<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1999
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
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>
MICHAEL J. HOLLIDAY, ESQ. MICHAEL STANSBURY, ESQ.
LUCENT TECHNOLOGIES INC. PERKINS COIE LLP
600 MOUNTAIN AVENUE 1201 THIRD AVENUE, 40TH FLOOR
MURRAY HILL, NEW JERSEY 07974 SEATTLE, WASHINGTON 98101
(908) 582-8500 (206) 583-8771
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the merger referred to herein.
If the securities being registered on this form are to be 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 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 Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
TO BE REGISTERED REGISTERED(1) SHARE PRICE(2) (3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value per share, and
related preferred stock purchase rights (4)..... 2,988,279 shares Not Applicable $159,895,312.50 $44,450.90
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the maximum number of shares to be issued in connection with the
merger, calculated as the product of (a) 15,505,000, the sum of (i) the
aggregate number of shares of Mosaix, Inc. common stock, par value $0.01 per
share, outstanding on June 7, 1999 (other than shares owned by Mosaix, Noah
Acquisition Inc., a wholly owned subsidiary of the registrant, or the
registrant), (ii) 2,846,000 shares of Mosaix common stock to be issued prior
to the merger and (iii) the aggregate number of shares of Mosaix common
stock issuable pursuant to outstanding options prior to the date the merger
is expected to be consummated and (b) an exchange ratio of 0.19273 shares of
the registrant's common stock for each share of Mosaix 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: $10.3125, the average of the high and low
prices per shares of Mosaix common stock on June 2, 1999 as reported on The
Nasdaq National Market, multiplied by 15,505,000, the maximum number of
shares of Mosaix common stock computed as described in clause (a) of Note
(1).
(3) Pursuant to Rule 457(b) under the Securities Act, $33,138.57 of the
registration fee was paid on May 25, 1999 in connection with the filing of
the preliminary proxy materials of Mosaix on March 26, 1999 and $11,312.33
of the registration fee was paid on June 8, 1999 in connection with the
filing of the registration statement by the registrant on June 9, 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
MOSAIX, INC.
6464 185TH AVENUE N.E.
REDMOND, WA 98052
JUNE 9, 1999
Dear Shareholder:
You are cordially invited to attend our special meeting of shareholders on
Monday, July 12, 1999, at 9:00 a.m., local time, at Mosaix's offices at 6464
185th Avenue N.E., Redmond, Washington.
At the special meeting, we will ask you to vote on the merger of Mosaix and
Lucent Technologies Inc. In the merger, you will receive 0.19273 shares of
Lucent common stock for each share of Mosaix common stock that you own. Lucent
common stock is listed on the New York Stock Exchange under the trading symbol
"LU" and on June 8, 1999, Lucent common stock closed at $60 3/16 per share. You
will receive cash for any fractional share of Lucent common stock which you
would otherwise receive in the merger.
We cannot complete the merger unless the holders of at least two-thirds of
the outstanding shares of Mosaix common stock vote to approve the merger
agreement. In a separate agreement, directors and executive officers, who hold
an aggregate of approximately 1% of the outstanding Mosaix common stock, have
agreed to vote in favor of the merger agreement. Only shareholders who hold
shares of Mosaix common stock at the close of business on May 26, 1999 will be
entitled to vote at the special meeting.
YOU SHOULD CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING TO
THE MERGER" ON PAGE 16 OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS BEFORE VOTING.
PLEASE REVIEW CAREFULLY THE ENTIRE PROXY STATEMENT/PROSPECTUS.
AFTER CAREFUL CONSIDERATION, MOSAIX'S BOARD OF DIRECTORS HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS
FAIR TO YOU AND IN YOUR BEST INTERESTS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THE APPROVAL OF THE MERGER AGREEMENT. THE UNANIMOUS APPROVAL, DETERMINATION
AND RECOMMENDATION DOES NOT INCLUDE DAVID LADD, A DIRECTOR, WHO EXCUSED HIMSELF
FROM THE CONSIDERATION OF THE MERGER BECAUSE OF A PRIOR RELATIONSHIP WITH
LUCENT.
Thank you for your cooperation.
Sincerely,
Nicholas A. Tiliacos
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 JUNE 9, 1999,
AND IS FIRST BEING MAILED TO SHAREHOLDERS ON OR ABOUT JUNE 11, 1999.
<PAGE> 3
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and
financial information about Lucent and Mosaix 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 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>
Lucent Technologies Inc. Mosaix, Inc.
c/o The Bank of New York 6464 185th Avenue N.E.
Church Street Station Redmond, Washington 98052
P.O. Box 11009 Attention: John J. Flavio
New York, New York 10286-1009 Telephone: (425) 881-7544
Telephone: 1-888-LUCENT6
</TABLE>
If you would like to request documents, please do so by July 2, 1999 in
order to receive them before the Mosaix special meeting.
See "Where You Can Find More Information" (page 75).
<PAGE> 4
MOSAIX, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 12, 1999
To the Shareholders of Mosaix, Inc.:
We will hold a special meeting of the shareholders of Mosaix, Inc. on
Monday, July 12, 1999, at 9:00 a.m., local time, at Mosaix's offices at 6464
185th Avenue N.E., Redmond, Washington, for the following purpose:
To consider and vote upon a proposal to approve the merger agreement
among Lucent Technologies Inc., a wholly owned subsidiary of Lucent and
Mosaix. Under the merger agreement, each outstanding share of Mosaix common
stock will be converted into the right to receive 0.19273 shares of Lucent
common stock.
We will transact no other business at the special meeting, except business
which may be properly brought before the special meeting or any adjournment of
it by the Mosaix board of directors.
Only holders of record of shares of Mosaix common stock at the close of
business on May 26, 1999, the record date for the special meeting, are entitled
to notice of, and to vote at, the special meeting and any adjournment or
postponement of it.
We cannot complete the merger unless the holders of at least two-thirds of
the outstanding shares of Mosaix common stock vote to approve the merger
agreement. Holders of Mosaix common stock who properly preserve their
dissenters' rights are entitled to an appraisal of their shares under Washington
law.
FOR MORE INFORMATION ABOUT THE MERGER, PLEASE REVIEW THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED AS ANNEX A.
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. You may vote in person at the special meeting, even if
you have returned a proxy. 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,
John J. Flavio
Secretary
Redmond, Washington
June 9, 1999
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... i
SUMMARY..................................................... 1
General................................................... 1
The Companies............................................. 3
The Special Meeting....................................... 4
The Merger................................................ 5
Selected Historical Financial Data -- Lucent................ 11
Selected Historical Financial Data -- Mosaix................ 13
Selected Unaudited Pro Forma Combined Financial
Data -- Lucent and Ascend................................. 15
RISK FACTORS RELATING TO THE MERGER......................... 16
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..................... 16
The price of Lucent common stock may be affected by
factors different from those affecting the price of
Mosaix common stock.................................... 16
THE COMPANIES............................................... 17
Mosaix.................................................... 17
Lucent.................................................... 17
Recent Developments....................................... 17
Material Contracts between Lucent and Mosaix.............. 18
THE SPECIAL MEETING......................................... 19
Date, Time and Place...................................... 19
Purpose of Special Meeting................................ 19
Record Date; Stock Entitled to Vote; Quorum............... 19
Votes Required............................................ 19
Voting by Mosaix Directors and Executive Officers......... 19
Voting of Proxies......................................... 20
Revocability of Proxies................................... 20
Solicitation of Proxies................................... 21
Dissenters' Rights to Appraisal........................... 21
THE MERGER.................................................. 22
Background to the Merger.................................. 22
Reasons for the Merger and Board of Directors
Recommendation......................................... 24
Opinion of BT Alex. Brown................................. 26
Interests of Mosaix Directors and Management in the
Merger................................................. 34
Accounting Treatment...................................... 36
Form of the Merger........................................ 36
Merger Consideration...................................... 36
Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares........................ 37
Effective Time of the Merger.............................. 38
Stock Exchange Listing of Lucent Common Stock............. 38
Delisting and Deregistration of Mosaix Common Stock....... 38
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Material United States Federal Income Tax Consequences of
the Merger............................................. 38
Regulatory Matters........................................ 40
Dissenters' Rights to Appraisal........................... 40
Continuation of Mosaix Employee Benefits.................. 41
Effect on Awards Outstanding Under Mosaix Stock Plans..... 42
Resale of Lucent Common Stock............................. 42
THE MERGER AGREEMENT AND STOCK OPTION AGREEMENT............. 43
The Merger Agreement...................................... 43
The Stock Option Agreement................................ 53
COMPARATIVE STOCK PRICES AND DIVIDENDS...................... 57
DESCRIPTION OF LUCENT CAPITAL STOCK......................... 58
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND
COMMON SHAREHOLDERS OF MOSAIX............................. 58
Capitalization............................................ 59
Voting Rights............................................. 59
Number, Election, Vacancy and Removal of Directors........ 59
Amendments to Articles of Incorporation................... 61
Amendments to By-Laws..................................... 61
Shareholder Action........................................ 62
Notice of Certain Shareholder Actions..................... 62
Special Shareholder Meetings.............................. 63
Limitation of Personal Liability of Directors and
Indemnification........................................ 63
Dividends................................................. 65
Conversion................................................ 66
Provisions Relating to Acquisitions and Business
Combinations........................................... 66
Mergers, Acquisitions and Other Transactions.............. 68
Appraisal or Dissenters' Rights........................... 68
Rights Plan............................................... 69
DISSENTERS' RIGHTS TO APPRAISAL............................. 71
LEGAL MATTERS............................................... 73
EXPERTS..................................................... 73
SHAREHOLDER PROPOSALS....................................... 73
OTHER MATTERS............................................... 74
WHERE YOU CAN FIND MORE INFORMATION......................... 75
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS........... 78
</TABLE>
<TABLE>
<S> <C>
Annexes
Annex A Agreement and Plan of Merger
Annex B Stock Option Agreement
Annex C Opinion of BT Alex. Brown Incorporated
Annex D Chapter 23B.13 of the Washington Business Corporation Act
</TABLE>
<PAGE> 7
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS MOSAIX MERGING?
A: This is a unique opportunity for Mosaix to join and become part of Lucent,
one of the world's leading designers, developers and manufacturers of
communications systems, software and products, and for Mosaix shareholders
to become Lucent shareholders.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive 0.19273 shares of Lucent
common stock for each share of Mosaix common stock that you own.
Q: WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR THE MERGER
AGREEMENT?
A: After considering the support for the merger from its independent directors
and the other reasons set forth on pages 24-34, including the opinion of
its financial advisor, BT Alex. Brown Incorporated, your board of directors
unanimously believes that the terms of the merger agreement are fair to and
in the best interests of Mosaix and its shareholders. The unanimous
approval excludes David Ladd, a director, who excused himself from
consideration of the merger because of a prior relationship with Lucent.
Q: WHAT IF THE MERGER IS NOT COMPLETED?
A: It is possible the merger will not be completed. That might happen if, for
example, Mosaix shareholders do not approve the merger agreement. Should
that occur, none of Lucent, Mosaix or any third party is under any
obligation to make or consider any alternative proposals regarding the
purchase of your shares of Mosaix common stock. Mosaix may be required to
pay a termination fee under the merger agreement if the merger is not
completed for certain reasons.
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 approval of the merger agreement. If you abstain from
voting or do not vote, it will have the effect of a vote against approval
of the merger agreement.
The special meeting will take place on Monday, July 12, 1999. You may
attend the special meeting and vote your shares in person, rather than
signing and mailing your proxy.
Q: WHO MAY VOTE ON THE MERGER?
A: All shareholders of record as of the close of business on May 26, 1999 may
vote. You are entitled to one vote per share of Mosaix common stock that
you own on the record date.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on
i
<PAGE> 8
how to vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares. If you do not instruct your
broker, your shares will not be voted, which will have the effect of a vote
against approval of the merger agreement.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. If you hold your shares in your own name, 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 Mosaix at the address set
forth in the answer to the last question below. Third, you can attend the
special meeting and vote in person. If you hold your shares in "street
name," you should follow the directions provided by your broker regarding
how to change your vote.
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 AND WHERE IS THE SPECIAL MEETING?
A: The special meeting will be held at 9:00 a.m., local time, on July 12, 1999
at Mosaix's offices at 6464 185th Avenue N.E., Redmond, Washington.
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 third calendar quarter of 1999.
Q: WHAT ELSE WILL HAPPEN AT THE MEETING?
A: We know of no other matters which are expected to come before the special
meeting.
Q: WHAT RIGHTS DO I HAVE IF I OPPOSE THE MERGER?
A: You may dissent from the merger and seek appraisal of the fair market value
of your shares by complying with all the Washington law procedures
explained on pages 71 to 72 and in Annex D.
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:
Mosaix, Inc.
Attention: John J. Flavio
6464 185th Avenue N.E.
Redmond, WA 98052
Telephone: (425) 881-7544
ii
<PAGE> 9
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and does not contain all the information that is important
to you. For a more complete understanding of the merger, you should carefully
read this entire proxy statement/prospectus and the other documents to which we
refer you. In particular, you should read the documents attached to this proxy
statement/prospectus, including the merger agreement and the stock option
agreement which are attached as Annexes A and B, respectively. Also, see "Where
You Can Find More Information" on page 75. We have included page references
parenthetically to direct you to a more complete description of the topics
presented in this summary.
GENERAL
WHAT YOU WILL RECEIVE IN THE MERGER (page 36)
In the merger, you will receive 0.19273 shares of Lucent common stock for
each share of Mosaix common stock that you own. You will receive cash for any
fractional share which you would otherwise receive in the merger.
OWNERSHIP OF LUCENT FOLLOWING THE MERGER
Based on the number of currently outstanding shares of Mosaix common
stock, outstanding options to purchase Mosaix common stock and the 2,846,000
shares of Mosaix common stock to be issued prior to the merger, we anticipate
that Mosaix shareholders will receive approximately 2,582,000 shares of Lucent
common stock in the merger. Based on that number and on the number of currently
outstanding shares of Lucent common stock, following the merger former Mosaix
shareholders will own less than 1% of the outstanding shares of Lucent common
stock.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 38)
The merger is intended to qualify as a reorganization within the meaning
of the Internal Revenue Code of 1986, as amended. It is a condition to the
completion of the merger that Mosaix receive an opinion from its special
counsel, Perkins Coie LLP, stating that the merger will qualify for United
States federal income tax purposes as a reorganization within the meaning of the
Internal Revenue Code. If the merger qualifies as a reorganization within the
meaning of the Internal Revenue Code, you will not recognize gain or loss for
United States federal income tax purposes as a result of the exchange of your
Mosaix common stock for Lucent common stock in the merger, except for any cash
received in lieu of fractional shares of Lucent common stock.
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.
1
<PAGE> 10
RECOMMENDATION OF THE MOSAIX BOARD OF DIRECTORS TO SHAREHOLDERS (PAGE 26)
The Mosaix board of directors believes that the terms of the merger and
the merger agreement are fair to and in the best interests of Mosaix and its
shareholders and unanimously recommends that the shareholders vote "for"
approval of the merger agreement. The unanimous approval, determination and
recommendation does not include David Ladd, a director, who excused himself from
the consideration of the merger because of a prior relationship with Lucent.
To review the background and reasons for the merger in greater detail, as
well as certain risks related to the merger, see pages 16 and 22-26.
FAIRNESS OPINION OF FINANCIAL ADVISOR (PAGE 26)
In deciding to approve the merger agreement, the Mosaix board of directors
considered the opinion dated April 1, 1999 of its financial advisor, BT Alex.
Brown, as to the fairness to Mosaix shareholders from a financial point of view
of the 0.19273 exchange ratio in the merger. This opinion is attached as Annex C
to this proxy statement/prospectus. WE ENCOURAGE SHAREHOLDERS TO READ THIS
OPINION CAREFULLY.
INTERESTS OF MOSAIX DIRECTORS AND MANAGEMENT IN THE MERGER (PAGE 34)
Mosaix shareholders should note that a number of directors and officers of
Mosaix have interests in the merger as directors or officers that are different
from, or in addition to, those of a shareholder. If we complete the merger,
certain indemnification arrangements for current directors and officers of
Mosaix will be continued and certain current executive officers of Mosaix will
be retained as employees or consultants to Mosaix. Mosaix's executive officers
under certain circumstances may be entitled to certain severance payments under
existing employment agreements as a result of the merger. In addition, directors
and employees with stock options to acquire Mosaix common stock will have these
options converted to stock options to acquire Lucent common stock, and stock
options held by certain executive officers and other employees will become fully
vested as a result of the merger.
DISSENTERS' RIGHTS TO APPRAISAL (PAGE 71)
If you do not wish to accept Lucent common stock in the merger, you have
the right under Washington law to have the fair value of your shares determined
by mutual agreement with Mosaix or, if you do not agree with Mosaix on the fair
value of your shares, by a Washington superior court. This right to seek
appraisal of the fair value of your shares is subject to a number of
restrictions and technical requirements. Generally, in order to exercise your
dissenters' rights to appraisal:
- - you must not vote in favor of the merger
- - you must, before the special meeting of shareholders to vote on the merger,
send a written notice to Mosaix of your intent to demand payment for the fair
value of your shares of Mosaix common stock in compliance with the Washington
Business Corporation Act.
Merely voting against the merger will not protect your dissenters' rights.
Annex D to this proxy statement/prospectus contains the Washington statutory
provisions relating to dissenters' rights. Failure to follow all the steps
required by Washing-
2
<PAGE> 11
ton law will result in the loss of your dissenters' rights to appraisal. If
your shares are held in street name by your broker, you should follow the
directions provided by your broker regarding how to exercise your dissenters'
rights.
THE COMPANIES (page 17)
MOSAIX, INC.
6464 185th Avenue NE
Redmond, WA 98502
(425) 881-7544
Mosaix is a global provider of call center software, predictive dialers
and workflow applications that enable companies to acquire, retain and develop
customer relationships. With these products, companies can integrate sales,
marketing and customer services applications in their call centers with
back-office applications throughout the enterprise. Mosaix manages its
operations through two lines of business, call management systems and customer
relationship management applications. Mosaix call management systems are
sophisticated computer telephony integration enabled systems for processing and
managing outbound and blended inbound/outbound telephone communications.
Customer relationship management workflow applications are client/server-based
software that enable customers to automate and integrate customer-facing
business processes beginning in the contact center and extending across the
enterprise.
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.
RECENT DEVELOPMENTS (page 17)
On January 13, 1999, Lucent announced that it had entered into a
definitive agreement to merge with Ascend Communications, Inc., a developer,
manufacturer and seller of wide area networking solutions for telecommunications
carriers, Internet service providers and corporate customers worldwide. Under
the terms of the merger agreement, which was approved by each company's board of
directors, each share of Ascend common stock will be converted into 1.650 shares
of Lucent common stock. Based on Lucent's closing stock price of $53 15/16 on
January 12, 1999, the transaction would be valued at approximately $20 billion.
This transaction, which is subject to customary conditions (including approval
by the Ascend shareholders), is expected to be completed following an Ascend
shareholders meeting to be held on June 24, 1999 and is expected to be accounted
for as a pooling of interests. However, there can be no assurance that the
merger will be approved by the Ascend shareholders. For further informa-
3
<PAGE> 12
tion, see "Selected Unaudited Pro Forma
Combined Financial Data -- Lucent and Ascend" on page 15.
MARKET PRICE AND DIVIDEND INFORMATION (page 57)
Shares of Lucent common stock are listed on the New York Stock Exchange.
Shares of Mosaix common stock are listed on The Nasdaq National Market. The
following table presents as of April 1, 1999, the last full trading day prior to
the public announcement of the proposed merger, and as of June 8, 1999, the last
day for which information in the table could be calculated prior to the date of
this proxy statement/prospectus, appropriately adjusted for Lucent's April 1,
1999 two-for-one stock split:
- - the last reported sale price of one share of Lucent common stock, as reported
on the New York Stock Exchange Composite Transactions Tape
- - the last reported sale price of one share of Mosaix common stock, as reported
on The Nasdaq National Market
- - the market value of one share of Mosaix common stock on an equivalent per
share basis in each case as if the merger had been completed on the relevant
date. The equivalent price per share data for Mosaix 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 0.19273.
<TABLE>
<CAPTION>
EQUIVALENT
PRICE
PER SHARE
LUCENT MOSAIX OF MOSAIX
COMMON COMMON COMMON
DATE STOCK STOCK STOCK
- ---- ------ ------ ----------
<S> <C> <C> <C>
April 1, 1999........ $55 7/8 $ 8 3/8 $10.77
June 8, 1999......... $60 3/16 $11 3/8 $11.60
</TABLE>
Lucent has historically paid to its stockholders a regular quarterly
dividend, currently $0.02 per share. The payment of dividends by Lucent in the
future will depend on business conditions, its financial position, earnings and
other factors. Mosaix has never paid dividends to its shareholders.
THE SPECIAL MEETING (PAGE 19)
The special meeting of Mosaix shareholders will be held at Mosaix's
offices at 6464 185th Avenue N.E., Redmond, Washington, at 9:00 a.m., local
time, on Monday, July 12, 1999. At the special meeting, shareholders will be
asked to approve the merger agreement.
RECORD DATE; VOTING POWER
Mosaix shareholders are entitled to vote at the special meeting if they
owned shares as of the close of business on May 26, 1999, the record date.
On the record date, there were 10,550,028 shares of Mosaix common stock
entitled to vote at the special meeting. Shareholders will have one vote at the
special meeting for each share of Mosaix common stock that they owned on the
record date.
VOTE REQUIRED
The affirmative vote of at least two-thirds of the shares of Mosaix common
stock outstanding on the record date is required to approve the merger
agreement.
VOTING BY MOSAIX DIRECTORS AND EXECUTIVE OFFICERS
On the record date, directors and executive officers of Mosaix and their
affiliates owned and were entitled to vote 101,029 shares of Mosaix common
stock, or approximately 1% of the shares of
4
<PAGE> 13
Mosaix common stock outstanding on the record date. Each director and executive
officer of Mosaix has entered into a voting agreement with Lucent pursuant to
which he or she has agreed to vote the Mosaix common stock he or she owns "for"
approval of the merger agreement. Each director and executive officer of Mosaix
also has granted irrevocable proxies to Lucent representatives to vote his or
her shares of Mosaix common stock on the approval of the merger agreement and
the merger.
THE MERGER (PAGE 43)
The merger agreement is attached as Annex A 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 43)
Lucent and Mosaix will complete the merger only if they satisfy or, in some
cases, waive several conditions, including the following:
- - holders of at least two-thirds of the outstanding shares of Mosaix common
stock must approve the merger agreement
- - any applicable waiting periods under the antitrust laws must expire or be
terminated
- - no legal restraints or prohibitions may exist or be pending which prevent the
consummation of the merger or are reasonably likely to have a material adverse
effect on Lucent or Mosaix
- - the registration statement on Form S-4, of which this proxy
statement/prospectus forms a part, must have become effective under the
Securities Act and must not be the subject of any stop order or proceedings
seeking a stop order
- - Lucent common stock to be issued to Mosaix shareholders in the merger must
have been authorized for listing on the New York Stock Exchange
- - Mosaix must complete an offering of shares of its common stock so that the
merger can be accounted for as a pooling of interests under Accounting
Principles Board Opinion No. 16
- - Lucent and Mosaix must receive letters from PricewaterhouseCoopers LLP and
KPMG LLP regarding those firms' concurrence with Lucent management's and
Mosaix management's conclusions, respectively, that pooling of interests
accounting is appropriate for the merger under Accounting Principles Board
Opinion No. 16 if completed in accordance with the merger agreement
- - Mosaix must ensure that the cash-out provisions in its Restated 1987 Stock
Option Plan do not apply upon the occurrence of a "Change in Control" as
defined in that Plan
- - Mosaix and Lucent must comply with their respective agreements and conditions
in all material respects
- - the respective representations and warranties of Mosaix and Lucent contained
in the merger agreement must be true and correct in all material respects
- - no material adverse change may occur in Mosaix's or Lucent's business
- - Mosaix must receive all necessary consents to the merger
- - Mosaix must receive an opinion of its special counsel, Perkins Coie LLP,
stating that for United States federal
5
<PAGE> 14
income tax purposes, the merger will qualify as a reorganization within the
meaning of the Internal Revenue Code.
