, any inquiries or the
making of any proposal that is or may reasonably be expected to lead to a
takeover proposal, as described below
- participate in any discussions or negotiations regarding any takeover
proposal
The merger agreement allows the Excel board of directors to make any
disclosure to Excel stockholders (including the withdrawal or modification of
the recommendation of the Excel board of directors of the merger or the merger
agreement and the disclosure of the terms of a takeover proposal) if, in the
good faith judgment of the Excel board of directors, after consultation with
outside counsel, failure to disclose would be inconsistent with the fiduciary
obligations of the Excel board of directors under applicable law; provided,
however, that neither Excel nor its board of directors nor any committee of the
board of directors will (1) withdraw or modify, or propose to withdraw or
modify, its approval of the merger agreement or the merger or the submission of
the merger agreement to the Excel stockholders for a vote on the approval of the
merger agreement and (2) approve or recommend, or propose to approve or
recommend a takeover proposal.
The merger agreement provides that the term "takeover proposal" means any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of 10% or more of the assets of Excel and its
subsidiaries, taken as a whole, or 10% or more of any class or series of equity
securities of Excel or any of its subsidiaries, any tender offer or exchange
offer that if completed would result in any person beneficially owning 10% or
more of any class or series of equity securities of Excel or any of its
subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Excel or any of its subsidiaries.
Neither the Excel board of directors nor any committee of the board will:
- withdraw or modify, or propose to withdraw or modify, in a manner adverse
to Lucent, the approval or, subject to the obligations of the Excel board
of directors or any committee of the board under applicable law,
recommendation by the Excel board of directors or such committee of the
merger or the merger agreement
- approve or recommend, or propose to approve or recommend, any takeover
proposal
37
<PAGE> 45
- approve or recommend, or propose to approve or recommend, or execute or
enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar
agreement.
TERMINATION. The merger agreement may be terminated at any time prior to
the effective time of the merger, whether before or after the approval of the
merger agreement by the stockholders of Excel:
1. by mutual written consent of Lucent and Excel
2. by Lucent or Excel, if the merger has not been completed by March 31,
1999; provided, however, that this right to terminate the merger agreement
will not be available to a party whose failure to perform any of its
obligations under the merger agreement has resulted in the failure of the
merger to be completed by that date
3. by Lucent or Excel, if any legal restraint or prohibition is in
effect and has become final and nonappealable (1) preventing the completion
of the merger or (2) which otherwise is reasonably likely to have a
material adverse effect on Excel or Lucent, provided that the party seeking
to exercise this right to terminate the merger agreement has used
reasonable efforts to prevent the entry of and to remove such legal
restraint or prohibition
4. by Lucent or Excel, if the other party has breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in the merger agreement, which
breach or failure to perform would give rise to the failure of a condition
to the merger and cannot be cured or has not been cured within 30 calendar
days after the written notice.
CONDUCT OF BUSINESS PENDING THE MERGER. Under the merger agreement, Excel
has agreed that, prior to the effective time of the merger, it will, and will
cause its subsidiaries to, carry on their respective businesses in the ordinary
course consistent with past practice and in compliance in all material respects
with applicable laws and regulations and will use reasonable efforts to preserve
intact their current business organizations, to keep available the services of
their current officers and other key employees and preserve their relationships
with those persons having business dealings with them. In addition, Excel has
agreed that, among other things and subject to certain exceptions, neither it
nor any of its subsidiaries may:
- declare, set aside or pay any dividends or make other distributions on
any of its capital stock, other than certain dividends and distributions
by a wholly owned subsidiary, or split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities
in substitution for shares of its capital stock, or purchase, redeem or
otherwise acquire, directly or indirectly, any shares of capital stock of
Excel or its subsidiaries or any other of its securities or any rights,
warrants or options to acquire any such securities
- issue, deliver, sell, pledge or otherwise encumber or subject to any lien
any shares of capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or options to
acquire, any such securities other than (1) the issuance of Excel stock
options granted consistent with past practice to new Excel employees
representing in the aggregate not more than 250,000 shares of Excel
common stock and (2) issuance of Excel common stock upon the exercise of
Excel stock options outstanding on the date of the merger agreement or
the exercise of Excel stock options referred to in clause (1)
- amend the restated articles of organization of Excel, the by-laws of
Excel or other comparable organizational documents
38
<PAGE> 46
- acquire or agree to acquire by merging or consolidating with, or by
purchasing assets of, any business or any person, other than purchases of
raw materials or supplies in the ordinary course of business consistent
with past practice
- sell, lease, license, sell and leaseback, mortgage or otherwise encumber
or subject to any lien or otherwise dispose of any of its properties or
assets, including securitizations, other than sales or licenses of
finished goods in the ordinary course of business consistent with past
practice
- incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Excel or any
of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business, or to refund
existing or maturing indebtedness, consistent with past practice and
except for intercompany indebtedness between Excel and any of its
subsidiaries or between such subsidiaries
- make any loans, advances or capital contributions to, or investments in,
any other person, other than loans to employees for travel and related
purposes in the ordinary course of business consistent with past practice
and policies
- make or agree to make any new capital expenditures, except for capital
expenditures that do not exceed the respective aggregate amounts in each
of the fiscal years ended 1999 and 2000 as set forth in Excel's capital
budget for each of the fiscal years ended 1999 and 2000
- make any tax election that is reasonably likely to adversely affect in
any material respect the tax liability or tax attributes of Excel or any
of its subsidiaries
- pay, discharge, settle or satisfy any claims, liabilities, obligations or
litigation, other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements of Excel
included in the documents filed by Excel with the Securities and Exchange
Commission or incurred since the date of such financial statements, or
waive the benefits of, or agree to modify in any manner, terminate,
release any person from or fail to enforce any confidentiality,
standstill or similar agreement to which Excel or any of its subsidiaries
is a party or a beneficiary
- except as required by law or contemplated in the merger agreement and
except for labor agreements negotiated in the ordinary course, enter
into, adopt or amend in any material respect or terminate any benefit
plan or any other agreement, plan or policy involving Excel or its
subsidiaries, and one or more of its directors, officers or employees, or
change any actuarial or other assumption used to calculate funding
obligations for any pension plan, or change the manner in which
contributions to any pension plan are made or the basis on which such
contributions are determined
- except for normal increases in the ordinary course of business consistent
with past practice or as contemplated in the merger agreement or by the
terms of any employment agreement the existence of which does not violate
the merger agreement, increase the compensation of any director, officer
or other employee or pay any benefit or amount not required by a plan or
arrangement as in effect on the date of the merger agreement to any such
person
39
<PAGE> 47
- transfer or license to any person or entity or otherwise extend, amend or
modify any rights to the intellectual property rights of Excel and its
subsidiaries other than in the ordinary course of business consistent
with past practices or on a non-exclusive basis not materially different
from past practices
- enter into or amend (1) any original equipment manufacturer agreement
other than in the ordinary course of business consistent with past
practice or (2) any agreement under which any person is granted exclusive
marketing, manufacturing or other rights concerning any Excel product,
process or technology
- call or hold any meeting of stockholders of Excel other than in
connection with the election of directors or other routine matters in the
ordinary course of business consistent with past practices
- take any action that would, or that is reasonably likely to, result in
any representation or warranty made by Excel in the merger agreement that
is qualified as to materiality becoming untrue, any representation or
warranty that is not so qualified becoming untrue in any material respect
or any condition necessary to the completion of the merger not being
satisfied.
AMENDMENT; EXTENSION AND WAIVER. Subject to applicable law:
- the merger agreement may be amended by the parties in writing at any
time, except that after the merger agreement has been approved by the
stockholders of Excel, no amendment may be entered into which requires
further approval by Excel stockholders or the approval of Lucent
stockholders unless such further approval is obtained
- at any time prior to the effective time of the merger, a party may, by
written instrument signed on behalf of such party, extend the time for
performance of the obligations of any other party to the merger
agreement, waive inaccuracies in representations and warranties of any
other party contained in the merger agreement or in any related document
and except as provided in the merger agreement, waive compliance by any
other party with any agreements or conditions in the merger agreement.
EXPENSES. Whether or not the merger is completed, all fees and expenses
incurred in connection with the merger, the merger agreement, the stockholders
agreement and related transactions will be paid by the party incurring such fees
or expenses, except as otherwise provided in the merger agreement and the
stockholders agreement and except that Lucent and Excel will share equally the
expenses incurred in connection with filing, printing and mailing this proxy
statement/prospectus and the registration statement of which it is a part and
the filing fees for the premerger notification and report forms under the
Hart-Scott-Rodino Act.
REPRESENTATIONS AND WARRANTIES. The merger agreement contains customary
representations and warranties relating to, among other things:
- corporate organization and similar corporate matters of each of Lucent
and Excel
- subsidiaries of Excel
- the capital structure of each of Lucent and Excel
- authorization, execution, delivery, performance and enforceability of,
and required consents, approvals, orders and authorizations of
governmental authorities relating to, the merger agreement and related
matters of each of Lucent and Excel
40
<PAGE> 48
- documents filed by each of Lucent and Excel with the Securities and
Exchange Commission, the accuracy of information contained in such
documents and the absence of undisclosed liabilities of each of Lucent
and Excel
- the accuracy of information supplied by each of Lucent and Excel in
connection with this proxy statement/prospectus and the registration
statement of which it is a part
- absence of changes or events concerning each of Lucent and Excel that
would have a material adverse change on Lucent or Excel
- compliance with applicable laws by Excel
- absence of changes in benefit plans of Excel
- matters relating to the Employee Retirement Income Security Act for Excel
- filing of tax returns and payment of taxes by each of Lucent and Excel
- required stockholder vote of Excel and no required stockholder vote of
Lucent
- satisfaction of certain state takeover statutes' requirements for Excel
- the absence of actions by Lucent or Excel that would prevent using the
"pooling of interests" method to account for the merger
- engagement and payment of fees of brokers, investment bankers, finders
and financial advisors by Excel
- receipt of fairness opinion by Excel from its financial advisor
- intellectual property and year 2000 matters of Excel
- outstanding and pending litigation of Excel that would have a material
adverse effect on Excel
- certain contracts of Excel
- title to material properties and assets of Excel
- any development or state of facts likely to have a material adverse
effect on the business relationships of Excel and its subsidiaries with
any value added reseller or independent software vendor
- interim operations of Dallas Merger Inc.
AMENDMENTS TO THE EXCEL RESTATED ARTICLES OF ORGANIZATION. After the
effective time of the merger, the articles of organization of the surviving
corporation will be substantially identical to the Excel restated articles of
organization, except such restated articles of organization will be amended in
the merger to provide that the total number of shares of authorized capital
stock of the surviving corporation in the merger will be 200,000 shares of
common stock, par value $1.00 per share.
AMENDMENTS TO THE EXCEL BY-LAWS. The merger agreement provides that the
by-laws of Dallas Merger Inc., as in effect immediately prior to the effective
time of the merger, will be the by-laws of the surviving corporation following
the merger until changed or amended. For a summary of certain provisions of the
Excel by-laws and the associated rights of Excel stockholders, see "Comparison
of Rights of Common Stockholders of Lucent and Excel."
41
<PAGE> 49
THE STOCKHOLDERS AGREEMENT
GENERAL. Immediately prior to the execution and delivery of the merger
agreement, Lucent entered into a stockholders agreement with Mr. Madonna and an
affiliated entity, who on the record date together held approximately 67% of the
Excel common stock then outstanding.
VOTING. The stockholders signing the stockholders agreement agreed, among
other things, to vote their shares of Excel common stock in favor of the
approval of the merger agreement at every meeting of Excel stockholders at which
such matters are considered and at every adjournment thereof. This vote will be
sufficient to approve the merger agreement. The stockholders signing the
agreement also agreed not to grant any proxy or power of attorney with respect
to any of their Excel shares with respect to such matters other than to certain
officers of Lucent or any other person designated by Lucent.
NO SOLICITATION. The stockholders have agreed that they will not, nor
shall they permit any investment banker, attorney or other advisor or
representative retained by it to, directly or indirectly, through another
person, solicit, initiate, encourage or otherwise facilitate any takeover
proposal, as described in "-- The Merger Agreement -- No Solicitation."
TERMINATION. The stockholders have also agreed that the stockholders
agreement and the obligations thereunder will be binding upon any person to
which legal or beneficial ownership of such shares shall pass, whether by
operation of law or otherwise.
The stockholders agreement provides that it will terminate upon the earlier
of the completion of the merger and 10 business days after the termination of
the merger agreement in accordance with its terms.
42
<PAGE> 50
COMPARATIVE STOCK PRICES AND DIVIDENDS
Lucent common stock is listed for trading on the New York Stock Exchange
under the trading symbol "LU" and Excel common stock is quoted on The Nasdaq
National Market under the trading symbol "XLSW." The following table sets forth,
for the periods indicated, dividends and the high and low sales prices per share
of Lucent common stock on the New York Stock Exchange Composite Transaction Tape
and of Excel common stock on The Nasdaq National Market. Lucent's per share data
has been restated to account for Lucent's two-for-one stock splits effective on
April 1, 1999 and on April 1, 1998. For current price information, stockholders
are urged to consult publicly available sources.
<TABLE>
<CAPTION>
LUCENT EXCEL
COMMON STOCK COMMON STOCK
------------------------ -------------------------
DIVIDENDS DIVIDENDS
CALENDAR PERIOD HIGH LOW DECLARED HIGH LOW DECLARED
- --------------- ---- --- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
Second Quarter........................ $ 9 13/16 $ 7 7/16 $0.019 $N/A $N/A $N/A
Third Quarter......................... 11 15/32 7 21/32 0.019 N/A N/A N/A
Fourth Quarter........................ 13 9/32 10 17/32 0.019 N/A N/A N/A
1997
First Quarter......................... 15 5/32 11 3/16 0.000 N/A N/A N/A
Second Quarter........................ 18 35/64 12 15/32 0.019 N/A N/A N/A
Third Quarter......................... 22 11/16 18 3/64 0.019 N/A N/A N/A
Fourth Quarter........................ 22 35/64 18 3/32 0.038 27 7/8 14 1/4 N/A
1998
First Quarter......................... 32 1/16 18 23/64 0.000 26 7/8 16 1/2 N/A
Second Quarter........................ 41 27/32 32 0.020 27 18 N/A
Third Quarter......................... 54 1/4 34 3/16 0.020 27 7/8 16 N/A
Fourth Quarter........................ 56 15/16 26 23/32 0.040 38 7/8 16 3/4 N/A
1999
First Quarter......................... 60 47 0.000 39 3/8 20 1/2 N/A
Second Quarter........................ 68 11/16 51 7/8 0.020 30 1/2 18 1/2 N/A
Third Quarter (through September 29,
1999).............................. 79 3/4 60 0.020 38 3/8 22 5/8 N/A
</TABLE>
- ---------------
N/A -- Not applicable
The following table sets forth the high and low sales prices per share of
Lucent common stock on the New York Stock Exchange Composite Transaction Tape
and of Excel common stock on The Nasdaq National Market on August 17, 1999, the
last trading day before the public announcement of the merger agreement, and on
September 29, the last trading day before the date of this proxy
statement/prospectus:
<TABLE>
<CAPTION>
LUCENT EXCEL
COMMON STOCK COMMON STOCK
------------ ------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
August 17, 1999............................................. $67 3/4 $65 1/16 $27 7/8 $26
September 29, 1999.......................................... 65 7/8 62 7/8 36 3/32 34 11/16
</TABLE>
43
<PAGE> 51
DESCRIPTION OF LUCENT CAPITAL STOCK
The following summary of the capital stock of Lucent is subject in all
respects to applicable Delaware law, the Lucent certificate of incorporation and
by-laws and the Lucent rights agreement. See "Comparison of Rights of Common
Stockholders of Lucent and Excel" and "Where You Can Find More Information."
The total authorized shares of capital stock of Lucent consist of (1) 6
billion shares of common stock, $.01 par value per share and (2) 250 million
shares of preferred stock, $1.00 par value per share. At the close of business
on August 31, 1999, approximately 3.1 billion shares of Lucent common stock were
issued and outstanding and no shares of Lucent preferred stock were issued and
outstanding.
The Lucent board of directors is authorized to provide for the issuance
from time to time of Lucent preferred stock in series and, as to each series, to
fix the designation, the dividend rate and the preferences, if any, which
dividends on such series will have compared to any other class or series of
capital stock of Lucent, the voting rights, if any, the voluntary and
involuntary liquidation prices, the conversion or exchange privileges, if any,
applicable to such series and the redemption price or prices and the other terms
of redemption, if any, applicable to such series. Cumulative dividends, dividend
preferences and conversion, exchange and redemption provisions, to the extent
that some or all of these features may be present when shares of Lucent
preferred stock are issued, could have an adverse effect on the availability of
earnings for distribution to the holders of Lucent common stock or for other
corporate purposes.
For a description of the rights to acquire Lucent junior preferred stock
that are attached to shares of Lucent common stock, see "Comparison of Rights of
Common Stockholders of Lucent and Excel -- Rights Plan."
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF
LUCENT AND EXCEL
The rights of Lucent stockholders are currently governed by the Delaware
General Corporation Law and the Lucent certificate of incorporation and by-laws.
The rights of Excel stockholders are currently governed by the Massachusetts
Business Corporation Law and the Excel restated articles of organization and
by-laws. Upon completion of the merger, the rights of Excel stockholders who
become stockholders of Lucent in the merger will be governed by Delaware law and
the Lucent certificate of incorporation and Lucent by-laws.
The following description summarizes the material differences which may
affect the rights of stockholders of Lucent and Excel but does not purport to be
a complete statement of all such differences, or a complete description of the
specific provisions referred to in this summary. The identification of specific
differences is not intended to indicate that other equally or more significant
differences do not exist. Stockholders should read carefully the relevant
provisions of Delaware law, the Lucent certificate of incorporation and by-laws
and the Excel restated articles of organization and by-laws.
CAPITALIZATION
LUCENT. Lucent's authorized capital stock is described above under
"Description of Lucent Capital Stock."
44
<PAGE> 52
EXCEL. The total authorized shares of capital stock of Excel consist of
(1) 100 million shares of common stock, $.01 par value per share, and (2) 10
million shares of preferred stock, $.01 par value per share. At the close of
business on September 29, 1999, there were approximately 40,032,322 shares of
Excel common stock issued and outstanding and no shares of Excel preferred stock
were issued and outstanding.
The Excel board of directors is authorized to issue preferred stock from
time to time in series, and to determine the designations, preferences, voting
powers, qualifications, special or relative rights and privileges as the Excel
board of directors deems advisable and consistent with the Excel restated
articles of organization and Massachusetts law. The Excel board of directors is
authorized to determine, with respect to any preferred stock, the terms of
dividends, redemption, conversion, obligations to repurchase pursuant to a
sinking fund and limitations, if any, on the issuance of additional shares of
any series of preferred stock.
VOTING RIGHTS
LUCENT. Each holder of Lucent common stock is entitled to one vote per
share held of record and may not cumulate votes for the election of directors.
EXCEL. Each holder of Excel common stock is entitled to one vote per share
held of record and may not cumulate votes for the election of directors.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
LUCENT. The Lucent board of directors has nine members. The Lucent
certificate of incorporation provides that the Lucent board of directors will
consist of at least three directors and that the number of directors may be
changed from time to time by a resolution adopted by a majority of the total
number of directors which Lucent would have if there were no vacancies. The
Lucent certificate of incorporation also provides that the Lucent board of
directors consists of three classes of directors with staggered terms. The
directors in each class serve on the Lucent board of directors for approximately
three years each.
The Lucent certificate of incorporation provides that if there is a vacancy
on the Lucent board of directors or if the number of directors is increased,
such vacancies or newly created directorships will be filled by the affirmative
vote of a majority of the remaining directors then in office, even though less
than a quorum, and not by the stockholders. A director elected to fill a vacancy
or newly created directorship will serve for the remainder of the full term of
the class of directors in which the vacancy occurred or the new directorship was
created and until such director's successor will have been duly elected and
qualified. No decrease in the number of directors will shorten the term of any
incumbent director.
Under the Lucent certificate of incorporation, any director may be removed
from office only for cause by the affirmative vote of the holders of at least a
majority of the voting power of all shares of Lucent common stock entitled to
vote generally in the election of directors then outstanding, voting together as
a single class.
EXCEL. The Excel board of directors has four members. The Excel by-laws
provide that the number of directors may be fixed by the stockholders, but may
not be less than three nor more than nine, except that whenever there are only
two stockholders the number of directors may not be less than two and whenever
there is only one stockholder, there must be at least one director. The Excel
board of directors may be enlarged by the stockholders at any meeting or by vote
of a majority of the directors then in office. Neither the Excel restated
articles of organization nor by-laws provides
45
<PAGE> 53
for a staggered board of directors. Under the Excel by-laws, directors are
elected by a plurality of the votes cast by stockholders entitled to vote at the
election.
Under the Excel by-laws, any vacancy in the Excel board of directors,
however occurring, including a vacancy resulting from the enlargement of the
board, may be filled by the stockholders or, in the absence of stockholder
action, by the directors. Each such successor holds office for the unexpired
term of his or her predecessor and until his or her successor is chosen and
qualified or until his or her earlier death, resignation or removal.
The Excel by-laws provide that a director may be removed from office (1)
with or without cause by the vote of the holders of a majority of the shares
entitled to vote in the election of directors, except that the directors of a
class elected by a particular class of stockholders may be removed only by the
vote of the holders of a majority of the shares of the particular class of
stockholders entitled to vote for the election of such directors; or (2) for
cause by vote of a majority of the directors then in office. A director may be
removed for cause only after a reasonable notice and opportunity to be heard
before the body proposing to remove him or her.
AMENDMENTS TO CERTIFICATES OF INCORPORATION AND ARTICLES OF ORGANIZATION
LUCENT. The Lucent certificate of incorporation provides that the
affirmative vote of the holders of at least 80% of the voting stock then
outstanding, voting together as a single class, will be required to alter,
amend, adopt any provision inconsistent with or repeal Articles V, VII and VIII
of the Lucent certificate of incorporation, which relate to stockholder action,
the Lucent board of directors and the Lucent by-laws, respectively.
EXCEL. The Excel restated articles of organization are silent as to
amendment. Massachusetts law provides that the articles of organization may be
amended by a vote of two-thirds of each class of stock outstanding and entitled
to vote, or if the articles or organization so provide, by a vote of a lesser
proportion but not less than a majority of each class of stock outstanding and
entitled to vote, except that such amendment must have been eligible for
inclusion in, or any provision deleted could have been omitted from, the
original articles of organization. Massachusetts law further states that only a
majority vote of stockholders entitled to vote is required for a corporation to
effect any of the following in its articles:
- an increase or a reduction of its capital stock of any class authorized
- a change of the par value of its authorized shares with par value or any
class thereof
- a change of its authorized shares with par value or any class thereof
into any number of shares without par value, or the exchange thereof pro
rata for any number of shares without par value
- change of its authorized shares without par value or any class thereof
into a greater or lesser number of shares without par value, or the
exchange thereof pro rata for a greater or lesser number of shares
without par value
- a change of its authorized shares with par value or any class thereof
into a greater or lesser number of shares with par value, or the exchange
thereof pro rata for a greater or lesser number of shares with par value
- a change of its authorized shares without par value or any class thereof
into any number of shares with par value, or the exchange thereof pro
rata for any number of shares with par value or
46
<PAGE> 54
- a change of its corporate name.
AMENDMENTS TO BY-LAWS
LUCENT. The Lucent certificate of incorporation and by-laws provide that
the Lucent by-laws may be altered or repealed and new by-laws may be adopted:
- at any annual or special meeting of stockholders, by the affirmative vote
of the holders of a majority of the voting power of the stock issued and
outstanding and entitled to vote at such meeting, except that any
proposed alteration or repeal of, or the adoption of, any by-law
inconsistent with Section 2.2, 2.7 or 2.10 of Article II of the Lucent
by-laws, which relate to special meetings of stockholders, notice of
stockholder business and nominations and actions by written consent of
stockholders, respectively, or with Section 3.2, 3.9 or 3.11 of Article
III of the Lucent by-laws, which relate to the number and tenure of the
directors, vacancies on the Lucent board of directors and removal of
directors, respectively, by the stockholders requires the affirmative
vote of the holders of at least 80% of the voting stock then outstanding,
voting together as a single class
- by a majority of the total number of directors Lucent would have if there
were no vacancies.
EXCEL. The Excel by-laws provides that the by-laws may be amended (1) by
the affirmative vote of a majority of the stockholders at any meeting of
stockholders or (2) by the Excel board of directors at any meeting of the board
by the affirmative vote of a majority of the directors then in office, except
that no amendment or repeal of a by-law may be voted by the board regarding (a)
the removal of directors or (b) the election of committees by directors and the
delegation of powers thereto. The Excel board of directors is also prohibited
from amending, repealing or making any by-laws that, under Massachusetts law or
the Excel restated articles of organization or by-laws, requires action by the
stockholders. Stockholders must be given notice of any amendment made to the
Excel by-laws by the board, and any such amendments may be amended or repealed
by the affirmative vote of stockholders.
STOCKHOLDER ACTION
LUCENT. The Lucent certificate of incorporation provides that any action
required or permitted to be taken by Lucent stockholders must be effected at a
duly called annual or special meeting and may not be effected by written
consent.
EXCEL. Massachusetts law provides that any action required or permitted to
be taken at any meeting of the stockholders may be taken without a meeting if
all stockholders entitled to vote on the matter consent to the action in
writing.
NOTICE OF CERTAIN STOCKHOLDER ACTIONS
LUCENT. The Lucent certificate of incorporation provides that a
stockholder must give advance written notice of nominations for election of
directors and to properly bring business before an annual meeting of
stockholders. Under the Lucent by-laws, a stockholder's written notice must
generally be delivered to the Secretary of Lucent not later than 45 days nor
earlier than the 75 days prior to the first anniversary of the record date for
determining stockholders entitled to vote at the preceding year's annual
meeting.
In the event that Lucent calls a special meeting of stockholders for the
purpose of electing one or more directors to the Lucent board of directors, any
stockholder may nominate a director or directors, provided that written notice
must be delivered not earlier than 120 days prior to such
47
<PAGE> 55
special meeting and not later than (1) 90 days prior to such special meeting or
(2) 10 days following the day on which public announcement is first made of the
date of the special meeting and of the nominees proposed by the Lucent board of
directors to be elected at such meeting.
EXCEL. The Excel by-laws provide that for business to be properly brought
before any meeting of stockholders, a stockholder must deliver notice in
writing, and such notice must be received by the Clerk of Excel:
- in the case of any annual meeting, not less than 90 days nor more than
120 days prior to the date designated for such meeting
- in the case of any special meeting (other than a special meeting in lieu
of an annual meeting), not later than the tenth day following the earlier
of the day on which notice of the date of the scheduled meeting was
mailed or the day on which public disclosure was made of the date of the
scheduled meeting
- in the case of a special meeting in lieu of an annual meeting, if public
disclosure or notice is made less than 70 days prior to such a meeting,
on the tenth day following such notice or public disclosure.
SPECIAL STOCKHOLDER MEETINGS
LUCENT. The Lucent certificate of incorporation and by-laws provide that a
special meeting of the Lucent stockholders may be called only by the Lucent
board of directors by a resolution stating the purposes of the special meeting
and approved by a majority of the total number of directors Lucent would have if
there were no vacancies or by the chairman of the Lucent board of directors. Any
power of the stockholders to call a special meeting is specifically denied in
the Lucent certificate of incorporation.
EXCEL. The Excel by-laws provide that special meetings of the stockholders
may be called by the president of Excel or by the Excel board of directors. As
long as Excel has a class of voting stock registered under the Exchange Act, a
special meeting may be called by written application of one or more stockholders
who hold at least 40% in interest of Excel capital stock entitled to vote at a
meeting.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
LUCENT. Delaware law provides that a corporation's certificate of
incorporation may include a provision limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. However, no such provision can eliminate or
limit the liability of a director for:
- any breach of the director's duty of loyalty to the corporation or its
stockholders
- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law
- violation of Section 174 of the Delaware General Corporation Law
regarding unlawful payment of dividends or unlawful stock purchases or
redemptions
- any transaction from which the director derived an improper personal
benefit
- any act or omission prior to the adoption of such a provision in the
certificate of incorporation.
48
<PAGE> 56
The Lucent certificate of incorporation provides that no director will be
personally liable to Lucent or to its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by law, for
liability:
- for any breach of the director's duty of loyalty to Lucent or its
stockholders
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
- under Section 174 of the Delaware General Corporation Law
- for any transaction from which the director derived an improper personal
benefit.
EXCEL. Massachusetts law allows a corporation to include in its articles
of organization a provision that limits or eliminates the personal liability of
directors to the corporation and its shareholders for monetary damages for
breach of fiduciary duty as a director. Massachusetts law does not, however,
permit a corporation to limit or eliminate the personal liability of a director
for:
- any breach of the director's duty of loyalty to the corporation or its
stockholders
- any act of omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
- payment of dividends or stock repurchase or redemption, except a
distribution of stock of the corporation, in violation of the
corporation's articles of organization
- any loans to any officer or director of the corporation.
The Excel restated articles of organization provide for limitations on
director's liability as permitted by Massachusetts law.
DIVIDENDS
LUCENT. The Lucent by-laws provide that the Lucent board of directors may
from time to time declare, and Lucent may pay, dividends on its outstanding
shares in the manner and upon the terms and conditions provided by law and in
the Lucent certificate of incorporation.
EXCEL. The Excel by-laws provide that the Excel board of directors may
from time to time declare dividends on its outstanding shares after (1) the
requirements, if any, with respect to preferential dividends on any preferred
stock have been met and (2) compliance with the requirements, if any, with
respect to the setting aside of sums as sinking fund or redemption or purchase
accounts.
CONVERSION
LUCENT. Holders of Lucent common stock have no rights to convert their
shares into any other securities.
EXCEL. Holders of Excel common stock have no rights to convert their
shares into any other securities.
RIGHTS PLAN
LUCENT. Lucent has a rights agreement with The Bank of New York as rights
agent. The following description of the rights agreement is qualified in its
entirety by reference to the terms and conditions of the rights agreement.
Stockholders should read carefully the rights agreement. See "Where You Can Find
More Information" on page 52.
49
<PAGE> 57
Under the rights agreement, rights attach to each share of Lucent common
stock outstanding and, when exercisable, entitle the registered holder to
purchase from Lucent one four-hundredth of a share of junior preferred stock,
par value $1.00 per share, at a purchase price of $22.50 per one four-hundredth
of a share, subject to customary anti-dilution adjustments.
The rights will not be exercisable until the earlier of:
- 10 days following a public announcement that a person or group has
acquired beneficial ownership of 10% or more of the outstanding shares of
Lucent common stock
- 10 business days, or such later date as may be determined by the Lucent
board of directors, following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of
which would result in a person or group acquiring beneficial ownership of
10% or more of the outstanding shares of Lucent common stock.
The rights will expire on March 31, 2006, unless such date is extended or unless
the rights are earlier redeemed or exchanged by Lucent, in each case as
summarized below.
In the event that a person or group acquires beneficial ownership of 10% or
more of the outstanding shares of Lucent common stock, each holder of a right,
other than rights beneficially owned by such person or group, which become void,
will have the right to receive upon exercise that number of shares of Lucent
common stock having a market value of two times the purchase price provided for
in the right. In the event that Lucent is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power is sold after a person or group acquires beneficial ownership of 10% or
more of the outstanding shares of Lucent common stock, each holder of a right
will have the right to receive upon exercise that number of shares of common
stock of the acquiring company which at the time of such transaction will have a
market value of two times the purchase price provided for in the right.
At any time after a person or group acquires beneficial ownership of 10% or
more of the outstanding shares of Lucent common stock and prior to the
acquisition by such person or group of 50% or more of the then outstanding
shares of Lucent common stock, the Lucent board of directors may exchange the
rights, other than rights owned by such person or group which have become void,
in whole or in part, for Lucent common stock or junior preferred stock.
At any time prior to a person or group acquiring beneficial ownership of
10% or more of the outstanding shares of Lucent common stock, the Lucent board
of directors may redeem the rights in whole, but not in part, at a redemption
price of $0.0025 per right, subject to customary anti-dilution provisions, or
amend the terms of the rights, in each case without the consent of the holders
of the rights, at such time, on such basis and with such conditions as the
Lucent board of directors may establish.
Junior preferred shares purchasable upon exercise of the rights will not be
redeemable. The junior preferred shares have dividend, voting and liquidation
rights that are intended to result in the value of the one four-hundredth
interest in a junior preferred share purchasable upon exercise of each right
approximating the value of one share of Lucent common stock.
The rights may have antitakeover effects. The rights will cause substantial
dilution to a person or group of persons that attempts to acquire Lucent on
terms not approved by the Lucent board of directors. The rights should not
interfere with any merger or other business combination approved by the Lucent
board of directors prior to the time that a person or group has acquired such
10% beneficial ownership since the rights may be redeemed or amended by Lucent
until such time.
EXCEL. Excel does not have a stockholders' rights plan.
50
<PAGE> 58
LEGAL MATTERS
The legality of Lucent common stock offered by this proxy
statement/prospectus will be passed upon for Lucent by Pamela F. Craven, Vice
President -- Law and Secretary, of Lucent. As of September 29, 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. Cravath, Swaine & Moore, New York, New
York from time to time acts as counsel for Lucent and its subsidiaries.
Certain United States federal income tax consequences of the merger will be
passed upon for Excel by Testa, Hurwitz & Thibeault, LLP.
EXPERTS
The financial statements incorporated in this proxy statement/prospectus by
reference in Exhibit 99.1 to Lucent's Current Report on Form 8-K dated August 2,
1999 for the year ended September 30, 1998, 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.
The consolidated financial statements of Excel at December 31, 1998, and
December 27, 1997, and for each of the three years in the period ended December
31, 1998, incorporated in this proxy statement/prospectus by reference in
Exhibit 99.6 to Excel's Current Report on Form 8-K/A dated August 27, 1999,
filed to restate the financial results for the merger of Excel and RAScom, have
been audited by Arthur Andersen LLP, independent accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
STOCKHOLDER PROPOSALS
Excel will hold a 2000 annual meeting of Excel stockholders only if the
merger is not completed before the time of such meeting. The deadline for
submission of stockholder proposals for inclusion in Excel's proxy materials for
the 2000 Excel annual meeting is February 11, 2000.
If the merger is not completed, Excel stockholders may present proper
proposals for consideration at the next annual meeting of Excel stockholders by
submitting their proposal in writing to the Clerk of Excel in a timely manner.
The Excel by-laws establish an advance notice procedure with regard to
certain matters, including stockholder proposals not included in Excel's proxy
statement, to be brought before an annual meeting of stockholders. See
"Comparison of Rights of Common Stockholders of Lucent and Excel -- Notice of
Certain Stockholder Actions."
The only business that will be conducted at a meeting of Excel stockholders
is business that is brought before the meeting:
- pursuant to the corporation's notice of meeting
- by or at the direction of the Excel board of directors or
- by any stockholder of Excel who is a stockholder of record at the time of
giving of the notice of stockholder action who is entitled to vote at
such meeting and who complies with the notice procedures.
51
<PAGE> 59
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Excel board of
directors knows of no matters that will be presented for consideration at the
special meeting other than as described in this proxy statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Lucent and Excel file 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
and Excel file 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
further information on 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. Reports, proxy statements and other information concerning Excel may also
be inspected at the offices of The Nasdaq Stock Market at 1735 K Street, N.W.,
Washington, D.C. 20006.
Lucent filed a registration statement on Form S-4 on September 30, 1999 to
register with the Securities and Exchange Commission the Lucent common stock to
be issued to Excel stockholders in the merger. This proxy statement/prospectus
is a part of that registration statement and constitutes a prospectus of Lucent
in addition to being a proxy statement of Excel. As allowed by Securities and
Exchange Commission rules, this proxy statement/prospectus does not contain all
the information you can find in Lucent's registration statement or the exhibits
to the registration statement.
The Securities and Exchange Commission allows Lucent and Excel to
"incorporate by reference" information into this proxy statement/prospectus,
which means that the companies 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 proxy statement/prospectus, except for any information superseded
by information contained directly in this proxy statement/prospectus or in later
filed documents incorporated by reference in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Lucent and Excel have previously filed with the Securities and
Exchange Commission. These
52
<PAGE> 60
documents contain important business and financial information about Lucent and
Excel that is not included in or delivered with this proxy statement/prospectus.
<TABLE>
<CAPTION>
LUCENT FILINGS
(FILE NO. 001-11639) PERIOD
-------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended September 30, 1998, as amended by
Amendment No. 1 thereto filed on Form 10-K/A on May
17, 1999
Quarterly Reports on Form Quarters ended December 31, 1998, March 31, 1999 and
10-Q June 30, 1999
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
thereto filed on Form 8-K/A on May 18, 1999, June 28,
1999 and August 2, 1999
Proxy Statement Filed December 22, 1998
The description of Lucent Filed under Section 12 of the Exchange Act on February
common stock and Lucent 26, 1996, as amended by Amendment No. 1 thereto filed
rights to acquire junior on Form 10/A on March 12, 1996, Amendment No. 2
preferred stock set forth thereto filed on Form 10/A on March 22, 1996 and
in the Lucent Registration Amendment No. 3 thereto filed on Form 10/A on April 1,
Statement on Form 10 1996, including any amendments or reports filed for
the purpose of updating such descriptions
</TABLE>
<TABLE>
<CAPTION>
EXCEL FILINGS
(FILE NO. 0-23263) PERIOD
------------------ ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Reports on Form Quarters ended June 27, 1998, March 31, 1999 and June
10-Q 30, 1999
Current Reports on Form 8-K Filed May 25, 1999, as amended by Amendment No. 1
thereto filed on Form 8-K/A on July 23, 1999,
Amendment No. 2 thereto filed on Form 8-K/A on July
29, 1999 and Amendment No. 3 thereto filed on Form
8-K/A on August 27, 1999
Proxy Statement Filed April 9, 1999
The description of Excel Filed under Section 12 of the Exchange Act on October
common stock set forth in 23, 1997
the Excel Registration
Statement on Form 8-A
</TABLE>
Lucent and Excel also incorporate 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 Exchange Act between the date of this proxy
statement/prospectus and the date of the special meeting. 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.
Lucent has supplied all information contained or incorporated by reference
in this proxy statement/prospectus relating to Lucent and Excel has supplied all
such information relating to Excel.
Excel stockholders should not send in their Excel certificates until they
receive the transmittal materials from the exchange agent. Excel stockholders of
record who have further questions about
53
<PAGE> 61
their share certificates or the exchange of their Excel common stock for Lucent
common stock should call the exchange agent.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the companies,
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 the companies without charge, excluding all
exhibits, except that if the companies have specifically incorporated by
reference an exhibit in this proxy statement/prospectus, the exhibit will also
be provided without charge. Stockholders may obtain documents incorporated by
reference in this proxy statement/prospectus by requesting them in writing or by
telephone from the appropriate company at the following addresses:
<TABLE>
<S> <C>
Lucent Technologies Inc. Excel Switching Corporation
c/o The Bank of New York 255 Independence Drive
Church Street Station Hyannis, Massachusetts 02601
P.O. Box 11009 Attention: Investor Relations
New York, New York 10286-1009 Telephone: (508) 862-3000
Telephone: 1-888-LUCENT6
</TABLE>
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. We have not authorized anyone to
provide you with information that is different from what is contained in this
proxy statement/prospectus. This proxy statement/ prospectus is dated September
30, 1999. You should not assume that the information contained in this proxy
statement/prospectus is accurate as of any date other than that date. Neither
the mailing of this proxy statement/prospectus to stockholders nor the issuance
of Lucent common stock in the merger creates any implication to the contrary.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations, business strategies,
operating efficiencies or synergies, competitive positions, growth opportunities
for existing products, plans and objectives of management, markets for stock of
Lucent and Excel and other matters. Statements in this proxy
statement/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 Exchange Act and Section 27A of the Securities Act. Such
forward-looking statements, including, without limitation, those relating to the
future business prospects, revenues and income, in each case relating to Lucent
and Excel, wherever they occur in this proxy statement/prospectus, are
necessarily estimates reflecting the best judgment of the senior management of
Lucent and Excel and involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by the
forward-looking statements. Such forward-looking statements should, therefore,
be considered in light of various important factors, including those set forth
in this proxy statement/prospectus. An important factor that could cause actual
results to differ materially from estimates or projections contained in the
forward-looking statements is the effect of vigorous competition in the markets
in which Lucent and Excel operate.
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
proxy statement/prospectus and the other documents
54
<PAGE> 62
incorporated by reference, including, but not limited to, the Annual Report on
Form 10-K for the year ended September 30, 1998 of Lucent, including any
amendments, and the Annual Report on Form 10-K for the year ended December 31,
1998 of Excel, 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 proxy statement/prospectus. Neither Lucent nor Excel undertakes any
obligation to publicly update or release any revisions to these forward-looking
statements to reflect events or circumstances after the date of this proxy
statement/prospectus or to reflect the occurrence of unanticipated events.
55
<PAGE> 63
ANNEX 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 17, 1999
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
DALLAS MERGER INC.