NO OTHER NEGOTIATIONS INVOLVING MOSAIX (PAGE 46)
The merger agreement provides that Mosaix will not, and will not authorize
or permit any of its directors, officers or employees or other representatives
to, solicit any takeover proposal or participate in any discussion or
negotiation regarding any takeover proposal. However, if at any time prior to
the date of the special meeting, the Mosaix board of directors determines in
good faith, after consultation with outside counsel, that a proposal by a third
party, which was unsolicited and did not result from a breach by Mosaix of the
merger agreement, is more favorable and superior to Mosaix shareholders than the
terms of the merger with Lucent, Mosaix may:
- - furnish under a customary confidentiality agreement information about Mosaix
and its subsidiaries to any person making that superior proposal
- - participate in discussions or negotiations regarding that superior proposal.
TERMINATION OF THE MERGER AGREEMENT (PAGE 47)
The merger agreement may be terminated under certain circumstances at any
time before the completion of the merger, as summarized below:
- - Lucent and Mosaix can jointly agree to terminate the merger agreement at any
time without completing the merger.
- - Lucent or Mosaix can terminate the merger agreement if:
(1) the merger is not completed by September 30, 1999
(2) the holders of at least two-thirds of the outstanding shares of Mosaix
common stock do not approve the merger agreement
(3) a court, governmental authority or other legal action permanently
prohibits the completion of the merger
(4) the other party materially breaches any of its representations,
warranties or obligations under the merger agreement and does not cure
the breach within 15 days.
- - Mosaix can terminate the merger agreement before the special meeting if the
Mosaix board of directors receives an unsolicited proposal by a third party to
acquire Mosaix on terms determined by the Mosaix board of directors, based on
the advice of a financial advisor of nationally-recognized reputation, to be
more favorable to Mosaix shareholders than the terms of the merger with Lucent
- - Lucent can terminate the merger agreement if Mosaix or any of its directors or
officers participates in discussions with third parties regarding certain
takeover proposals or other business transactions in material breach of the
merger agreement.
TERMINATION FEES (PAGE 48)
Mosaix must pay Lucent a termination fee of $2,815,000 if:
- - Mosaix shareholders receive a takeover proposal, a takeover proposal otherwise
6
<PAGE> 15
becomes publicly known or anyone publicly announces its intention to make a
takeover proposal, Lucent or Mosaix terminates the merger agreement because
the merger is not completed by September 30, 1999 and within nine months of
the termination Mosaix or any of its subsidiaries enters into any definitive
agreement with respect to, or consummates, any takeover proposal
- - Lucent or Mosaix terminates the merger agreement because the holders of at
least two-thirds of the outstanding shares of Mosaix common stock do not
approve the merger
- - Mosaix terminates the merger agreement because before the special meeting
Mosaix receives an unsolicited proposal by a third party to acquire Mosaix on
terms determined by the Mosaix board of directors to be more favorable to
Mosaix than the terms of the merger with Lucent
- - Lucent terminates the merger agreement because Mosaix or any of its directors
or officers participates in discussions with third parties regarding certain
takeover proposals or other business transactions in material breach of the
merger agreement.
STOCK OPTION AGREEMENT (PAGE 53)
Mosaix has granted an option to Lucent to purchase shares of Mosaix common
stock equal to approximately 19.9% of the number of outstanding shares of Mosaix
common stock if certain events occur that entitle Lucent to receive the
termination fee under the merger agreement. The option agreement limits to
$3,378,000 the total amount Lucent may receive from (1) the stock option and (2)
any termination fee payable by Mosaix if the merger agreement is terminated.
REGULATORY MATTERS (PAGE 40)
United States antitrust laws prohibit Lucent and Mosaix 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 Mosaix each filed
the required notification and report forms with the Antitrust Division and the
Federal Trade Commission on April 19, 1999. Under the antitrust laws, the merger
may not be completed until after the expiration or early termination of the
applicable waiting period. The applicable waiting period expired on May 19,
1999.
ACCOUNTING TREATMENT (PAGE 36)
Lucent and Mosaix expect the merger to qualify as a pooling of interests,
which means that Lucent and Mosaix will be treated as if they had always been
combined for accounting and financial reporting purposes. Because of certain
repurchases by Mosaix of its common stock, Mosaix is required under the merger
agreement to issue and sell approximately 2,846,000 shares of Mosaix common
stock prior to the merger in order for the merger to be accounted for as a
pooling of interests. As part of the merger agreement, Mosaix has agreed that it
will issue and sell prior to the merger that number of shares. See "The Merger
Agreement -- Offering of Shares of Mosaix Common Stock to Cure 'Tainted' Shares"
on page 46.
7
<PAGE> 16
EXPENSES (PAGE 51)
Each of Lucent and Mosaix will bear all expenses it incurs in connection
with the merger, except that Lucent and Mosaix 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 from the Antitrust Division of the Department
of Justice and the Federal Trade Commission.
8
<PAGE> 17
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per common share information for Lucent on a
historical basis, for Lucent and Mosaix on a pro forma combined basis and for
Mosaix on an historical and pro forma equivalent basis. Lucent's historical
results include the results of Kenan Systems Corporation which merged with
Lucent on February 26, 1999. The Kenan merger was accounted for as a pooling of
interests. Lucent's historical results have not been adjusted to reflect the
proposed merger of Lucent and Ascend. See "The Companies -- Recent Developments"
on page 17 and the "Selected Unaudited Pro Forma Combined Financial
Data -- Lucent and Ascend on page 15. 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 Mosaix's fiscal
year ends on December 31.
The unaudited "pro forma combined" and the unaudited "pro forma
equivalent -- Mosaix" information assumes that the merger of Mosaix and Lucent
was accounted for as a pooling of interests and 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 Mosaix for the six months ended March 31, 1999 and June 30, 1998,
for each of the two years in the period ended December 31, 1998 and for the
nine-month period ended December 31, 1996, respectively. Beginning September 30,
1996, Lucent changed its fiscal year end from December 31 to September 30 and
Lucent reported results for the nine-month transition period ended September 30,
1996. Results for the six-month period ended March 31, 1999 may not be
indicative of the results for the full year.
The unaudited "pro forma equivalent -- Mosaix" information was calculated
by multiplying the corresponding pro forma combined data by the exchange ratio
of 0.19273. This information shows how each share of Mosaix 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 and do not reflect the issuance
and sale of 2,846,000 shares of Mosaix common stock required to be issued by
Mosaix prior to the merger. The following unaudited comparative and unaudited
pro forma per share data is derived from the historical financial statements of
Lucent and Mosaix.
SHAREHOLDERS SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH
LUCENT'S AND MOSAIX'S HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND
ACCOMPANYING NOTES INCLUDED IN THE DOCUMENTS DESCRIBED UNDER "WHERE YOU CAN FIND
MORE INFORMATION" ON PAGE 75.
9
<PAGE> 18
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
--------------- ----------------- -------------
1999 1998 1998 1997 1996
----- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
LUCENT -- HISTORICAL
Basic earnings per share... $1.19 $ 0.33 $ 0.40 $ 0.22 $ 0.10
Diluted earnings per
share................... 1.16 0.32 0.39 0.22 0.10
Cash dividends declared per
share................... 0.04 0.0375 0.0775 0.0563 0.0375
Book value per share....... 3.39 1.92 2.11 1.31 1.05
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS SIX MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, DECEMBER 31, DECEMBER 31,
------------- ------------- ------------- -------------
1999 1998 1998 1997 1996
------------- ------------- ----- ----- -------------
<S> <C> <C> <C> <C> <C>
MOSAIX -- HISTORICAL
Basic earnings per
share.................. $0.37 $0.02 $0.36 $0.74 $0.47
Diluted earnings per
share.................. 0.37 0.02 0.35 0.71 0.44
Cash dividends declared
per share.............. N/A N/A N/A N/A N/A
Book value per share...... 4.41 4.31 4.42 4.56 4.33
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
--------------- ----------------- -------------
1999 1998 1998 1997 1996
----- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
PRO FORMA COMBINED
Basic earnings per share... $1.19 $ 0.33 $ 0.40 $ 0.23 $ 0.10
Diluted earnings per
share................... 1.16 0.32 0.39 0.22 0.10
Cash dividends declared per
share................... 0.04 0.0375 0.0775 0.0563 0.0375
Book value per share....... 3.40 1.94 2.13 1.33 1.07
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE
SIX MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30
----------------- ----------------- -------------
1999 1998 1998 1997 1996
------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
PRO FORMA EQUIVALENT --
MOSAIX
Basic earnings per
share................. $ 0.23 $ 0.06 $ 0.08 $ 0.04 $ 0.02
Diluted earnings per
share................. 0.22 0.06 0.08 0.04 0.02
Cash dividends declared
per share............. 0.0077 0.0072 0.0149 0.0109 0.0072
Book value per share..... 0.66 0.37 0.41 0.26 0.21
</TABLE>
- ---------------
N/A -- Not applicable
10
<PAGE> 19
SELECTED 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. Lucent's results include the results of Kenan Systems Corporation, which
merged with Lucent on February 26, 1999. The Kenan merger was accounted for as a
pooling of interests. Lucent's historical results have not been adjusted to
reflect the proposed merger of Lucent and Ascend. See "The Companies -- Recent
Developments" on page 17 and "Selected Unaudited Pro Forma Combined Financial
Data -- Lucent and Ascend" on page 15.
Effective October 1, 1998, Lucent changed its method of accounting for
pension and post-retirement benefits. 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 $0.48 per share, for the first fiscal
quarter of 1999. Included in net income as a result of the accounting change is
$130 million, or $0.05 per share for the six months ended March 31, 1999.
The following selected historical 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
historical financial statements incorporated by reference in this proxy
statement/prospectus. The selected historical 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 are derived from unaudited 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 that data in conformity with generally accepted accounting
principles.
The selected historical financial data of Lucent 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 financial statements incorporated by
reference in this proxy statement/prospectus and, in the opinion of Lucent's
management, includes all
11
<PAGE> 20
necessary adjustments for a fair presentation of that data in conformity with
generally accepted accounting principles. Results for the six-month period ended
March 31, 1999 may not be indicative of the results for the full year.
THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH LUCENT'S
HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON
PAGE 75.
<TABLE>
<CAPTION>
AT OR FOR THE
AT OR FOR THE SIX NINE MONTHS AT OR FOR THE TWELVE
MONTHS ENDED AT OR FOR THE TWELVE MONTHS ENDED ENDED MONTHS ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
----------------- --------------------------------- ------------- ---------------------
1999 1998 1998 1997 1996 1996 1995 1994
------- ------- --------- --------- --------- ------------- --------- ---------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues....................... $17,484 $14,959 $30,328 $26,444 $23,324 $15,897 $21,431 $19,777
Operating income (loss)...... 2,962 1,585 2,550 1,666 (939) 495 (998) 970
Net income (loss)............ 3,178 854 1,055 574 (788) 229 (866) 481
Earnings (loss) per common
share-basic................ 1.19 0.33 0.40 0.22 (0.34) 0.10 (0.41) N/A
Earnings (loss) per common
share -- diluted........... 1.16 0.32 0.39 0.22 (0.34) 0.10 (0.41) N/A
Dividends declared per common
share...................... 0.04 0.0375 0.0775 0.0563 0.0375 0.0375 -- N/A
BALANCE SHEET DATA:
Total assets................. $32,840 $24,733 $26,831 $23,868 $22,650 $22,650 $19,735 $17,348
Total debt................... 6,901 3,852 4,640 4,203 3,997 3,997 4,014 3,164
Shareowners' equity.......... 9,051 5,088 5,615 3,410 2,695 2,695 1,438 2,480
</TABLE>
- ---------------
N/A -- Not applicable
12
<PAGE> 21
SELECTED HISTORICAL FINANCIAL DATA -- MOSAIX
The following selected historical financial data of Mosaix at December 31,
1998 and 1997, and for each of the years in the three-year period ended December
31, 1998 is derived from audited financial statements incorporated by reference
in this proxy statement/prospectus.
The selected historical financial data of Mosaix at December 31, 1996, 1995
and 1994, and for each of the years in the two-year period ended December 31,
1995 is derived from audited financial statements not incorporated by reference
in this proxy statement/prospectus.
The selected historical financial data of Mosaix at and for the six months
ended June 30, 1998 is derived from unaudited consolidated financial statements
not incorporated by reference in this proxy statement/prospectus and, in the
opinion of Mosaix's management, includes all necessary adjustments for a fair
presentation of that data in conformity with generally accepted accounting
principles.
The selected financial data of Mosaix at and for the six-month period ended
March 31, 1999 was calculated by adding the three-month period ended December
31, 1998 to the three-month period ended March 31, 1999. The selected financial
data for the nine-month period ended December 31, 1996 was calculated by
subtracting the March 31, 1996 three-month period from the financial statements
for the year ended December 31, 1996. In the opinion of Mosaix's management,
this selected 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 March 31, 1999 may not be
indicative of the results for the full year.
THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH MOSAIX'S
HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON
PAGE 75.
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------------------------------------------
AT OR FOR AT OR FOR AT OR FOR AT OR FOR AT OR FOR
THE SIX THE SIX THE TWELVE THE NINE THE TWELVE
MONTHS MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------- ---------- ------------------------ ------------ ---------------
1999 1998 1998 1997 1996 1996 1995 1994
---------- ---------- ------ ------ ------ ------------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................ 56 54 110 121 117 90 93 76
Operating income (loss)............. 4 (1) 3 12 6 8 2 (8)
Net income (loss)................... 4 -- 4 10 4 6 (1) (6)
Earnings (loss) per common
share-basic....................... 0.37 0.02 0.36 0.74 0.29 0.47 (0.06) (0.65)
Earnings (loss) per common share-
diluted........................... 0.37 0.02 0.35 0.71 0.27 0.44 (0.06) (0.65)
Dividends declared per common
share............................. N/A N/A N/A N/A N/A N/A N/A N/A
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
13
<PAGE> 22
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------------------------------------------------------
AT OR FOR AT OR FOR AT OR FOR AT OR FOR AT OR FOR
THE SIX THE SIX THE TWELVE THE NINE THE TWELVE
MONTHS MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED ENDED
MARCH 31, JUNE 30, DECEMBER 31, DECEMBER 31, DECEMBER 31,
---------- ---------- ------------------------ ------------ ---------------
1999 1998 1998 1997 1996 1996 1995 1994
---------- ---------- ------ ------ ------ ------------ ------ ------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................ 73 80 74 84 91 91 94 96
Total debt.......................... -- -- -- -- 2 2 2 3
Shareowners' equity................. 46 51 48 56 57 57 49 53
</TABLE>
- ---------------
N/A -- Not applicable
14
<PAGE> 23
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA -- LUCENT AND ASCEND
The following selected unaudited pro forma combined financial data of
Lucent and Ascend has been prepared giving effect to the proposed merger of
Lucent and Ascend under the pooling of interests method of accounting. This data
does not reflect the merger of Mosaix and Lucent. The selected unaudited pro
forma combined information combines the financial information of Lucent at or
for the six months ended March 31, 1999 and 1998, for each of the two years in
the period ended September 30, 1998, and the nine-month period ended September
30, 1996 with the financial information of Ascend at or for the six months ended
March 31, 1999 and June 30, 1998, for each of the two years in the period ended
December 31, 1998 and the nine-month period ended December 31, 1996,
respectively. The selected unaudited pro forma combined financial data is
derived from unaudited pro forma combined condensed financial statements not
included or incorporated by reference in this proxy statement/prospectus.
The unaudited pro forma combined financial information does not purport to
represent what the combined company's financial position or results of
operations would have been had the merger occurred at the beginning of the
earliest period presented or to project the combined company's financial
position or results of operations for any future date or period. In addition, it
does not incorporate any benefits from cost savings or synergies of operations
of the combined company.
THE FINANCIAL INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH
LUCENT'S HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCLUDED IN THE
DOCUMENTS DESCRIBED UNDER "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 75.
<TABLE>
<CAPTION>
AT OR FOR THE
AT OR FOR THE SIX AT OR FOR THE TWELVE NINE MONTHS
MONTHS ENDED MONTHS ENDED ENDED
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
------------------ -------------------- -------------
1999 1998 1998 1997 1996
------- ------- -------- -------- -------------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................ $18,469 $15,591 $31,807 $27,611 $16,639
Operating income.................... 2,932 1,748 2,639 1,598 735
Net income.......................... 3,089 965 1,035 450 383
Earnings per common share - basic... 1.02 0.33 0.35 0.16 0.14
Earnings per common
share - diluted.................. 0.99 0.32 0.34 0.15 0.14
Dividends declared per
common share..................... 0.04 0.0375 0.0775 0.0563 0.0375
BALANCE SHEET DATA:
Total assets........................ $35,605
Total debt.......................... 6,901
Shareowners' equity................. 11,349
</TABLE>
15
<PAGE> 24
RISK FACTORS RELATING TO THE MERGER
In addition to the other information included and incorporated by reference
in this proxy statement/prospectus, Mosaix shareholders 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 Mosaix common stock
will be converted into the right to receive 0.19273 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 Mosaix common stock. The prices of Lucent common stock
and Mosaix 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 Mosaix, 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 Mosaix 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 Mosaix shareholders to obtain current market
quotations for Lucent common stock and Mosaix common stock.
- THE PRICE OF LUCENT COMMON STOCK MAY BE AFFECTED BY FACTORS DIFFERENT
FROM THOSE AFFECTING THE PRICE OF MOSAIX COMMON STOCK. Upon completion of
the merger, holders of Mosaix common stock will become holders of Lucent
common stock. Lucent's business differs from that of Mosaix, and Lucent's
results of operations, as well as the price of Lucent common stock, may
be affected by factors different from those affecting Mosaix's results of
operations and the price of Mosaix common stock. For a discussion of
Lucent's and Mosaix's businesses and certain factors to consider in
connection with these businesses, see Lucent's Annual Report on Form 10-K
for the fiscal year ended September 30, 1998, as amended, and Mosaix's
Annual Report on Form 10-K for the year ended December 31, 1998, which
are incorporated by reference in this proxy statement/prospectus.
16
<PAGE> 25
THE COMPANIES
MOSAIX
Mosaix is a global provider of call center software, predictive dialers and
workflow applications that enable companies to acquire, retain and develop
customer relationships. With these products, companies can integrate sales,
marketing and customer services applications in their call centers with
back-office applications throughout the enterprise. Mosaix manages its
operations through two lines of business, call management systems and customer
relationship management applications. Mosaix call management systems are
sophisticated computer telephony integration enabled systems for processing and
managing outbound and blended inbound/outbound telephone communications.
Customer relationship management workflow applications are client/server-based
software that enable customers to automate and integrate customer-facing
business processes beginning in the contact center and extending across the
enterprise.
Mosaix was incorporated in Washington in 1984. Additional information
regarding Mosaix is contained in Mosaix's filings with the Securities and
Exchange Commission. See "Where You Can Find More Information" on page 75.
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 on
April 10, 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 on September 30, 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 75.
RECENT DEVELOPMENTS
On January 13, 1999, Lucent announced that it had entered into a definitive
agreement to merge with Ascend Communications, Inc., a developer, manufacturer
and seller of wide area networking solutions for telecommunications carriers,
Internet service providers and corporate customers worldwide. Under the terms of
the agreement, which was approved by each company's board of directors, each
share of Ascend common stock will be converted into 1.650 shares of Lucent
common stock. Based on Lucent's closing
17
<PAGE> 26
stock price on January 12, 1999, the transaction would be valued at
approximately $20 billion. This transaction, which is subject to customary
conditions (including approval by the Ascend shareholders), is expected to be
completed following an Ascend shareholders meeting to be held on June 24, 1999
and is expected to be accounted for as a pooling of interests. However, there
can be no assurance that the merger will be approved by the Ascend shareholders.
MATERIAL CONTRACTS BETWEEN LUCENT AND MOSAIX
Lucent and Mosaix are parties to a consulting agreement dated as of April
12, 1999, as amended as of May 13, 1999, under which Lucent provides consulting
and other services to Mosaix involving software development, product testing and
advising on changes to Mosaix's documentation, products and software. Lucent and
Mosaix are also parties to an agreement dated as of April 12, 1999, as amended
as of May 4, 1999 covering the joint development by Lucent and Mosaix of
customer care solutions. Lucent and Mosaix entered into a lead referral
agreement dated as of April 12, 1999, as amended as of May 8, 1999, under which
Lucent may in its sole discretion provide Mosaix with information on potential
customers for Mosaix's customer relationship management applications, call
management solutions and certain other products, and Mosaix has agreed to pay
Lucent a customary fee based on the price of Mosaix products and licenses sold
to those referred customers. Lucent and Mosaix are also parties to an agreement
dated as of April 12, 1999 covering the lending (at no cost) of certain products
by Lucent to Mosaix and certain products by Mosaix to Lucent. Lucent and Mosaix
also entered into a confidentiality agreement dated as of August 8, 1998, as
amended as of September 25, 1998 and November 1, 1998 and a separate
confidentiality agreement dated April 5, 1999, containing customary terms and
conditions regarding the confidential treatment of information exchanged between
the parties.
18
<PAGE> 27
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to shareholders of Mosaix
as part of the solicitation of proxies by the Mosaix board of directors for use
at the special meeting.
DATE, TIME AND PLACE
We will hold the special meeting at Mosaix's offices at 6464 185th Avenue
N.E., Redmond, Washington, at 9:00 a.m., local time, on Monday, July 12, 1999.
PURPOSE OF SPECIAL MEETING
At the special meeting, we are asking holders of Mosaix common stock to
approve the merger agreement. The Mosaix board of directors has determined that
the merger is fair to, and in the best interests of, Mosaix shareholders, has
unanimously approved the merger agreement and the merger and unanimously
recommends that Mosaix shareholders vote "for" approval of the merger agreement.
The unanimous approval, determination and recommendation does not include David
Ladd, a director, who excused himself from the consideration of the merger
because of a prior relationship with Lucent.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of Mosaix common stock at the close of business on
May 26, 1999, the record date, are entitled to notice of and to vote at the
special meeting. On the record date, 10,550,028 shares of Mosaix common stock
were issued and outstanding and held by approximately 390 holders of record. A
quorum is present at the special meeting if a majority of the shares of Mosaix
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 Mosaix 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 at
least two-thirds of the shares of Mosaix common stock outstanding on the record
date. IF A MOSAIX SHAREHOLDER ABSTAINS FROM VOTING OR DOES NOT VOTE, EITHER IN
PERSON OR BY PROXY, IT WILL HAVE THE EFFECT OF A VOTE AGAINST APPROVAL OF THE
MERGER AGREEMENT.