AND
EXCEL SWITCHING CORPORATION
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.................................................... 1
SECTION 1.02. Closing....................................................... 2
SECTION 1.03. Effective Time................................................ 2
SECTION 1.04. Effects of the Merger......................................... 2
SECTION 1.05. Articles of Organization and By-laws.......................... 2
SECTION 1.06. Board of Directors and Officers............................... 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock....................................... 3
(a) Capital Stock of Sub..................................... 3
(b) Cancelation of Treasury Stock and Lucent-Owned Stock..... 3
(c) Conversion of Excel Common Stock......................... 3
(d) Dissenting Shares........................................ 3
(e) Anti-Dilution Provisions................................. 4
SECTION 2.02. Exchange of Certificates...................................... 4
(a) Exchange Agent........................................... 4
(b) Exchange Procedures...................................... 4
(c) Distributions with Respect to Unexchanged Shares......... 5
(d) No Further Ownership Rights in Excel Common Stock........ 5
(e) No Fractional Shares..................................... 5
(f) Termination of Exchange Fund............................. 6
(g) No Liability............................................. 6
(h) Investment of Exchange Fund.............................. 7
(i) Lost Certificates........................................ 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of Excel....................... 7
(a) Organization, Standing and Corporate Power............... 7
(b) Subsidiaries............................................. 7
(c) Capital Structure........................................ 8
(d) Authority; Noncontravention.............................. 9
(e) SEC Documents; Undisclosed Liabilities................... 10
(f) Information Supplied..................................... 10
(g) Absence of Certain Changes or Events..................... 11
(h) Litigation............................................... 11
</TABLE>
i
<PAGE> 65
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
(i) Compliance with Applicable Laws.......................... 11
(j) Absence of Changes in Benefit Plans...................... 12
(k) ERISA Compliance......................................... 12
(l) Taxes.................................................... 14
(m) Voting Requirements...................................... 15
(n) Accounting Matters....................................... 15
(o) Brokers.................................................. 15
(p) Takeover Statutes........................................ 15
(q) Opinion of Financial Advisor............................. 15
(r) Intellectual Property; Year 2000......................... 15
(s) Certain Contracts........................................ 16
(t) Title to Properties...................................... 16
(u) Business Relationships................................... 17
SECTION 3.02. Representations and Warranties of Lucent and Sub.............. 17
(a) Organization, Standing and Corporate Power............... 17
(b) Capital Structure........................................ 17
(c) Authority; Noncontravention.............................. 18
(d) SEC Documents; Undisclosed Liabilities................... 19
(e) Information Supplied..................................... 19
(f) Absence of Certain Changes or Events..................... 19
(g) Voting Requirements...................................... 20
(h) Tax Matters.............................................. 20
(i) Accounting Matters....................................... 20
(j) Interim Operations of Sub................................ 20
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business........................................... 20
(a) Conduct of Business by Excel............................. 20
(b) Advice of Changes........................................ 22
SECTION 4.02. No Solicitation............................................... 22
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Form S-4 and the Excel Proxy Statement;
Excel Stockholders Meeting.................................... 23
SECTION 5.02. Letters of Excel's Accountants................................ 24
SECTION 5.03. Letters of Lucent's Accountants............................... 24
SECTION 5.04. Access to Information; Confidentiality........................ 25
SECTION 5.05. Commercially Reasonable Efforts............................... 25
SECTION 5.06. Stock Options................................................. 26
SECTION 5.07. Employee Matters.............................................. 27
</TABLE>
ii
<PAGE> 66
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
SECTION 5.08. Indemnification, Exculpation and Insurance.................... 27
SECTION 5.09. Fees and Expenses............................................. 28
SECTION 5.10. Public Announcements.......................................... 28
SECTION 5.11. Affiliates.................................................... 28
SECTION 5.12. NYSE Listing.................................................. 29
SECTION 5.13. Litigation.................................................... 29
SECTION 5.14. Tax Treatment................................................. 29
SECTION 5.15. Pooling of Interests.......................................... 29
SECTION 5.16. Stockholder Agreement Legend.................................. 29
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Merger.... 29
(a) Excel Stockholders Approval.............................. 29
(b) HSR Act.................................................. 29
(c) No Litigation............................................ 29
(d) Form S-4................................................. 30
(e) NYSE Listing............................................. 30
(f) Pooling Letters.......................................... 30
SECTION 6.02. Conditions to Obligations of Lucent and Sub................... 30
(a) Representations and Warranties........................... 30
(b) Performance of Obligations of Excel...................... 30
(c) Tax Opinions............................................. 30
SECTION 6.03. Conditions to Obligations of Excel............................ 31
(a) Representations and Warranties........................... 31
(b) Performance of Obligations of Lucent and Sub............. 31
(c) Tax Opinions............................................. 31
SECTION 6.04. Frustration of Closing Conditions............................. 31
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination................................................... 31
SECTION 7.02. Effect of Termination......................................... 32
SECTION 7.03. Amendment..................................................... 32
SECTION 7.04. Extension; Waiver............................................. 32
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties................. 32
SECTION 8.02. Notices....................................................... 32
SECTION 8.03. Definitions................................................... 33
SECTION 8.04. Interpretation................................................ 34
</TABLE>
iii
<PAGE> 67
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
SECTION 8.05. Counterparts.................................................. 35
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries................ 35
SECTION 8.07. Governing Law................................................. 35
SECTION 8.08. Assignment.................................................... 35
SECTION 8.09. Enforcement................................................... 35
SECTION 8.10. Severability.................................................. 36
Annex I Index of Defined Terms
Exhibit A Form of Affiliate Letter
</TABLE>
iv
<PAGE> 68
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 17,
1999, among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"),
DALLAS MERGER INC., a Massachusetts corporation and a wholly owned
subsidiary of Lucent ("Sub"), and EXCEL SWITCHING CORPORATION, a
Massachusetts corporation ("Excel").
WHEREAS the respective Boards of Directors of Lucent, Sub and Excel have
approved and declared advisable this Agreement and the merger of Sub with and
into Excel (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of common
stock, par value $.01 per share, of Excel ("Excel Common Stock"), other than
shares owned by Lucent, Sub or Excel, and other than Dissenting Shares will be
converted into the right to receive the Merger Consideration;
WHEREAS the respective Boards of Directors of Lucent, Sub and Excel have
each determined that the Merger and the other transactions contemplated hereby
are consistent with, and in furtherance of, their respective business strategies
and goals and that the products and services of Excel will complement and
enhance the products and services of Lucent;
WHEREAS simultaneously with the execution and delivery of this Agreement
and as a condition and inducement to the willingness of Lucent and Sub to enter
into this Agreement, Lucent and certain principal stockholders of Excel (the
"Principal Stockholders") are entering into an agreement (the "Stockholders
Agreement") pursuant to which the Principal Stockholders will agree to vote to
approve the Merger Agreement and to take certain other actions in furtherance of
the Merger upon the terms and subject to the conditions set forth in the
Stockholders Agreement;
WHEREAS for U.S. federal income tax purposes, it is intended that (a) the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations promulgated thereunder, and (b) this Agreement constitutes a plan of
reorganization;
WHEREAS for financial accounting purposes, it is intended that the Merger
will be accounted for as a pooling of interests transaction;
WHEREAS under the Massachusetts Business Corporation Law (the "MBCL"), in
order to effect the Merger, the Company is required to obtain the vote of the
holders of two-thirds of the outstanding shares of Excel Common Stock to approve
this Agreement (the "Excel Stockholders Approval"); and
WHEREAS Lucent, Sub and Excel desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the MBCL, Sub shall be merged
with and into Excel at the Effective Time. Following the Effective Time, Excel
shall (a) be the surviving corporation (the "Surviving Corporation"), (b)
continue its corporate existence under the laws of the Common-
1-1
<PAGE> 69
wealth of Massachusetts and (c) succeed to and assume all the rights and
obligations of Sub in accordance with the MBCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. (New York City time) on a date to be specified by the
parties hereto (the "Closing Date"), which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
VI (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the satisfaction or waiver of those conditions), at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New
York, New York 10019, unless another time, date or place is agreed to by the
parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on or after the Closing Date, the parties shall file
articles of merger or other appropriate documents (in any such case, the
"Articles of Merger") with the Secretary of State of the Commonwealth of
Massachusetts executed in accordance with the relevant provisions of the MBCL
and shall make all other filings or recordings required under the MBCL. The
Merger shall become effective at such time as the Articles of Merger are duly
filed with the Secretary of State of the Commonwealth of Massachusetts in
accordance with the provisions of Section 78 of the MBCL or at such subsequent
date or time as Lucent and Excel shall agree and specify in the Articles of
Merger (the time the Merger becomes effective being hereinafter referred to as
the "Effective Time"); provided that such date shall not be more than 30 days
after the date of such filing.
SECTION 1.04. Effects of the Merger. The Merger shall have the effects as
provided in the applicable provisions of the MBCL (including Section 80
thereof).
SECTION 1.05. Articles of Organization and By-laws. (a) The Restated
Articles of Organization of Excel, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time of the Merger so that
Article IV of such Restated Articles of Organization reads in its entirety as
follows: "The total number of shares of all classes of stock which the
corporation shall have authority to issue is 200,000 shares of Common Stock, par
value $1.00 per share." and, as so amended, such Restated Articles of
Organization shall be the Restated Articles of Organization of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The by-laws of Sub, as in effect immediately prior to the Effective
Time, shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
SECTION 1.06. Board of Directors and Officers. (a) The directors of Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
(b) The officers of Sub immediately prior to the Effective Time shall be
the officers of the Surviving Corporation until the earlier of their resignation
or removal or until their respective successors are duly elected and qualified,
as the case may be.
1-2
<PAGE> 70
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Excel Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Lucent-Owned Stock. Each share of
Excel Common Stock that is owned by Excel, Sub or Lucent shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and no consideration shall be delivered or deliverable in
exchange therefor.
(c) Conversion of Excel Common Stock. Subject to Section 2.01(d) and
Section 2.02(e), each issued and outstanding share of Excel Common Stock
(other than shares to be canceled in accordance with Section 2.01(b)) shall
be converted into the right to receive 0.558 (the "Exchange Ratio") fully
paid and nonassessable shares of common stock, par value $.01 per share, of
Lucent ("Lucent Common Stock") (the "Merger Consideration"). As of the
Effective Time, all such shares of Excel Common Stock shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such shares of
Excel Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration and any cash in lieu
of fractional shares of Lucent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance
with Section 2.02, without interest.
(d) Dissenting Shares. (i) Notwithstanding anything in this Agreement
to the contrary and unless otherwise provided by applicable law, shares of
Excel Common Stock that are issued and outstanding immediately prior to the
Effective Time and that are owned by stockholders who have properly
perfected their rights of appraisal within the meaning of Section 85 of
Chapter 156B of the MBCL (the "Dissenting Shares") shall not be converted
into the right to receive the Merger Consideration, unless and until such
stockholders shall have failed to perfect or shall have effectively
withdrawn or lost their right of payment under applicable law, but,
instead, the holders thereof shall be entitled to payment of the appraised
value of such Dissenting Shares in accordance with the provisions of the
MBCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, each share of Excel
Common Stock held by such stockholder shall thereupon be deemed to have
been converted into the right to receive and become exchangeable for, at
the Effective Time, the Merger Consideration in the manner provided in
Section 2.01(c).
(ii) Excel shall give Lucent (A) prompt notice of any objections filed
pursuant to the MBCL received by Excel, withdrawals of such objections and
any other instruments served in connection with such objections pursuant to
the MBCL and received by Excel and (B) the opportunity to direct all
negotiations and proceedings with respect to objections under the MBCL
consistent with the obligations of Excel thereunder. Excel shall not,
except with the prior written consent of Lucent, (x) make any payment with
respect to any such objection, (y) offer to settle or settle any such
objection or (z) waive any failure to timely deliver a written objection in
accordance with the MBCL.
1-3
<PAGE> 71
(e) Anti-Dilution Provisions. In the event Lucent changes (or
establishes a record date for changing) the number of shares of Lucent
Common Stock issued and outstanding prior to the Effective Time as a result
of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction
with respect to the outstanding Lucent Common Stock and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares or similar transaction.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of the
Effective Time, Lucent shall enter into an agreement with such bank or trust
company as may be designated by Lucent (the "Exchange Agent"), which shall
provide that Lucent shall deposit with the Exchange Agent as of the Effective
Time, for the benefit of the holders of shares of Excel Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent,
certificates representing the shares of Lucent Common Stock (such shares of
Lucent Common Stock, together with any dividends or distributions with respect
thereto with a record date after the Effective Time, any Excess Shares and any
cash (including cash proceeds from the sale of the Excess Shares) payable in
lieu of any fractional shares of Lucent Common Stock being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Excel Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Excel Common Stock (the "Certificates") whose
shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Lucent and Excel may reasonably
specify) and (ii) instructions for use in surrendering the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancelation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall receive in exchange
therefor a certificate representing that number of whole shares of Lucent Common
Stock which such holder has the right to receive pursuant to the provisions of
this Article II, certain dividends or other distributions in accordance with
Section 2.02(c) and cash in lieu of any fractional share of Lucent Common Stock
in accordance with Section 2.02(e), and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Excel Common
Stock which is not registered in the transfer records of Excel, a certificate
representing the proper number of shares of Lucent Common Stock may be issued to
a person other than the person in whose name the Certificate so surrendered is
registered if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such issuance shall pay any
transfer or other taxes required by reason of the issuance of shares of Lucent
Common Stock to a person other than the registered holder of such Certificate or
establish to the satisfaction of Lucent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.02(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration and any
cash in lieu of fractional shares of Lucent Common Stock to be issued or paid in
consideration therefor upon surrender of such certificate in accordance with
this Section 2.02. No interest shall be paid or
1-4
<PAGE> 72
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Lucent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Lucent Common Stock represented thereby, and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e), and all such dividends, other distributions and
cash in lieu of fractional shares of Lucent Common Stock shall be paid by Lucent
to the Exchange Agent and shall be included in the Exchange Fund, in each case
until the surrender of such Certificate in accordance with this Article II.
Subject to the effect of applicable escheat or similar laws, following surrender
of any such Certificate there shall be paid to the holder of the certificate
representing whole shares of Lucent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Lucent Common Stock, and the amount of any
cash payable in lieu of a fractional share of Lucent Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of Lucent
Common Stock.
(d) No Further Ownership Rights in Excel Common Stock. All shares of
Lucent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to this Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Excel Common Stock
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by Excel on such shares of Excel Common Stock which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Excel Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Lucent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution of Lucent shall relate to
such fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Lucent.
(ii) As promptly as practicable following the Effective Time, the Exchange
Agent shall determine the excess of (A) the number of whole shares of Lucent
Common Stock delivered to the Exchange Agent by Lucent pursuant to Section
2.02(a) over (B) the aggregate number of whole shares of Lucent Common Stock to
be distributed to former holders of Excel Common Stock pursuant to Section
2.02(b) (such excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent shall, on behalf of former stockholders of
Excel, sell the Excess Shares at then-prevailing prices on the New York Stock
Exchange, Inc. (the "NYSE"), all in the manner provided in Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall be executed
on the NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent
1-5
<PAGE> 73
practicable. The Exchange Agent shall use reasonable efforts to complete the
sale of the Excess Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent with obtaining the
best execution of such sales in light of prevailing market conditions. Until the
net proceeds of such sale or sales have been distributed to the holders of
Certificates formerly representing Excel Common Stock, the Exchange Agent shall
hold such proceeds in trust for such holders (the "Common Shares Trust"). Excel
shall pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Common Shares Trust to which each former holder of
Excel Common Stock is entitled, if any, by multiplying the amount of the
aggregate net proceeds comprising the Common Shares Trust by a fraction, the
numerator of which is the amount of the fractional share interest to which such
former holder of Excel Common Stock is entitled (after taking into account all
shares of Excel Common Stock held at the Effective Time by such holder) and the
denominator of which is the aggregate amount of fractional share interests to
which all former holders of Excel Common Stock are entitled.
(iv) Notwithstanding the provisions of Section 2.02(e)(ii) and (iii),
Lucent may elect at its option, exercised prior to the Effective Time, in lieu
of the issuance and sale of Excess Shares and the making of the payments
hereinabove contemplated, to pay each former holder of Excel Common Stock an
amount in cash equal to the product obtained by multiplying (A) the fractional
share interest to which such former holder (after taking into account all shares
of Excel Common Stock held at the Effective Time by such holder) would otherwise
be entitled by (B) the closing price for a share of Lucent Common Stock as
reported on the NYSE Composite Transaction Tape (as reported in The Wall Street
Journal, or, if not reported thereby, any other authoritative source) on the
Closing Date, and, in such case, all references herein to the cash proceeds of
the sale of the Excess Shares and similar references shall be deemed to mean and
refer to the payments calculated as set forth in this Section 2.02(e)(iv).
(v) As soon as practicable after the determination of the amount of cash,
if any, to be paid to holders of Certificates formerly representing Excel Common
Stock with respect to any fractional share interests, the Exchange Agent shall
make available such amounts to such holders of Certificates formerly
representing Excel Common Stock subject to and in accordance with the terms of
Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to Lucent, upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Lucent for payment of their claim for Merger
Consideration, any dividends or distributions with respect to Lucent Common
Stock and any cash in lieu of fractional shares of Lucent Common Stock.
(g) No Liability. None of Lucent, Sub, Excel or the Exchange Agent shall
be liable to any person in respect of any shares of Lucent Common Stock, any
dividends or distributions with respect thereto, any cash in lieu of fractional
shares of Lucent Common Stock or any cash from the Exchange Fund, in each case
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificate shall not have been surrendered prior
to one year after the Effective Time (or immediately prior to such earlier date
on which any Merger Consideration, any dividends or distributions payable to the
holder of such Certificate or any cash payable to the holder of such Certificate
formerly representing Excel Common Stock pursuant to this Article II, would
otherwise escheat to or become the property of any Governmental Entity), any
1-6
<PAGE> 74
such Merger Consideration, dividends or distributions in respect of such
Certificate or such cash shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Lucent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Lucent.
(i) Lost Certificates. 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, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificate the
applicable Merger Consideration with respect thereto and, if applicable, any
unpaid dividends and distributions on shares of Lucent Common Stock deliverable
in respect thereof and any cash in lieu of fractional shares, in each case
pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of Excel. Except as disclosed
in the Excel SEC Documents filed and publicly available prior to the date of
this Agreement (the "Excel Filed SEC Documents") or as set forth on the
Disclosure Schedule delivered by Excel to Lucent prior to the execution of this
Agreement (the "Excel Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is being taken, Excel
represents and warrants to Lucent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of Excel and its
subsidiaries is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions which
recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may
be, and authority to carry on its business as now being conducted. Each of
Excel and its subsidiaries is duly qualified or licensed to do business and
is in good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its assets makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be
so qualified or licensed or to be in good standing individually or in the
aggregate is not reasonably likely to have a Material Adverse Effect on
Excel. Excel has made available to Lucent prior to the execution of this
Agreement complete and correct copies of its articles of organization and
by-laws, each as amended to the date of this Agreement, and the comparable
charter and organizational documents of each subsidiary of Excel, in each
case as amended to the date of this Agreement.
(b) Subsidiaries. Section 3.01(b) of the Excel Disclosure Schedule sets
forth a true and complete list of each of Excel's subsidiaries. All the
outstanding shares of capital stock of, or other equity interests in, each
subsidiary of Excel have been validly issued, are fully paid and
nonassessable and are owned directly or indirectly by Excel or a wholly
owned subsidiary of Excel, free and clear of all pledges, claims, liens,
charges, encumbrances, mortgages and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any
1-7
<PAGE> 75
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests except restrictions under applicable
law.
(c) Capital Structure. The authorized capital stock of Excel consists
of 100 million shares of Excel Common Stock and 10 million shares of
preferred stock, par value $.01 per share, of Excel ("Excel Authorized
Preferred Stock"). At the close of business on August 17, 1999, (i)
36,946,110 shares of Excel Common Stock were issued and outstanding; (ii)
no shares of Excel Common Stock were held by Excel in its treasury; (iii)
no shares of Excel Authorized Preferred Stock were issued and outstanding;
and (iv) 13,192,509 shares of Excel Common Stock were reserved for issuance
pursuant to the Stock Option Program for non-qualified stock options, the
Excel Amended and Restated 1997 Stock Option Plan, the Excel Amended and
Restated 1997 Non-Employee Director Stock Option Plan, the Excel Employee
Stock Purchase Plan and the RAScom, Inc. 1996 Stock Plan (such plans,
collectively, the "Excel Stock Plans") (of which 10,696,040 are subject to
outstanding Excel Stock Options). There are no outstanding stock
appreciation rights or rights (other than the Excel Stock Options) to
receive shares of Excel Common Stock on a deferred basis granted under the
Excel Stock Plans or otherwise. Section 3.01(c) of the Excel Disclosure
Schedule sets forth a complete and correct list, as of August 17, 1999, of
each holder of outstanding stock options or other rights to purchase or
receive Excel Common Stock granted under the Excel Stock Plans
(collectively, "Excel Stock Options"), the date on which such holder was
originally employed by Excel, the number of shares of Excel Common Stock
subject to each such Excel Stock Option, the name of the Excel Stock Plan
pursuant to which such Excel Stock Options were granted and the exercise
prices of such Excel Stock Options. No bonds, debentures, notes or other
indebtedness of Excel having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which stockholders of Excel or any of its subsidiaries may vote are issued
or outstanding or subject to issuance. All outstanding shares of capital
stock of Excel are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and
will be delivered free and clear of all Liens (other than Liens created by
or imposed upon the holders thereof) and not subject to preemptive rights.