VOTING BY MOSAIX DIRECTORS AND EXECUTIVE OFFICERS
At the close of business on the record date, directors and executive
officers of Mosaix and their affiliates owned and were entitled to vote 101,024
shares of Mosaix common stock, which represented approximately 1% of the shares
of Mosaix common stock outstanding on that date. Each Mosaix director and
executive officer has entered into a voting agreement with Lucent pursuant to
which he or she has agreed to vote, or cause to be voted, the Mosaix common
stock owned by him or her "for" approval of the
19
<PAGE> 28
merger agreement. Each Director and executive officer of Mosaix has also granted
an irrevocable proxy to Lucent representatives to vote his or her shares of
Mosaix common stock on the approval of the merger agreement.
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" APPROVAL OF THE MERGER AGREEMENT.
Shares of Mosaix common stock represented at the special meeting but not
voting, including shares of Mosaix 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 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 a Mosaix shareholder
abstains from voting or does not vote, either in person or by proxy, it will
have the effect of a vote against approval of the merger agreement. Brokers who
hold shares of Mosaix common stock in street name for customers who are the
beneficial owners of those 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 have the effect of
votes against approval of the merger agreement.
The persons named as proxies by a shareholder 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 adjournment or postponement.
Mosaix 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 Mosaix board of directors properly presents other matters, the persons named
as proxies will vote on those other matters in accordance with their respective
judgments.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude a
shareholder from voting in person at the special meeting. A shareholder may
revoke a proxy at any time prior to its exercise by filing with the Secretary of
Mosaix a duly executed revocation of proxy, by submitting a duly executed proxy
to the Secretary of Mosaix 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. If the shares are held in street name by the
shareholder's broker, the shareholder must follow the broker's directions
regarding how to change a vote.
20
<PAGE> 29
SOLICITATION OF PROXIES
Mosaix will bear the cost of the solicitation of proxies from its
shareholders. In addition to solicitation by mail, the directors, officers and
employees of Mosaix and its subsidiaries may solicit proxies from shareholders
by telephone or other electronic means or in person. Mosaix will cause brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of stock held of record by those persons.
Mosaix will reimburse any of these custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses in doing so.
Corporate Investor Communications, Inc. will assist in the solicitation of
proxies by Mosaix. Mosaix will pay Corporate Investor Communications a fee of
$6,000, plus reimbursement of certain out-of-pocket expenses, and will indemnify
it against any losses arising out of its proxy soliciting services on behalf of
Mosaix.
SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXIES. A
transmittal form with instructions for the surrender of Mosaix common stock
certificates will be mailed to Mosaix shareholders as soon as practicable after
completion of the merger.
DISSENTERS' RIGHTS TO APPRAISAL
Mosaix shareholders will be entitled to dissenters' rights to appraisal
under Chapter 23B.13 of the Washington Business Corporation Act in connection
with the merger if they follow the procedures specified in that chapter for
perfecting those rights. Chapter 23B.13 of the Washington Business Corporation
Act is attached to this proxy statement/prospectus as Annex D.
Generally, in order to exercise your dissenters' rights to appraisal:
- you must not vote in favor of the merger
- you must, before the special meeting of shareholders to vote on the
merger, send a written notice to Mosaix of your intent to demand payment
for the fair value of your shares of Mosaix common stock in compliance
with the Washington Business Corporation Act.
Merely voting against the merger will not protect your dissenters' rights.
Annex D to this proxy statement/prospectus contains the Washington statutory
provisions relating to your dissenters' rights. Failure to follow all the steps
required of these provisions will result in the loss of your dissenters' rights
to appraisal.
See "The Merger -- Dissenters' Rights to Appraisal" on page 40, "Comparison
of Rights of Common Stockholders of Lucent and Common Shareholders of Mosaix --
Appraisal or Dissenters' Rights" on page 68 and "Dissenters' Rights to
Appraisal" on page 71.
21
<PAGE> 30
THE MERGER
The following discussion summarizes the material terms of the merger, the
merger agreement and the stock option agreement. We urge shareholders to read
carefully the merger agreement and the stock option agreement, which are
attached as Annexes A and B to this proxy statement/prospectus.
BACKGROUND TO THE MERGER
In May 1998, Mosaix and Lucent independently contacted each other to
explore proposals that the two companies work together to market and sell Mosaix
products. From May through August 1998, representatives of Mosaix and Lucent met
to discuss a possible business relationship and the value of a reseller
arrangement. Representatives of Lucent also attended presentations of Mosaix's
systems and software products and made site visits to Mosaix's facilities. On
August 8, 1998, the companies entered into a confidentiality agreement
containing customary terms and conditions regarding the confidential treatment
of information between the parties.
On August 26 and September 17, 1998, Janice Anderson, Customer Care
Solutions Vice President of Lucent's Business Communications Systems Group, met
with Nicholas A. Tiliacos, President and CEO of Mosaix, regarding trends in the
customer relationship management applications market and strategies for the two
companies to work together in the future. On September 25, 1998, the companies
entered into a broader confidentiality agreement.
On October 22, 1998, Mosaix and BT Alex. Brown Incorporated entered into an
engagement letter formalizing a relationship that had been initiated in the late
summer of 1997, and formally authorized by the Mosaix board of directors in
October 1997, to advise Mosaix on strategic alternatives and partnering
opportunities that could accelerate the growth of Mosaix's customer relationship
management business.
During October and November 1998, Lucent and Mosaix exchanged information
relating to products and market trends, and representatives of both companies
participated in meetings to discuss several areas of Mosaix's business,
including corporate strategy and the direction of future product development.
Representatives of Lucent attended further product demonstrations and made
additional site visits to Mosaix facilities. Eight video conference calls
between Lucent and Mosaix were held during this period to review Mosaix
products. In light of the extensive exchange of information and discussions, the
confidentiality agreement was amended on November 1, 1998.
On November 23, 1998, representatives of Lucent, including Ms. Anderson,
and representatives of Mosaix, including Mr. Tiliacos, met to review Mosaix's
call management, professional services and customer support. Following these
meetings, Ms. Anderson and Phillip Chin, Manager, Corporate Strategy and
Development of Lucent and Mr. Tiliacos and John J. Flavio, Senior Vice President
Finance and Chief Financial Officer of Mosaix, met and first raised the
possibility of a business combination of the two companies. Both parties
indicated a willingness to continue discussions on
22
<PAGE> 31
these subjects. On November 23, 1998, Lucent obtained preliminary approval from
the office of the Chief Executive Officer to continue discussions.
Mosaix management advised its directors of these discussions, and
representatives of Lucent and Mosaix continued their review of technical and
product issues through mid-December 1998. On December 16, 1998, at a regularly
scheduled meeting of the Mosaix board of directors, Mosaix management summarized
for the board the status of discussion with Lucent regarding a possible reseller
relationship and a possible business combination. After discussion, the board of
directors authorized management to continue discussions with Lucent with regard
to both possibilities.
On February 18, 1999, Michael Lambert, Director, Corporate Strategy and
Development of Lucent and Mr. Chin called Messrs. Tiliacos and Flavio to
communicate Lucent's further interest in negotiating a business combination of
the two companies. During the discussion, Mr. Lambert proposed various principal
terms of such a transaction, including a suggested exchange ratio based on
$10.75 per share of Mosaix common stock.
From February 22 to March 1, 1999, in a series of telephone conferences,
Robert Packard, Managing Director of BT Alex. Brown, Mosaix's financial adviser,
and Messrs. Lambert and Chin discussed a variety of material terms of a possible
transaction. On March 4, 1999, based on the framework discussed during this
period, including a tentative exchange ratio based on $11.375 per share of
Mosaix common stock, subject to completion of Lucent's continuing business
review and resolution of other outstanding transaction issues, the managements
of Mosaix and Lucent authorized more complete due diligence and initial drafts
of transaction documents.
From March 10 through March 17, 1999, representatives of Lucent, including
their financial, legal and accounting advisers, conducted due diligence
concerning Mosaix's businesses, operations and financial affairs. During this
period, the legal advisers of Lucent delivered an initial draft of a proposed
merger agreement and related transaction documents. On March 17, 1999, Ms.
Anderson and Mr. Chin called Mr. Tiliacos to discuss business and due diligence
issues that Lucent believed could result in an exchange ratio based on a price
of Mosaix stock in the range of $10.00 per share. Mr. Tiliacos expressed his
view that such pricing would not be acceptable to the Mosaix board.
On March 19, 1999, the Mosaix board of directors held a meeting, attended
by members of Mosaix's senior management and representatives of BT Alex. Brown
and Mosaix's legal counsel, Perkins Coie. Counsel described to the Mosaix board
of directors the fiduciary duties applicable to directors considering a
strategic business combination and summarized the terms of a proposed merger
agreement, stock option agreement and related documents and the status of
ongoing negotiations, including the method of determining the exchange ratio,
break-up fees and a related option to purchase Mosaix stock, voting agreements
applicable to officers and directors and pooling of interests accounting issues
(including methods of dealing with Mosaix's repurchase of shares). Mr. Tiliacos
addressed the areas of agreement and disagreement between Lucent and Mosaix.
Representatives of BT Alex. Brown described, on a preliminary basis, its
23
<PAGE> 32
financial analysis with respect to the possible business combination with
Lucent. The board discussed the proposed transaction and other alternatives
available to Mosaix. At the conclusion of the meeting, the board authorized
management to continue negotiations on the basis of the board discussion.
On March 20, 1999, Ms. Anderson telephoned Mr. Tiliacos to suggest an
exchange ratio based on $10.50 per share of Mosaix common stock. Mr. Tiliacos
responded that Mosaix would defer a response on price until the other
outstanding transaction issues were resolved. Representatives of Lucent and
Mosaix and their advisers continued negotiations the following week.
On April 1, 1999, the Mosaix board of directors held a meeting by
conference telephone, attended by senior management and representatives of BT
Alex. Brown and Perkins Coie. Counsel summarized the results of negotiation and
reviewed the final terms of the merger agreement, the stock option agreement and
related documents, which included an exchange ratio of .19273 shares of Lucent
common stock for each share of Mosaix common stock. The exchange ratio
represented a purchase price of $10.50 per share of Mosaix common stock (based
upon the average closing price of Lucent common stock for the prior three
business days). Representatives of BT Alex. Brown reviewed its financial
analysis and delivered its oral opinion, later confirmed in writing, to the
effect that, as of April 1, 1999, the exchange ratio was fair, from a financial
point of view, to the Mosaix shareholders. Following discussions, the Mosaix
board of directors concluded that the merger was fair to and in the best
interest of Mosaix and the directors approved the merger agreement, the stock
option agreement and related documents. Mr. Ladd, a director, excused himself
from the consideration of and the vote on the merger agreement, the stock option
agreement and the related documents because of a prior relationship with Lucent.
On April 1, 1999, during a telephonic meeting, the Lucent board of
directors considered the merger and, after deliberations, approved the
transactions and authorized the execution and delivery of the merger agreement,
the stock option agreement and the related documents.
Lucent and Mosaix executed the merger agreement and the stock option
agreement on the evening of Friday, April 2, 1999. On the morning of Monday,
April 5, 1999, prior to the commencement of trading, Lucent and Mosaix 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 approval of the merger agreement by
Mosaix shareholders, the Mosaix board of directors consulted with its management
team and advisors and independently considered the proposed merger agreement,
the stock option agreement and the transactions contemplated by the merger
agreement. The following discussion of the factors considered by the Mosaix
board of directors in making its decision is not intended to be exhaustive but
includes all material factors considered by the Mosaix board of directors.
24
<PAGE> 33
The Mosaix board of directors considered the following factors as reasons
that the merger will be beneficial to Mosaix and its shareholders:
- the belief that the customer relationship management market was
increasingly attractive to large fully integrated computer and software
companies and that a strategic combination or extensive partnering
relationship would be increasingly necessary for Mosaix to attract
substantial customers and expand its business in this market
- the access to large business organizations and enterprises that Lucent's
established relationships with major customers, sales and marketing
resources and distribution channels would bring to Mosaix products
- the complementary nature of the companies' product offerings across a
range of products and the opportunity, working with Lucent's extensive
technical capabilities, to accelerate development of Mosaix voice and
data solutions in customer relationship management
- the belief that, through a tax-free reorganization, the opportunity to
own Lucent common stock would provide the shareholders with greater
future liquidity in the security of an attractive company that could
capitalize on the business prospects of Mosaix and provide a better
return on shareholder investment
- the belief that Lucent and other similar large, integrated companies were
committed to expanding in the customer relationship management market and
that combining resources with Lucent would provide Mosaix greater
business opportunities than remaining independent.
In the course of its deliberations, the Mosaix board of directors reviewed
with Mosaix management a number of other factors relevant to the merger. In
particular, the Mosaix board of directors considered, among other things:
- information relating to the business, assets, management, competitive
position, operating performance, trading performance and prospects of
each of Mosaix and Lucent, including the prospects of Mosaix if it were
to continue as an independent company
- the market price of Mosaix common stock in the last several years
- the financial presentation by BT Alex. Brown, including its opinion
described under "The Merger -- Opinion of BT Alex. Brown" on page 26 to
the effect that as of the date of such opinion the exchange ratio was
fair, from a financial point of view, to the shareholders of Mosaix
- the possibility of strategic alternatives to the merger for enhancing
long-term shareholder value
- the impact of the merger on Mosaix's and Lucent's customers, suppliers
and employees
- the likelihood that the merger would be completed
25
<PAGE> 34
- the terms of the merger agreement, including provisions permitting the
Mosaix board of directors to terminate the merger agreement in response
to a third party proposal which the Mosaix board of directors determines
in its good faith judgment to be more favorable to Mosaix shareholders
than the merger
- the expected qualification of the merger as a reorganization under
Section 368(a) of the Internal Revenue Code.
The Mosaix board of directors also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including:
- the risk that the operations of Lucent and Mosaix might not be
successfully integrated
- a recognition that Lucent common stock has traded at high valuation
multiples, and the risk that these multiples might not be sustained in
the future
- the risk that, despite the efforts of Mosaix and Lucent after the merger,
key personnel might leave Mosaix
- the difficulty of managing operations in the different geographic
locations in which Mosaix and Lucent operate
- the risk that the potential benefits of the merger might not be fully
realized.
The Mosaix board of directors believed that certain of these risks were
unlikely to occur, that Mosaix 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 Mosaix 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 Mosaix board of directors may have given
different weight to different factors.
RECOMMENDATION OF THE MOSAIX BOARD OF DIRECTORS. After careful
consideration, the Mosaix 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, Mosaix and its shareholders and has unanimously approved the
merger agreement and the merger. The Mosaix board of directors unanimously
recommends that the shareholders of Mosaix vote "for" the approval of the merger
agreement. The unanimous approval, determination and recommendation excludes
David Ladd, a director, who excused himself from the consideration of the merger
because of a prior relationship with Lucent.
OPINION OF BT ALEX. BROWN
Mosaix engaged BT Alex. Brown on October 22, 1998 to act as its exclusive
financial advisor in connection with the exploration of strategic alternatives.
On April 1, 1999, at a meeting of the Mosaix board of directors held to evaluate
the proposed merger, BT Alex. Brown rendered to the Mosaix board an oral
opinion, subsequently confirmed by delivery of a written opinion dated April 1,
1999, to the effect that, as of
26
<PAGE> 35
that date and based upon and subject to the assumptions made, matters considered
and limitations stated in this opinion, the exchange ratio was fair, from a
financial point of view, to the shareholders of Mosaix.
The full text of BT Alex. Brown's written opinion dated April 1, 1999,
which states, among other things, the assumptions made, matters considered and
limitations of the review undertaken, is attached as Annex C to this proxy
statement/prospectus and is incorporated herein by reference. BT Alex. Brown's
opinion is directed to the Mosaix board, addresses only the fairness of the
exchange ratio from a financial point of view to the shareholders of Mosaix, and
does not constitute a recommendation to any shareholder as to how that
shareholder should vote at the Mosaix special meeting. Mosaix shareholders
should carefully read the entire BT Alex. Brown written opinion. This section is
only a summary of the written opinion, and as a summary is qualified and not a
substitute for the written opinion.
In connection with its opinion, BT Alex. Brown:
- reviewed publicly available financial information and other information
concerning Mosaix and Lucent and internal analyses and other information
regarding Mosaix furnished to it by Mosaix
- held discussions with the members of the senior management of Mosaix
regarding Mosaix and the prospects of Mosaix; BT Alex. Brown was granted
only very limited access to management of Lucent for the purpose of
discussing Lucent and the prospects of Lucent and thus relied to a
greater extent than is its custom on publicly available information
regarding these topics
- reviewed the reported prices and trading activity for Mosaix common stock
and Lucent common stock
- compared financial information for Mosaix with similar information for
publicly traded companies
- reviewed the financial terms of a number of recent business combinations
which it deemed comparable in whole or in part
- reviewed the terms of the merger agreement and the stock option agreement
and
- performed other studies and analyses and considered other factors as it
deemed appropriate.
In preparing its opinion, BT Alex. Brown did not independently verify the
information described above and for purposes of its opinion, BT Alex. Brown
assumed the accuracy, completeness and fairness of that information. With
respect to the information relating to the prospects of Mosaix and Lucent, BT
Alex. Brown assumed that such information reflected the best currently available
judgments and estimates of the management of Mosaix and Lucent, respectively, as
to the future financial performance of Mosaix and Lucent. BT Alex. Brown did not
make an independent evaluation or appraisal of the assets or liabilities of
Mosaix, nor was BT Alex. Brown furnished with any such evaluations or
appraisals.
27
<PAGE> 36
In rendering its opinion, BT Alex. Brown was not asked to consider, and did
not address, the relative merits of the merger as compared to any alternative
business transaction. BT Alex. Brown's opinion was necessarily based upon
market, economic and other conditions as they existed and could be evaluated as
of April 1, 1999. BT Alex. Brown did not express an opinion as to the price at
which the Lucent common stock will trade at any time.
Below is a summary of the material financial analyses performed and factors
considered by BT Alex. Brown in connection with its opinion and reviewed with
the Mosaix board at its meeting on April 1, 1999. These summaries of financial
analyses include information presented in tabular format. In order to fully
understand the financial analyses used by BT Alex. Brown, the tables must be
read together with the text of each summary. The tables alone do not constitute
a complete description of the financial analysis.
HISTORICAL STOCK PRICE PERFORMANCE. BT Alex. Brown reviewed and analyzed
the daily closing per share market prices and trading volume for Mosaix common
stock and Lucent common stock for the period from August 1, 1997 through March
31, 1999.
ANALYSIS OF OTHER SELECTED PUBLICLY TRADED COMPANIES. This analysis
examines a company's valuation in the public market as compared to the valuation
in the public market of other selected publicly-traded companies. BT Alex. Brown
compared financial information relating to Mosaix including, among other things,
common equity market valuation, adjusted market capitalization (i.e., equity
market value net of cash and debt) and the ratios of common equity market value
to trailing twelve month and estimated 1999 and 2000 earnings, and adjusted
market capitalization to trailing twelve month and estimated 1999 and 2000
earnings before interest and taxes and revenue based upon estimates derived from
analyst reports and Mosaix management in the case of estimates of Mosaix's
business mix, to corresponding information from two separate groups of
companies. One group consisted of call management systems companies roughly
comparable to Mosaix's call management systems division. This group included
Aspect Telecommunications, Davox Corporation, EIS International and Melita
International Corporation. The other group consisted of customer interaction
software/customer relationship management software companies roughly comparable
to the Mosaix customer interaction software/customer relationship management
software division and included Computer Associates International, Clarify,
Documentum, FileNET Corporation, Pegasystems Inc., Remedy Corporation, Seibel
Systems, Inc. and The Vantive Corporation.
28
<PAGE> 37
IMPLIED EQUITY VALUE PER SHARE(A)
BASED ON SELECTED PUBLICLY TRADED COMPANIES
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
----------------------------------
MEAN MEDIAN RANGE
------ ------ --------------
<S> <C> <C> <C>
Trailing Twelve Month Revenue.............. $14.00 $11.53 $ 6.38-$28.64
Calendar Year 1999 revenue................. 13.85 11.89 6.55- 27.66
Calendar Year 2000 revenue................. 12.58 11.74 6.88- 19.12
Trailing Twelve Month Earnings Before
Interest and Taxes(b)................... $ 6.94 $ 5.73 $ 3.26-$12.93
Calendar Year 1999 Earnings Before Interest
and Taxes............................... 9.16 9.39 5.77- 12.49
Calendar Year 2000 Earnings Before Interest
and Taxes............................... 14.20 14.09 11.65- 16.94
Trailing Twelve Month Earnings Per
Share(b)................................ $ 7.88 $ 7.18 $ 4.52-$12.61
Calendar Year 1999 Earnings Per Share...... 10.63 10.09 6.73- 14.86
Calendar Year 2000 Earnings Per Share...... 13.80 13.42 8.09- 19.31
</TABLE>
- ---------------
(a) Adjusted for $28.5 million cash pro rata; assumes 10.7 million fully-diluted
shares outstanding, including exercisable options and warrants outstanding,
treasury adjusted.
(b) Trailing twelve month earnings before interest and taxes and trailing twelve
month earnings per share multiples and values reflect call management
systems business alone, as trailing twelve month multiples and trailing
twelve month values for customer interaction software/customer relationship
management business are not meaningful.
29
<PAGE> 38
IMPLIED EQUITY VALUE PER SHARE(A)
BASED ON SELECTED PUBLICLY TRADED CALL MANAGEMENT SYSTEMS COMPANIES
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
---------------------------------
MEAN MEDIAN RANGE
----- ------ --------------
<S> <C> <C> <C>
Trailing Twelve Month Revenue................ $7.64 $5.47 $4.03-$14.85
Calendar Year 1999 revenue................... 7.38 5.79 4.20- 12.95
Calendar Year 2000 revenue................... 7.22 5.39 4.47- 11.79
Trailing Twelve Month Earnings Before
Interest and Taxes........................ $6.94 $5.73 $3.20-$12.93
Calendar Year 1999 Earnings Before Interest
and Taxes................................. 4.35 4.82 2.75- 5.43
Calendar Year 2000 Earnings Before Interest
and Taxes................................. 3.86 3.75 2.68- 5.23
Trailing Twelve Month Earnings Per Share..... $7.88 $7.18 $4.52-$12.61
Calendar Year 1999 Earnings Per Share........ 4.69 4.65 3.48- 5.99
Calendar Year 2000 Earnings Per Share........ 3.80 3.10 3.05- 5.14
</TABLE>
- ---------------
(a) Adjusted for $28.5 million cash pro rata; assumes 10.7 million fully-diluted
shares outstanding, including exercisable options and warrants outstanding,
treasury adjusted.
30
<PAGE> 39
IMPLIED EQUITY VALUE PER SHARE(A)
BASED ON SELECTED PUBLICLY TRADED CUSTOMER INTERACTION SOFTWARE/CUSTOMER
RELATIONSHIP MANAGEMENT COMPANIES
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
IMPLIED EQUITY VALUE PER SHARE
----------------------------------
MEAN MEDIAN RANGE
------ ------ --------------
<S> <C> <C> <C>
Trailing Twelve Month Revenue.............. $ 6.36 $ 6.06 $2.35 - $13.78
Calendar Year 1999 revenue................. 6.47 6.10 2.35 - 14.71
Calendar Year 2000 revenue................. 5.36 6.35 2.41 - 7.33
Trailing Twelve Month Earnings Before
Interest and Taxes...................... NM NM NM
Calendar Year 1999 Earnings Before Interest
and Taxes............................... $ 4.81 $ 4.57 $3.02 - $ 7.06
Calendar Year 2000 Earnings Before Interest
and Taxes............................... 10.34 10.34 8.97 - 11.71
Trailing Twelve Month Earnings Per Share... NM NM NM
Calendar Year 1999 Earnings Per Share...... $ 5.94 $ 5.44 $3.25 - $ 8.87
Calendar Year 2000 Earnings Per Share...... 10.00 10.31 5.04 - 14.17
</TABLE>
- ---------------
NM = Not meaningful.
(a) Adjusted for $28.5 million cash pro rata; assumes 10.7 million fully-diluted
shares outstanding, including exercisable options and warrants outstanding,
treasury adjusted.
HISTORICAL EXCHANGE RATIO ANALYSIS. BT Alex. Brown reviewed and analyzed
the historical ratio of the daily per share market closing prices of Mosaix
common stock divided by the corresponding prices of Lucent common stock over the
90-day, 60-day, 30-day and 15-day periods prior to March 31, 1999 and as of
March 31, 1999 and compared such ratios to the implied exchange ratio of the
merger as of March 31, 1999.
<TABLE>
<CAPTION>
EXCHANGE RATIO PREMIUM OF IMPLIED EXCHANGE RATIO
-------------- ---------------------------------
<S> <C> <C>
April 1, 1999........................... 0.1499 28.6%
15-Day Average.......................... 0.1401 37.6%
30-Day Average.......................... 0.1443 33.6%
60-Day Average.......................... 0.1558 23.7%
90-Day Average.......................... 0.1569 22.8%
</TABLE>
PRO FORMA EARNINGS ANALYSIS. BT Alex. Brown analyzed the pro forma
effects of the merger on the earnings per share of Lucent in calendar years 1999
and 2000 based on publicly available research estimates of BancBoston Robertson
Stephens and BT Alex. Brown for Mosaix and Lucent, respectively. BT Alex. Brown
noted that the managements of Mosaix and Lucent had agreed to use pooling of
interests accounting treatment in accounting for the merger. The result of this
analysis was that the effect on the earnings per share to Lucent shareholders
would be an accretion of 0.1% for the fiscal year ending December 31, 1999 and
an accretion of 0.2% for the fiscal year ending December 31, 2000.
31
<PAGE> 40
The actual operating or financial results achieved by the pro forma
combined company may vary from projected results and variations may be material
as a result of business and operational risks, the timing and amount of
potential transaction benefits, the costs associated with achieving those
potential transaction benefits and other factors.
PREMIUMS PAID ANALYSIS. BT Alex. Brown reviewed the premiums paid in
various transactions since January 1, 1990 as follows: 57 hostile transactions,
882 "friendly" cash transactions, 1,219 "friendly" stock transactions, 148 cash
transactions in the technology sector, 213 stock transactions in the technology
sector and 3 transactions in which Lucent was the acquiror.
<TABLE>
<CAPTION>
AVERAGE % PRICE PREMIUM PAID
-----------------------------
4 WEEKS 1 WEEK 1 DAY
-------- ------- ------
TRANSACTION TYPES PRIOR TO ANNOUNCEMENT DATE
- ----------------- -----------------------------
<S> <C> <C> <C>
Hostile Transactions.................................. 50.0 53.4 49.5
"Friendly" Cash Transactions.......................... 43.1 38.1 32.6
"Friendly" Stock Transactions......................... 39.9 33.5 28.9
All Technology Cash Transactions...................... 51.2 47.0 38.2
All Technology Stock Transactions..................... 48.7 41.8 35.2
Lucent Precedent Public Transactions.................. 48.1 27.4 15.3
Proposed Lucent/Mosaix Transaction.................... 27.3 50.0 25.4
</TABLE>
ANALYSIS OF SELECTED MERGER TRANSACTIONS. BT Alex. Brown reviewed the
financial terms, to the extent publicly available, of 29 completed public
company software and communications transactions since January 1, 1994. BT Alex.
Brown calculated various financial multiples based on publicly available
information for each of the selected transactions and compared them to
corresponding financial multiples for the proposed transaction. However, BT
Alex. Brown did not rely significantly upon the analysis of the selected merger
transactions in connection with its opinion or its presentation to the Mosaix
board of directors. BT Alex. Brown believes that the above analysis is limited
in its relevance because most of the above transactions occurred several years
ago when the perception of growth in the call management system business was
higher. This change in sentiment by securities analysts is evidenced by
significantly lower public company trading analysis multiples. BT Alex. Brown
believed that the other valuation methodologies described above were more
relevant valuation parameters.
OTHER FACTORS. In rendering its opinion, BT Alex. Brown also reviewed and
considered, among other things:
- historical and projected financial data and operating data for Mosaix and
Lucent and
- the current shareholder profile of Mosaix.
The preparation of a fairness opinion is a complex analytic process
involving various determinations as to the most appropriate and relevant methods
of financial analyses and the application of those methods to the particular
circumstances. Fairness opinions are not readily susceptible to summary
description. The analyses and the summary stated above must be considered as a
whole. Selecting portions of the analyses, without
32
<PAGE> 41
considering all analyses, or selecting portions of the above summary, without
considering all factors and analyses, could create a misleading or incomplete
view of the processes underlying the analyses and opinion. In performing its
analyses, BT Alex. Brown made numerous assumptions with respect to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Mosaix and Lucent. No
company, transaction or business used in the analyses as a comparison is
identical to Mosaix, Lucent or the proposed merger, nor is an evaluation of the
results of the analyses entirely mathematical; rather, the analyses involve
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the merger, public trading
or other values of the companies, business segments or transactions being
analyzed. The estimates contained in the analyses and the ranges of valuations
resulting from any particular analysis are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
those suggested by the analyses. In addition, analyses relating to the value of
businesses or securities do not purport to be appraisals or to reflect the
prices at which businesses or securities actually may be sold. Accordingly, the
analyses and estimates are inherently subject to substantial uncertainty.
The type and amount of consideration payable in the merger were determined
through negotiations between Mosaix and Lucent and were approved by the Mosaix
board of directors. Although BT Alex. Brown provided advice to Mosaix during the
course of these negotiations, the decision to enter into the merger was solely
that of the Mosaix board of directors. BT Alex. Brown's opinion and financial
analyses were only one of a number of factors taken into consideration by the
Mosaix board of directors in its evaluation of the proposed merger and should
not be viewed as determinative of the views of the Mosaix board of directors or
management of Mosaix with respect to the Mosaix exchange ratio or the merger.
Based on the terms of BT Alex. Brown's engagement, Mosaix agreed to pay
$100,000 to BT Alex. Brown upon execution of its engagement letter and $400,000
to BT Alex. Brown upon the public announcement of the merger, each of which will
be credited against an aggregate financial advisory fee based on the value of
the merger consideration at closing (which fee would have been approximately
$1,700,000 based on the merger value at announcement) payable upon consummation
of the merger. In addition, Mosaix agreed to reimburse BT Alex. Brown for its
reasonable travel and other out-of-pocket expenses, including reasonable fees
and disbursements of counsel, and to indemnify BT Alex. Brown and related
parties against liabilities, including a number of liabilities under the federal
securities laws, relating to, or arising out of, its engagement.
Mosaix selected BT Alex. Brown based on BT Alex. Brown's reputation,
expertise and familiarity with Mosaix and its business. BT Alex. Brown is an
internationally recognized investment banking firm and, as a customary part of
its investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. BT Alex. Brown has, from time to time, provided investment banking and
other financial services to Mosaix or its affiliates. BT Alex.
33
<PAGE> 42
Brown regularly publishes research reports regarding the communications software
industry and the securities of publicly owned companies in such industry. In the
ordinary course of business, BT Alex. Brown may actively trade or hold the
securities of both of Mosaix and Lucent for its own account and the account of
customers and, accordingly, may at any time hold a long or short position in
securities of Mosaix and Lucent.
INTERESTS OF MOSAIX DIRECTORS AND MANAGEMENT IN THE MERGER
In considering the recommendation of the Mosaix board of directors in favor
of the merger, shareholders of Mosaix should be aware that certain directors and
executive officers of Mosaix have interests in the merger that are different
from, or in addition to, the interests of shareholders of Mosaix. These
interests relate to or arise from, among other things:
- the continued indemnification of current directors and officers of Mosaix
pursuant to the merger agreement
- the retention of certain current officers of Mosaix as employees or
consultants
- directors and employees with stock options to acquire Mosaix common stock
will have these options converted to stock options to acquire Lucent
common stock pursuant to the merger agreement and options held by certain
executive officers and other employees will become fully vested
- six executive officers are parties to employment agreements that provide
for severance payments if such executive officer is terminated by Mosaix
or resigns for "good reason" (including a material change in
responsibilities) following a "corporate transaction," such as the
merger.
These interests are described below, to the extent material, and except as
described below those persons have, to the knowledge of Lucent and Mosaix, no
material interest in the merger apart from those of shareholders generally. The
Mosaix 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 Mosaix and its subsidiaries as
provided in their respective articles of incorporation and by-laws will be
assumed by the surviving corporation in the merger, and will continue in full
force and effect in accordance with their terms after the merger. Lucent will
maintain for six years after the merger directors' and officers' liability
insurance for acts or omissions which occur prior to the merger for those
directors and officers who were, as of the date of the merger agreement, covered
by Mosaix'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 premium paid by Mosaix for its existing insurance
coverage. If Lucent cannot maintain the existing or equivalent insurance
coverage without exceeding the 200% cap, Lucent is required to
34
<PAGE> 43
maintain only that amount of insurance coverage which can be obtained by paying
an annual premium equal to the 200% cap.
MOSAIX EXECUTIVE OFFICERS. Messrs. Tiliacos and Flavio will be employed
in transitional capacities as employees of Mosaix until September 30, 1999 and
then will be retained as consultants for a period expiring September 30, 2000.
Because their responsibilities are materially changed, they will receive the
severance benefits (or substantial portions thereof) provided by existing
employment agreements. Messrs. Tiliacos and Flavio will also enter into
noncompetition agreements. Lucent and other executive officers of Mosaix are
currently in discussions regarding employment following the merger.
EMPLOYEE BENEFITS. Lucent has agreed to provide employee benefit plans,
programs and arrangements to those individuals who will continue to be employees
of Mosaix 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 arrangements of Mosaix that
were provided to employees of Mosaix as were in effect as of April 2, 1999. See
"-- Continuation of Mosaix Employee Benefits" on page 41.
STOCK OPTIONS. Under the merger agreement, at the effective time of the
merger, Lucent will assume each stock option plan of Mosaix and all stock
options granted under those plans to acquire shares of Mosaix 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 Mosaix common stock subject to that Mosaix option multiplied by the
0.19273 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 Mosaix common stock subject to that Mosaix option
divided by the 0.19273 exchange ratio. As soon as practicable following the
effective time 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 Mosaix 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 Mosaix options remain outstanding. See "-- Effect on Awards
Outstanding Under Mosaix Stock Plans" on page 42. Also, stock options held by
certain executive officers and other employees will become fully vested as a
result of the merger.
CHANGE IN CONTROL-TERMINATION AGREEMENTS. The six Mosaix executive
officers are parties to previously executed employment agreements that provide
for severance payments if any such executive officer is terminated by Mosaix or
resigns for "good reason" (including a material change in responsibilities)
following the merger. The severance payment consists of base salary for two
years for the chief executive officer, for
35
<PAGE> 44
18 months for four other executive officers and six months for one executive
officer. Messrs. Tiliacos and Flavio will be entitled to receive these severance
payments and other executive officers may also be entitled to receive such
payments whether or not they continue with Mosaix after the merger, depending on
the terms of their employment.
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 Mosaix of
letters from PricewaterhouseCoopers LLP and KPMG LLP regarding those firms'
concurrence with Lucent management's and Mosaix management's conclusions,
respectively, that pooling of interests accounting is appropriate for the merger
under Accounting Principles Board Opinion No. 16 if completed in accordance with
the merger agreement. See "The Merger Agreement and Stock Option
Agreement -- The Merger Agreement -- Conditions to the Completion of the Merger"
on page 43 and "-- Termination" on page 47. Under this accounting treatment,
when the merger becomes effective, the assets and liabilities of Mosaix would be
added to those of Lucent at their recorded book values and the stockholders'
equity accounts of Lucent and Mosaix would be combined on Lucent's consolidated
balance sheet.
Because of certain repurchases by Mosaix of its common stock, Mosaix is
required to issue and sell approximately 2,846,000 shares of Mosaix common stock
prior to the merger in order for the merger to be accounted for as a pooling of
interests. As part of the merger agreement, Mosaix has agreed that it will issue
and sell that number of shares prior to the merger. See "The Merger Agreement
-- Offering of Shares of Mosaix Common Stock to Cure 'Tainted' Shares" on page
46.
FORM OF THE MERGER
Subject to the terms and conditions of the merger agreement and in
accordance with Washington law, at the effective time of the merger, Noah
Acquisition Inc., a wholly owned subsidiary of Lucent, will merge with and into
Mosaix. Mosaix will be the surviving corporation of the merger and a wholly
owned Washington subsidiary of Lucent, and will continue under the name "Mosaix,
Inc."
MERGER CONSIDERATION
At the effective time of the merger, each outstanding share of Mosaix
common stock will be converted into the right to receive 0.19273 shares of
Lucent common stock (other than shares as to which dissenters' rights to
appraisal have been perfected), except that treasury stock and stock held by
Lucent and Noah Acquisition will be canceled. Shareholders 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 Mosaix common stock will no
longer be outstanding, will automatically be canceled and will cease to exist.
At that time, each holder of a certificate representing shares of Mosaix common
stock (other than shares as to which dissenters' rights to appraisal have
36
<PAGE> 45
been perfected) will cease to have any rights as a shareholder except the right
to receive Lucent common stock and the right to receive cash for any fractional
share of Lucent common stock. The exchange ratio of 0.19273 was determined
through arm's-length negotiations between Lucent and Mosaix.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
The conversion of Mosaix 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 merger, The Bank of New York, the exchange agent,
will send a transmittal letter to each former Mosaix shareholder. The
transmittal letter will contain instructions for obtaining shares of Lucent
common stock in exchange for shares of Mosaix common stock. MOSAIX SHAREHOLDERS
SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
After the merger, each certificate that previously represented shares of
Mosaix common stock will represent only the right to receive the Lucent common
stock into which those shares were converted in the merger and the right to
receive cash for any fractional share of Lucent common stock as described below.
Until holders of certificates previously representing Mosaix 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 those shares have been converted with a record date after the merger, and
will not receive cash for any fractional shares of Lucent common stock. When
holders surrender those 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 Mosaix common stock which is not
registered in the records of Mosaix's transfer agent, 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:
- that certificate is properly endorsed and otherwise is in proper form for
transfer
- the person requesting that issuance will (1) pay to The Bank of New York
any transfer or other taxes resulting from the issuance of shares of
Lucent common stock and delivery of cash for any fractional share or (2)
establish to the satisfaction of The Bank of New York that tax has been
paid or is not applicable.
All shares of Lucent common stock issued upon conversion of shares of
Mosaix common stock, including any cash paid for any fractional share of Lucent
common stock, will be issued in full satisfaction of all rights relating to
those shares of Mosaix common stock.
No fractional share of Lucent common stock will be issued to any Mosaix
shareholder upon surrender of certificates previously representing Mosaix common
stock. In lieu of any fractional share, the shareholder will receive cash equal
to the product obtained by multiplying (1) the closing price for a share of
Lucent common stock on the New York Stock Exchange Composite Transactions Tape
on the date immediately
37
<PAGE> 46
preceding the date on which the merger is completed by (2) the fractional share
to which the shareholder would otherwise be entitled.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of articles of merger with
the Washington Secretary of State or a later time agreed upon by Lucent and
Mosaix and specified in the articles of merger. The filing of articles of merger
will occur as soon as practicable, but no later than the third business day,
after satisfaction or waiver of the conditions to the completion of the merger
described in the merger agreement unless another date is agreed to in writing by
Lucent and Mosaix.
STOCK EXCHANGE LISTING OF LUCENT COMMON STOCK
It is a condition to the completion of the merger that Lucent common stock
issuable to Mosaix shareholders in the merger be authorized for listing on the
New York Stock Exchange, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF MOSAIX COMMON STOCK
If the merger is completed, Mosaix common stock will be delisted from The
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following reflects the opinion delivered by Perkins Coie LLP to Mosaix
regarding the material federal income tax considerations relevant to the
exchange of shares of Mosaix common stock for Lucent common stock pursuant to
the merger. It is based on the Internal Revenue Code of 1986, or Code, the
applicable treasury regulations promulgated or proposed under the Code, judicial
authority and current administrative rulings and practice. All of these may
change, possibly on a retroactive basis.
Mosaix shareholders should be aware that the following discussion does not
deal with all federal income tax considerations that may be relevant to
particular shareholders of Mosaix in light of their particular circumstances. In
particular, this discussion does not address the specific tax consequences to
shareholders who are one of the following:
- banks
- insurance companies
- pension funds
- tax-exempt organizations
- dealers in securities or foreign currencies
- foreign persons
- persons who have a "functional currency" other than the U.S. dollar
38
<PAGE> 47
- persons who do not hold their Mosaix common stock as capital assets
within the meaning of Section 1221 of the Code
- persons who acquired their shares in connection with stock option or
stock purchase plans or in other compensatory transactions.
In addition, the following discussion does not address the tax consequences of
the merger under foreign, state or local tax laws or the tax consequences of
transactions completed prior or subsequent to or concurrently with the merger,
whether or not such transactions are in connection with the merger. ACCORDINGLY,
MOSAIX SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN THEIR
PARTICULAR CIRCUMSTANCES.
The tax opinion Mosaix received from its counsel, Perkins Coie LLP, states
that the merger will constitute a "reorganization" within the meaning of Section
368 of the Code. The opinion also concludes that, subject to the limitations and
qualifications referred to below, the merger will result in the following
federal income tax consequences:
(1) No gain or loss will be recognized by holders of Mosaix common
stock solely upon their receipt of Lucent common stock solely in exchange
for Mosaix common stock in the merger, except to the extent of cash
received in lieu of a fractional shares of Lucent common stock.
(2) The aggregate tax basis of Lucent common stock received by Mosaix
shareholders in the merger will be the same as the aggregate tax basis of
Mosaix common stock surrendered in the merger reduced by any amount
allocable to fractional share interests for which cash is received.
(3) The holding period of Lucent common stock received in the merger
will include the period for which the Mosaix common stock surrendered in
exchange therefor was held, provided that the Mosaix common stock is held
as a capital asset at the time of the merger.
(4) Cash payments received by holders of Mosaix common stock in lieu of
fractional shares will be treated as if fractional shares of Lucent common
stock had been issued in the merger and then redeemed by Lucent. A
shareholder of Mosaix receiving such cash will generally recognize gain or
loss upon such payment, equal to the difference, if any, between such
shareholder's allocable basis in the fractional shares and the amount of
cash received. This gain or loss will be a capital gain or loss if the
Mosaix common stock is held by such shareholder as a capital asset at the
effective time of the merger.
(5) Mosaix will recognize no gain or loss solely as a result of the
merger.
No ruling has been or will be obtained from the Internal Revenue Service,
or IRS, in connection with the merger. It is a condition to the consummation of
this merger that Mosaix receive a closing opinion from Perkins Coie LLP
regarding the qualification of
39
<PAGE> 48
the merger as a reorganization that is consistent with the opinion already
received. Mosaix shareholders should be aware that the tax opinions do not bind
the IRS and that the IRS is therefore not precluded from successfully asserting
a contrary position, in which case the Lucent common stock received in the
merger could be taxable to Mosaix shareholders. The tax opinion is also subject
to certain assumptions, and is subject to the truth and accuracy of certain
customary representations made by Lucent and Mosaix.
Mosaix shareholders will be required to attach a statement to their tax
returns for the year of the merger that contains certain information required by
Treasury Regulations under Section 368 of the Code. Such statement must include
the shareholder's tax basis in the shareholder's Mosaix common stock and a
description of the Lucent common stock received.
FAILURE OF THE MERGER TO QUALIFY AS A REORGANIZATION. A successful IRS
challenge to the reorganization status of the merger would result in a Mosaix
shareholder recognizing gain or loss with respect to each share of Mosaix common
stock surrendered equal to the difference between the shareholder's basis in
that share and the fair market value, as of the effective time of the merger, of
the Lucent common stock received in exchange for that share. In that case, a
shareholders' aggregate basis in the Lucent common stock so received would equal
such fair market value and his or her holding period for that Lucent common
stock would begin the day after the merger.
REGULATORY MATTERS
UNITED STATES ANTITRUST. Under the Hart-Scott-Rodino Antitrust
Improvements Act and related rules, certain transactions, including the merger,
may not be completed unless certain waiting period requirements have been
satisfied. Lucent and Mosaix each filed a Notification and Report Form with the
Antitrust Division of the Department of Justice and the Federal Trade Commission
on April 19, 1999. Under the antitrust laws, the merger may not be completed
until after the expiration or early termination of the applicable waiting
period. The applicable waiting period expired on May 19, 1999. 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 Mosaix. There can be no assurance that a challenge to the merger on
antitrust grounds will not be made or, if made, that it would not be successful.
DISSENTERS' RIGHTS TO APPRAISAL
Mosaix shareholders will be entitled to dissenters' rights to appraisal
under Chapter 23B.13 of the Washington Business Corporation Act in connection
with the merger if they follow the procedures specified for perfecting those
rights. Chapter 23B.13 of the Washington Business Corporation Act is attached to
this accompanying proxy statement/prospectus as Annex D.
40
<PAGE> 49
Generally, in order to exercise your dissenters' rights to appraisal:
- you must not vote in favor of the merger
- you must, before the special meeting of shareholders to vote on the
merger, send a written notice to Mosaix of your intent to demand payment
for the fair value of your shares of Mosaix common stock in compliance
with the Washington Business Corporation Act.
Merely voting against the merger will not protect your dissenters' rights.
Annex D to this proxy statement/prospectus contains the Washington statutory
provisions relating to your dissenters' rights. Failure to follow all the steps
required by these provisions will result in the loss of your dissenters' rights
to appraisal.
If you follow all the steps required by these provisions, your shares of
Mosaix common stock which are issued and outstanding immediately prior to the
merger will not be converted into or be exchangeable for the right to receive
shares of Lucent common stock, unless you fail to perfect or effectively
withdraw or lose your dissenters' rights to appraisal under the Washington
Business Corporation Act. If you fail to perfect or effectively withdraw or lose
your dissenters' rights, your shares of Mosaix common stock will be converted
into and become exchangeable for the right to receive, as of the effective time
of the merger, (1) shares of Lucent common stock and (2) cash for any fractional
share of Lucent common stock, in each case without interest.