Except as set forth in this Section 3.01(c) (including pursuant to the
conversion or exercise of the securities referred to above), and except for
changes since June 30, 1999, resulting from the issuance of Excel Common
Stock as expressly permitted by Section 4.01(a)(ii), (x) there are not
issued, reserved for issuance or outstanding (A) any shares of capital
stock or other voting securities of Excel or any of its subsidiaries (other
than shares of capital stock or other voting securities of such
subsidiaries that are directly or indirectly owned by Excel), (B) any
securities of Excel or any of its subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or other voting
securities of, or other ownership interests in, Excel or any of its
subsidiaries, (C) any warrants, calls, options or other rights to acquire
from Excel or any of its subsidiaries, and no obligation of Excel or any of
its subsidiaries to issue, any capital stock or other voting securities of,
or other ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock or other voting
securities of, or other ownership interests in, Excel or any of its
subsidiaries and (y) there are not any outstanding obligations of Excel or
any of its subsidiaries to repurchase, redeem or otherwise acquire any such
securities or to issue, deliver or sell, or cause to be issued, delivered
or sold, any such securities. Excel is not a party to any voting agreement
with respect to the voting of any such securities. Other than the capital
stock of, or other equity interests in, its subsidiaries, Excel does not
directly or indirectly beneficially own any securities or other beneficial
ownership interests in any other entity.
1-8
<PAGE> 76
(d) Authority; Noncontravention. Excel has all requisite corporate
power and authority to enter into this Agreement and, subject to obtaining
the Excel Stockholders Approval, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Excel
and the consummation by Excel of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Excel, subject, in the case of the Merger, to obtaining the Excel
Stockholders Approval. This Agreement has been duly executed and delivered
by Excel and, assuming the due authorization, execution and delivery by
each of the other parties hereto, constitutes a legal, valid and binding
obligation of Excel, enforceable against Excel in accordance with its
terms. The execution and delivery of this Agreement do not, and the
consummation of the Merger and the other transactions contemplated hereby
and compliance with the provisions of this Agreement will not, conflict
with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancelation or acceleration of any obligation or to the loss of a benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Excel or any of its subsidiaries under, (i) the Restated Articles
of Organization or by-laws of Excel or the comparable organizational
documents of any of its subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other contract, agreement,
obligation, commitment, arrangement, understanding, instrument, permit,
concession, franchise, license or similar authorization applicable to Excel
or any of its subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in
the following sentence, (A) any judgment, order or decree or (B) any
statute, law, ordinance, rule or regulation, in each case applicable to
Excel or any of its subsidiaries or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate are not reasonably likely to (x) have a Material Adverse Effect
on Excel, (y) materially impair the ability of Excel to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated hereby. No consent, approval,
order or authorization of, action by or in respect of, or registration,
declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority (each a "Governmental Entity") is required
by or with respect to Excel or any of its subsidiaries in connection with
the execution and delivery of this Agreement by Excel or the consummation
by Excel of the transactions contemplated hereby, except for (1) the filing
of a premerger notification and report form by Excel under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
any applicable filings and approvals under similar foreign antitrust or
competition laws and regulations; (2) the filing with the Securities and
Exchange Commission (the "SEC") of (A) a proxy statement relating to the
Excel Stockholders Meeting (such proxy statement, as amended or
supplemented from time to time, the "Excel Proxy Statement"), and (B) such
reports under Section 13(a), 13(d), 15(d) or 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as may be required
in connection with this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement;
(3) the filing of the Articles of Merger (and any other merger documents as
required by the MBCL) with the Secretary of State of the Commonwealth of
Massachusetts and appropriate documents with the relevant authorities of
other states in which Excel is qualified to do business; and (4) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made individually or in
the aggregate is not reasonably likely to (x) have a Material Adverse
Effect
1-9
<PAGE> 77
on Excel, (y) materially impair the ability of Excel to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated hereby.
(e) SEC Documents; Undisclosed Liabilities. Excel has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 1998 (collectively, the "Excel SEC Documents"). As
of their respective dates, the Excel SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended
(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
Excel SEC Documents, and none of the Excel 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. Except to the extent that information contained in
any Excel SEC Document has been revised or superseded by a later filed
Excel SEC Document, none of the Excel SEC Documents contains any untrue
statement of a material fact or omits to state any 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 Excel included in the Excel 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 (the
"Accounting Rules"), have been prepared in accordance with generally
accepted accounting principles ("GAAP") (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 Excel 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 the absence
of footnotes, if applicable). Except (i) as set forth in the Excel Filed
SEC Documents or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither Excel nor any of
its subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on
Excel.
(f) Information Supplied. None of the information supplied or to be
supplied by Excel specifically for inclusion or incorporation by reference
in (i) the registration statement on Form S-4 to be filed with the SEC by
Lucent in connection with the issuance of Lucent Common Stock in the Merger
(the "Form S-4") will, at the time the Form S-4 becomes effective under the
Securities Act, 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 or (ii) the Excel Proxy Statement
will, at the date it is first mailed to Excel's stockholders or at the time
of the Excel Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Excel
Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
No representation or warranty is made by Excel with respect to statements
made or
1-10
<PAGE> 78
incorporated by reference therein based on information supplied by Lucent
or Sub specifically for inclusion or incorporation by reference in the
Excel Proxy Statement.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby and except as disclosed in the Excel Filed SEC Documents, since
March 31, 1999, Excel and its subsidiaries have conducted their business
only in the ordinary course and since such date there has not been (1) any
Material Adverse Change in Excel, (2) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of Excel's capital stock, (3) any split,
combination or reclassification of any of Excel's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of Excel's capital
stock, except for issuances of Excel Common Stock as expressly permitted by
Section 4.01(a)(ii), (4) (A) any granting by Excel or any of its
subsidiaries to any current or former director, executive officer or other
employee of Excel or its subsidiaries of any increase in compensation,
bonus or other benefits, except for normal increases in cash compensation
in the ordinary course of business consistent with past practice or as was
required under any employment agreements in effect as of the date of the
most recent audited financial statements included in the Excel Filed SEC
Documents, (B) any granting by Excel or any of its subsidiaries to any such
current or former director, executive officer or employee of any increase
in severance or termination pay, (C) any entry by Excel or any of its
subsidiaries into, or any amendments of, any employment, deferred
compensation, consulting, severance, termination or indemnification
agreement with any such current or former director, executive officer or
employee, or (D) any amendment to, or modification of, any Excel Stock
Option, (5) except insofar as may have been required by a change in GAAP,
any change in accounting methods, principles or practices by Excel or any
of its subsidiaries materially affecting their respective assets,
liabilities or businesses, (6) any tax election that individually or in the
aggregate is reasonably likely to adversely affect in any material respect
the tax liability or tax attributes of Excel or any of its subsidiaries or
(7) any settlement or compromise of any material income tax liability.
(h) Litigation. There is no suit, action or proceeding pending or, to
the knowledge of Excel or any of its subsidiaries, threatened against or
affecting Excel or any of its subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on Excel
nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Excel or any of its
subsidiaries having, or which is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Excel; provided that for
purposes of this paragraph (h) any such suit, action, proceeding, judgment,
decree, injunction, rule or order arising after the date hereof shall not
be deemed to have a Material Adverse Effect on Excel if and to the extent
such suit, action, proceeding, judgment, decree, injunction, rule or order
(or any relevant part thereof) is based on this Agreement or the
transactions contemplated hereby.
(i) Compliance with Applicable Laws. (i) Excel and its subsidiaries
hold all permits, licenses, variances, exemptions, orders, registrations
and approvals of all Governmental Entities (the "Excel Permits") that are
required for them to own, lease or operate their assets and to carry on
their businesses, except where the failure to hold any such Excel Permits,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on Excel. Excel and its subsidiaries are in
compliance in all material respects with the terms of the Excel Permits and
all applicable statutes, laws, ordinances, rules and regulations. No
action, demand, requirement or investigation by any Governmental Entity and
no suit, action or
1-11
<PAGE> 79
proceeding by any person, in each case with respect to Excel or any of its
subsidiaries or any of their respective properties, is pending or, to the
knowledge of Excel, threatened; provided that for purposes of this
paragraph (i) any such action, demand, requirement or investigation or any
such suit, action or proceeding arising after the date hereof shall not be
deemed to have a Material Adverse Effect on Excel if and to the extent such
action, demand, requirement or investigation or such suit, action or
proceeding (or any relevant part thereof) is based on this Agreement or the
transactions contemplated hereby.
(ii) To Excel's knowledge, there have been no Releases of any Hazardous
Materials at, on or under any facility or property currently or formerly
owned, leased, or operated by Excel or any of its subsidiaries that,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Excel. Neither Excel nor any of its subsidiaries is the
subject of any pending or, to Excel's knowledge, threatened investigation
or proceeding under Environmental Law relating in any manner to the
off-site treatment, storage or disposal of any Hazardous Materials
generated at any facility or property currently or formerly owned, leased
or operated by Excel or any of its subsidiaries. Neither Excel nor any of
its subsidiaries has assumed or otherwise agreed to be responsible for any
liabilities arising under Environmental Law where such assumption or
responsibility, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on Excel. The term "Environmental Law" means
any and all applicable laws or regulations or other requirements of any
Governmental Entity concerning the protection of human health or the
environment. The term "Hazardous Materials" means all explosive or
regulated radioactive materials, hazardous or toxic substances, wastes or
chemicals, petroleum (including crude oil or any fraction thereof) or
petroleum distillates, asbestos or asbestos-containing materials, and all
other materials or chemicals regulated under any Environmental Law. The
term "Release" means any spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, emanation or migration
in, into, onto, or through the environment.
(j) Absence of Changes in Benefit Plans. Since the date of the most
recent audited financial statements included in the Excel Filed SEC
Documents, there has not been any adoption or amendment in any material
respect (other than as required by law) by Excel or any of its subsidiaries
of any collective bargaining agreement or 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, welfare
benefit or other plan, arrangement or understanding providing benefits to
any current or former director, officer or employee of Excel or any of its
wholly owned subsidiaries (collectively, the "Excel Benefit Plans"), or any
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Excel pension plans, or any change in the
manner in which contributions to any Excel pension plans are made or the
basis on which such contributions are determined.
(k) ERISA Compliance. (i) With respect to the Excel Benefit Plans, no
event has occurred and, to the knowledge of Excel, there exists no
condition or set of circumstances, in connection with which Excel or any of
its subsidiaries could be subject to any liability that individually or in
the aggregate is reasonably likely to have a Material Adverse Effect on
Excel under the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code or any other applicable law.
(ii) Each Excel Benefit Plan has been administered in accordance with
its terms, except for any failures so to administer any Excel Benefit Plan
that individually or in the aggregate are
1-12
<PAGE> 80
not reasonably likely to have a Material Adverse Effect on Excel. Excel,
its subsidiaries and all the Excel Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws and
the terms of all applicable collective bargaining agreements, except for
any failures to be in such compliance that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on Excel. Each
Excel Benefit Plan that is intended to be qualified under Section 401(a) or
401(k) of the Code has received a favorable determination letter from the
IRS that it is so qualified and each trust established in connection with
any Excel Benefit Plan that is intended to be exempt from federal income
taxation under Section 501(a) of the Code has received a determination
letter from the IRS that such trust is so exempt. To the knowledge of
Excel, no fact or event has occurred since that date of any determination
letter from the IRS which is reasonably likely to affect adversely the
qualified status of any such Excel Benefit Plan or the exempt status of any
such trust. There are no pending or, to the knowledge of Excel, threatened
lawsuits, claims, grievances, investigations or audits of any Excel Benefit
Plan that, individually or in the aggregate, are reasonably likely to have
a Material Adverse Effect on Excel.
(iii) No Excel Benefit Plan is a "defined benefit" plan (as defined in
Section 3(35) of ERISA) or is subject to the minimum funding requirements
of Section 302 of ERISA or Section 412 of the Code and neither Excel nor
any of its subsidiaries has incurred any liability under Title IV of ERISA
which has not been satisfied in full. No Excel Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code) whether or not waived. No Excel Benefit
Plan is a "multiemployer plan" within the meaning of Section 3(37) of ERISA
and neither Excel nor any of its subsidiaries or affiliates has been
required to contribute to any such multiemployer plan in the past six
years.
(iv) Excel and its subsidiaries are in compliance with all federal,
state and local requirements regarding employment, except for any failures
to comply that individually or in the aggregate are not reasonably likely
to have a Material Adverse Effect on Excel. Neither Excel nor any of its
subsidiaries is a party to any collective bargaining or other labor union
contract applicable to persons employed by Excel or any of its subsidiaries
and no collective bargaining agreement is being negotiated by Excel or any
of its subsidiaries. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against Excel or any of its subsidiaries
pending or, to the knowledge of Excel, threatened which may interfere with
the respective business activities of Excel or any of its subsidiaries,
except where such dispute, strike or work stoppage individually or in the
aggregate is not reasonably likely to have a Material Adverse Effect on
Excel. As of the date of this Agreement, to the knowledge of Excel, none of
Excel, any of its subsidiaries or any of their respective representatives
or employees has committed any unfair labor practice in connection with the
operation of the respective business of Excel or any of its subsidiaries,
and there is no charge or complaint against Excel or any of its
subsidiaries by the National Labor Relations Board or any comparable
governmental agency pending or threatened in writing, in each case except
where such actions, charges or complaints, individually or in the
aggregate, are not reasonably likely to have a Material Adverse Effect on
Excel.
(v) No employee of Excel will be entitled to any additional benefits or
any acceleration of the time of payment or vesting of any benefits under
any Excel Benefit Plan as a result of the transactions contemplated by this
Agreement or the Stockholders Agreement. No amount payable, or economic
benefit provided, by Excel or its subsidiaries (including any acceleration
of the time of payment or vesting of any benefit) could be considered an
"excess parachute
1-13
<PAGE> 81
payment" under Section 280G of the Code. No person is entitled to receive
any additional payment from Excel or its subsidiaries or any other person
(a "Parachute Gross-Up Payment") in the event that the excise tax of
Section 4999 of the Code is imposed on such person. The Board of Directors
of Excel or any of its subsidiaries has not granted to any person any right
to receive any Parachute Gross-Up Payment.
(vi) Except as provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, no Excel Benefit Plan provides
post-retirement health insurance plans, the total cost of which is not
incurred by the former employee.
(l) Taxes. (i) Each of Excel and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions granted
that remain in effect individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on Excel. Excel and each of its
subsidiaries has paid (or Excel has paid on its behalf) all taxes shown as
due on such returns, and the most recent financial statements contained in
the Excel Filed SEC Documents reflect an adequate reserve for all taxes
payable by Excel and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements.
(ii) No deficiencies for any taxes have been proposed, asserted or
assessed against Excel or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
are not reasonably likely to have a Material Adverse Effect on Excel. The
federal income tax returns of Excel and each of its subsidiaries
consolidated in such returns have closed by virtue of the applicable
statute of limitations.
(iii) Neither Excel nor any of its subsidiaries has taken any action or
knows of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
(iv) The Excel Benefit Plans and other Excel employee compensation
arrangements in effect as of the date of this Agreement have been designed
so that the disallowance of a material deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amounts paid or
payable by Excel or any of its subsidiaries under any such plan or
arrangement and, to the knowledge of Excel, no fact or circumstance exists
that is reasonably likely to cause such disallowance to apply to any such
amounts.
(v) Neither Excel nor any of its subsidiaries has 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
(x) in the two years prior to the date of this Agreement or (y) 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.
(vi) As used in this Agreement, "taxes" shall include all (x) federal,
state, local or foreign income, property, sales, excise and other taxes or
similar governmental charges, including any interest, penalties or
additions with respect thereto, (y) liability for the payment of any
amounts of the type described in (x) as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (z) liability for
the payment of any amounts as a result of being party to any tax sharing
agreement or as a result of any express or implied
1-14
<PAGE> 82
obligation to indemnify any other person with respect to the payment of any
amounts of the type described in clause (x) or (y).
(m) Voting Requirements. The Excel Stockholders Approval is the only
vote or approval of the holders of any class or series of Excel's capital
stock necessary to approve and adopt this Agreement and approve the Merger
and the transactions contemplated hereby.
(n) Accounting Matters. Neither Excel nor any of its affiliates has
taken, failed to take or agreed to take any action that would prevent the
business combination to be effected by the Merger to be accounted for as a
pooling of interests.
(o) Brokers. No broker, investment banker, financial advisor or other
person, other than Morgan Stanley & Co. Incorporated, the fees and expenses
of which will be paid by Excel, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Excel. Excel has furnished to Lucent true and
complete copies of all agreements under which any such fees or expenses are
payable and all indemnification and other agreements related to the
engagement of the persons to whom such fees are payable.
(p) Takeover Statutes. No state takeover statute (including Chapters
110C, 110D and 110F of the MBCL) or similar statute or regulation applies
to this Agreement, the Stockholders Agreement, the Merger or the other
transactions contemplated hereby or thereby.
(q) Opinion of Financial Advisor. Excel has received the written
opinion of Morgan Stanley & Co. Incorporated, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is fair
from a financial point of view to the stockholders of Excel (other than
Lucent and its affiliates), a signed copy of which opinion has been or
promptly will be delivered to Lucent.
(r) Intellectual Property; Year 2000. (i) Excel and its subsidiaries
own, or are validly licensed or otherwise have the right to use, all
patents, patent rights, trademarks, trade secrets, trade names, service
marks, copyrights and other proprietary intellectual property rights and
computer programs (the "Intellectual Property Rights") which are material
to the conduct of the business of Excel and its subsidiaries.
(ii) To the knowledge of Excel, neither Excel nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property Rights of any
other person, except for any such interference, infringement,
misappropriation or other conflict which, individually or in the aggregate,
is not reasonably likely to have a Material Adverse Effect on Excel.
Neither Excel nor any of its subsidiaries has received any written charge,
complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or other conflict (including any claim that
Excel or any such subsidiary must license or refrain from using any
Intellectual Property Rights of any other person) which has not been
settled or otherwise fully resolved. To Excel's knowledge, no other person
has interfered with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property Rights of Excel or any of its
subsidiaries, except for any such interference, infringement,
misappropriation or other conflict which, individually or in the aggregate,
is not reasonably likely to have a Material Adverse Effect on Excel.
(iii) As the business of Excel and its subsidiaries is presently
conducted and proposed to be conducted without giving effect to any change
with respect thereto that may be made by Lucent, to Excel's knowledge,
Lucent's use after the Closing of the Intellectual Property Rights which
are material to the conduct of the business of Excel and its subsidiaries
taken as a
1-15
<PAGE> 83
whole will not interfere with, infringe upon, misappropriate or otherwise
come into conflict with the Intellectual Property Rights of any other
person.
(iv) Each employee, agent, consultant 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 Excel, any
of its subsidiaries or any predecessor-in-interest thereto either (x) is a
party to a "work-for-hire" agreement under which Excel or such subsidiary
is deemed to be the original owner/author of all property rights therein or
(y) has executed an assignment or an agreement to assign in favor of Excel,
such subsidiary or such predecessor-in-interest, as applicable, all right,
title and interest in such material.
(v) Neither Excel nor any of its subsidiaries is a party to any
agreement or other arrangement that is currently in effect and which
requires Excel or any of its subsidiaries to place into escrow any source
code, parts list, schematic, test procedure, technical information or other
data relating to products required to be supplied by Excel or any of its
subsidiaries pursuant to such agreement or arrangement.
(vi) Excel has substantially completed all necessary 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 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, provided that all other
non-Excel products (e.g., hardware, software and firmware) used by Excel in
or in combination with Excel products properly exchange data with Excel
products. In addition, Excel has taken the necessary steps to ensure that
operations and all material systems utilized to support such operations
will not be materially adversely impacted by the year 2000 date change or
any other date change. Excel further represents and warrants: (i) the
accuracy of year 2000 product information provided on its external website;
and (ii) that based on all currently available information, Excel believes
it has sufficient resources to complete all necessary customer year 2000
upgrades.
(s) Certain Contracts. Section 3.01(s) of the Excel Disclosure Schedule
sets forth a true and complete list as of the date hereof of each material
contract for the purchase or sale of goods or services to which Excel or
any of its subsidiaries is a party. Neither Excel nor any of its
subsidiaries is a party to or bound by any non-competition agreement or any
other similar agreement or obligation which purports to limit in any
material respect the manner in which, or the localities in which, the
business of Excel and its subsidiaries is conducted.
(t) Title to Properties. (i) Section 3.01(t) of the Excel Disclosure
Schedule sets forth a true and complete list of all real property and
leasehold property owned or leased by Excel or any of its subsidiaries.
Each of Excel and its subsidiaries has good and valid title to, or valid
leasehold interests in or valid rights to, all its material properties and
assets except for such as are no longer used or useful in the conduct of
its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive covenants
and similar encumbrances that individually or in the aggregate do not
materially interfere with its ability to conduct its business as currently
conducted. All such material assets and properties, other than assets and
properties in which Excel or any of its subsidiaries has a leasehold
interest, are free and clear of all Liens except for Liens that
individually or in the aggregate do
1-16
<PAGE> 84
not materially interfere with the ability of Excel and its subsidiaries to
conduct their respective businesses as currently conducted.
(ii) Each of Excel and its subsidiaries has complied in all material
respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and effect.
Each of Excel and its subsidiaries enjoys peaceful and undisturbed
possession under all such leases, except for failures to do so that
individually or in the aggregate not reasonably likely to have a Material
Adverse Effect on Excel.
(u) Business Relationships. To Excel's knowledge, as of the date
hereof, neither Excel nor any of its subsidiaries has been informed or is
otherwise aware of any development or state of facts which is reasonably
likely to have a material adverse effect on the business relationship of
Excel or any of its subsidiaries with any VAR (Value Added Reseller) or ISV
(Independent Software Vendor) other than as may directly arise as a result
of this Agreement or the transactions contemplated hereby or the
announcement thereof.
SECTION 3.02. Representations and Warranties of Lucent and Sub. Except as
disclosed in the Lucent SEC Documents filed and publicly available prior to the
date of this Agreement (the "Lucent Filed SEC Documents") or as set forth on the
Disclosure Schedule delivered by Lucent to Excel prior to the execution of this
Agreement (the "Lucent Disclosure Schedule") and making reference to the
particular subsection of this Agreement to which exception is being taken,
Lucent and Sub represent and warrant to Excel as follows:
(a) Organization, Standing and Corporate Power. Each of Lucent and Sub
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now
being conducted. Each of Lucent and Sub is duly qualified or licensed to do
business and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its assets makes such
qualification or licensing necessary, except for those jurisdictions where
the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect on Lucent. Lucent has made available to Excel prior
to the execution of this Agreement complete and correct copies of its
certificate of incorporation and by-laws and the certificate of
incorporation and by-laws of Sub, in each case as amended to the date of
this Agreement.
(b) Capital Structure. The authorized capital stock of Lucent consists
of 6 billion shares of Lucent Common Stock and 250 million shares of
preferred stock, par value $1.00 per share, of Lucent ("Lucent Authorized
Preferred Stock"), of which 15 million shares have been designated Series A
Junior Participating Preferred Stock (the "Lucent Junior Preferred Stock").
As of June 30, 1999, (i) approximately 3 billion shares of Lucent Common
Stock were issued and outstanding, (ii) no shares of Lucent Junior
Preferred Stock were issued and outstanding and (iii) other than the Lucent
Junior Preferred Stock, no other shares of Lucent Authorized Preferred
Stock have been designated or issued. As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of Lucent having the right
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of Lucent may vote are
issued or outstanding. All outstanding shares of capital stock of Lucent
are, and all shares which may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Lucent has made available to Excel a complete and
correct copy of the Rights Agreement dated as of April 4, 1996, as amended
(the "Lucent Rights Agreement") between Lucent and
1-17
<PAGE> 85
The Bank of New York, as Rights Agent, relating to rights ("Lucent Rights")
to purchase Lucent Junior Preferred Stock.
(c) Authority; Noncontravention. Each of Lucent and Sub has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by Lucent and Sub and the consummation by
Lucent and Sub of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Lucent and Sub,
as applicable. This Agreement has been duly executed and delivered by
Lucent and Sub and, assuming the due authorization, execution and delivery
by each of the other parties hereto, constitutes a legal, valid and binding
obligation of each of Lucent and Sub, enforceable against each of them in
accordance with its terms. The execution and delivery of this Agreement do
not, and the consummation of the Merger and the other transactions
contemplated hereby and compliance with the provisions of this Agreement
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to the loss
of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Lucent or Sub under, (i) the certificate of
incorporation or by-laws of Lucent or the articles of organization or
by-laws of Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other contract, agreement, obligation, commitment,
arrangement, understanding, instrument, permit, concession, franchise,
license or similar authorization applicable to Lucent or Sub or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, (A) any
judgment, order or decree or (B) any statute, law, ordinance, rule or
regulation, in each case applicable to Lucent or Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate are not reasonably likely to (x) have a
Material Adverse Effect on Lucent, (y) materially impair the ability of
Lucent or Sub to perform its obligations under this Agreement or (z)
prevent or materially delay the consummation of the transactions
contemplated hereby. No consent, approval, order or authorization of,
action by or in respect of, or registration, declaration or filing with,
any Governmental Entity is required by or with respect to Lucent or Sub in
connection with the execution and delivery of this Agreement by Lucent and
Sub or the consummation by Lucent and Sub of the transactions contemplated
hereby, except for (1) the filing of a premerger notification and report
form by Lucent under the HSR Act and any applicable filings and approvals
under similar foreign antitrust or competition laws and regulations; (2)
the filing with the SEC of (A) the Form S-4 and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required
in connection with this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement;
(3) the filing of the Articles of Merger (and any other merger documents
required by the MBCL) with the Secretary of State of the Commonwealth of
Massachusetts and appropriate documents with the relevant authorities of
other states in which Lucent is qualified to do business and such filings
with Governmental Entities to satisfy the applicable requirements of state
securities or "blue sky" laws; (4) such filings with and approvals of the
NYSE to permit the shares of Lucent Common Stock that are to be issued in
the Merger to be listed on the NYSE; and (5) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
the failure of which to be obtained or made individually or in the
aggregate is not reasonably likely to (x) have a Material Adverse Effect on
Lucent, (y) materially impair the ability of Lucent or Sub to
1-18
<PAGE> 86
perform its obligations under this Agreement or (z) prevent or materially
delay the consummation of the transactions contemplated hereby.
(d) SEC Documents; Undisclosed Liabilities. Lucent has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since October 1, 1997 (collectively, 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 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. 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 contains any untrue statement of a material fact or
omits to state any 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 the
Accounting Rules, have been prepared in accordance with GAAP (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
the absence of footnotes, if applicable). Except (i) as set forth in the
Lucent Filed SEC Documents or (ii) for liabilities incurred in connection
with this Agreement or the transactions contemplated hereby, neither Lucent
nor any of its subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that,
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on Lucent.
(e) Information Supplied. None of the information supplied or to be
supplied by Lucent specifically for inclusion or incorporation by reference
in (i) the Form S-4 will, at the time the Form S-4 becomes effective under
the Securities Act, 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 or (ii) the Excel Proxy
Statement will, at the date it is first mailed to Excel's stockholders or
at the time of the Excel Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Form S-4
will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder. No
representation or warranty is made by Lucent with respect to statements
made or incorporated by reference therein based on information supplied by
Excel specifically for inclusion or incorporation by reference in the Form
S-4.
(f) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the Stockholders Agreement or
the transactions contemplated hereby or thereby, and except as disclosed in
the Lucent Filed SEC Documents, since March 31,
1-19
<PAGE> 87
1999, Lucent and its subsidiaries have conducted their business only in the
ordinary course, and there has not been any Material Adverse Change in
Lucent.
(g) Voting Requirements. No vote of the holders of shares of Lucent
Common Stock or any other class or series of capital stock of Lucent is
necessary to approve and adopt this Agreement and the Stockholders
Agreement and the transactions contemplated hereby and thereby.
(h) Tax Matters. Neither Lucent nor any of its subsidiaries has taken
any action or knows of any fact, agreement, plan or other circumstance that
is reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(i) Accounting Matters. Neither Lucent nor any of its affiliates has
taken, failed to take or agreed to take any action that would prevent the
business combination to be effected by the Merger to be accounted for as a
pooling of interests.
(j) Interim Operations of Sub. Sub 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.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business. (a) Conduct of Business by
Excel. Except as set forth in Section 4.01(a) of the Excel Disclosure Schedule,
as otherwise expressly contemplated by this Agreement or as consented to in
writing by Lucent, during the period from the date of this Agreement to the
Effective Time, Excel shall, and shall cause its subsidiaries to, carry on their
respective businesses in the ordinary course consistent with past practice and
in compliance in all material respects with all applicable laws and regulations
and, to the extent consistent therewith, use all reasonable efforts to preserve
intact their current business organizations, use reasonable efforts to keep
available the services of their current officers and other key employees and
preserve their relationships with those persons having business dealings with
them to the end that their goodwill and ongoing businesses shall be unimpaired
at the Effective Time. Without limiting the generality of the foregoing (but
subject to the above exceptions), during the period from the date of this
Agreement to the Effective Time, Excel shall not, and shall not permit any of
its subsidiaries to:
(i) other than dividends and distributions (including liquidating
distributions) by a direct or indirect wholly owned subsidiary of Excel to
its parent, (x) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock, property or otherwise) in
respect of, any of its capital stock, (y) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (z) purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Excel or any of its subsidiaries
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject to
any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
other than (x) the issuance of Excel Stock Options granted consistent with
past practice to new
1-20
<PAGE> 88
employees of Excel representing in the aggregate not more than 250,000
shares of Excel Common Stock or (y) the issuance of Excel Common Stock upon
the exercise of Excel Stock Options outstanding as of the date hereof in
accordance with their present terms or upon the exercise of the Excel Stock
Options referred to in clause (x) in accordance with their terms;
(iii) amend Excel's Restated Articles of Organization, by-laws or other
comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with, or by
purchasing assets of, or by any other manner, any business or any person,
other than purchases of raw materials or supplies in the ordinary course of
business consistent with past practice;
(v) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets (including securitizations), other than sales or
licenses of finished goods in the ordinary course of business consistent
with past practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Excel or any of
its subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business (or to refund existing or
maturing indebtedness) consistent with past practice and except for
intercompany indebtedness between Excel and any of its subsidiaries or
between such subsidiaries, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, other than loans to
employees for travel and related purposes in the ordinary course of
business consistent with past practice and policies;
(vii) make or agree to make any new capital expenditure or expenditures,
other than capital expenditures not exceeding the respective aggregate
amounts in each of the fiscal years ended 1999 and 2000 as set forth in
Excel's capital expenditure budget for each of the fiscal years ended 1999
and 2000;
(viii) make any tax election that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of Excel or any of its subsidiaries;
(ix) (x) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of
this Agreement), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements (or the
notes thereto) of Excel included in the Excel Filed SEC Documents or
incurred since the date of such financial statements, or (y) waive the
benefits of, agree to modify in any manner, terminate, release any person
from or fail to enforce any confidentiality, standstill or similar
agreement to which Excel or any of its subsidiaries is a party or of which
Excel or any of its subsidiaries is a beneficiary;
(x) except as required by law or contemplated hereby and except for
labor agreements negotiated in the ordinary course, enter into, adopt or
amend in any material respect or terminate any Excel Benefit Plan or any
other agreement, plan or policy involving Excel or its subsidiaries, and
one or more of its directors, officers or employees, or change any
actuarial or
1-21
<PAGE> 89
other assumption used to calculate funding obligations with respect to any
pension plan, or change the manner in which contributions to any pension
plan are made or the basis on which such contributions are determined;
(xi) except for normal increases in the ordinary course of business
consistent with past practice or as contemplated hereby or by the terms of
any employment agreement the existence of which does not constitute a
violation of this Agreement, increase the compensation of any director,
officer or other employee or pay any benefit or amount not required by a
plan or arrangement as in effect on the date of this Agreement to any such
person;
(xii) transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Intellectual Property Rights of Excel and
its subsidiaries other than in the ordinary course of business consistent
with past practices or on a non-exclusive basis not materially different
from past practices;
(xiii) enter into or amend (A) any OEM agreement other than in the
ordinary course of business consistent with past practice, or (B) any
agreement pursuant to which any person is granted exclusive marketing,
manufacturing or other rights with respect to any Excel product, process or
technology;
(xiv) call or hold any meeting of stockholders of Excel other than in
connection with the election of members of the Board of Directors of Excel
or other routine matters in the ordinary course of business consistent with
past practice;
(xv) take any action that would, or that is reasonably likely to, result
in (x) any of the representations and warranties made by Excel in this
Agreement that are qualified as to materiality becoming untrue, (y) any of
such representations and warranties that are not so qualified becoming
untrue in any material respect or (z) any condition to the Merger set forth
in Article VI not being satisfied; or
(xvi) authorize, or commit, resolve or agree to take any of the
foregoing actions.
(b) Advice of Changes. Excel and Lucent shall promptly advise the other
party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it (and, in the case of Lucent, made by Sub)
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, (ii) the
failure by it (and, in the case of Lucent, by Sub) to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement and (iii) any change or event having, or
which is reasonably likely to have, a Material Adverse Effect on such party or
on the truth of their respective representations and warranties or the ability
of the conditions set forth in Article VI to be satisfied; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties (or remedies with respect thereto) or the
conditions to the obligations of the parties under this Agreement.
SECTION 4.02. No Solicitation. (a) Excel shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), 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 Takeover Proposal or
(ii) participate in any discussions or negotiations regarding any Takeover
Proposal. For purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any
1-22
<PAGE> 90
person relating to any direct or indirect acquisition or purchase of 10% or more
of the assets of Excel and its subsidiaries, taken as a whole, or 10% or more of
any class or series of equity securities of Excel or any of its subsidiaries,
any tender offer or exchange offer that if consummated would result in any
person beneficially owning 10% or more of any class or series of equity
securities of Excel or any of its subsidiaries, or any merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Excel or any of its subsidiaries, other than the
transactions contemplated by this Agreement.
(b) Neither the Board of Directors of Excel nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Lucent, the approval or, subject to its or their obligations under applicable
law as referred to in Section 4.02(d), recommendation by such Board of Directors
or such committee of the Merger or this Agreement, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or (iii) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose or agree to do
any of the foregoing related to any Takeover Proposal.
(c) In addition to the obligations of Excel set forth in paragraphs (a) and
(b) of this Section 4.02, Excel shall immediately (and no later than 48 hours)
advise Lucent orally and in writing of any request for information or of any
inquiry with respect to a Takeover Proposal or of any Takeover Proposal, the
material terms and conditions of such request, inquiry or Takeover Proposal and
the identity of the person making such request, inquiry or Takeover Proposal.
Excel will promptly keep Lucent informed of the status and details (including
amendments or changes or proposed amendments or changes) of any such request,
inquiry or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit Excel from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to Excel's
stockholders (including the withdrawal or modification of the recommendation of
the Board of Directors of Excel of the Merger or this Agreement and the
disclosure of the terms of a Takeover Proposal) if, in the good faith judgment
of the Board of Directors of Excel, after consultation with outside counsel,
failure so to disclose would be inconsistent with its obligations under
applicable law; provided, however, that neither Excel nor its Board of Directors
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, its approval of this Agreement or the Merger or the submission of
this Agreement to the stockholders of Excel for a vote thereon pursuant to
Section 78 of the MBCL or (ii) approve or recommend, or propose to approve or
recommend, a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Form S-4 and the Excel Proxy Statement;
Excel Stockholders Meeting. (a) As soon as practicable following the date of
this Agreement, Lucent and Excel shall prepare and Excel shall file with the SEC
the Excel Proxy Statement and Lucent and Excel shall prepare and Lucent shall
file with the SEC the Form S-4, in which the Excel Proxy Statement will be
included as a prospectus. Each of Excel and Lucent shall use all reasonable
efforts to have the Form S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Excel will use all reasonable efforts
to cause the Excel Proxy Statement to be mailed to Excel's stockholders as
promptly as practicable after the Form S-4 is declared effective under the
Securities Act. Lucent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file a
general consent to service of process)
1-23
<PAGE> 91
required to be taken under any applicable state securities laws in connection
with the issuance of Lucent Common Stock in the Merger and Excel shall furnish
all information concerning Excel and the holders of capital stock of Excel as
may be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Excel Proxy Statement. No filing of,
or amendment or supplement to, or correspondence to the SEC or its staff with
respect to, the Form S-4 will be made by Lucent, or the Excel Proxy Statement
will be made by Excel, without providing the other party a reasonable
opportunity to review and comment thereon. Lucent will advise Excel, promptly
after it receives notice thereof, of the time when the Form S-4 has become
effective or any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Lucent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or any request by the SEC for amendment of the Form S-4 or comments thereon and
responses thereto or requests by the SEC for additional information. Excel will
advise Lucent, promptly after it receives notice thereof, of any request by the
SEC for the amendment of the Excel Proxy Statement or comments thereon and
responses thereto or requests by the SEC for additional information. If at any
time prior to the Effective Time any information relating to Excel or Lucent, or
any of their respective affiliates, directors or officers, should be discovered
by Excel or Lucent which should be set forth in an amendment or supplement to
any of the Form S-4 or the Excel Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of Excel.
(b) Excel shall, as soon as practicable following the date of this
Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Excel Stockholders Meeting") solely
for the purpose of obtaining the Excel Stockholders Approval. Excel shall,
through its Board of Directors, recommend to its stockholders the approval and
adoption of this Agreement, the Merger and the other transactions contemplated
hereby. Without limiting the generality of the foregoing, Excel agrees that its
obligations pursuant to the first sentence of this Section 5.01(b) shall not be
affected by the commencement, public proposal, public disclosure or
communication to Excel of any Takeover Proposal.
SECTION 5.02. Letters of Excel's Accountants. (a) Excel shall use all
reasonable efforts to cause to be delivered to Lucent two letters from Excel's
independent public accountants, one dated a date within two business days before
the date on which the Form S-4 shall become effective and one dated a date
within two business days before the Closing Date, each addressed to Lucent, in
form and substance reasonably satisfactory to Lucent and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Excel shall provide all reasonable cooperation to each of its
independent public accountants and Lucent's independent public accountants to
enable them to issue the letters referred to in Section 6.01(f) and shall use
reasonable efforts to cause them to do so.
SECTION 5.03. Letters of Lucent's Accountants. (a) Lucent shall use all
reasonable efforts to cause to be delivered to Excel two letters from Lucent's
independent public accountants, one dated a date within two business days before
the date on which the Form S-4 shall become effective and one dated a date
within two business days before the Closing Date, each addressed to Excel, in
1-24
<PAGE> 92
form and substance reasonably satisfactory to Excel and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(b) Lucent shall provide all reasonable cooperation to each of its
independent public accountants and Excel's independent public accountants to
enable them to issue the letters referred to in Section 6.01(f) and shall use
reasonable efforts to cause them to do so.
SECTION 5.04. Access to Information; Confidentiality. Upon reasonable
notice and subject to the Non-Disclosure Agreement dated December 4, 1998,
between Lucent and Excel (the "Confidentiality Agreement"), Excel shall, and
shall cause each of its subsidiaries to, afford to Lucent and its officers,
employees, accountants, counsel, financial advisors and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all its properties, books, contracts, commitments, personnel
and records and, during such period, Excel shall, and shall cause each of its
subsidiaries to, furnish promptly to Lucent (a) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (b) all
other information concerning its business, properties and personnel as Lucent
may reasonably request (including Excel's outside accountants work papers).
Excel shall not be required to provide access to or disclose information where
such access or disclosure would contravene any law, rule, regulation, order or
decree. No review pursuant to this Section 5.04 shall have an effect for the
purpose of determining the accuracy of any representation or warranty given by
either party hereto to the other party hereto. Lucent will hold, and will cause
its officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in accordance
with the terms of the Confidentiality Agreement.
SECTION 5.05. Commercially Reasonable Efforts. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties hereto in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and the Stockholders Agreement, including using commercially
reasonable efforts to accomplish the following: (i) the taking of all
commercially reasonable acts necessary to cause the conditions to Closing to be
satisfied as promptly as practicable, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the Stockholders Agreement or the consummation of
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the Stockholders Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement and the Stockholders Agreement.
(b) In connection with and without limiting the foregoing, Excel and its
Board of Directors and Lucent and its Board of Directors shall (i) take all
action necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this
1-25
<PAGE> 93
Agreement, the Stockholders Agreement or any of the other transactions
contemplated by this Agreement or the Stockholders Agreement and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
the Merger, this Agreement, the Stockholders Agreement or any other transaction
contemplated by this Agreement or the Stockholders Agreement, take all action
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement and the Stockholders Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and the Stockholders
Agreement and otherwise to minimize the effect of such statute or regulation on
the Merger and the other transactions contemplated by this Agreement and the
Stockholders Agreement.