Mosaix will give Lucent (1) prompt notice of any demands for appraisal,
attempted withdrawal of these demands, and any other instrument served pursuant
to the Washington Business Corporation Act and received by Mosaix relating to
dissenters' rights, and (2) the opportunity to participate in, and direct all
negotiations and proceedings with respect to, the exercise of dissenters' rights
under the Washington Business Corporation Act. Mosaix is not allowed, except
with the prior written consent of Lucent, to make any payment with respect to
any demands for appraisal, offer to settle or settle any demands for appraisal.
CONTINUATION OF MOSAIX EMPLOYEE BENEFITS
Lucent has agreed to provide employee benefit plans, programs and
arrangements to those individuals who will continue to be employees of Mosaix
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 arrangements of Mosaix that were
provided to employees of Mosaix as were in effect on April 2, 1999.
Lucent has agreed that:
- continuing employees of Mosaix will be credited for their service with
Mosaix and its affiliates and predecessor employers for purposes of
determining vesting and entitlement to benefits, and for purposes of
satisfying any waiting periods,
41
<PAGE> 50
evidence of insurability requirements or the application of any pre-existing
condition limitations, in any employee benefits plans, programs or arrangements
maintained by Lucent in which they subsequently participate after the effective
time of the merger, but not for accrual of pension benefits and not to
the extent that recognition would result in a duplication of benefits
- it will waive pre-existing condition limitations to any employee benefits
plans, programs or arrangements maintained by Lucent to the same extent
waived under the applicable employee benefits plans, programs or
arrangements of Mosaix
- continuing employees will be given credit for amounts paid under a
corresponding benefit plan during the same period 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 MOSAIX STOCK PLANS
After the merger, Lucent will assume each stock option plan of Mosaix. Each
stock option to acquire shares of Mosaix common stock under those plans will be
amended and converted into a stock option to acquire shares of Lucent common
stock on the same terms and conditions. The number of shares of Lucent common
stock to be subject to each Mosaix option assumed by Lucent will be equal to the
number of shares of Mosaix common stock subject to the Mosaix option multiplied
by the 0.19273 exchange ratio and rounded down to the nearest whole share. The
exercise price per share of Lucent common stock under each Mosaix option assumed
by Lucent will be equal to the exercise price per share of Mosaix common stock
subject to the Mosaix option divided by the 0.19273 exchange ratio. As of June
7, 1999, the number of shares of Mosaix common stock reserved for issuance under
these plans was approximately two million.
In the case of any assumed stock option that is an incentive stock option
under Section 422 of the Internal Revenue Code, the option price and the number
of shares of Lucent common stock purchasable pursuant to that option will be
further adjusted, if necessary, to preserve the status of the option as an
incentive stock option. Prior to the merger, Lucent will take all necessary
actions to assume the Mosaix stock option plans. As soon as practicable
following 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 Mosaix stock options. That
registration statement will be kept effective (and the current status of the
prospectus or prospectuses required by that registration statement will be
maintained) for so long as any assumed Mosaix options remain outstanding. In
addition, Mosaix has agreed to amend its 1991 Employee Stock Purchase Plan to
terminate the current offering period on or prior to the effective date of the
merger and to terminate all future offering periods.
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 Mosaix
42
<PAGE> 51
shareholder who may be deemed to be an "affiliate" of Mosaix 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
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 unless, in the opinion of counsel to Lucent, the transaction will not
have any adverse consequences for Lucent with respect to the treatment of the
merger for tax purposes. In addition, it is expected that each affiliate will
agree not to make any disposition beginning 30 days prior to the merger until
after the date on which financial results covering at least 30 days of combined
operations of Lucent and Mosaix after the merger have been published. The merger
agreement requires Mosaix to use its reasonable best efforts to cause its
affiliates to enter into these agreements, and Lucent has agreed to use its
reasonable best 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 resale.
THE MERGER AGREEMENT AND STOCK OPTION AGREEMENT
The following description summarizes the material provisions of the merger
agreement and the stock option agreement. We urge shareholders to read carefully
the merger agreement and the stock option agreement, which are attached as
Annexes A and B 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 at least two-thirds of the voting power of all outstanding
shares of Mosaix common stock having approved the merger agreement
- the waiting period and any extension thereof applicable to the merger
under applicable antitrust laws having expired or been terminated and the
receipt of any other governmental authorizations or consents and the
making of any other filings which if not obtained or made would
reasonably be likely to have a material adverse effect
- Lucent and Mosaix each signing and delivering letters relating to certain
tax matters
- 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
that (1) would prevent the consummation of
43
<PAGE> 52
the merger or (2) otherwise would be reasonably likely to have a material
adverse effect, as described below, on Lucent or Mosaix; provided, that
each of the parties will have used its reasonable best efforts to prevent
the entry of any legal restraint or prohibition and to appeal as promptly
as possible any 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 Mosaix shareholders in the
merger having been authorized for listing on the New York Stock Exchange,
subject to official notice of issuance
- Mosaix having completed an offering of shares of its common stock
necessary so that the merger would be accounted for as a pooling of
interests under Accounting Principles Board Opinion No. 16 and applicable
SEC rules and regulations
- Lucent and Mosaix each having received letters dated as of the date on
which the merger is to be completed from PricewaterhouseCoopers LLP and
KPMG LLP regarding those firms' concurrence with Lucent management's and
Mosaix management's conclusions, respectively, that pooling of interests
accounting is appropriate for the merger under Accounting Principles
Board Opinion No. 16 and applicable SEC rules and regulations if the
merger is completed in accordance with the merger agreement
- Mosaix ensuring that the cash-out provisions in its Restated 1987 Stock
Option Plan do not apply upon the occurrence of a "Change in Control" as
defined in the Restated 1987 Stock Option Plan.
In addition, each party's obligation to effect the merger is further
subject to the satisfaction or waiver of the following additional conditions:
- each party having performed the various obligations and complied with the
various conditions in all material respects to be performed and complied
with by it on or by the closing date
- each representation and warranty of the other party set forth in the
merger agreement to the extent it is qualified by a material adverse
effect being true and correct, and each representation and warranty of
the other party set forth in the merger agreement to the extent it is not
so qualified by a material adverse effect being true and correct in all
material respects, in each case, on and as of the closing date with the
same effect as though that representation and warranty was made on and as
of the closing date, except for changes permitted by the merger agreement
and except to the extent that any representation and warranty expressly
relates to an earlier date, in which case that representation and
warranty will be as of that earlier date
44
<PAGE> 53
- no event or events having occurred that could reasonably be expected to
have a material adverse effect on the other party
- in the case of Lucent only, Mosaix having received all necessary consents
or waivers, in form and substance satisfactory to Lucent, from the other
parties to each contract, lease or agreement to which Mosaix is a party,
except where the failure to receive any consent or waiver would not
reasonably be expected, individually or in the aggregate, to have a
material adverse effect on Mosaix
- in the case of Lucent only, certain individuals having entered into
non-disclosure and non-competition agreements with Mosaix and Lucent, and
those agreements being in full force and effect
- in the case of Lucent only, receipt of an executed affiliate letter from
each person who is an "affiliate" of Mosaix for purposes of Rule 145
under the Securities Act and 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
- in the case of Mosaix only, receipt of an executed affiliate letter from
each person who is an "affiliate" of Lucent for purposes of qualifying
the merger for pooling of interests accounting treatment under Opinion 16
of the Accounting Principles Board and applicable SEC rules and
regulations
- in the case of Mosaix only, Mosaix having received from Perkins Coie LLP,
on the date on which the registration statement is declared effective by
the SEC and on the closing date, an opinion dated as of the relevant date
stating that the merger will qualify for U.S. federal income tax purposes
as reorganization within the meaning of Section 368(a) of the Internal
Revenue Code.
The merger agreement defines a "material adverse effect" when used in
connection with Lucent or Mosaix as any condition or event that:
- has a material adverse effect on the assets, business, financial
condition, operations or prospects of Lucent or Mosaix, as applicable, in
each case, taken as a whole with its subsidiaries, other than any
condition or event
- relating to the economy in general
- relating to the industries in which that party generally operates
- arising out of or resulting from actions contemplated by the parties
in connection with, or attributable to, the announcement of the
merger agreement and the transactions contemplated by the merger
agreement, including loss of certain personnel, customers or
suppliers or the delay or cancellation of orders for products
- in the case of Mosaix, litigation brought or threatened against
Mosaix or any member of its board of directors in respect of the
merger agreement
- materially impairs the ability of Lucent or Mosaix to perform its
obligations under the merger agreement or the stock option agreement
45
<PAGE> 54
- prevents or materially delays the consummation of transactions
contemplated under the merger agreement.
OFFERING OF SHARES OF MOSAIX COMMON STOCK TO CURE "TAINTED" SHARES. A
condition to the completion of the merger is Mosaix having completed an offering
of shares of its common stock necessary so that the merger can be accounted for
as a pooling of interests under Accounting Principles Board Opinion No. 16 and
applicable SEC rules and regulations. Shares of Mosaix common stock repurchased
by Mosaix within two years prior to the merger announcement are deemed under
applicable accounting rules to be "tainted" and would prevent pooling of
interests accounting treatment for the merger to the extent that the tainted
shares, together with any fractional shares settled in cash, exceed 10% of the
total number of shares of Lucent common stock to be issued in the merger.
Tainted shares may be cured through the reissuance prior to the effective time
of the merger of an equivalent number of shares. Mosaix intends to issue
approximately 2,846,000 shares of its common stock promptly after the special
shareholders meeting to approve the merger agreement in order to satisfy this
condition to the completion of the merger.
NO OTHER NEGOTIATIONS INVOLVING MOSAIX. The merger agreement provides
that Mosaix will not, and will not permit any of its subsidiaries to, or
authorize or permit any of its directors, officers or employees or any 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 designed to facilitate, any
inquiries or the making of any takeover proposal, as described below
- participate in any discussion or negotiation regarding any takeover
proposal.
However, if at any time prior to the date of the special meeting, the
Mosaix board of directors determines in good faith, after consultation with
outside counsel, that it is legally advisable to do so in order to comply with
its fiduciary duties to Mosaix shareholders under applicable law, Mosaix may, in
response to a superior proposal, as described below, which was not solicited by
it or which did not otherwise result from a breach of the merger agreement,
subject to providing prior written notice of its decision to do so to Lucent:
- furnish under a customary confidentiality agreement information about
Mosaix and its subsidiaries to any person making that superior proposal
- participate in discussions or negotiations regarding that superior
proposal.
The merger agreement provides that:
- the term "takeover proposal" means any inquiry, proposal or offer from
any person relating to (1) any acquisition or purchase of a business that
constitutes 15% or more of the net revenues, net income or assets of
Mosaix and its subsidiaries, taken as a whole, or 15% or more of any
class of equity securities of Mosaix or any material equity interest in
any subsidiary of Mosaix, (2) any
46
<PAGE> 55
tender offer or exchange offer that if completed would result in any
person beneficially owning 15% or more of any class of equity securities
of Mosaix or any material equity interest in any subsidiary of Mosaix, or
(3) any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving Mosaix or any
of its subsidiaries
- the term "superior proposal" means any proposal made by a third party to
acquire, for consideration consisting of cash and/or securities, more
than 50% of the combined voting power of the shares of Mosaix common
stock then outstanding or all or substantially all the assets of Mosaix,
on terms that the Mosaix board of directors determines in its good faith
judgment, based on the advice of a financial advisor of nationally
recognized reputation, to be more favorable to Mosaix's shareholders than
the merger and for which financing, to the extent required, is then
committed or which, in the good faith judgment of the Mosaix board of
directors, is reasonably capable of being obtained.
Except as expressly permitted by the merger agreement, neither the Mosaix
board of directors nor any committee of the board will:
- withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Lucent, the approval or recommendation by the Mosaix
board of directors or any committee of the merger or the merger agreement
- approve or recommend, or propose publicly to approve or recommend, any
takeover proposal
- cause Mosaix to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any takeover
proposal, other than any agreement entered into concurrently with a
termination as described in the next sentence in order to facilitate that
action.
Notwithstanding the foregoing, prior to the date of the special meeting, in
response to a superior proposal which was not solicited by Mosaix and which did
not otherwise result from a breach of the merger agreement, the Mosaix board of
directors may terminate the merger agreement, but only at a time that is prior
to the date of the special meeting and after the third business day following
Lucent's receipt of written notice advising Lucent that the Mosaix board of
directors is prepared to accept a superior proposal, and specifying the material
terms and conditions of that superior proposal and identifying the person making
that superior proposal. Mosaix must pay a fee in the amount of $2,815,000 to
Lucent upon that termination. See "-- Termination" and "-- Termination Fees"
below.
TERMINATION. The merger agreement may be terminated at any time prior to
the merger, whether before or after approval of the merger agreement by the
shareholders of Mosaix:
- by mutual agreement of Lucent, Noah Acquisition and Mosaix
- by Lucent, Noah Acquisition or Mosaix, if the merger has not been
completed by September 30, 1999
47
<PAGE> 56
- by Lucent, Noah Acquisition or Mosaix, if any court of competent
jurisdiction in the United States or other United States governmental
authority issues an order, decree, ruling or takes any other action
restraining, enjoining or otherwise prohibiting the merger and that
order, decree, ruling or other action has become final and nonappealable
- by Lucent, Noah Acquisition or Mosaix, if the Mosaix shareholders have
not approved the merger agreement at a Mosaix shareholders meeting or any
adjournment or postponement of that meeting
- by Lucent or Mosaix, if the other party has materially breached its
obligations under the merger agreement, unless the breach is cured within
15 calendar days after notice to the other party
- by Mosaix, at any time prior to the date of the special meeting of
shareholders, in response to a superior proposal which was not solicited
by Mosaix and which did not otherwise result from a breach of the
provisions of the merger agreement, if Mosaix has complied with certain
notice requirements and payment of the termination fee
- by Lucent, because Mosaix or any of its directors or officers
participated in discussions or negotiations with third parties regarding
certain takeover proposals or other business transactions involving
Mosaix in material breach of the merger agreement.
TERMINATION FEES. If the merger agreement is terminated:
- by Lucent or Mosaix because the merger has not been completed by
September 30, 1999 at a time when a bona fide takeover proposal has been
made directly to Mosaix shareholders generally or has otherwise become
publicly known or any person has publicly announced an intention to make
a takeover proposal and, within nine months of the termination, Mosaix or
any of its subsidiaries enters into any definitive agreement with respect
to, or consummates, any takeover proposal
- by Lucent or Mosaix because the Mosaix shareholders have not approved the
merger agreement at a Mosaix shareholders meeting or any adjournment or
postponement of that meeting
- by Mosaix because prior to the date of the special meeting of Mosaix
shareholders, Mosaix received a superior proposal which was not solicited
by Mosaix and which did not otherwise result from a breach of the merger
agreement or
- by Lucent because Mosaix or any of its directors or officers participated
in discussions or negotiations with third parties regarding certain
takeover proposals or other business transactions involving Mosaix in
material breach of the merger agreement
48
<PAGE> 57
then, in each case, Mosaix must pay Lucent a $2,815,000 termination fee. The
merger agreement further provides that if Mosaix fails to pay any termination
fee due, Mosaix must pay the costs and expenses, including attorneys' fees and
expenses, in connection with any action taken to collect payment, together with
interest on the amount of the termination fee.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the merger agreement,
Mosaix has agreed that, prior to the merger, it will and will cause each of its
subsidiaries to:
- maintain its existence in good standing
- maintain the general character of its business and properties and conduct
its business in the ordinary and usual manner consistent with past
practices, except as expressly permitted by the merger agreement
- maintain business and accounting records consistent with past practices
- use its reasonable best efforts to preserve its business intact, to keep
available the services of its present officers and employees, and to
preserve the goodwill of its suppliers, customers and others having
business relations with Mosaix or that subsidiary.
In addition, Mosaix has agreed that, subject to certain exceptions provided
in the merger agreement or approved by Lucent in writing, it will not and will
not permit any of its subsidiaries to:
- amend or otherwise change its articles of incorporation or by-laws
- issue, sell or authorize for issuance or sale, or grant any options or
make any other agreements with respect to, any shares of its capital
stock or other securities other than (1) any issuance of Mosaix common
stock upon the exercise of any outstanding option which option was issued
prior to the date of the merger agreement in accordance with the terms of
the relevant stock option, (2) the issuance of shares of Mosaix common
stock pursuant to the stock option agreement with Lucent or (3) the
offering of Mosaix shares in order to permit the merger to be accounted
for as a pooling of interests
- declare, set aside, make or pay any dividend or other distribution
payable in cash, stock, property or otherwise with respect to any of its
capital stock
- reclassify, combine, split, subdivide or redeem, purchase or otherwise
acquire, directly or indirectly, any of its capital stock
- incur any indebtedness for borrowed money or issue any debt securities or
assume, guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans or
advances, except (1) short-term borrowings incurred in the ordinary
course of business or to refinance existing or maturing indebtedness and
(2) intercompany indebtedness between Mosaix and any of its subsidiaries
or between subsidiaries
49
<PAGE> 58
- acquire any corporation, partnership, other business organization or any
division thereof or any material amount of assets
- enter into any contract or agreement other than in the ordinary course of
business and consistent with past practice
- authorize any capital commitment which is in excess of $50,000 or capital
expenditures which are, in the aggregate, in excess of $100,000
- mortgage, pledge or subject to lien, any of its assets or properties or
agree to do so except for certain permitted liens under the merger
agreement
- sell, lease, license, 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
- assume, guarantee or otherwise become responsible for the obligations of
any other person or agree to so do
- enter into or agree to enter into any employment agreement
- take any action, other than in the ordinary course of business and
consistent with past practice, with respect to accounting policies or
procedures
- make any tax election or settle or compromise any material federal,
state, local or foreign income tax liability
- settle or compromise any pending or threatened suit, action or claim
which is material or which relates to any of the transactions
contemplated by the merger agreement
- pay, discharge or satisfy any claim, liability or obligation, other than
the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the most recently audited balance sheet filed by
Mosaix with the Securities and Exchange Commission or subsequently
incurred in the ordinary course of business and consistent with past
practice
- except in connection with the sale of Mosaix's products in the ordinary
course of business and consistent with past practice, sell, assign,
transfer, license, sublicense, pledge or otherwise encumber any of
Mosaix's intellectual property rights
- 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 Mosaix
benefit plan or any other agreement, plan or policy involving Mosaix or
its subsidiaries, and one or more of its directors, officers or
employees, or materially change any actuarial or 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 those contributions are determined
50
<PAGE> 59
- except for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not materially increase the
benefits or compensation expenses of Mosaix or its subsidiaries, or as
contemplated in the merger agreement or by the terms of any employment
agreement in existence on the date of the merger agreement, increase the
cash compensation of any director, executive officer or other key
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 of
those persons, except 1998 bonuses that have been earned under Mosaix's
incentive bonus plans in accordance with the terms of those plans as in
effect on the date of the merger agreement consistent with past practice.
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
shareholders of Mosaix, no amendment may be entered into which by law
requires further approval by Mosaix shareholders or Lucent stockholders
unless that 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 that party, extend the time for
performance of the obligations or other acts 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 consummated, all fees and expenses
incurred in connection with the merger, the merger agreement and the stock
option agreement will be paid by the party incurring those fees or expenses,
except that Lucent and Mosaix will share equally the costs and expenses incurred
in connection with filing, printing and mailing this proxy statement/prospectus
and the registration statement of which it is a part including SEC filing fees
and the filing fees for the premerger notification and report forms under the
Hart-Scott-Rodino Antitrust Improvements Act.
REPRESENTATIONS AND WARRANTIES. The merger agreement contains customary
representations and warranties relating to, among other things:
- corporate organization and similar corporate matters of Lucent, Noah
Acquisition and Mosaix
- subsidiaries of Mosaix
- the capital structure of Lucent and Mosaix
- 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 Lucent, Noah Acquisition and Mosaix
51
<PAGE> 60
- documents filed by each of Lucent and Mosaix with the Securities and
Exchange Commission, the accuracy of information contained in those
documents and the absence of undisclosed liabilities of each of Lucent
and Mosaix
- the accuracy of information supplied by each of Lucent and Mosaix in
connection with this proxy statement/prospectus and the registration
statement of which it is a part
- absence of material changes or events concerning Lucent and Mosaix
- compliance with applicable laws by Mosaix
- absence of changes in benefit plans of Mosaix
- matters relating to the Employee Retirement Income Security Act for
Mosaix
- filing of tax returns and payment of taxes by Mosaix
- required shareholder vote of Mosaix
- satisfaction of certain state takeover statutes' requirements by Mosaix
- absence of actions by Lucent or Mosaix that would prevent accounting for
the merger as a pooling of interests and the offering by Mosaix of its
stock to permit using this method of accounting
- absence of actions by Lucent or Mosaix that would prevent the merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code
- engagement and payment of fees of brokers, investment bankers, finders
and financial advisors by each of Lucent and Mosaix
- receipt of fairness opinions by Mosaix from its financial advisors
- intellectual property and year 2000 matters of Mosaix
- outstanding and pending material litigation of each of Lucent and Mosaix
- good and valid title to property of Mosaix
- certain leases and contracts entered into by Mosaix and absence of
default by Mosaix under those leases and contracts
- certain employment matters regarding Mosaix
- liability of Mosaix under environmental laws
- interim operations of Noah Acquisition.
ADDITIONAL AGREEMENTS. The merger agreement contains certain other
agreements, relating to, among other things:
- actions to be taken by Mosaix and Lucent relating to the assumption of
Mosaix stock option plans by Lucent
- employee benefits plans, programs and arrangements to be provided by
Lucent
52
<PAGE> 61
- indemnification by Lucent of directors and officers of Mosaix and
continuation by Lucent of current directors' and officers' liability
insurance maintained by Lucent as described below under the caption
"-- Indemnification and Insurance."
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 Mosaix and its subsidiaries as
provided in their respective articles of incorporation and by-laws will be
assumed by the surviving corporation in the merger and will continue in full
force and effect in accordance with their terms after the merger. Lucent will
maintain for six years after the merger the directors' and officers' liability
insurance for acts or omissions which occur prior to the effective time of the
merger for those directors and officers who were, as of the date of the merger
agreement, covered by Mosaix'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 premium paid by Mosaix for its
existing insurance coverage. If Lucent cannot maintain the existing or
equivalent insurance coverage without exceeding the 200% cap, Lucent is required
to obtain only that amount of insurance coverage which can be obtained by paying
an annual premium equal to the 200% cap.
AMENDMENTS TO THE MOSAIX ARTICLES OF INCORPORATION. As of the effective
time of the merger, the Mosaix articles of incorporation will be substantially
identical to the articles of incorporation of Noah Acquisition immediately prior
to the merger. For a summary of certain provisions of the Mosaix articles of
incorporation and the associated rights of Mosaix shareholders, see "Comparison
of Rights of Common Stockholders of Lucent and Common Shareholders of Mosaix" on
page 58.
AMENDMENTS TO THE MOSAIX BY-LAWS. The merger agreement provides that the
by-laws of Noah Acquisition, as in effect immediately prior to 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 Mosaix by-laws and the
associated rights of Mosaix shareholders, see "Comparison of Rights of Common
Stockholders of Lucent and Common Shareholders of Mosaix" on page 58.