SECTION 5.06. Stock Options. (a) As soon as practicable following the date
of this Agreement, the Board of Directors of Excel (or, if appropriate, any
committee thereof administering the Excel Stock Plans) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Excel Stock Options granted
under the Excel Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each Excel 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 Excel 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 Excel Common Stock subject to such Excel Stock Option immediately prior
to the Effective Time multiplied by (B) the Exchange Ratio, at an exercise
price per share of Lucent Common Stock (rounded to the nearest
one-hundredth of a cent) equal to (x) the exercise price per share of such
Excel Common Stock immediately prior to the Effective Time divided by (y)
the Exchange Ratio (each, as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Excel Stock Plans as Excel and
Lucent may agree are appropriate to give effect to the Merger.
(b) As soon as practicable after the Effective Time, Lucent shall deliver
to the holders of Excel Stock Options appropriate notices setting forth such
holders' rights pursuant to the respective Excel Stock Plans and the agreements
evidencing the grants of such Excel Stock Options and that such Excel 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 5.06 after giving effect to the Merger).
(c) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by following procedures to be
communicated by Lucent with the notice contemplated by Section 5.06(b), together
with the consideration therefor and the federal withholding tax information, if
any, required in accordance with the related Excel Stock Plan.
(d) Except as otherwise contemplated by this Section 5.06 and except to the
extent required under the respective terms of the Excel Stock Options, all
restrictions or limitations on transfer and vesting with respect to Excel Stock
Options awarded under the Excel Stock Plans or any other plan, program or
arrangement of Excel or any of its subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in full
force and effect with respect to such options after giving effect to the Merger
and the assumption by Lucent as set forth above. It is the intention of the
parties hereto that the options so assumed by Lucent qualify, to the maximum
extent permissible following the Effective Time, as incentive stock options as
defined in Section 422 of the Code to the extent that such options qualified as
incentive stock options prior to the Effective Time.
1-26
<PAGE> 94
(e) Within 30 days after the Closing, Lucent shall prepare and file with
the SEC a registration statement on Form S-8 (or another appropriate form)
registering a number of shares of Lucent Common Stock equal to the number of
shares subject to the Adjusted Options. Excel shall cooperate with, and assist
Lucent in the preparation of, such registration statement.
(f) Excel shall take, or cause to be taken, all action necessary to amend
Excel's 1997 Employee Stock Purchase Plan to terminate such Plan and all future
offering periods thereunder, in each case, effective as of the date that is two
business days prior to the Closing Date.
SECTION 5.07. Employee Matters. (a) Lucent shall cause the Surviving
Corporation to make an offer of employment to each employee of Excel who on the
Closing Date is employed by Excel or who was employed by Excel but is on
authorized leave of absence. The foregoing undertaking shall not apply to any
inactive or former employee 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 Excel 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.
(b) As soon as practicable after the Closing Date (the "Benefits Date"),
Lucent shall provide, or cause to be provided, employee benefit plans, programs
and arrangements to employees of Excel that are the same as those made generally
available to non-represented employees of Lucent who are hired by Lucent after
December 31, 1998. 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 Lucent), Lucent shall provide, or cause to be
provided, the employee benefit plans, programs and arrangements of Excel
provided to employees of Excel as of the date hereof.
(c) With respect to each benefit plan, program practice, policy or
arrangement maintained by Lucent (the "Lucent Plans") in which employees of
Excel subsequently participate, (i) service with Excel and its subsidiaries
prior to the Effective Time shall be credited against all service and waiting
period requirements under the Lucent Plans (provided that such recognition shall
not be for the purpose of determining (x) retirement benefits under Lucent's
defined benefit pension plans (unless otherwise required by law) or (y) any
Lucent subsidy under Lucent's retiree health plans), (ii) the Lucent Plans shall
not provide any pre-existing condition exclusions and (iii) the deductibles,
copayments and out-of-pocket maximums in effect under the Lucent Plans shall be
reduced by any deductibles, copayments and out-of-pocket maximums paid by such
individuals under the Excel Benefit Plans for the plan year in which the
Effective Time occurs.
SECTION 5.08. Indemnification, Exculpation and Insurance. (a) Lucent
agrees that all rights to indemnification and exculpation (including the
advancement of expenses) from liabilities for acts or omissions occurring at or
prior to the Effective Time (including with respect to the transaction
contemplated by this Agreement) now existing in favor of the current or former
directors or officers of Excel and its subsidiaries as provided in their
respective articles of organization or by-laws (or comparable organizational
documents) and any indemnification agreements of Excel (as each is in effect on
the date hereof), the existence of which does not constitute a breach of this
Agreement, shall be assumed by the Surviving Corporation in the Merger, without
further action, as of the Effective Time and shall survive the Merger and shall
continue in full force and effect in accordance with their terms, and Lucent
shall cause the Surviving Corporation to honor all such rights.
(b) In the event that the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially
1-27
<PAGE> 95
all of its properties and assets to any person, or otherwise dissolves the
Surviving Corporation, then, and in each such case, Lucent shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.08.
(c) Lucent shall, at its option, for a period of not less than six years
after the Effective Time, either (i) maintain Excel's current directors' and
officers' liability insurance covering acts or omissions occurring prior to the
Effective Time ("D&O Insurance") with respect to those persons who are currently
covered by Excel's directors' and officers' liability insurance policy on terms
with respect to such coverage and amount no less favorable than those of such
policy in effect on the date hereof; or (ii) cause to be provided coverage no
less favorable to such directors or officers, as the case may be, than the D&O
Insurance, in each case so long as the annual premium therefor would not be in
excess of 200% of the last annual premium paid for the D&O Insurance prior to
the date of this Agreement (such 200% amount the "Maximum Premium"). If the
existing or substituted directors' and officers' liability insurance expires, is
terminated or canceled during such six-year period, Lucent will obtain as much
D&O Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium. Excel represents that
the Maximum Premium is $450,000.
(d) The provisions of this Section 5.08(i) are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.09. Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement shall
be paid by the party incurring such fees or expenses, whether or not the Merger
is consummated, except that each of Lucent and Excel shall bear and pay one-half
of (a) the costs and expenses incurred in connection with the filing, printing
and mailing of the Form S-4 and the Excel Proxy Statement (including SEC filing
fees) and (b) the filing fees for the premerger notification and report forms
under the HSR Act.
SECTION 5.10. Public Announcements. Lucent (on behalf of itself and Sub)
and Excel will consult with each other before issuing, and provide each other
the opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Merger and the Stockholders Agreement, and shall not
issue any such press release or make any such public statement prior to such
consultation, except as either party may determine is required by applicable
law, the SEC, court process or by obligations pursuant to any listing agreement
with any national securities exchange or national trading system. The parties
hereto agree that the initial press release to be issued with respect to the
transactions contemplated by this Agreement and the Stockholders Agreement shall
be in the form heretofore agreed to by the parties.
SECTION 5.11. Affiliates. Excel shall deliver to Lucent at least 30 days
prior to the Closing Date a letter identifying all persons who are, at the time
this Agreement is submitted for adoption by the stockholders of Excel,
"affiliates" of Excel for purposes of Rule 145 under the Securities Act or 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. Excel shall use reasonable efforts to cause each such person to
deliver to Lucent at least 30 days prior to the Closing Date, a written
agreement substantially in the form attached as Exhibit A hereto. Lucent shall
use reasonable 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
1-28
<PAGE> 96
Accounting Principles Board and applicable SEC rules and regulations to deliver
to Excel, at least 30 days prior to the Closing Date, a written agreement
complying with the fourth paragraph of Exhibit A hereto.
SECTION 5.12. NYSE Listing. Lucent shall use reasonable efforts to cause
the Lucent Common Stock issuable in the Merger to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable after
the date hereof, and in any event prior to the Closing Date.
SECTION 5.13. Litigation. Excel shall give Lucent the opportunity to
participate in the defense of any litigation against Excel and/or its directors
relating to the transactions contemplated by this Agreement.
SECTION 5.14. Tax Treatment. Each of Lucent and Excel shall use reasonable
efforts to cause the Merger to qualify as a reorganization under the provisions
of Section 368 of the Code and to obtain the opinions of counsel referred to in
Sections 6.02(c) and 6.03(c), including the execution of the letters of
representation referred to therein.
SECTION 5.15. Pooling of Interests. Each of Excel and Lucent shall use
reasonable efforts to cause the transactions contemplated by this Agreement,
including the Merger, and the Stockholders Agreement to be accounted for as a
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, and each of Excel and Lucent agrees that
it shall take no action that would cause such accounting treatment not to be
obtained.
SECTION 5.16. Stockholder Agreement Legend. Excel will inscribe upon any
certificate representing Subject Shares (as defined in the Stockholders
Agreement) tendered by a Stockholder (as defined in the Stockholders Agreement)
in connection with any proposed transfer of any Subject Shares by such
Stockholder in accordance with the terms of the Stockholders Agreement the
following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $0.01, PER SHARE, OF
EXCEL SWITCHING CORPORATION, REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 17, 1999, AND ARE SUBJECT TO THE TERMS
THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE
OFFICES OF EXCEL SWITCHING CORPORATION."; and Excel will return such certificate
containing such inscription to such Stockholder within three business days
following Excel's receipt thereof.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party hereto to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Excel Stockholders Approval. The Excel Stockholders Approval shall
have been obtained.
(b) HSR Act. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
(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
1-29
<PAGE> 97
Entity of competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") shall be in effect, and there shall not be
pending or threatened any suit, action or proceeding by any Governmental
Entity, (i) preventing the consummation of the Merger or (ii) which
otherwise is reasonably likely to have a Material Adverse Effect on Excel
or Lucent, as applicable; provided, however, that each of the parties
hereto shall have used its reasonable efforts to prevent the entry of any
such Restraints and to appeal as promptly as possible any such Restraints
that may be entered.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE Listing. The shares of Lucent Common Stock issuable to Excel's
stockholders as contemplated by this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(f) Pooling Letters. Each of Lucent and Excel shall have received a
letter, dated as of the Closing Date, addressed to Lucent and Excel, from
PricewaterhouseCoopers LLP in form and substance satisfactory to Lucent,
stating in substance that PricewaterhouseCoopers LLP concurs with the
conclusion of Lucent's management that no condition exists 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. Each of Lucent and Excel shall have received a letter, dated
as of the Closing Date, addressed to Lucent and Excel, from Arthur Andersen
LLP stating in substance that Arthur Andersen LLP concurs with the
conclusion of Excel's management that no condition exists that would
preclude accounting of the Merger as a pooling of interests transaction
under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations.
SECTION 6.02. Conditions to Obligations of Lucent and Sub. The obligation
of Lucent and Sub to effect the Merger is further subject to satisfaction or
waiver of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Excel set forth herein that are qualified as to materiality shall be
true and correct, and those that are not so qualified shall be true and
correct in all material respects, in each case as of the date hereof and as
of the Effective Time, with the same effect as if made at and as of such
time (except to the extent expressly made as of an earlier date, in which
case as of such date). Lucent shall have received a certificate signed on
behalf of Excel by the chief executive officer of Excel to such effect.
(b) Performance of Obligations of Excel. Excel shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date. Lucent shall have received
a certificate signed on behalf of Excel by the chief executive officer of
Excel to such effect.
(c) Tax Opinions. Lucent shall have received from Cravath, Swaine &
Moore, counsel to Lucent, on the date on which the Form S-4 is declared
effective by the SEC and on the Closing Date, an opinion, in each case
dated as of such respective date and stating that the Merger will qualify
for U.S. federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned upon the receipt by such tax counsel of customary
representation letters from each of Lucent and Excel, in each case, in form
and substance reasonably satisfactory to such tax counsel.
1-30
<PAGE> 98
SECTION 6.03. Conditions to Obligations of Excel. The obligation of Excel
to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Lucent and Sub set forth herein that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be
true and correct in all material respects, in each case as of the date
hereof and as of the Effective Time, with the same effect as if made at and
as of such time (except to the extent expressly made as of an earlier date,
in which case as of such date). Excel shall have received a certificate
signed on behalf of Lucent by an authorized signatory of Lucent to such
effect.
(b) Performance of Obligations of Lucent and Sub. Lucent and Sub shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date.
Excel shall have received a certificate signed on behalf of Lucent by an
authorized signatory of Lucent to such effect.
(c) Tax Opinions. Excel shall have received from Testa, Hurwitz &
Thibeault, LLP, counsel to Excel, on the date on which the Form S-4 is
declared effective by the SEC and on the Closing Date, an opinion, in each
case dated as of such respective date and stating that the Merger will
qualify for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. The issuance of such opinion shall
be conditioned upon the receipt by such tax counsel of customary
representation letters from each of Lucent and Excel, in each case, in form
and substance reasonably satisfactory to such tax counsel.
SECTION 6.04. Frustration of Closing Conditions. None of Lucent, Sub or
Excel may rely on the failure of any condition set forth in Section 6.01, 6.02
or 6.03, as the case may be, to be satisfied if such failure was caused by such
party's failure to use reasonable efforts to consummate the Merger and the other
transactions contemplated by this Agreement and the Stockholders Agreement, as
required by and subject to Section 5.05.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Excel Stockholders
Approval:
(a) by mutual written consent of Lucent and Excel;
(b) by either Lucent or Excel:
(i) if the Merger shall not have been consummated by March 31, 2000;
provided, however, that the right to terminate this Agreement pursuant
to this Section 7.01(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results
in the failure of the Merger to be consummated by such time; or
(ii) if any Restraint having any of the effects set forth in Section
6.01(c) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(ii) shall have used
reasonable efforts to prevent the entry of and to remove such Restraint;
(c) by Lucent, if Excel shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition
1-31
<PAGE> 99
set forth in Section 6.02(a) or (b), and (B) is incapable of being or has
not been cured by Excel within 30 calendar days after the giving of written
notice to Excel of such breach or failure to perform (it being understood
and agreed that any breach of Section 4.02(a) or (b) by Excel would satisfy
clauses (A) and (B) above); or
(d) by Excel, if Lucent shall have breached or failed to perform in any
material respect any of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section
6.03(a) or (b), and (B) is incapable of being or has not been cured by
Lucent within 30 calendar days after the giving of written notice to Lucent
of such breach or failure to perform.
SECTION 7.02. Effect of Termination. In the event of termination of this
Agreement by either Excel or Lucent as provided in Section 7.01, this Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of Lucent, Sub or Excel, other than the provisions of
Section 3.01(o), the last sentence of Section 5.04, Section 5.09, this Section
7.02 and Article VIII, which provisions survive such termination, and except to
the extent that such termination results from the wilful and material breach by
a party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the parties
hereto at any time before or after the Excel Stockholders Approval; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by the stockholders of Excel or the
approval of the stockholders of Lucent without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective Time,
a party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 7.03, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the
1-32
<PAGE> 100
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Lucent or Sub, to
Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, NJ 07974
Telecopy No.: Separately supplied
Attention: Pamela F. Craven
Vice President = Law
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telecopy No.: Separately supplied
Attention: Robert A. Kindler
Robert I. Townsend, III; and
(b) if to Excel, to
Excel Switching Corporation
225 Independence Drive
Hyannis, MA 02601
Telecopy No.: Separately supplied
Attention: General Counsel
with a copy to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
Boston, MA 02110
Telecopy No.: Separately supplied
Attention: John M. Hession
Gordon H. Hayes, Jr.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person, where "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a person, whether through the
ownership of voting securities, by contract, as trustee or executor, or
otherwise;
(b) "business day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in New York;
(c) "knowledge" of any person that is not an individual means, with
respect to any specific matter, the knowledge of such person's executive
officers and other officers having primary responsibility for such matter;
1-33
<PAGE> 101
(d) "Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with Excel or Lucent, any change, effect, event,
occurrence, condition, development or state of facts that is materially
adverse to the long-term business prospects, business, assets, results of
operations or financial condition of Excel and its subsidiaries, taken as a
whole, or Lucent and its subsidiaries, taken as a whole; provided, however,
that no change, effect, event, occurrence, condition, development or state
of facts shall be deemed, individually or in the aggregate, to constitute a
Material Adverse Change or Material Adverse Effect to the extent:
(i) relating to or resulting from the telephony and
telecommunications markets generally, the U.S. economy as a whole or the
international economy as a whole or any political, economic or social
instability in any such market or economy;
(ii) relating to or resulting from U.S. or international securities
markets in general; or
(iii) solely with respect to Excel and its subsidiaries, arising as
a result of this Agreement or the transactions contemplated hereby or
the announcement thereof, including one or more of the following:
(A) the market price of Excel Common Stock;
(B) the bookings, revenues, gross margins or earnings of Excel;
(C) any delay of, reduction in or cancelation or change in the
term or timing of product orders or project implementations by
customers of Excel;
(D) any attrition of Excel employees;
(E) any termination or modification of any existing contract
(or any negotiations with respect thereto) between Excel and any of
its customers;
(F) any litigation brought or threatened against Excel, any
principal stockholder thereof or any member of its Board of
Directors after the date hereof;
(G) any material litigation existing on the date hereof
involving Excel's Intellectual Property Rights or any change in
strategy, position or status of any such pending litigation; or
(H) any refusal by any of Excel's suppliers to continue to do
business with Excel;
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) a "subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this Agreement
to an Article, Section or Exhibit, such reference shall be to an Article or
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The
1-34
<PAGE> 102
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term. Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as from time to time
amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement and (b) except for the
provisions of Article II, Section 5.06 and Section 5.08, are not intended to
confer upon any person other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof, except that the consummation of the Merger shall be governed by,
and construed in accordance with, the MBCL.
SECTION 8.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding two sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Enforcement. Each of the parties hereto agrees that
irreparable damage would occur and that the parties would not have any adequate
remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any federal court located in the
State of Delaware or in Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal court sitting in the State of
Delaware or a Delaware state court.
1-35
<PAGE> 103
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
IN WITNESS WHEREOF, Lucent, Sub and Excel have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
LUCENT TECHNOLOGIES INC.,
by /s/ FRANK D'AMELIO
--------------------------------------
Name: Frank D'Amelio
Title: Vice President
Switching & Access Solutions
DALLAS MERGER INC.,
by /s/ JEAN F. RANKIN
--------------------------------------
Name: Jean F. Rankin
Title: Vice President
by /s/ MICHAEL J. HOLLIDAY
--------------------------------------
Name: Michael J. Holliday
Title: Assistant Treasurer
EXCEL SWITCHING CORPORATION,
by /s/ ROBERT P. MADONNA
--------------------------------------
Name: Robert P. Madonna
Title: President and Chief
Executive Officer
by /s/ STEPHEN S. GALLIKER
--------------------------------------
Name: Stephen S. Galliker
Title: Vice President, Chief
Financial Officer and Treasurer
1-36
<PAGE> 104
ANNEX I
TO THE MERGER AGREEMENT
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Accounting Rules................... 15
Adjusted Option.................... 42
affiliate.......................... 53
Agreement.......................... 1
Articles of Merger................. 2
business day....................... 53
Benefits Date...................... 43
Certificates....................... 6
Closing............................ 2
Closing Date....................... 2
Code............................... 1
Common Shares Trust................ 8
Confidentiality Agreement.......... 40
control............................ 53
Dissenting Shares.................. 5
D&O Insurance...................... 44
Effective Time..................... 3
Environmental Law.................. 19
ERISA.............................. 19
Excel.............................. 1
Excel Authorized Preferred Stock... 12
Excel Benefit Plans................ 19
Excel Common Stock................. 1
Excel Disclosure Schedule.......... 11
Excel Filed SEC Documents.......... 11
Excel Permits...................... 18
Excel Proxy Statement.............. 14
Excel SEC Documents................ 15
Excel Stock Options................ 12
Excel Stock Plans.................. 12
Excel Stockholders Approval........ 2
Excel Stockholders Meeting......... 39
Excess Shares...................... 8
Exchange Act....................... 14
Exchange Agent..................... 5
Exchange Fund...................... 6
Exchange Ratio..................... 4
Form S-4........................... 16
</TABLE>
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
GAAP............................... 15
Governmental Entity................ 14
Hazardous Materials................ 19
HSR Act............................ 14
Intellectual Property Rights....... 24
knowledge.......................... 53
Liens.............................. 11
Lucent............................. 1
Lucent Authorized Preferred
Stock............................ 27
Lucent Common Stock................ 4
Lucent Disclosure Schedule......... 27
Lucent Filed SEC Documents......... 27
Lucent Junior Preferred Stock...... 28
Lucent Plans....................... 43
Lucent Rights...................... 28
Lucent Rights Agreement............ 28
Lucent SEC Documents............... 30
Material Adverse Change............ 53
Material Adverse Effect............ 53
Maximum Premium.................... 44
MBCL............................... 2
Merger............................. 1
Merger Consideration............... 4
NYSE............................... 8
Parachute Gross-Up Payment......... 21
person............................. 55
Principal Stockholders............. 1
Release............................ 19
Restraints......................... 47
SEC................................ 14
Securities Act..................... 15
Stockholders Agreement............. 1
Sub................................ 1
subsidiary......................... 55
Surviving Corporation.............. 2
Takeover Proposal.................. 36
taxes.............................. 23
</TABLE>
1-37
<PAGE> 105
EXHIBIT A
TO THE MERGER AGREEMENT
FORM OF AFFILIATE LETTER
Dear Sirs:
The undersigned, a holder of shares of common stock, par value $.01 per
share ("Excel Common Stock"), of Excel Switching Corporation, a Massachusetts
corporation ("Excel"), is entitled to receive in connection with the merger (the
"Merger") of a subsidiary of Lucent Technologies Inc., a Delaware corporation
("Lucent"), with and into Excel, securities of Lucent, as the parent of the
surviving corporation in the Merger (the "Parent Securities"). The undersigned
acknowledges that the undersigned may be deemed an "affiliate" of Excel within
the meaning of Rule 145 ("Rule 145") promulgated under the Securities Act of
1933, as amended (the "Securities Act"), by the Securities and Exchange
Commission (the "SEC") and may be deemed an "affiliate" of Excel 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, although nothing contained herein should be construed as an
admission of either such fact.