THE STOCK OPTION AGREEMENT
GENERAL. Immediately following the execution and delivery of the merger
agreement, Lucent and Mosaix entered into a stock option agreement under which
Mosaix granted Lucent an option to purchase up to 2,092,757 shares of Mosaix
common stock, or that number of shares of Mosaix common stock as represents
19.9% of the then outstanding shares of Mosaix common stock, in each case,
without giving effect to shares of Mosaix common stock subject to or issued
under the option, at a purchase price of $10.50 per share.
EXERCISE OF THE OPTION. Except as described below, the option is
exercisable with respect to any or all the option shares at any time or times
after the occurrence of any event unconditionally entitling Lucent to receive
the termination fee under the merger
53
<PAGE> 62
agreement. The right to purchase shares under the stock option agreement will
expire at the effective time of the merger.
Lucent may exercise the option with respect to all or a portion of the
option shares by delivering to Mosaix an exercise notice specifying the number
of shares Lucent wishes to purchase, the denominations of certificates for those
shares and the closing date. Any purchase of the option shares is subject to
applicable laws and regulations, including approval under the Hart-Scott-Rodino
Antitrust Improvements Act.
If regulatory approvals are required and have not yet been obtained, Lucent
may acquire that number of option shares specified in the exercise notice that
does not require regulatory approval, and, if regulatory approval is then
obtained, Lucent may acquire the remaining number of option shares specified in
the exercise notice.
If Lucent receives official notice that a governmental or regulatory
approval will not be obtained or a governmental or regulatory approval has not
been obtained within six months after Lucent delivers to Mosaix an exercise
notice to purchase option shares, then Lucent may exercise its rights to receive
cash for those option shares for which regulatory approval will not be obtained.
The amount of cash will be equal to that number of shares of Mosaix common stock
multiplied by the difference between:
- the average closing price on The Nasdaq National Market of shares of
Mosaix common stock for the 10 trading days commencing on the 12th
trading day immediately preceding the option closing date; and
- the purchase price of the option.
ADJUSTMENTS TO NUMBER AND TYPE OF SHARES. The number and type of
securities subject to the option and the purchase price will be adjusted for any
change in Mosaix common stock by reason of a stock dividend, split-up, merger,
recapitalization, combination, exchange of shares or similar transaction, so
that Lucent will receive, upon exercise of the option, the number and type of
securities that Lucent would have received if the option had been exercised
immediately prior to the occurrence of that event, or the record date of that
event. The number of shares of Mosaix common stock subject to the option will
also be adjusted in the event Mosaix issues additional shares of common stock,
so that, after that issuance, the number of shares of Mosaix common stock
subject to the option represents 19.9% of the shares of Mosaix common stock then
issued and outstanding, without giving effect to shares subject to or issued
under the option.
If Mosaix enters into an agreement:
(1) to consolidate with or merge into any person other than Lucent or one
of its subsidiaries
(2) to permit any person other than Lucent or one of its subsidiaries to
merge into Mosaix or
(3) to sell or otherwise transfer all or substantially all its assets to
any person other than Lucent or one of its subsidiaries,
54
<PAGE> 63
then that agreement will provide that the option will, upon the completion of
that transaction, be converted into or exchanged for an option with identical
terms appropriately adjusted to acquire the number and class of shares or other
securities or property Lucent would have received for Mosaix common stock if the
option had been exercised immediately prior to that consolidation, merger, sale
or transfer, or the record date of that event.
CALL OPTION. If Lucent's right to exercise the option occurs because
Mosaix fails to obtain approval of at least two-thirds of the outstanding shares
of Mosaix common stock at the special shareholders meeting or any adjournment or
postponement and no takeover proposal has been made on or prior to the date of
that meeting, then Mosaix, upon notice delivered to Lucent within 10 days
following that meeting, may purchase Lucent's option for $563,000 payable not
later than 20 days after the date of Mosaix's notice. If Mosaix does not deliver
a notice to purchase the option as described in the previous sentence, Lucent
may, upon notice delivered to Mosaix within 30 days following the failed
approval by the Mosaix shareholders, cause Mosaix to purchase the option for
$563,000 payable not later than 20 days after Lucent's notice.
LIMIT ON TOTAL PROFIT OF LUCENT. The stock option agreement provides that
in no event will Lucent's total profit from the option plus any termination fee
paid to Lucent under the merger agreement exceed $3,378,000 and, if Lucent's
total profit would otherwise exceed that amount, Lucent, at its discretion, is
required to do one or any combination of the following:
(1) reduce the number of shares of Mosaix common stock subject to the
option;
(2) deliver to Mosaix for cancellation shares of Mosaix common stock
previously purchased by Lucent; or
(3) pay cash to Mosaix
so that Lucent's total profit from the option plus the termination fee pursuant
to the merger agreement so paid to Lucent does not exceed $3,378,000 after
taking into account the foregoing actions.
REGISTRATION RIGHTS AND LISTING. Lucent has certain rights to require
registration under the securities laws by Mosaix of any shares purchased under
the option if necessary for Lucent to be able to sell those shares and to
require the listing of those shares on The Nasdaq National Market or other
national securities exchange.
ASSIGNABILITY; TRANSFERS. The stock option agreement may not be assigned
or delegated by Lucent or Mosaix without the prior written consent of the other.
The shares subject to the option may not be sold, assigned, transferred or
otherwise disposed of except in an underwritten public offering or to a
purchaser or transferee who would not, immediately after that sale, assignment,
transfer or disposal, beneficially own more than 3.0% of the outstanding voting
power of Mosaix. However, Lucent may sell any of the shares it receives upon
exercise of the option if the sale is made in connection with a tender or
exchange offer that has been approved or recommended by a majority of the
55
<PAGE> 64
Mosaix board of directors, which majority includes a majority of directors who
were directors as of the date of the stock option agreement.
EFFECT OF STOCK OPTION AGREEMENT. The stock option agreement is intended
to increase the likelihood that the merger will be completed on the terms set
forth in the merger agreement. Consequently, certain aspects of the stock option
agreement may discourage persons who might now or prior to the merger be
interested in acquiring all of or a significant interest in Mosaix from
considering or proposing an acquisition, even if those persons were prepared to
offer higher consideration per share for Mosaix common stock than that implicit
in the 0.19273 exchange ratio or a higher price per share for Mosaix common
stock than the market price.
56
<PAGE> 65
COMPARATIVE STOCK PRICES AND DIVIDENDS
Lucent common stock is listed for trading on the New York Stock Exchange
under the trading symbol "LU" and Mosaix common stock is quoted on The Nasdaq
National Market under the trading symbol "MOSX." 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 Transactions
Tape and of Mosaix 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,
shareholders are urged to consult publicly available sources.
<TABLE>
<CAPTION>
LUCENT MOSAIX
COMMON STOCK COMMON STOCK
--------------------------- --------------------------
DIVIDENDS DIVIDENDS
CALENDAR PERIOD HIGH LOW DECLARED HIGH LOW DECLARED
- --------------- ---- ---- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter................ $N/A $N/A $ -- $16 3/4 $10 1/2 N/A
Second Quarter............... 9 13/16 7 7/16 0.01875 24 13 1/2 N/A
Third Quarter................ 11 15/32 7 21/32 0.01875 18 3/8 12 N/A
Fourth Quarter............... 13 9/32 10 17/32 0.01875 23 10 N/A
1997
First Quarter................ 15 5/32 11 3/16 0.00000 16 9 3/4 N/A
Second Quarter............... 18 35/64 12 15/32 0.01875 15 1/4 11 3/4 N/A
Third Quarter................ 22 11/16 18 3/64 0.01875 15 9 N/A
Fourth Quarter............... 22 35/64 18 3/32 0.03750 11 5/16 7 15/16 N/A
1998
First Quarter................ 32 1/16 18 23/64 0.00000 12 8 3/4 N/A
Second Quarter............... 41 27/32 32 0.02000 12 1/8 9 13/16 N/A
Third Quarter................ 54 1/4 34 3/16 0.02000 9 7/8 4 N/A
Fourth Quarter............... 56 15/16 26 23/32 0.04000 8 1/4 4 5/8 N/A
1999
First Quarter................ 60 47 0.00000 9 3/4 5 13/16 N/A
Second Quarter (through June
8, 1999).................. 67 51 7/8 0.02000 12 1/2 7 3/4 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 Transactions Tape
and of Mosaix common stock on The Nasdaq National Market on April 1, 1999, the
last trading day before the public announcement of the merger agreement, and on
June 8, 1999, the last trading day before the date of this proxy
statement/prospectus:
<TABLE>
<CAPTION>
LUCENT MOSAIX
COMMON STOCK COMMON STOCK
-------------- ----------------
HIGH LOW HIGH LOW
---- ---- ---- ---
<S> <C> <C> <C> <C>
April 1, 1999.............................. $56 $54 3/32 $ 8 3/8 $ 7 3/4
June 8, 1999............................... $61 15/16 $59 3/4 $11 29/64 $11
</TABLE>
57
<PAGE> 66
DESCRIPTION OF LUCENT CAPITAL STOCK
The following summary of the capital stock of Lucent is subject in all
respects to applicable Delaware law, Lucent's certificate of incorporation and
by-laws and Lucent's rights agreement. See "Comparison of Rights of Common
Stockholders of Lucent and Common Shareholders of Mosaix" on page 58 and "Where
You Can Find More Information" on page 75.
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 April 30, 1999, approximately 2.7 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 each 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 each series and the redemption price or prices and the other terms
of redemption, if any, applicable to each 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 Common Shareholders of Mosaix -- Rights Plan"
on page 69.
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS
OF LUCENT AND COMMON SHAREHOLDERS OF MOSAIX
The rights of Lucent stockholders are currently governed by the Delaware
General Corporation Law, Lucent's certificate of incorporation and Lucent's
by-laws. The rights of Mosaix shareholders are currently governed by the
Washington Business Corporation Act, Mosaix's articles of incorporation and
Mosaix's by-laws. Upon completion of the merger, the rights of Mosaix
shareholders who become stockholders of Lucent in the merger will be governed by
the Delaware General Corporation Law, Lucent's certificate of incorporation and
Lucent's by-laws.
The following description summarizes the material differences that may
affect the rights of stockholders of Lucent and shareholders of Mosaix but does
not purport to be a complete statement of all those 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. Shareholders should read
carefully the relevant provisions of the Delaware General
58
<PAGE> 67
Corporation Law, Lucent's certificate of incorporation, Lucent's by-laws, the
Washington Business Corporation Act, Mosaix's articles of incorporation and
Mosaix's by-laws.
CAPITALIZATION
LUCENT. Lucent's authorized capital stock is described above under
"Description of Lucent Capital Stock."
MOSAIX. The total authorized shares of capital stock of Mosaix consist of
(1) 25,000,000 shares of common stock, $.01 par value per share, and (2)
5,000,000 shares of preferred stock, $.01 par value per share. At the close of
business on June 8, 1999, there were approximately 10,550,000 shares of Mosaix
common stock outstanding and no shares of Mosaix preferred stock outstanding.
The Mosaix board of directors is authorized to issue preferred stock from
time to time in series, and to fix, determine and amend the rights and
preferences of wholly unissued series of preferred shares. The Mosaix board of
directors may issue a series of preferred shares entitled to cumulative or
noncumulative dividends. The Mosaix board of directors also may provide for
rights of and terms of redemption, the voting rights, if any, the liquidation
prices and conversion of the shares of any series of preferred stock.
VOTING RIGHTS
LUCENT. The Delaware General Corporation Law allows for more or less than
one vote per share and permits cumulative voting if each is provided for in the
certificate of incorporation. Each holder of Lucent common stock is entitled to
one vote for each share held of record and may not cumulate votes for the
election of directors.
MOSAIX. The Washington Business Corporation Act allows for more or less
than one vote per share if provided in the articles of incorporation. The
Washington Business Corporation Act also permits cumulative voting for directors
unless otherwise provided in the articles of incorporation. Each holder of
Mosaix common stock is entitled to one vote for each share held of record, and
Mosaix's articles of incorporation do not permit cumulative voting for the
election of directors.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
LUCENT. Lucent's board of directors has nine members. The Delaware
General Corporation Law provides that the board of directors of a Delaware
corporation will consist of one or more directors as fixed by the corporation's
certificate of incorporation or by-laws. Lucent's 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. As permitted under the Delaware General
Corporation Law, Lucent's certificate of incorporation also provides that the
Lucent board of directors consists of three classes of directors. The directors
in each class serve on the Lucent board of directors for approximately three
years each.
59
<PAGE> 68
Lucent's certificate of incorporation and by-laws provide that if there is
a vacancy on the Lucent board of directors or if the number of directors is
increased, those vacancies 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 that 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.
The Delaware General Corporation Law provides that a director or the entire
board of directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
However, in the case of a corporation whose board is classified, the directors
may be removed only for cause unless the certificate of incorporation provides
otherwise. Under Lucent's 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.
MOSAIX. Mosaix's board of directors has six members. The Washington
Business Corporation Act provides that the board of directors of a Washington
corporation shall consist of one or more directors as fixed by the corporation's
articles of incorporation or by-laws. Mosaix's articles of incorporation
provides that the number of directors may be changed from time to time as
provided in the by-laws. The by-laws provide that the number of directors must
be at least three but no more than nine and may be set by a resolution adopted
by a majority of the directors present or the shareholders. As permitted under
the Washington Business Corporation Act, Mosaix's articles of incorporation
provides that the Mosaix board of directors will consist of three classes of
directors as equal in number as possible. The directors in each class serve on
the Mosaix board of directors for approximately three years each.
Under Mosaix's by-laws, vacancies on the Mosaix board of directors and
newly created directorships resulting from any increase in the authorized number
of directors may be filled by shareholders, the directors or, if the directors
in office are fewer than a quorum, by the affirmative vote of a majority of the
remaining directors. Mosaix's by-laws provide that a vacancy on the Mosaix board
of directors of a director who was elected by holders of a class or series of
shares entitled to vote for that office may only be filled by the vote of
holders of that class or series of shares.
The Washington Business Corporation Act provides that a corporation's
shareholders at a special meeting called expressly for that purpose may remove
one or more directors with or without cause unless the articles of incorporation
provide that directors may be removed only for cause. Mosaix's by-laws provide
that any director or the entire Mosaix board of directors may be removed at any
time, with or without cause, by the holders of the shares of capital stock
entitled to elect the director or directors whose removal is sought if a
majority of the votes cast are for the removal of that director or those
directors.
60
<PAGE> 69
AMENDMENTS TO ARTICLES OF INCORPORATION
LUCENT. Under the Delaware General Corporation Law, amendments to a
corporation's certificate of incorporation require the approval of the board of
directors and stockholders holding a majority of the outstanding stock of that
class entitled to vote on that amendment as a class, unless a different
proportion is specified in the certificate of incorporation or by other
provisions of the Delaware General Corporation Law. Lucent's 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 Lucent's certificate of incorporation, which relate
to stockholder action, the Lucent board of directors and Lucent's by-laws,
respectively.
MOSAIX. The Washington Business Corporation Act authorizes a
corporation's board of directors to make various changes of an administrative
nature to the corporation's articles of incorporation without shareholder
action. These changes include a change to the corporate name, changes to the
number of authorized shares solely to effectuate a stock split or stock dividend
in the corporation's shares and changes to or elimination of provisions with
respect to the par value of the corporation's stock. The Washington Business
Corporation Act requires that other amendments to a corporation's articles of
incorporation must be recommended to the shareholders by the board of directors,
unless the board determines that, because of a conflict of interest or other
special circumstances, it should make no recommendation and communicates the
basis for its determination to the shareholders. Under the Washington Business
Corporation Act, these other amendments must be approved by each voting group
entitled to vote thereon by a majority of all the votes entitled to be cast by
that voting group, unless another proportion is specified in the articles of
incorporation, by the board of directors as a condition to its recommendation,
or by the provisions of the Washington Business Corporation Act. Mosaix's
articles of incorporation permits the right to amend or repeal the provisions of
the articles of incorporation in any manner permitted by law.
AMENDMENTS TO BY-LAWS
LUCENT. Under the Delaware General Corporation Law, by-laws of a
corporation may be amended or repealed by stockholders, and, if provided for in
the corporation's certificate of incorporation, by the directors. Lucent's
certificate of incorporation and by-laws provide that Lucent's 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 that meeting, provided 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 Lucent's
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 Lucent's by-laws, which relate to the number and tenure of the
directors,
61
<PAGE> 70
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.
MOSAIX. Under the Washington Business Corporation Act, shareholders may
amend or repeal the by-laws of a corporation. The board of directors also may
amend or repeal the by-laws of a corporation under the Washington Business
Corporation Act except to the extent (1) the articles of incorporation reserve
that power to the shareholders or (2) the shareholders in amending or repealing
a by-law expressly provide that directors may not amend or repeal that by-law.
Mosaix's articles of incorporation and by-laws give the Mosaix board of
directors the power to adopt, amend or repeal Mosaix's by-laws, subject to the
power of shareholders of Mosaix to amend or repeal Mosaix's by-laws. Mosaix's
by-laws provide that the directors may not amend by-laws that shareholders have
expressly provided may not be amended or repealed by the directors. Mosaix's
by-laws also provide that shareholders may alter, amend or repeal the by-laws or
adopt new by-laws.
SHAREHOLDER ACTION
LUCENT. The Delaware General Corporation Law authorizes stockholder
action without a meeting, unless otherwise provided in a corporation's
certificate of incorporation. Lucent's certificate of incorporation provides
that any action required or permitted to be taken by the Lucent stockholders
must be effected at a duly called annual or special meeting and may not be
effected by written consent.
MOSAIX. Under the Washington Business Corporation Act, shareholder action
for a public company may be taken without a meeting only if written consents
setting forth that action are signed by all holders of outstanding shares
entitled to vote thereon. Mosaix's by-laws provide that any action may be
effected without a meeting if all shareholders entitled to vote on the action
sign and deliver to Mosaix a consent setting forth the action so taken.
NOTICE OF CERTAIN SHAREHOLDER ACTIONS
LUCENT. Lucent's 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 Lucent's
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 the special meeting and not
later than (1) 90 days prior to
62
<PAGE> 71
that 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 that
meeting.
MOSAIX. Mosaix's by-laws provide that for business to be properly brought
before an annual meeting of shareholders, a shareholder must deliver notice, and
that notice must be received by the Secretary of Mosaix not fewer than 60 nor
more than 90 days in advance of the date of that annual meeting, provided that
if less than 60 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, the notice for shareholder
action may be no later than the tenth day following notice or prior public
disclosure of the date of the annual meeting was mailed or made.
SPECIAL SHAREHOLDER MEETINGS
LUCENT. Under the Delaware General Corporation Law, a special meeting of
stockholders may be called by the board of directors or by any other person
authorized to do so in the certificate of incorporation or the by-laws. The
Delaware General Corporation Law requires notice of stockholders meetings to be
sent to all stockholders of record entitled to vote thereon not less than 10 nor
more than 60 days prior to the date of the meeting.
Lucent's certificate of incorporation and by-laws provide that a special
meeting of Lucent's 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
Lucent's certificate of incorporation.
MOSAIX. Under the Washington Business Corporation Act, a special meeting
of shareholders may be called by a corporation's board of directors or other
persons authorized by the corporation's articles of incorporation or by-laws,
or, unless limited by the articles of incorporation, on written demand by
holders of at least 10% of all votes entitled to be cast on any issue proposed
to be considered at the proposed special meeting. Mosaix's by-laws provide that
special meetings of the shareholders may be called by the chairman of the board
of directors of Mosaix, the president of Mosaix, the authorized directors of the
Mosaix board of directors or by the holders of not less than 10% of all shares
entitled to vote at the special meeting.
In the event of a special meeting, Mosaix's by-laws provide that only the
business as specified in the notice of the special meeting given by or at the
direction of the stockholder calling the meeting will come before the special
meeting.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND INDEMNIFICATION
LUCENT. The Delaware General Corporation 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
63
<PAGE> 72
fiduciary duty as a director. However, no 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 a provision eliminating or
limiting the liability of a director for breach of fiduciary duty in the
certificate of incorporation.
Lucent's 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.
The Delaware General Corporation Law permits a corporation to indemnify any
director, officer, employee or agent of the corporation for expenses, monetary
damages, fines and settlement amounts to the extent the person acted in good
faith and in a manner he or she believed to be in the best interests of the
corporation and, with respect to any criminal action, had no reasonable cause to
believe the conduct was unlawful. The Delaware General Corporation Law does not
permit indemnification if the person is held liable to the corporation except to
the extent that an appropriate court concludes, upon application by the person,
that despite the adjudication of liability but in view of all the circumstances,
the person is fairly and reasonably entitled to indemnification for those
expenses that the court deems proper.
Lucent's certificate of incorporation provides a right to indemnification
to directors and officers of Lucent subject to the limitations under Delaware
law described in the previous paragraph.
In addition, Lucent must indemnify any present or former director or
officer of a corporation who has been successful on the merits or otherwise in
the defense of any claim or proceeding for expenses (including attorneys' fees)
actually and reasonably incurred.
MOSAIX. The Washington Business Corporation Act provides that a
corporation's articles of incorporation may include provisions that eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for
64
<PAGE> 73
conduct as a director. However, the provisions may not eliminate or limit the
liability of a director for acts or omissions that involve intentional
misconduct by the director or a knowing violation of law by the director,
unlawful distributions, or any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled.
Mosaix's articles of incorporation authorizes Mosaix to limit or eliminate
the liability of directors to the fullest extent permitted by the Washington
Business Corporation Act.
In addition, under the Washington Business Corporation Act, if authorized
by the articles of incorporation or a by-law adopted or ratified by the
shareholders or by a resolution adopted or ratified by the shareholders, a
corporation has the power to indemnify a director or officer made a party to a
proceeding, or advance or reimburse expenses incurred in a proceeding, under any
circumstances, except that no indemnification is allowed on account of:
- acts or omissions of a director or officer finally adjudged to be an
intentional misconduct or a knowing violation of the law
- conduct of a director or officer finally adjudged to be an unlawful
distribution
- any transaction with respect to which it was finally adjudged that the
director or officer personally received a benefit in money, property or
services to which the director or officer was not legally entitled.
Unless limited by the corporation's articles of incorporation, Washington law
requires indemnification if the director or officer is wholly successful on the
merits of the action or otherwise. Any indemnification of a director must be
reported to the shareholders in writing with or before notice of the next
shareholders meeting.
Mosaix's by-laws provide a right to indemnification to directors and
officers of Mosaix subject to the limitations under Washington law described in
the previous paragraph. Mosaix's articles of incorporation do not limit
indemnification if the director or officer is wholly successful on the merits of
the action or otherwise.
DIVIDENDS
LUCENT. A Delaware corporation may declare and pay dividends out of its
surplus or, if it has no surplus, out of any net profits for the fiscal year in
which the dividend was declared or for the preceding fiscal year in which the
dividend was declared, provided that the payment will not reduce capital below
the amount of capital represented by all classes of shares having a preference
upon the distribution of assets. Lucent's 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 Lucent's certificate of incorporation.
MOSAIX. Under the Washington Business Corporation Act, a corporation may
make a distribution in cash or in property to its shareholders upon the
authorization of
65
<PAGE> 74
its board of directors and subject to its articles of incorporation unless,
after giving effect to that distribution, (1) the corporation would be unable to
pay its debts as they become due in the usual course of business or (2) the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose preferential rights are superior to those receiving the distribution.
Mosaix's articles of incorporation provide that the Mosaix board of directors
may from time to time declare dividends on its outstanding shares out of funds
legally available for dividends.
CONVERSION
LUCENT. Holders of Lucent common stock have no rights to convert their
shares into any other securities.
MOSAIX. Holders of Mosaix common stock have no rights to convert their
shares into any other securities.
PROVISIONS RELATING TO ACQUISITIONS AND BUSINESS COMBINATIONS
LUCENT. Section 203 of the Delaware General Corporation Law prohibits a
Delaware corporation from engaging in any "business combination" with any person
who owns 15% or more of a corporation's voting stock (i.e., an "interested
stockholder") for a period of three years following the time that person became
an interested stockholder, unless:
- the corporation's board of directors has approved, prior to the time on
which that person became an interested stockholder, either the business
combination or the transaction that resulted in the person becoming an
interested stockholder
- upon consummation of the transaction that resulted in that person
becoming an interested stockholder, that person owned at least 85% of the
corporation's voting stock outstanding at that time, excluding shares
owned by persons who are both directors and officers and shares owned by
employee stock plans in which participants do not have the right to
determine confidentially whether shares will be tendered in a tender or
exchange offer or
- at or after the time on which that person became an interested
stockholder, the business combination is approved by the board of
directors and authorized by the affirmative vote, at an annual or special
meeting and not by written consent, of at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.
For purposes of determining whether a person is the "owner" of 15% or more of a
corporation's voting stock for purposes of Section 203 of the Delaware General
Corporation Law, ownership is defined broadly to include the right, directly or
indirectly, to acquire the stock or to control the voting or disposition of the
stock.
66
<PAGE> 75
A "business combination" is also defined broadly to include:
- mergers and sales or other dispositions of 10% or more of the assets of a
corporation with or to an interested stockholder
- certain transactions resulting in the issuance or transfer to the
interested stockholder of any stock of the corporation or its
subsidiaries
- certain transactions that would result in an increase in the
proportionate share of a corporation's or its subsidiaries' stock owned
by the interested stockholder and
- any receipt by the interested stockholder of the benefit, directly or
indirectly, except proportionately as a stockholder, of any loans,
advances, guarantees, pledges or other financial benefits provided by or
through the corporation or any of its subsidiaries.
A Delaware corporation may elect not to be governed by Section 203 by a
provision contained in its original certificate of incorporation, its by-laws,
or an amendment to the original certificate of incorporation, which amendment
must be approved by a majority of the shares entitled to vote and may not be
further amended by the board of directors. Such an amendment is effective
immediately in the case of a corporation that (1) has not elected in its
original certificate of incorporation or amendment thereto to be governed by
Section 203 and (2) has never had voting stock listed on a national securities
exchange, authorized for quotation on the Nasdaq Stock Market or held of record
by more than 2,000 stockholders. Otherwise this amendment is not effective until
12 months following its adoption. Lucent has not expressly made such an election
in its original certificate of incorporation or an amendment thereto or in its
by-laws.
MOSAIX. Chapter 23B.19 of the Washington Business Corporation Act, which
applies to Washington corporations which have a class of voting stock registered
with the SEC under the Exchange Act, prohibits a "target corporation," with
certain exceptions, from engaging in certain "significant business transactions"
with an acquiror which beneficially owns 10% or more of the voting securities of
the target corporation for a period of five years after the acquisition, unless
the transaction or acquisition of shares is approved by a majority of the
members of the target corporation's board of directors prior to the time of
acquisition. These prohibited transactions include, among other things, a
merger, share exchange or consolidation with, disposition of assets to, or
issuance or redemption of stock to or from, the acquiror, termination of 5% or
more of the employees of the target corporation employed in Washington as a
result of the acquiror's acquisition of 10% or more of the shares, or allowing
the acquiror to receive any disproportionate benefit as a shareholder. After the
five-year period, a "significant business transaction" may take place if it
complies with certain "fair price" provisions of the statute. A corporation may
not "opt out" of this statute, and Mosaix is subject to it. The merger with
Lucent will not be subject to this statute because the Mosaix board has approved
the merger agreement.
67
<PAGE> 76
MERGERS, ACQUISITIONS AND OTHER TRANSACTIONS
LUCENT. Under the Delaware General Corporation Law, a merger,
consolidation or sale of all or substantially all of a corporation's assets must
be approved by the board of directors and by a majority of the outstanding stock
of the corporation entitled to vote thereon, provided that no vote of
stockholders of a constituent corporation surviving a merger is required unless
the corporation provides otherwise in its certificate of incorporation if
- the merger agreement does not amend the certificate of incorporation of
the surviving corporation
- each share of stock of the surviving corporation outstanding before the
merger is an identical outstanding or treasury share after the merger and
- either no shares of common stock of the surviving corporation are to be
issued or delivered pursuant to the merger or, if common stock will be
issued or delivered, it will not increase the number of shares of common
stock outstanding immediately prior to the merger by more than 20%.
MOSAIX. Under the Washington Business Corporation Act, a merger,
consolidation or sale of substantially all of a corporation's assets other than
in the regular course of business must be approved by the affirmative vote of a
majority of directors and by two-thirds of all votes entitled to be cast by each
voting group entitled to vote as a separate group, unless another percentage,
but not less than a majority of all votes entitled to be cast, is specified in
the articles of incorporation. Under the Mosaix articles of incorporation,
Mosaix may merge, consolidate or sell substantially all its assets only upon the
affirmative vote of the holders of at least two-thirds of the voting stock of
Mosaix.
APPRAISAL OR DISSENTERS' RIGHTS
LUCENT. Under the Delaware General Corporation Law, dissenters' rights of
appraisal are available to a stockholder of a corporation only in connection
with certain mergers or consolidations involving that corporation. Appraisal
rights are not available under the Delaware General Corporation Law if the
corporation's stock is either:
- listed on a national securities exchange, as the Lucent common shares
are, or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
(the "NASD") or
- held of record by more than 2,000 stockholders;
provided that appraisal rights will be available if the merger or consolidation
requires stockholders to exchange their stock for anything other than:
- shares of the surviving corporation
- shares of another corporation that will be listed on a national
securities exchange, designated as a national market system security on
an interdealer quotation system by the NASD or held of record by more
than 2,000 stockholders or
- cash in lieu of fractional shares.
68
<PAGE> 77
Additionally, no appraisal rights are available if the corporation is the
surviving corporation, and no vote of its stockholders is required for the
merger.
MOSAIX. Under the Washington Business Corporation Act, a shareholder of a
Washington corporation may exercise dissenters' rights in connection with:
- a plan of merger providing for a shareholder vote
- a plan of exchange involving the acquisition of the corporation's shares
providing for a shareholder vote
- a sale or exchange of all, or substantially all, the property of the
corporation other than in the usual and regular course of business, if a
shareholder is entitled to vote on the sale or exchange
- a reverse stock split that results in the shareholder owning a fractional
share if that fractional share is to be acquired for cash and
- any corporate action taken by shareholder vote for which the articles of
incorporation, by-laws or resolution of the board of directors provide
for dissenters' rights.
Accordingly, Mosaix shareholders have the right to dissent from the merger and
receive payment of the fair value of their shares of Mosaix common stock. See
"Dissenters' Rights to Appraisal" on page 71.
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.
Shareholders should read carefully the rights agreement. See "Where You Can Find
More Information" on page 75.
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 that 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.
69
<PAGE> 78
The rights will expire on March 31, 2006, unless that 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 that 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 are 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 that 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 that 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 that 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
may amend the terms of the rights, in each case, without the consent of the
holders of the rights, at the time, on the basis and upon the conditions that
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.
MOSAIX. Mosaix does not have a rights plan.
70
<PAGE> 79
DISSENTERS' RIGHTS TO APPRAISAL
Holders of shares of Mosaix common stock are entitled to dissenters' rights
under Chapter 23B.13 of the Washington Business Corporation Act with respect to
the merger.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE LAW PERTAINING
TO DISSENTERS' RIGHTS UNDER THE WASHINGTON BUSINESS CORPORATION ACT AND IS
QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF CHAPTER 23B.13 OF THE WASHINGTON
BUSINESS CORPORATION ACT, WHICH IS REPRINTED IN ITS ENTIRETY AS ANNEX D TO THIS
PROXY STATEMENT/PROSPECTUS.
Holders of shares of Mosaix common stock will have the right to dissent
with respect to the merger and, subject to certain conditions, will be entitled
to receive a payment of the fair value for those shares under the Washington
Business Corporation Act. Each beneficial owner asserting dissenters' rights
must assert those rights with respect to all shares of which the holder is the
beneficial owner or has power to direct the vote, and must submit to Mosaix,
with or prior to his or her assertion of dissenters' rights, the record
shareholder's written consent to the dissent. A record shareholder may assert
dissenters' rights as to fewer than all the shares registered in his or her name
only if the shareholder dissents with respect to all shares beneficially owned
by any one person and notifies Mosaix in writing of the name and address of each
person on whose behalf that shareholder asserts dissenters' rights.
A Mosaix dissenting holder (1) must deliver to Mosaix before the vote on
the merger is taken, written notice of his or her intent to demand payment for
his or her shares if the merger is effectuated and (2) must not vote his or her
shares in favor of the merger. The notice should be delivered to Mosaix at its
principal executive offices, 6464 185th Avenue NE, Redmond Washington 98052,
Attention: Secretary. A shareholder who does not satisfy both of these
requirements will not be entitled to dissenters' rights.
If the merger is approved by the Mosaix shareholders, Mosaix will send
written notice not later than ten days after the effective time of the merger
agreement to each Mosaix dissenting holder:
- stating where the shareholder must send his or her written payment demand
- stating where and when certificates representing Mosaix common stock must
be deposited
- containing a form for demanding payment which requires that the dissenter
certify whether or not he or she acquired beneficial ownership before the
first public announcement of the merger on April 5, 1999
- setting a date by which the written payment demand must be received.
The notice by Mosaix will be accompanied by a copy of Chapter 23B.13 of the
Washington Business Corporation Act. A Mosaix shareholder who does not demand
payment, does not certify that he or she acquired the shares before April 5,
1999, and does not deposit his or her shares within the time provided by this
notice will not be entitled to dissenters' rights.
71
<PAGE> 80
Mosaix will pay to each Mosaix dissenting shareholder who complies with the
procedures described in the previous paragraph, within 30 days after the
effective time of the merger agreement, the amount that Mosaix estimates to be
the fair value of the dissenters' shares, plus accrued interest. Mosaix will
provide, along with this payment,
- certain financial information, including Mosaix's balance sheet, income
statement and statement of changes in shareholders' equity for its last
fiscal year and Mosaix's latest available interim financial statements,
if any
- an explanation of how Mosaix estimated the fair value of the shares
- an explanation of how the accrued interest was calculated and certain
other information;
provided, that Mosaix may elect to withhold this payment from any dissenter who
was not the beneficial owner of the shares of Mosaix common stock as to which
dissenters' rights are asserted before the date of first public announcement of
the merger, April 5, 1999.
Any dissenting shareholder who is dissatisfied with the payment or the
offer may, within 30 days of the payment or offer for payment, notify Mosaix in
writing of the shareholder's estimate of fair value of his or her shares and the
amount of interest due, and demand payment. If any Mosaix dissenting
shareholder's demand for payment is not settled within 60 days after receipt by
Mosaix of the shareholder's payment demand, the Washington Business Corporation
Act requires that Mosaix commence a proceeding, and petition the court to
determine the fair value of the shares and accrued interest, naming all Mosaix
dissenting shareholders whose demands remain unsettled as parties to the
proceeding. The court may appoint one or more persons as appraisers to receive
evidence and recommend the fair value of the shares. The dissenters will be
entitled to the same discovery rights as parties in other civil actions. Each
dissenter made a party to the proceeding will be entitled to judgment for the
amount, if any, by which the court finds the fair value of his or her shares,
plus accrued interest, exceeds the amount paid by Mosaix. Court costs and
approval fees would be assessed against Mosaix, except that the court may assess
costs against some or all of the dissenters to the extent that the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment. The court may also assess the fees and expenses of counsel and experts
of the respective parties in amounts that the court finds equitable (1) against
Mosaix, if the court finds that it did not substantially comply with certain
provisions of the Washington Business Corporation Act concerning dissenters'
rights and (2) against either the dissenter or Mosaix, if the court finds that
the party against whom the fees and expenses are assessed acted arbitrarily,
vexatiously or not in good faith. If the court finds that services of counsel
for any dissenter were of substantial benefit to other dissenters similarly
situated, and that the fees should not be assessed against Mosaix, the court may
award to that counsel reasonable fees to be paid out of the amounts awarded to
dissenters who benefited from the proceedings.
72
<PAGE> 81
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 June 7, 1999, Pamela F. Craven
owned 1,096 shares of Lucent common stock and options and stock units for
304,028 shares of Lucent common stock.
Certain United States federal income tax consequences of the merger will be
passed upon for Mosaix by its special counsel Perkins Coie LLP.
EXPERTS
The consolidated balance sheets of Lucent as of September 30, 1998 and 1997
and the related consolidated statements of income, changes in shareowners'
equity and cash flows for each of the two years in the period ended September
30, 1998 and for the nine-month period ended September 30, 1996, included in
Lucent's Current Report on Form 8-K/A No. 1 have been incorporated by reference
in this proxy statement/ prospectus in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The consolidated financial statements of Mosaix at December 31, 1998, and
December 31, 1997, and for each of the three years in the period ended December
31, 1998, incorporated by reference in this proxy statement/prospectus from
Mosaix's Annual Report on Form 10-K for the year ended December 31, 1998, have
been audited by KPMG LLP, independent auditors, as set forth in their report
which is incorporated by reference, and have been so incorporated in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
Representatives of KPMG LLP are not expected to be present at the special
meeting.
SHAREHOLDER PROPOSALS
Mosaix will hold a 1999 Annual Meeting of Mosaix shareholders only if the
merger is not completed before the time of that meeting. The deadline for
submission of shareholder proposals for inclusion in Mosaix's proxy materials
for the 1999 Mosaix annual meeting has passed.
If the merger is not completed, Mosaix shareholders may present proper
proposals for consideration at the next annual meeting of Mosaix shareholders by
submitting their proposal in writing to the Secretary of Mosaix in a timely
manner.
Mosaix's by-laws establish an advance notice procedure with regard to
certain matters, including shareholder proposals not included in Mosaix's proxy
statement, to be brought before an annual meeting of shareholders. The only
business that will be
73
<PAGE> 82
conducted at an annual meeting of Mosaix shareholders is business that is
brought before the meeting:
- by or at the direction of the board of directors
- by any shareholder entitled to vote who has delivered written notice to
the Secretary of Mosaix not less than 60 nor more than 90 days prior to
the date of the annual meeting, or if less than 60 days' notice or prior
public disclosure of the date of the annual meeting is given or made to
the shareholders, not later than the tenth day following the day on which
notice of the date of the annual meeting was mailed or public disclosure
was made, which notice must contain specific information concerning the
matters to be brought before the meeting and concerning the shareholder
proposing those matters.
In general, nominations for the election of directors may be made by:
- the Mosaix board of directors
- a proxy committee appointed by the Mosaix board of directors
- any shareholder entitled to vote in the election of directors at the
annual meeting who has delivered written notice to the Secretary of
Mosaix not less than 60 nor more than 90 days prior to the date of the
annual meeting, or if less than 60 days' notice or prior public
disclosure of the date of the annual meeting is given or made to the
shareholders, not later than the tenth day following the day on which
notice of the date of the annual meeting was mailed or public disclosure
was made, which notice must contain specified information concerning the
nominees and concerning the shareholder proposing the nominations.
For an election of directors to be held at a special meeting of Mosaix
shareholders, nominations may be made by any Mosaix shareholder entitled to vote
who has delivered written notice to the Secretary of Mosaix by the close of
business on the seventh day following the date on which notice of the special
meeting was given to shareholders.
A copy of the full text of the by-law provisions discussed above may be
obtained by writing to the Secretary of Mosaix.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Mosaix board of
directors knows of no matters that will be presented for consideration at the
special meeting of shareholders other than as described in this proxy
statement/prospectus.
74
<PAGE> 83
WHERE YOU CAN FIND MORE INFORMATION
Lucent and Mosaix 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 Mosaix 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 pertaining to Mosaix are
also available for inspection at the offices of The Nasdaq Stock Market, which
is located at 1735 K Street, N.W., Washington, D.C. 20006.
Lucent filed a registration statement on Form S-4 on June 9, 1999 to
register with the Securities and Exchange Commission the Lucent common stock to
be issued to Mosaix shareholders 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 Mosaix. 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 Mosaix 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 Mosaix have previously filed with the Securities and
Exchange Commission. These documents contain important business and financial
information about Lucent and Mosaix that is not included in or delivered with
this proxy statement/prospectus.
75
<PAGE> 84
<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 10-Q Quarters ended December 31, 1998 and
March 31, 1999
Current Reports on Form 8-K Filed November 19, 1998, January 8,
1999, January 15, 1999 and March 5,
1999 as amended by Amendment No. 1
thereto filed on Form 8-K/A on May
18, 1999
Proxy Statement Filed December 22, 1998
The description of Lucent common Filed under Section 12 of the
stock and Lucent rights to acquire Exchange Act on February 26, 1996,
junior preferred stock set forth in as amended by Amendment No. 1
the Lucent Registration Statement on thereto filed on Form 10/A on March
Form 10 12, 1996, Amendment No. 2 thereto
filed on Form 10/A on March 22, 1996
and Amendment No. 3 thereto filed on
Form 10/A on April 1, 1996
</TABLE>
<TABLE>
<CAPTION>
MOSAIX FILINGS
(FILE NO. 000-18511) PERIOD
- -------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Current Report on Form 8-K Filed April 16, 1999
Proxy Statement Filed March 16, 1999
The description of Mosaix common Filed under Section 12 of the
stock set forth in the Mosaix Exchange Act on April 27, 1990
Registration Statement on Form 8-A
</TABLE>
Lucent and Mosaix also incorporate by reference additional documents that
may be filed with the Securities and Exchange Commission under Sections 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 Mosaix has supplied
all such information relating to Mosaix.
Mosaix shareholders should not send in their Mosaix certificates until they
receive the transmittal materials from the exchange agent. Mosaix shareholders
of record who have further questions about their share certificates or the
exchange of their Mosaix common stock for Lucent common stock should call the
exchange agent.
76
<PAGE> 85
If you are a shareholder, 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. Shareholders 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. Mosaix, Inc.
c/o The Bank of New York 6464 185th Avenue NE
Church Street Station Redmond, Washington 98052
P.O. Box 11009 Attention: John J. Flavio
New York, New York 10286-1009 Telephone: (425) 881-7544
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 June 9,
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 shareholders nor the issuance
of Lucent common stock in the merger creates any implication to the contrary.
77
<PAGE> 86
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 Mosaix 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. These
forward-looking statements, including, without limitation, those relating to the
future business prospects, revenues and income, in each case relating to Lucent
and Mosaix, wherever they occur in this proxy statement/prospectus, are
necessarily estimates reflecting the best judgment of the senior management of
Lucent and Mosaix and involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by the
forward-looking statements. These forward-looking statements should, therefore,
be considered in light of various important factors, including those set forth
in this proxy statement/prospectus. Important factors that could cause actual
results to differ materially from estimates or projections contained in the
forward-looking statements include without limitation:
- the ability to integrate the operations of Lucent and Mosaix, including
their respective product lines
- the effects of vigorous competition in the markets in which Lucent and
Mosaix 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 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 Mosaix, 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 Mosaix 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.
78
<PAGE> 87
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
NOAH ACQUISITION INC.,
AND
MOSAIX, INC.
------------------------------------
Dated as of April 2, 1999
------------------------------------
<PAGE> 88
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
1. The Merger...................................................... A-2
1.1. General................................................... A-2
1.2. Articles of Incorporation................................. A-2
1.3. By-Laws................................................... A-2
1.4. Directors and Officers.................................... A-2
1.5. Conversion of Securities.................................. A-3
1.6. Adjustment of the Exchange Ratio.......................... A-3
1.7. Dissenting Shares......................................... A-3
1.8. No Fractional Shares...................................... A-4
1.9. Exchange Procedures; Distributions with Respect to
Unexchanged Shares; Stock Transfer Books.................. A-4
1.10. No Further Ownership Rights in Company Common Stock....... A-6
1.11. Return of Exchange Fund................................... A-6
1.12. Further Assurances........................................ A-7
2. Representations and Warranties of the Company................... A-7
2.1. Organization.............................................. A-7
2.2. Subsidiaries.............................................. A-7
2.3. Capital Structure......................................... A-8
2.4. Authority................................................. A-9
2.5. No Conflict............................................... A-9
2.6. SEC Documents; Undisclosed Liabilities.................... A-10
2.7. Lucent Registration Statement; Company Proxy Statement.... A-11
2.8. Absence of Certain Changes................................ A-12
2.9. Properties................................................ A-13
2.10. Leases.................................................... A-14
2.11. Contracts................................................. A-14
2.12. Absence of Default........................................ A-15
2.13. Litigation................................................ A-15
2.14. Compliance with Law....................................... A-15
2.15. Intellectual Property; Year 2000.......................... A-16
2.16. Taxes..................................................... A-17
2.17. Benefit Plans............................................. A-18
2.18. ERISA Compliance.......................................... A-19
2.19. Employment Matters........................................ A-20
2.20. Environmental Laws........................................ A-20
2.21. Voting Requirements....................................... A-21
2.22. State Takeover Statutes................................... A-21
2.23. Accounting Matters........................................ A-21
2.24. Brokers................................................... A-22
</TABLE>
i
<PAGE> 89
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
2.25. Opinion of Financial Advisor.............................. A-22
2.26. Minute Books.............................................. A-22
2.27. Complete Copies of Materials.............................. A-22
2.28. Disclosure................................................ A-22
3. Representations and Warranties of Lucent and Acquisition........ A-22
3.1. Organization, Standing and Corporate Power................ A-22
3.2. Capital Structure......................................... A-23
3.3. Authority................................................. A-23
3.4. No Conflict............................................... A-23
3.5. Litigation................................................ A-24
3.6. SEC Documents; Undisclosed Liabilities.................... A-24
3.7. Information Supplied...................................... A-25
3.8. Absence of Certain Changes................................ A-26
3.9. Accounting Matters........................................ A-26
3.10. Brokers................................................... A-26
3.11. Interim Operations of Acquisition......................... A-26
3.12. Taxes..................................................... A-26
4. Conduct Pending Closing......................................... A-27
4.1. Conduct of Business Pending Closing....................... A-27
4.2. Prohibited Actions Pending Closing........................ A-27
5. Additional Agreements........................................... A-29
5.1. Access; Documents; Supplemental Information............... A-29
5.2. No Solicitation by the Company............................ A-30
5.3. Preparation of the Lucent Registration Statement and
Company Proxy Statement; Company Shareholders Meeting..... A-32
5.4. Letter of the Company's Accountants; Letter of Lucent's
Accountants............................................... A-33
5.5. Reasonable Best Efforts................................... A-34
5.6. Stock Options............................................. A-34
5.7. Company Stock Plans....................................... A-35
5.8. Employee Benefit Plans; Existing Agreement................ A-36
5.9. Indemnification........................................... A-36
5.10. Fees and Expenses......................................... A-37
5.11. Public Announcements...................................... A-38
5.12. Affiliates................................................ A-38
5.13. NYSE Listing.............................................. A-38
5.14. Shareholder Litigation.................................... A-38
5.15. Pooling of Interests...................................... A-39
5.16. Reorganization............................................ A-39
</TABLE>
ii
<PAGE> 90
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
6. Conditions Precedent............................................ A-39
6.1. Conditions Precedent to Each Party's Obligation to Effect
the Merger................................................ A-39
6.2. Conditions Precedent to Obligations of Acquisition and
Lucent.................................................... A-40
6.3. Conditions Precedent to the Company's Obligations......... A-41
7. Non-Survival of Representation and Warranties................... A-42
7.1. Representations and Warranties............................ A-42
8. Contents of Agreement; Parties in Interest; etc................. A-42
9. Assignment and Binding Effect................................... A-42
10. Termination..................................................... A-43
11. Definitions..................................................... A-43
12. Notices......................................................... A-46
13. Amendment....................................................... A-47
14. Extensions; Waiver.............................................. A-47
15. Governing Law................................................... A-47
16. No Benefit to Others............................................ A-47
17. Severability.................................................... A-47
18. Section Headings................................................ A-48
19. Schedules and Exhibits.......................................... A-48
20. Counterparts.................................................... A-48
Glossary of Defined Terms....................................... A-i
</TABLE>
iii
<PAGE> 91
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of April 2, 1999 by and
among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), NOAH
ACQUISITION INC., a Washington corporation ("Acquisition"), and MOSAIX, INC., a
Washington corporation (the "Company").