If in fact the undersigned were an affiliate under the Securities Act, the
undersigned's ability to sell, assign or transfer the Parent Securities received
by the undersigned in exchange for any shares of Excel Common Stock in
connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act. The undersigned understands that Lucent will not be
required to maintain the effectiveness of any registration statement under the
Securities Act for the purposes of resale of Parent Securities by the
undersigned.
The undersigned hereby represents to and covenants with Lucent that the
undersigned will not sell, assign or transfer any of the Parent Securities
received by the undersigned in exchange for shares of Excel Common Stock in
connection with the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 or (iii) in a transaction which, in the opinion of
counsel to Lucent or as described in a "no-action" or interpretive letter from
the Staff of the SEC specifically issued with respect to a transaction to be
engaged in by the undersigned, is not required to be registered under the
Securities Act.
The undersigned hereby further represents to and covenants with Lucent that
the undersigned has not, within the preceding 30 days, sold, transferred or
otherwise disposed of any shares of Excel Common Stock held by the undersigned
and that the undersigned will not sell, transfer or otherwise dispose of any
Parent Securities received by the undersigned in connection with the Merger
until after such time as results covering at least 30 days of post-Merger
combined operations of Excel and Lucent have been published by Lucent, in the
form of a quarterly earnings report, an effective registration statement filed
with the SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any other public
filing or announcement which includes such combined results of operations,
except as would not otherwise reasonably be expected to adversely affect the
qualification of the Merger as a pooling-of-interests.
1-38
<PAGE> 106
In the event of a sale or other disposition by the undersigned of Parent
Securities pursuant to Rule 145, the undersigned will supply Lucent with
evidence of compliance with such Rule, in the form of a letter in the form of
Annex I hereto and the opinion of counsel or no-action letter referred to above.
The undersigned understands that Lucent may instruct its transfer agent to
withhold the transfer of any Parent Securities disposed of by the undersigned,
but that (provided such transfer is not prohibited by any other provision of
this letter agreement) upon receipt of such evidence of compliance, Lucent shall
cause the transfer agent to effectuate the transfer of the Parent Securities
sold as indicated in such letter.
Lucent covenants that it will take all such actions as may be reasonably
available to it to permit the sale or other disposition of Parent Securities by
the undersigned under Rule 145 in accordance with the terms thereof.
The undersigned acknowledges and agrees that the legends set forth below
will be placed on certificates representing Parent Securities received by the
undersigned in connection with the Merger or held by a transferee thereof, which
legends will be removed by delivery of substitute certificates upon receipt of
an opinion in form and substance reasonably satisfactory to Lucent from
independent counsel reasonably satisfactory to Lucent to the effect that such
legends are no longer required for purposes of the Securities Act.
There will be placed on the certificates for Parent Securities issued to
the undersigned, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to a
business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by the
holder with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. The shares may
not be sold, pledged or otherwise transferred (i) until such time as Lucent
Technologies Inc. shall have published financial results covering at least
30 days of combined operations after the Effective Time and (ii) except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Securities
and (ii) the receipt by Lucent of this letter is an inducement to Lucent's
obligations to consummate the Merger.
Very truly yours,
Dated:
1-39
<PAGE> 107
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the securities of Lucent
Technologies Inc., a Delaware corporation ("Lucent"), described below in the
space provided for that purpose (the "Securities"). The Securities were received
by the undersigned in connection with the merger of a subsidiary of Lucent with
and into Excel Switching Corporation, a Massachusetts corporation.
Based upon the most recent report or statement filed by Lucent with the
Securities and Exchange Commission, the Securities sold by the undersigned were
within the prescribed limitations set forth in paragraph (e) of Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned hereby represents that the Securities were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the offer or sale of the
Securities to any person other than to the broker who executed the order in
respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
1-40
<PAGE> 108
ANNEX 2
STOCKHOLDERS AGREEMENT dated as of August 17, 1999 (this "Agreement"),
among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Parent"), and the
individuals and other parties listed on Schedule A attached hereto (each, a
"Stockholder" and, collectively, the "Stockholders").
WHEREAS Parent, Dallas Merger Inc., a Massachusetts corporation and a
wholly owned subsidiary of Parent ("Sub"), and Excel Switching Corporation, a
Massachusetts corporation (the "Company"), propose to enter into an Agreement
and Plan of Merger dated as of the date hereof (as the same may be amended or
supplemented, the "Merger Agreement"; terms used but not defined herein shall
have the meanings set forth in the Merger Agreement), providing for, among other
things, the merger of Sub with and into the Company, upon the terms and subject
to the conditions set forth in the Merger Agreement;
WHEREAS each Stockholder owns the number of shares of capital stock of the
Company set forth opposite such Stockholder's name on Schedule A attached hereto
(such shares of capital stock of the Company, together with any other shares of
capital stock of the Company acquired by such Stockholder after the date hereof
and during the term of this Agreement (including through the exercise of any
stock options, warrants or similar instruments), being collectively referred to
herein as the "Subject Shares"); and
WHEREAS as a condition to its willingness to enter into the Merger
Agreement, Parent has requested that each Stockholder enter into this Agreement.
NOW, THEREFORE, to induce Parent to enter into, and in consideration of its
entering into, the Merger Agreement, and in consideration of the premises and
the representations, warranties and agreements contained herein, the parties
hereto agree as follows:
1. Agreement to Vote Shares. Each Stockholder agrees during the term of
this Agreement to vote, or cause to be voted, its Subject Shares, in person
or by proxy, in favor of the Merger, the adoption and approval of the
Merger Agreement and the approval of the transactions contemplated by the
Merger Agreement at every meeting of the stockholders of the Company at
which such matters are considered and at every adjournment thereof.
2. Grant of Irrevocable Proxy. Each Stockholder hereby irrevocably
grants to, and appoints, Pamela F. Craven and Jean F. Rankin and any other
individual who shall hereafter be designated by Parent, and each of them,
such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to
vote, or cause to be voted, such Stockholder's Subject Shares, or grant a
consent or approval in respect of such Subject Shares, at any meeting of
stockholders of the Company or at any adjournment thereof or in any other
circumstances upon which their vote, consent or other approval is sought,
in favor of the Merger, the adoption and approval of the Merger Agreement
and the approval of the transactions contemplated by the Merger Agreement.
3. No Other Grant of Proxy. Each Stockholder will not, directly or
indirectly, grant any proxies or powers of attorney with respect to its
Subject Shares to any person in connection with its vote, consent or other
approval sought, in favor of the Merger, the adoption and approval of the
Merger Agreement and the approval of the transactions contemplated by the
Merger Agreement, other than as set forth in Section 2.
4. Transfers. Other than this Agreement, each Stockholder will not, nor
will such Stockholder permit any entity under such Stockholder's control
to, sell, transfer, pledge, assign
2-1
<PAGE> 109
or otherwise dispose of (including by gift) (collectively, "Transfer"), or
consent to any Transfer of, any Subject Shares or any interest therein or
enter into any contract, option or other agreement or arrangement
(including any profit sharing or other derivative arrangement) with respect
to the Transfer of, any Subject Shares or any interest therein to any
person, unless prior to any such Transfer the transferee of such Subject
Shares agrees to be subject to the provisions of this Agreement.
5. No Voting Trusts. Each Stockholder agrees that it will not enter
into any voting trust or other arrangement or agreement, or agree, in any
manner, with respect to its vote, consent or other approval sought, in
favor of the Merger, the adoption and approval of the Merger Agreement and
the approval of the transactions contemplated by the Merger Agreement (and
if entered into or executed, such voting trust or other arrangement or
agreement shall not be effective).
6. No Solicitation. Until the Merger is consummated or the Merger
Agreement is terminated, each Stockholder shall not, nor shall it permit
any investment banker, attorney or other advisor or representative of such
Stockholder to, directly or indirectly through another person, solicit,
initiate, encourage or otherwise facilitate any Takeover Proposal.
7. Affiliate Agreement. (a) If, at the time the Merger Agreement is
submitted for approval to the stockholders of the Company, a Stockholder is
an "affiliate" of the Company for purposes of Rule 145 under the Securities
Act or 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, such Stockholder shall deliver to
Parent at least 30 days prior to the Closing a written agreement
substantially in the form attached as Exhibit A to the Merger Agreement.
(b) Each Stockholder shall use reasonable efforts to cause the
transactions contemplated by the Merger Agreement, including the Merger, to
be accounted for as a pooling of interests transaction under Opinion 16 of
the Accounting Principles Board and applicable SEC rules and regulations.
Each Stockholder agrees that it shall take no action that would cause such
accounting treatment not to be obtained.
8. Representations and Warranties of the Stockholders. Each Stockholder
hereby, severally and not jointly, represents and warrants to Parent in
respect of himself or itself as follows:
(a) Authority. Such Stockholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by such Stockholder and constitutes a
valid and binding obligation of such Stockholder enforceable in
accordance with its terms. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the terms hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time or
both) under any provision of, any trust agreement, loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order,
notice, decree, statute, law, ordinance, rule or regulation applicable
to such Stockholder or to such Stockholder's property or assets. Except
for (i) such filings under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby
and (ii) informational filings with the SEC, no consent, approval, order
or authorization of, or registration, declaration or filing with any
Governmental Entity is required by or with respect to such Stockholder
2-2
<PAGE> 110
in connection with the execution and delivery of this Agreement or the
consummation by such Stockholder of the transactions contemplated
hereby.
(b) The Subject Shares. Such Stockholder has good and marketable
title to the Subject Shares, free and clear of all Liens.
9. Representations and Warranties of Parent. Parent hereby represents
and warrants to each Stockholder that Parent has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent, and the consummation of the transactions contemplated
hereby, has been duly authorized by all necessary corporate action on the
part of Parent. This Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding obligation of Parent enforceable
in accordance with its terms.
10. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled,
without the posting of any bond, to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any federal court located in the State of
Delaware or in Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity, and neither party
will oppose the granting of such relief on the basis that the other party
has an adequate remedy at law.
11. Term and Termination. Subject to Section 16(f), the term of this
Agreement shall commence on the date hereof and shall terminate upon the
earlier of (i) the Effective Time and (ii) the date that is ten Business
Days after the date on which the Merger Agreement is terminated in
accordance with its terms. No such termination of this Agreement shall
relieve any party hereto from any liability for breach of this Agreement
prior to termination.
12. Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Subject Shares and
shall be binding upon any Person to which legal or beneficial ownership of
such Subject Shares shall pass, whether by operation of law or otherwise,
including such Stockholder's heirs, guardians, administrators or
successors. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure
of the Company affecting the Subject Shares, or the acquisition of
additional shares of the Company's capital stock by such Stockholder, the
number of Subject Shares listed on Schedule A beside the name of such
Stockholder shall be adjusted appropriately and this Agreement and the
obligations hereunder shall attach to any additional shares of the
Company's capital stock issued to or acquired by such Stockholder.
13. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes
(or shall be deemed to have made) any agreement or understanding herein in
his or her capacity as such director or officer. Without limiting the
generality of the foregoing, each Stockholder signs solely in its or his
capacity as the record and/or beneficial owner, as applicable, of such
Stockholder's Subject Shares and nothing herein shall limit or affect any
actions taken by such Stockholder (or a designee of such Stockholder) in
his or her capacity as an officer or director of the Company in exercising
his or her rights under the Merger Agreement.
14. Entire Agreement; No Third Party Beneficiaries; Amendment;
Waiver. This Agreement (including the documents and instruments referred
to herein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, written or oral, among the
2-3
<PAGE> 111
parties with respect to the subject matter hereof and (ii) is not intended
to confer upon any Person other than the parties hereto any rights or
remedies hereunder. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by each party to be charged. No waiver of any
provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
15. Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein shall be in writing and shall
be deemed to have been duly given if mailed, by first class or registered
mail, three business days after deposit in the United States Mail, or if
telexed or telecopied, sent by telegram, or delivered by hand or reputable
overnight courier, when confirmation is received, in each case as follows:
If to the Stockholders, to the addresses listed on Schedule A
hereto;
If to Parent, in accordance with Section 8.02 of the Merger
Agreement;
or to such other persons or addresses as may be designated in writing by
the party to receive such notice.
16. Miscellaneous. (a) When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include," "includes"
or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
(b) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws.
(c) If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable manner and to
the end that the transactions contemplated hereby are fulfilled to the
extent possible.
(d) This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more of the counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that
each party need not sign the same counterpart.
(e) This Agreement shall not be assigned by any Stockholder, on the one
hand, without the prior written consent of Parent, or by Parent, on the
other hand, without the prior written consent of the Stockholders, except
that Parent may assign, in its sole discretion, any or all of its rights,
interests and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent; provided that notwithstanding such assignment, Parent
shall remain liable for performance of its obligations hereunder. Subject
to the preceding sentence, this Agreement
2-4
<PAGE> 112
will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(f) The obligations of the Stockholders set forth in this Agreement
shall not be effective or binding upon the Stockholders until after such
time as the Merger Agreement is executed and delivered by Parent, Sub and
the Company.
(g) Each Stockholder agrees to take, or cause to be taken, all actions,
and to do, or cause to be done, and assist and cooperate with the other
Stockholders in doing, all things necessary, proper or advisable to cause a
Stockholder Meeting to be held as promptly as practicable after the date
hereof.
IN WITNESS WHEREOF, Parent has caused this Agreement to be signed by its
officer thereunto duly authorized and each Stockholder has signed this
Agreement, all as of the date first written above.
LUCENT TECHNOLOGIES INC.,
by /s/ PAMELA F. CRAVEN
------------------------------------
Name: Pamela F. Craven
Title: Vice President -- Law &
Secretary
/s/ ROBERT P. MADONNA
--------------------------------------
Robert P. Madonna
THE MADONNA FAMILY LIMITED
PARTNERSHIP,
by /s/ ROBERT P. MADONNA
------------------------------------
Robert P. Madonna, its
General Partner
2-5
<PAGE> 113
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
OUTSTANDING VOTING POWER OF
NAME AND ADDRESS OF EACH STOCKHOLDER SHARES OWNED THE COMPANY
- ------------------------------------ ------------ ---------------
<S> <C> <C>
Robert P. Madonna........................................... 23,021,310 62.3%
The Madonna Family Limited Partnership...................... 4,191,840 11.3%
</TABLE>
2-6
<PAGE> 114
ANNEX 3
MORGAN STANLEY DEAN WITTER
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
August 17, 1999
Board of Directors
Excel Switching Corporation
255 Independence Drive
Hyannis, MA 02601
Members of the Board:
We understand that Excel Switching Corporation ("Excel" or the "Company"),
Lucent Technologies, Inc. ("Lucent") and Dallas Merger Inc., a wholly owned
subsidiary of Lucent ("Acquisition Sub"), propose to enter into an Agreement and
Plan of Merger, dated August 17, 1999 (the "Merger Agreement"), which provides,
among other things, for the merger (the "Merger") of Acquisition Sub with and
into Excel. Pursuant to the Merger, the Company will become a wholly-owned
subsidiary of Lucent and each outstanding share of common stock, par value $.01
per share, of Excel (the "Excel Common Stock"), other than shares held by Excel,
Lucent or Acquisition Sub or as to which dissenters' rights have been perfected,
will be converted into the right to receive 0.558 shares (the "Exchange Ratio")
of common stock, par value $0.01 per share, of Lucent (the "Lucent Common
Stock"), subject to adjustment in certain circumstances. The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to the
Merger Agreement is fair from a financial point of view to the holders of shares
of Excel Common Stock.
For purposes of the opinion set forth herein, we have:
<TABLE>
<C> <S>
(i) reviewed certain publicly available financial statements and
other information of Excel and Lucent, respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Excel prepared by
the management of Excel;
(iii) analyzed certain financial projections prepared by the
management of Excel;
(iv) discussed the past and current operations and financial
condition and the prospects of Excel, including information
relating to certain strategic, financial and operational
benefits anticipated from the Merger, with senior executives
of Excel;
(v) discussed the past and current operations and financial
condition and the prospects of Lucent, including information
relating to certain strategic, financial and operational
benefits anticipated from the Merger, with senior executives
of Lucent;
(vi) reviewed the pro forma impact of the Merger on Lucent's
earnings per share and other financial ratios;
(vii) reviewed the reported prices and trading activity for the
Excel Common Stock and the Lucent Common Stock;
</TABLE>
<PAGE> 115
Excel Switching Corporation
August 17, 1999 MORGAN STANLEY DEAN WITTER
Page 2
<TABLE>
<C> <S>
(viii) discussed with the senior management of Excel and
representatives of Lucent certain research analyst
projections for Excel and Lucent, respectively;
(ix) compared the financial performance of Excel and Lucent and
the prices and trading activity of the Excel Common Stock
and the Lucent Common Stock with that of certain other
publicly-traded companies and their securities;
(x) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions;
(xi) participated in discussions and negotiations among
representatives of Excel and Lucent and their financial and
legal advisors;
(xii) reviewed the draft Merger Agreement and certain related
documents; and
(xiii) performed such other analyses and considered such other
factors as we have deemed appropriate.
</TABLE>
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, including the information
relating to certain strategic, financial and operational benefits anticipated
from the Merger, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
prospects of Excel. In addition, we have assumed that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement,
including, among other things, that the Merger will be accounted for as a
"pooling-of-interests" business combination in accordance with U.S. Generally
Accepted Accounting Principles and the Merger will be treated as a tax-free
reorganization and/or exchange, each pursuant to the Internal Revenue Code of
1986. We have not made any independent valuation or appraisal of the assets or
liabilities of the Company, nor have we been furnished with any such appraisals.
As you are aware, Lucent did not make available its forecasts of future
financial performance. Instead, for purpose of our analysis, we have relied,
with your consent, on the publicly available estimates of certain research
analysts for Lucent. Our opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and Lucent and their
affiliates, and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Excel and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in any
filing made by Excel in respect of the transaction with the Securities and
Exchange Commission. In addition, this opinion does not in any manner address
the prices at which the Lucent Common Stock will trade following the
consummation of the Merger and Morgan Stanley expresses no opinion or
recommendation as to how the stockholders of Excel or Lucent should vote at the
stockholders' meeting held in connection with the Merger.
<PAGE> 116
Excel Switching Corporation
August 17, 1999 MORGAN STANLEY DEAN WITTER
Page 3
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the holders of shares of Excel Common Stock.
Very truly yours,
MORGAN STANLEY & CO.
INCORPORATED
/s/ Cordell G. Spencer
By: _______________________________
Cordell G. Spencer
Managing Director
<PAGE> 117
ANNEX 4
SECTIONS 86 THROUGH 98 OF CHAPTER 156B
OF THE MASSACHUSETTS BUSINESS CORPORATION LAW
DISSENTERS' APPRAISAL RIGHTS
MASS. GEN. LAWS CH. 156B, SEC.SEC. 86-98 (1997)
SEC. 86 RIGHT OF APPRAISAL.
If a corporation proposes to take a corporate action as to which any section of
this chapter provides that a stockholder who objects to such action shall have
the right to demand payment for his shares and an appraisal thereof, sections
eighty-seven to ninety-eight, inclusive, shall apply except as otherwise
specifically provided in any section of this chapter. Except as provided in
sections eighty-two and eighty-three, no stockholder shall have such right
unless (1) he files with the corporation before the taking of the vote of the
shareholders on such corporate action, written objection to the proposed action
stating that he intends to demand payment for his shares if the action is taken
and (2) his shares are not voted in favor of the proposed action.
SEC. 87 NOTICE OF STOCKHOLDERS MEETING TO CONTAIN STATEMENT AS TO APPRAISAL
RIGHTS.
The notice of the meeting of stockholders at which the approval of such proposed
action is to be considered shall contain a statement of the rights of objecting
stockholders. The giving of such notice shall not be deemed to create any rights
in any stockholder receiving the same to demand payment for his stock, and the
directors may authorize the inclusion in any such notice of a statement of
opinion by the management as to the existence or non-existence of the right of
the stockholders to demand payment for their stock on account of the proposed
corporate action. The notice may be in such form as the directors or officers
calling the meeting deem advisable, but the following form of notice shall be
sufficient to comply with the section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the
corporation before the taking of the vote on the approval of such action,
written objection to the proposed action stating that he intends to demand
payment for his shares if the action is taken and (2) whose shares are not
voted in favor of such action has or may have the right to demand in
writing from the corporation (or, in the case of a consolidation or merger,
the name of the resulting or surviving corporation shall be inserted),
within twenty days after the date of mailing to him of notice in writing
that the corporate action has become effective, payment for his shares and
an appraisal of the value thereof. Such corporation and any such
stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of
the General Laws of Massachusetts."
SEC. 88 NOTICE TO OBJECTING STOCKHOLDER THAT CORPORATE ACTION HAS BECOME
EFFECTIVE.
The corporation taking such action, or in the case of a merger or consolidation
the surviving or resulting corporation, shall, within ten days after the date on
which such corporate action became effective, notify each stockholder who filed
written objection meeting the requirements of section eighty-six and whose
shares were not voted in favor of the approval of such action, that the action
approved at the meeting of the corporation of which he is a stockholder has
become effective. The giving of such notice shall not be deemed to create any
rights in any stockholder receiving the same
4-1
<PAGE> 118
to demand payment for his stock. The notice shall be sent by registered or
certified mail, addressed to the stockholder at his last known address as it
appears in the records of the corporation.
SEC. 89 DEMAND FOR PAYMENT BY OBJECTING STOCKHOLDER.
If within twenty days after the date of mailing of a notice under subsection (e)
of section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
SEC. 90 DETERMINATION OF VALUE OF STOCK BY SUPERIOR COURT.
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
SEC. 91 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF ETC; PARTIES TO BILL ETC; SERVICE OF
BILL ON CORPORATION; NOTICE TO STOCKHOLDER PARTIES ETC.
If the bill is filed by the corporation, it shall name as parties respondent all
stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
4-2
<PAGE> 119
SEC. 92 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC; ENTRY OF DECREE DETERMINING
VALUE OF STOCK; DATE ON WHICH VALUE IS TO BE DETERMINED.
After hearing the court shall enter a decree determining the fair value of the
stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment for
their shares, and shall order the corporation to make payment of such value,
together with interest, if any, as hereinafter provided, to the stockholders
entitled thereto upon the transfer by them to the corporation of the
certificates representing such stock if certificated or if uncertificated, upon
receipt of an instruction transferring such stock to the corporation. For this
purpose, the value of the shares shall be determined as of the day preceding the
date of the vote approving the proposed corporate action and shall be exclusive
of any element of value arising from the expectation or accomplishment of the
proposed corporate action.
SEC. 93 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; COURT MAY REFER BILL, ETC., TO
SPECIAL MASTER TO HEAR PARTIES, ETC.
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
the superior court.
SEC. 94 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDER ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; STOCKHOLDERS PARTIES MAY BE
REQUIRED TO SUBMIT THEIR STOCK CERTIFICATES FOR NOTATION THEREON OF
PENDENCY OF BILL, ETC.
On motion the court may order stockholder parties to the bill to submit their
certificates of stock to the corporation for notation thereon of the pendency of
the bill, and may order the corporation to note such pendency in its records
with respect to any uncertificated shares held by such stockholder parties, and
may on motion dismiss the bill as to any stockholder who fails to comply with
such order.
SEC. 95 BILL IN EQUITY TO DETERMINE VALUE OF STOCK OF OBJECTING STOCKHOLDERS ON
FAILURE TO AGREE ON VALUE THEREOF, ETC.; TAXATION OF COSTS, ETC.;
INTEREST ON AWARD, ETC.
The costs of the bill, including the reasonable compensation and expenses of any
master appointed by the court, but exclusive of fees of counsel or of experts
retained by any party, shall be determined by the court and taxed upon the
parties to the bill, or any of them, in such manner as appears to be equitable,
except that all costs of giving notice to stockholders as provided in this
chapter shall be paid by the corporation. Interest shall be paid upon any award
from the date of the vote approving the proposed corporate action, and the court
may on application of any interested party determine the amount of interest to
be paid in the case of any stockholder.
4-3
<PAGE> 120
SEC. 96 STOCKHOLDER DEMANDING PAYMENT FOR STOCK NOT ENTITLED TO NOTICE OF
STOCKHOLDERS' MEETING OR TO VOTE STOCK OR TO RECEIVE DIVIDENDS, ETC.;
EXCEPTIONS.
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except a dividends
or other distributions payable to stockholders of record at a date which is
prior to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or
in the case of a consolidation or merger, the resulting or surviving
corporation, or in the case of a consolidation or merger, the resulting
or surviving corporation, deliver to it a written withdrawal of his
objections to and an acceptance of such corporate action.
Notwithstanding the provisions of clauses(1) to (3), inclusive, said stockholder
shall have only the rights of a stockholder who did not so demand payment for
his stock as provided in this chapter.
SEC. 97 CERTAIN SHARES PAID FOR BY CORPORATION TO HAVE STATUS OF TREASURY STOCK,
ETC.
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
SEC. 98 ENFORCEMENT BY STOCKHOLDER OF RIGHT TO RECEIVE PAYMENT FOR HIS SHARES TO
BE EXCLUSIVE REMEDY; EXCEPTION.
The enforcement by a stockholder of his right to receive payment for his shares
in the manner provided in this chapter shall be an exclusive remedy except that
this chapter shall not exclude the right of such stockholder to bring or
maintain an appropriate proceeding to obtain relief on the ground that such
corporate action will be or is illegal or fraudulent as to him.
4-4
<PAGE> 121
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. 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 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
II-1
<PAGE> 122
them against certain liabilities, including certain liabilities arising under
the Securities Act of 1933, which might be incurred by them in such capacities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) See Exhibit Index.
(b) Not applicable.
(c) Opinion of Morgan Stanley & Co. Incorporated, attached as Annex 3 to
the proxy statement/prospectus which is a part of this registration statement on
Form S-4.
ITEM 22. 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.
(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
pursuant to 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.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, 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 of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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)(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the
II-2
<PAGE> 123
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (c)(1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, 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.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 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 of 1933 and will be governed by the final adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 124
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
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 SEPTEMBER 30, 1999.
LUCENT TECHNOLOGIES INC.
(Registrant)
By: /s/ DONALD K. PETERSON
------------------------------------
Name: Donald K. Peterson
Title: Executive Vice President and
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <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
Principal Accounting Officer:
James S. Lusk Vice President and
Controller
Directors:
Paul A. Allaire
Carla A. Hills By:
Drew Lewis /s/ DONALD K. PETERSON
Richard A. McGinn --------------------------
Paul H. O'Neill (Donald K. Peterson
Donald S. Perkins attorney-in-fact)*
Henry B. Schacht *by power of attorney
Franklin A. Thomas
John A. Young Date: September 30, 1999
</TABLE>
II-4
<PAGE> 125
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
2.1** Agreement and Plan of Merger dated as of August 17, 1999, by
and among the registrant, Dallas Merger Inc. and Excel
(included as Annex 1 to the proxy statement/prospectus which
is a part of this registration statement on Form S-4).
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).
4.5* Indenture dated as of April 1, 1996 between the registrant
and The Bank of New York, as trustee (incorporated by
reference to Exhibit 4A to Registration Statement (No.
333-01223) on Form S-3).
4.6 Other instruments in addition to Exhibit 4.5 which define
the rights of holders of long term debt of the registrant
and all of its consolidated subsidiaries are not filed
herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
Pursuant to this regulation, the registrant hereby agrees to
furnish a copy of any such instrument to the Commission upon
request.
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.
8.1 Opinion of Testa, Hurwitz & Thibeault, LLP as to certain
United States federal income tax consequences of the merger.
10.1 Stockholders Agreement dated as of August 17, 1999, between
the registrant and Robert P. Madonna and The Madonna Family
Limited Partnership (included as Annex 2 to the proxy
statement/prospectus which is a part of this registration
statement on Form S-4).
23.1 Consent of Pamela F. Craven, Vice President -- Law and
Secretary of the registrant (included as part of Exhibit 5.1
to this registration statement).
23.2 Consent of PricewaterhouseCoopers LLP.
</TABLE>
<PAGE> 126
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C>
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of Testa, Hurwitz & Thibeault, LLP (included as part
of Exhibit 8.1 to this registration statement).
23.5 Consent of Morgan Stanley & Co. Incorporated.
24.1 Powers of Attorney.
99.1 Form of Proxy Card to be mailed to holders of Excel common
stock.
99.2 Opinion of Morgan Stanley & Co. Incorporated (included as
Annex 3 to the proxy statement/prospectus which is a part of
this registration statement on Form S-4).
</TABLE>
- ---------------
* Incorporated herein by reference.
** The registrant hereby agrees to furnish supplementally a copy of any omitted
schedules to this agreement to the Securities and Exchange Commission upon
its request.
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF PAMELA F. CRAVEN]
SEPTEMBER 30, 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-4 (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 the
proposed issuance by Lucent of up to 28,306,426 shares (the "Shares") of its
common stock, par value $0.01 per share (together with the attached rights to
purchase junior preferred stock, the "Common Stock"), pursuant to the Agreement
and Plan of Merger (the "Merger Agreement") dated as of August 17, 1999, among
Lucent, Dallas Merger Inc., a Massachusetts corporation and a wholly owned
subsidiary of Lucent ("MergerSub"), and Excel Switching Corporation, a
Massachusetts corporation ("Excel"). The Merger Agreement provides for the
merger (the "Merger") of MergerSub with and into Excel, with Excel surviving as
a wholly owned subsidiary of Lucent.
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 and MergerSub, 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, when issued in accordance with the terms and
conditions of the Merger Agreement, will be 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 8.1
[LETTERHEAD OF TESTA, HURWITZ & THIBEAULT, LLP]
September 30, 1999
Excel Switching Corporation
255 Independence Drive
Hyannis, MA 02601
Ladies and Gentlemen:
We have acted as counsel for Excel Switching Corporation, a Massachusetts
corporation ("Excel"), in connection with the preparation and execution of the
Agreement and Plan of Merger dated as of August 7, 1999 (the "Agreement") by and
among Excel, Lucent Technologies Inc., a Delaware corporation ("Lucent"), and
Dallas Merger Inc., a Massachusetts corporation wholly-owned by Lucent ("Sub").
Pursuant to the Agreement, Sub will merge with and into Excel (the "Merger"),
and Excel will become a wholly-owned subsidiary of Lucent. Unless otherwise
defined, capitalized terms referred to herein have the meanings set forth in the
Agreement.
You have requested our opinion regarding certain United States federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and are relying upon (without any independent investigation or
examination thereof) the truth and accuracy, at all relevant times, of the
facts, statements, descriptions, covenants, representations and warranties set
forth in the Registration Statement on Form S-4 filed by Lucent with the
Securities and Exchange Commission (which contains a proxy statement/prospectus)
(the "Registration Statement"), the Agreement (including exhibits),
representations by Excel, Lucent and Sub respectively (the "Corporate
Representations"), and such other documents pertaining to the Merger as we have
deemed necessary or appropriate.
In connection with rendering this opinion, we have also assumed and are
relying upon (without any independent investigation or examination thereof) the
following:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
(or will be by the Effective Time) due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness thereof.
2. Any statement made in any of the documents referred to herein "to the
knowledge of" or "to the best of the knowledge" of any person or party or
similarly qualified is correct without such qualification.
3. As to all matters for which a person or entity has represented that such
person or entity is not a party to, does not have or is not aware of any plan,
intention, understanding or agreement to take an action, there is in fact no
such plan, intention, understanding or agreement and such action will not be
taken.
4. All facts, statements, descriptions, covenants, representations and
warranties contained in any of the documents referred to herein or otherwise
made to us (including, without limitation, the aforementioned Corporate
Representations) are true and correct in all material respects and no actions
have been (or will be) taken which are inconsistent with such positions.
<PAGE> 2
5. The Merger will be consummated in accordance with the terms of the
Agreement and without any waiver or breach of any material provision thereof,
and the Merger will be effective under applicable state law.
Based upon our examination of the foregoing items and subject to the
assumptions, limitations and qualifications set forth herein and in the
Registration Statement, it is our opinion that, under current law, and assuming
that the Merger constitutes a "reorganization" as defined in Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), the following
statements regarding United States federal income tax considerations set forth
under the heading "THE MERGER--Material United States Federal Income Tax
Consequences of the Merger" in the Registration Statement, insofar as they
constitute statements of law or legal conclusions, although general in nature,
are correct in all material respects:
- no gain or loss will be recognized by the holders of Excel common stock
who exchange their Excel common stock for Lucent common stock pursuant to
the Merger, except with respect to cash received instead of a fractional
share of Lucent common stock;
- the aggregate tax basis of the Lucent common stock received in the Merger
by each holder of Excel common stock will be the same as the aggregate
tax basis of the Excel common stock surrendered in exchange therefor,
reduced by the amount of tax basis allocable to any fractional share of
Lucent common stock for which cash is received;
- the holding period of the Lucent common stock received in the Merger will
include the holding period of the Excel common stock surrendered in
exchange therefor; and
- a holder of Excel common stock who receives cash instead of a fractional
share of Lucent common stock will recognize gain or loss in connection
with the disposition of such fractional share measured by the difference
between the amount of cash received and the portion of the tax basis of
the Lucent common stock allocable to the fractional share. Such gain or
loss generally will be long-term capital gain or loss if the holding
period of the Excel common stock exchanged is more than one year.
The United States federal income tax consequences of the Merger to a holder
of Excel common stock will, however, depend upon that holder's particular
situation and we express no opinion as to the completeness of the discussion set
forth under the heading "THE MERGER--Material United States Federal Income Tax
Consequences of the Merger" as applied to any particular holder.
This opinion represents and is based upon our judgment regarding the
application of federal income tax laws including the Code, existing judicial
decisions, administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service or the courts, and
there is no assurance that the Internal Revenue Service will not successfully
assert a contrary position. Furthermore, we can provide no assurance that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, will not adversely affect the accuracy of the conclusions
stated herein. Nevertheless, we undertake no responsibility to advise you of any
new developments in the application or interpretation of the federal income tax
laws.
This opinion addresses only the matters set forth above, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger.
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement (whether or not undertaken in connection with the
Merger) or as to any transaction whatsoever, including the Merger, if any the
transactions described in the Agreement are not
<PAGE> 3
consummated in accordance with the terms of such Agreement and without waiver or
breach of any material provision thereof, or if any of the facts, statements,
descriptions, covenants, representations, warranties or assumptions upon which
we relied (including, without limitation, the aforementioned Corporate
Representations) are not true and accurate at all relevant times. In the event
any one of the facts, statements, descriptions, covenants, representations,
warranties or assumptions upon which we have relied to issue this opinion is
incorrect, our opinion might be adversely affected and may not be relied upon.
This opinion has been delivered to you for the purpose of being included as
an exhibit to the Registration Statement. It may not be relied upon for any
other purpose or by any other person or entity and may not be made available to
any other person or entity without our prior written consent. We hereby consent
to the filing of this opinion as an exhibit to the Registration Statement, and
to the references to our firm name under the heading "THE MERGER--Material
United States Federal Income Tax Consequences of the Merger" in the Registration
Statement solely for the limited purposes stated therein. In giving this
consent, however, we do not admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Testa, Hurwitz & Thibeault, LLP
TESTA, HURWITZ & THIBEAULT, LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Lucent Technologies Inc. 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
September 29, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated May 24, 1999
(except for the matters discussed in Note 16 to the Consolidated Financial
Statements, as to which the date is August 17, 1999) included in Excel Switching
Corporation's Report on Form 8-K/A dated May 10, 1999 and filed with the
Commission on August 26, 1999 and to all references to our Firm included in this
registration statement. Our initial report dated January 26, 1999 included in
Excel Switching Corporation's Form 10-K for the year ended December 31, 1998 is
no longer appropriate since restated financial statements have been presented
giving effect to a business combination accounted for as a pooling-of-interests.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 30, 1999
<PAGE> 1
EXHIBIT 23.5
DEAR SIRS:
We hereby consent to the use of our name and to the description of our
opinion letter, dated August 17, 1999, in, and to the inclusion of such opinion
letter as Annex 3 to, the Proxy Statement/ Prospectus of Excel Switching
Corporation, constituting part of the Registration Statement on Form S-4 of
Lucent Technologics, Inc., filed with the Securities and Exchange Commission. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under, or that we are experts with respect to
any part of such Registration Statement within the meaning of the term "experts"
as used in the Securities Act of 1933, as amended, or the rules and regulations
of the Securities and Exchange Commission promulgated thereunder.
Very Truly Yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CORDELL G. SPENCER
------------------------------------
Cordell G. Spencer
Managing Director
New York, New York
September 23, 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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 24th day of August, 1999.
By /s/ RICHARD A. MCGINN
------------------------------------
Richard A. McGinn
Chairman of the Board and
Chief Executive Officer
<PAGE> 2
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 30th day of September, 1999.
By /s/ DONALD K. PETERSON
------------------------------------
Donald K. Peterson
Executive Vice President
and Chief Financial Officer
<PAGE> 3
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 30th day of September, 1999.
By: /s/ JAMES S. LUSK
------------------------------------
James S. Lusk
Vice President and Controller
<PAGE> 4
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 23rd day of August, 1999.
By /s/ PAUL A. ALLAIRE
------------------------------------
Paul A. Allaire
Director
<PAGE> 5
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 20th day of August, 1999.
By /s/ CARLA A. HILLS
------------------------------------
Carla A. Hills
Director
<PAGE> 6
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 25th day of August, 1999.
By /s/ DREW LEWIS
------------------------------------
Drew Lewis
Director
<PAGE> 7
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 24th day of August, 1999.
By /s/ PAUL H. O'NEILL
------------------------------------
Paul H. O'Neill
Director
<PAGE> 8
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, per value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 20th day of August, 1999.
By: /s/ DONALD S. PERKINS
------------------------------------
Donald S. Perkins
Director
<PAGE> 9
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 24th day of August, 1999.
By /s/ HENRY B. SCHACHT
------------------------------------
Henry B. Schacht
Director
<PAGE> 10
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 Excel's Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 20th day of August, 1999.
By /s/ FRANKLIN A. THOMAS
------------------------------------
Franklin A. Thomas
Director
<PAGE> 11
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 Excel Switching Corporation, including up to 35,000 shares to be
offered under Excel's 401(k) Plan; 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 31st day of August, 1999.
By /s/ JOHN A. YOUNG
------------------------------------
John A. Young
Director
<PAGE> 1
EXHIBIT 99.1
EXCEL SWITCHING CORPORATION
PROXY FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, NOVEMBER 3, 1999
The undersigned stockholder of Excel Switching Corporation ("Excel"),
revoking all prior proxies, hereby appoints John Loughlin and Christopher
Stavros, or any of them acting singly, proxies, with full power of substitution,
to vote all shares of capital stock of Excel which the undersigned is entitled
to vote at the special meeting of stockholders to be held at Sheraton Hyannis
Resort, West End Circle, Hyannis, Massachusetts 02601, on Wednesday, November 3,
1999 beginning at 9:00 a.m., local time, and at any adjournments thereof, upon
matters set forth in the Notice of Special Meeting dated September 30, 1999, and
the related proxy statement/prospectus, copies of which have been received by
the undersigned, and in their discretion upon any adjournment of the meeting or
upon any other business that may properly be brought before the special meeting
by the Excel board of directors. Attendance of the undersigned at the meeting or
any adjourned session thereof will not be deemed to revoke this proxy unless the
undersigned shall affirmatively indicate the intention of the undersigned to
vote the shares represented hereby in person prior to the exercise of this
proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EXCEL. A
STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD
OF DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
(Continued on reverse side)
(Please fill in the appropriate boxes on the other side)
<PAGE> 2
(Continued from other side)
EXCEL SWITCHING CORPORATION
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. To approve the Agreement and Plan of Merger dated as of August 17, 1999,
among Lucent Technologies Inc., Excel Switching Corporation, and a
wholly owned subsidiary of Lucent Technologies Inc.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
The shares represented by this proxy will be voted as directed or, if no
direction is given with respect to the proposal set forth above, will be voted
for such proposal. In addition, the shares represented by this proxy will be
voted in the discretion of John Loughlin or Christopher Stavros on any other
business which may properly be brought before the special meeting by the Excel
board of directors.
Dated: ____________________ , 1999
Signature(s) of Stockholders
______________________________
______________________________
Please promptly complete, date and sign this proxy and mail it in the
enclosed envelope to assure representation of your shares. No postage need be
affixed if mailed in the United States. PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON
THE STOCK CERTIFICATE.
If stockholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please sign in full
partnership name by an authorized partner or other persons.
Mark here if you plan to attend the meeting [ ]