BACKGROUND
A. The Company is a Washington corporation with its registered office
located at 6464 185th Avenue N.E., Redmond, WA 98052 and has authorized
25,000,000 shares of common stock, par value $.01 per share (the "Company Common
Stock"), of which 10,516,369 shares of Company Common Stock are issued and
outstanding, and 5,000,000 shares of preferred stock, par value $.01 per share
(the "Company Preferred Stock"), of which no shares of Company Preferred Stock
are issued and outstanding. The Company is engaged principally in the business
of providing call management systems and customer relationship management
applications.
B. Lucent is a Delaware corporation with its registered office located at
1013 Centre Road, Wilmington, Delaware.
C. Acquisition is a wholly-owned subsidiary of Lucent and was formed to
merge with and into the Company so that, as a result of the merger, the Company
will survive and become a wholly-owned subsidiary of Lucent. Acquisition is a
Washington corporation and has authorized an aggregate of 1,000 shares of common
stock, no par value per share (the "Acquisition Common Stock").
D. The Board of Directors of each of Lucent, Acquisition and the Company
has determined that this Agreement and the merger of Acquisition with and into
the Company (the "Merger") in accordance with the provisions of the Washington
Business Corporation Act (the "WBCL"), and, subject to the terms and conditions
of this Agreement, is advisable and in the best interests of Lucent, Acquisition
and the Company and their respective shareholders. The Board of Directors of
each of Lucent, Acquisition and the Company have approved this Agreement and the
Merger.
E. The parties intend that, for United States federal income tax
purposes, the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Code and that this Agreement shall constitute a plan of
reorganization.
F. The parties intend that, for financial accounting purposes, the Merger
shall be accounted for as a pooling of interest transaction.
G. Immediately following the execution and delivery of this Agreement,
Lucent and the Company will enter into a stock option agreement (the "Option
Agreement"), pursuant to which the Company will grant to Lucent the option to
purchase up to 2,092,757 shares of Company Common Stock, upon the terms and
subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and
A-1
<PAGE> 92
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. The Merger
1.1 General. (a) Upon the terms and subject to the conditions of this
Agreement and in accordance with the WBCL, at the Effective Time, (i)
Acquisition shall be merged with and into the Company, (ii) the separate
corporate existence of Acquisition shall cease and (iii) the Company shall be
the surviving corporation (the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of Washington.
(b) The Merger shall become effective at the time of filing of the articles
of merger with the Secretary of State of the State of Washington substantially
in the form of Exhibit A attached hereto (the "Articles of Merger") in
accordance with the provisions of the WBCL or such later date as the parties may
mutually agree (the "Effective Time"). Subject to the terms and conditions of
this Agreement, the Company and Acquisition shall duly execute and file the
Articles of Merger with the Secretary of State of the State of Washington at the
time of the Closing. The closing of the Merger (the "Closing") shall take place
at the offices of Sidley & Austin, 875 Third Avenue, New York, N.Y. at 10:00
A.M., three business days after the date on which the last of the conditions set
forth in Article 6 shall have been satisfied or waived, or on such other date,
time and place as the parties may mutually agree (the "Closing Date").
(c) At the Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the WBCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Acquisition shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
1.2. Articles of Incorporation. The Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be amended
as set forth in Exhibit B and, as so amended, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
therein and by law.
1.3. By-Laws. The By-laws of Acquisition, as in effect immediately
prior to the Effective Time, shall be the By-laws of the Surviving Corporation
until thereafter amended as provided therein and by law.
1.4. Directors and Officers. From and after the Effective Time, (a) the
directors of Acquisition at the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the Articles
of Incorporation and By-laws of the Surviving Corporation, and (b) the officers
of Acquisition at the Effective Time shall be the initial officers of the
Surviving Corporation, in each case, until their respective successors are duly
elected or appointed and qualified.
A-2
<PAGE> 93
1.5. Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Lucent, Acquisition, the Company or
the holders of any of the following securities:
(a) Each issued and outstanding share of common stock of Acquisition
shall be converted into one validly issued, fully paid and nonassessable
share of common stock, $.01 par value per share, of the Surviving
Corporation;
(b) Each share of Company Common Stock owned or held in treasury by the
Company and each share of Company Common Stock owned by Acquisition or
Lucent shall be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto; and
(c) Subject to the provisions of Sections 1.6 and 1.8, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
1.5(b)) shall be converted into the right to receive 0.19273 (such number
as adjusted in accordance with Section 1.6 (the "Exchange Ratio")) of a
validly issued, fully paid and nonassessable shares of Lucent Common Stock,
including the corresponding percentage right (the "Right") to purchase
junior preferred stock, par value $1.00 per share, pursuant to the Rights
Agreement dated as of April 4, 1996, between Lucent and First Chicago Trust
Company of New York as Rights Agent. All references in this Agreement to
Lucent Common Stock to be received in accordance with the Merger, from and
after the Effective Time, shall be deemed to include the Right. As of the
Effective Time, each share of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and retired, and each
holder of record of a certificate representing any shares of Company Common
Stock shall cease to have any rights with respect thereto other than (i)
the right to receive shares of Lucent Common Stock to be issued in
consideration therefor upon the surrender of such certificate and (ii) any
cash, without interest, to be paid in lieu of any fractional share of
Lucent Common Stock in accordance with Section 1.8.
1.6. Adjustment of the Exchange Ratio. In the event that, prior to the
Effective Date, any stock split, combination, reclassification or stock dividend
with respect to the Lucent Common Stock, any change or conversion of Lucent
Common Stock into other securities or any other dividend or distribution with
respect to the Lucent Common Stock (other than regular quarterly dividends)
should occur or, if a record date with respect to any of the foregoing should
occur, appropriate and proportionate adjustments shall be made to the Exchange
Ratio, and thereafter all references to the Exchange Ratio shall be deemed to be
to the Exchange Ratio as so adjusted.
1.7. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall not have voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with the WBCL (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the
A-3
<PAGE> 94
consideration set forth in Section 1.5(c). Such shareholders shall be entitled
to receive such consideration as is determined to be due with respect to such
Dissenting Shares in accordance with the provisions of the WBCL, except that all
Dissenting Shares held by shareholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares under the WBCL shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, the right to receive
the shares of Lucent Common Stock specified in Section 1.5(c), without any
interest thereon, upon surrender, in the manner provided in Section 1.9, of the
certificate or certificates that formerly evidenced such Dissenting Shares. The
Company hereby consents, to the fullest extent permitted by Section 23.B.13.020
of the WBCL, to the withdrawal of any demand for appraisal by any shareholder.
(b) The Company shall give Lucent prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to the WBCL and received by the Company and the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the WBCL. The Company shall not, except with the prior
written consent of Lucent, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
1.8. No Fractional Shares. No certificates or scrip representing
fractional shares of Lucent Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share shall not entitle the record
or beneficial owner thereof to vote or to any other rights as a shareholder of
Lucent. In lieu of receiving any such fractional share, the shareholder shall
receive cash (without interest) in an amount rounded to the nearest whole cent,
determined by multiplying (i) the per share closing price on the New York Stock
Exchange, Inc. (the "NYSE") of Lucent Common Stock (as reported on the NYSE
Composite Transactions Tape as such Tape is reported in the Wall Street Journal
or another recognized business publication) on the date immediately preceding
the date on which the Effective Time shall occur (or, if the Lucent Common Stock
did not trade on the NYSE on such prior date, the last day of trading in Lucent
Common Stock on the NYSE prior to the Effective Time) by (ii) the fractional
share to which such holder would otherwise be entitled. Lucent shall make
available to the Exchange Agent the cash necessary for this purpose.
1.9. Exchange Procedures; Distributions with Respect to Unexchanged
Shares; Stock Transfer Books. (a) As of the Effective Time, Lucent shall
deposit with the Exchange Agent for the benefit of the holders of shares of
Company Common Stock, certificates representing shares of the Lucent Common
Stock to be issued pursuant to Section 1.5(c) in exchange for the shares of
Company Common Stock. Such shares of Lucent Common Stock, together with any
dividends or distributions with respect thereto pursuant to Sections 1.8 and
1.9(c), are referred to herein as the "Exchange Fund".
(b) As soon as practicable after the Effective Time, Lucent shall use its
reasonable efforts to cause the Exchange Agent to send to each Person who was,
at the Effective Time, a holder of record of certificates which represented
outstanding Company
A-4
<PAGE> 95
Common Stock (the "Certificates") which shares were converted into the right to
receive Lucent Common Stock pursuant to Section 1.5(c), a letter of transmittal
which (i) shall specify that delivery shall be effected and risk of loss and
title to such Certificates shall pass, only upon actual delivery thereof to the
Exchange Agent and (ii) shall contain instructions for use in effecting the
surrender of the Certificates. Upon surrender to the Exchange Agent of
Certificates for cancellation, together with such letter of transmittal duly
executed and such other documents as the Exchange Agent may reasonably require,
such holder shall be entitled to receive in exchange therefor (A) a certificate
representing the number of whole shares of Lucent Common Stock into which the
Company Common Stock represented by the surrendered Certificate shall have been
converted at the Effective Time, (B) cash in lieu of any fractional share of
Lucent Common Stock in accordance with Section 1.8 and (C) certain dividends and
distributions in accordance with Section 1.9(c), and the Certificates so
surrendered shall then be canceled. Subject to Section 1.8 and Section 1.9(c),
until surrendered as contemplated by this Section 1.9(b), each Certificate, from
and after the Effective Time shall be deemed to represent only the right to
receive, upon such surrender, the number of shares of Lucent Common Stock into
which such Company Common Stock shall have been converted.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to the Lucent Common Stock with a record date after
the Effective Time shall be paid to any holder entitled by reason of the Merger
to receive certificates representing Lucent Common Stock and no cash payment in
lieu of a fractional share of Lucent Common Stock shall be paid to any such
holder pursuant to Section 1.8 until such holder shall have surrendered its
Certificates pursuant to this Section 1.9. Subject to applicable law, following
surrender of any such Certificate, such holder shall be paid, in each case,
without interest, (i) the amount of any dividends or other distributions
theretofore paid with respect to the shares of Lucent Common Stock represented
by the certificate received by such holder and having a record date on or after
the Effective Time and a payment date prior to such surrender and (ii) at the
appropriate payment date or as promptly as practicable thereafter, the amount of
any dividends or other distributions payable with respect to such shares of
Lucent Common Stock and having a record date on or after the Effective Time but
prior to such surrender and a payment date on or after such surrender.
(d) If any certificate representing shares of Lucent Common Stock or any
cash is to be issued or paid to any Person other than the registered holder of
the Certificate surrendered in exchange therefor, it shall be a condition to
such exchange that such surrendered Certificate shall be properly endorsed and
otherwise in proper form for transfer and such Person either (i) shall pay to
the Exchange Agent any transfer or other taxes required as a result of the
issuance of such certificates of Lucent Common Stock and the distribution of
such cash payment to such Person or (ii) shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Lucent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Lucent or the Exchange Agent is
required to
A-5
<PAGE> 96
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Lucent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by Lucent or the Exchange Agent. All amounts in respect of
taxes received or withheld by Lucent shall be disposed of by Lucent in
accordance with the Code or such state, local or foreign tax law, as applicable.
(e) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and subject to such other conditions as the Board
of Directors of the Surviving Corporation may impose, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificate the shares of
Lucent Common Stock as determined under Section 1.5(c) and pay any cash,
dividends or other distributions as determined in accordance with Sections 1.8
and 1.9(c) in respect of such Certificate; provided, that Lucent may, in its
reasonable discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificate to deliver a
bond in such sum as it may reasonably require as indemnity against any claim
that may be made against Lucent, the Surviving Corporation or the Exchange Agent
with respect to the Certificate alleged to have been lost, stolen or destroyed.
(f) At the close of business on the day on which the Effective Time occurs,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of shares of Company Common Stock
on the records of the Company. From and after the Effective Time, the holders of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares except as
otherwise provided herein or by applicable law.
1.10. No Further Ownership Rights in Company Common Stock. All
certificates representing shares of Lucent Common Stock delivered upon the
surrender for exchange of the Certificates in accordance with the terms hereof
(including any cash paid pursuant to Section 1.8) shall be deemed to have been
delivered (and paid) in full satisfaction of all rights pertaining to the
Company Common Stock previously represented by such Certificates.
1.11. Return of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former holders of Company Common Stock for six
months after the Effective Time shall be delivered to Lucent, upon its request,
and any such former holders who have not theretofore surrendered to the Exchange
Agent their Certificates in compliance herewith shall thereafter look only to
Lucent for payment of their claim for shares of Lucent Common Stock, any cash in
lieu of fractional shares of Lucent Common Stock and any dividends or
distributions with respect to such shares of Lucent Common Stock. None of
Lucent, Acquisition, the Exchange Agent or the Company shall be liable to any
former holder of Company Common Stock for any such shares of Lucent Common Stock
held in the Exchange Fund (and any cash, dividends
A-6
<PAGE> 97
and distributions payable in respect thereof) which are delivered to a public
official pursuant to an official request under any applicable abandoned
property, escheat or similar law.
1.12. Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either the
Company or Acquisition or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either the Company or Acquisition, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Company or
Acquisition, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Company or
Acquisition, as applicable, and otherwise to carry out the purposes of this
Agreement.
2. Representations and Warranties of the Company. Except as set forth
on the Disclosure Schedule delivered by the Company to Lucent prior to the
execution of this Agreement (the "Company Disclosure Schedule") and making
reference to the particular subsection of this Agreement to which exception is
being taken, the Company represents and warrants to Lucent and Acquisition as
follows:
2.1. Organization. Each of the Company and its Subsidiaries is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite power and authority and all necessary governmental
approval to carry on its business as it has been and is now being conducted.
Each of the Company and its Subsidiaries is duly qualified or licensed as a
foreign corporation to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction where the
nature of its business or the ownership, leasing or operation of its properties
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing, would not have a Material Adverse
Effect. The Company has made available to Lucent prior to the execution of this
Agreement complete and correct copies of its articles of incorporation and
by-laws and the charter documents for each of its Subsidiaries in each case, as
amended to the date hereof.
2.2. Subsidiaries. Item 2.2 of the Company Disclosure Schedule contains
(i) the name and jurisdiction of incorporation of each Subsidiary of the
Company, (ii) the total number of shares of each class of capital stock of (or
other equity interests in) each Subsidiary authorized, the number of shares (or
other equity interests) outstanding and the number of shares (or other equity
interests) owned by the Company or any other Subsidiary of the Company and (iii)
a complete list of the directors and officers of the Company and each
Subsidiary. All the issued and outstanding capital stock of (or other equity
interests in) each Subsidiary have been duly and validly authorized and issued
A-7
<PAGE> 98
and are fully paid, nonassessable and free of pre-emptive rights. None of the
outstanding capital stock of (or other equity interests in) any Subsidiary has
been issued in violation of the preemptive rights of any equity holder of such
Subsidiary. The capital stock of (or other equity interests in) each Subsidiary
were issued in compliance in all material respects with all applicable federal
and state securities laws and regulations, are owned free and clear of all Liens
and are free of any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other equity interest.
2.3. Capital Structure. (a) The authorized capital stock of the Company
consists of 25,000,000 shares of Company Common Stock and 5,000,000 shares of
Company Preferred Stock. At the close of business on March 31, 1999, (i)
10,516,369 shares of Company Common Stock were issued and outstanding; (ii) no
shares of Company Common Stock were held by the Company in its treasury; (iii)
no shares of Company Preferred Stock were issued and outstanding; and (iv)
2,965,388 shares of Company Common Stock were reserved for issuance pursuant to
the 1987 Stock Option Plan, 1996 Stock Incentive Compensation Plan, 1992 Stock
Option Plan for Non-Employee Directors, 1991 Employee Stock Purchase Plan (such
plans, collectively, the "Company Stock Plans") (of which 2,169,982 shares are
subject to outstanding Company Stock Options).
(b) Except as set forth in paragraph (a), at the close of business on March
31, 1999, no shares of capital stock or other voting securities of the Company
were issued, reserved for issuance or outstanding. There are no outstanding
stock appreciation rights ("SARs") or rights (other than outstanding stock
options or other rights to purchase or receive Company Common Stock granted
under the Company Stock Plans (collectively, "Company Stock Options")) to
receive shares of Company Common Stock on a deferred basis granted under the
Company Stock Plans or otherwise and no warrants to purchase shares of capital
stock of the Company at any time or upon the occurrence of any stated event. The
Company has delivered to Lucent a complete and correct list, as of March 3,
1999, of the number of shares of Company Common Stock subject to Company Stock
Options and the exercise prices thereof.
(c) As of the date of this Agreement, no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote are issued or outstanding. All outstanding
shares of capital stock of the Company are, and all shares which may be issued
will be, when issued, duly authorized, validly issued, fully paid and
nonassessable, not subject to preemptive rights and were issued in compliance in
all material respects with all applicable federal and state securities laws.
(d) Except as set forth in this Section 2.3 and Section 5.15(b) and except
for changes since March 3, 1999 resulting from the issuance of shares of Company
Common Stock pursuant to the Company Stock Options outstanding as of March 3,
1999, and pursuant to the Company Stock Options issued after the date hereof as
expressly permitted by the terms of this Agreement, (i) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or other
voting securities of the Company,
A-8
<PAGE> 99
(B) any securities of the Company convertible into or exchangeable or
exercisable for shares of capital stock or voting securities of the Company, (C)
any warrants, calls, options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or securities convertible into or exchangeable
or exercisable for capital stock or voting securities of the Company and (ii) as
of the close of business on March 3, 1999, there are not any outstanding
obligations of the Company or any Subsidiary 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. The Company is not a party to any voting
agreement with respect to the voting of any such securities.
(e) There are no outstanding (i) securities of the Company or any
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary, (ii)
warrants, calls, options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any such Subsidiary or (iii)
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any such outstanding securities of such Subsidiaries or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
Except for the Company's ownership of the Subsidiaries, the Company does not,
directly or indirectly, have any ownership or other interest in, or control of,
any Person, nor is the Company or any Subsidiary controlled by or under common
control with any Person.
2.4. Authority. The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to Company Shareholder
Approval, to consummate the transactions contemplated by this Agreement. The
Company has all requisite corporate power and authority to enter into the Option
Agreement and to consummate the transactions contemplated thereby. The execution
and delivery of this Agreement and the Option Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
and the Option Agreement have been duly authorized by all necessary corporate
action on the part of the Company, subject, in the case of the Merger, to
Company Shareholder Approval. The Board of Directors of the Company has adopted
for purposes of Chapters 23B.11.010 and 23B.11.030 of the WBCL the plan of
merger contained in this Agreement. This Agreement and the Option Agreement have
been duly executed and delivered by the Company and constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
2.5. No Conflict. (a) The execution and delivery of this Agreement and
the Option Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and compliance with the
provisions of this Agreement and the Option 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, cancellation or
acceleration of any obligation or loss of a benefit
A-9
<PAGE> 100
under, or result in the creation of any Lien upon any of the properties or
assets of the Company or any of its Subsidiaries under, (i) the articles of
incorporation or by-laws of the Company or the comparable organizational
documents of any of its Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license or similar authorization applicable to the
Company or any of its Subsidiaries or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to in
paragraph (b), any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company 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 could not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) 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 the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the Option
Agreement by the Company or the consummation by the Company of the transactions
contemplated by this Agreement or the Option Agreement, except for (i) the
filing of a premerger notification and report form by the Company 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 laws
and regulations; (ii) the filing with the Securities and Exchange Commission
(the "SEC") of (A) a proxy statement relating to the Company Shareholders
Meeting for the approval by the shareholders of the Company of the Merger (such
proxy statement, as amended or supplemented from time to time, the "Company
Proxy Statement"), and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") as may be
required in connection with this Agreement, the Option Agreement and the
transactions contemplated hereby and thereby; (iii) the filing of the Articles
of Merger with the Secretary of State of the State of Washington and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business; (iv) such filings with and approvals of The Nasdaq
National Market ("Nasdaq") to permit the shares of Company Common Stock that are
to be issued pursuant to the Option Agreement or the Offering to be listed on
Nasdaq; (v) filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; and (vi) such consents,
approvals, orders or authorizations which if not made or obtained, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
2.6. SEC Documents; Undisclosed Liabilities. The Company has filed with
the SEC since January 1, 1997 or, with respect to the Offering, will file with
the SEC all required registration statements, reports, schedules, forms,
statements, proxy or information statements and other documents (including
exhibits and all other information
A-10
<PAGE> 101
incorporated therein) (the "Company SEC Documents"). As of their respective
dates, the Company SEC Documents complied or, with respect to those not yet
filed, will comply in all material respects with the requirements of the
Securities Act of 1933 (the "Securities Act"), or the Exchange Act, as the case
may be, and, in each case, the rules and regulations of the SEC promulgated
thereunder and, except to the extent that information contained in any Company
SEC Document has been revised and superseded by a later filed Company SEC
Document, did not or, with respect to those not yet filed, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form, as of their respective dates of filing with the SEC, in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial position
of the Company 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). Except for liabilities (i) reflected in such
financial statements or in the notes thereto, (ii) incurred in the ordinary
course of business consistent with past practice since the date of the most
recent audited financial statements included in the Company Filed SEC Documents,
(iii) incurred in connection with this Agreement or the Option Agreement or the
transactions contemplated hereby or thereby, or (iv) disclosed in Item 2.6 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect on the
Company.
2.7. Lucent Registration Statement; Company Proxy Statement. None of
the information supplied or to be supplied by the Company 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, together with all amendments thereto (the
"Lucent Registration Statement"), will, at the time the Lucent Registration
Statement 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 Company Proxy Statement will, at the date it is first mailed to the
Company's shareholders and the time of the Company Shareholders 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 were made, not
misleading. The Company Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representa-
A-11
<PAGE> 102
tion or warranty is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied by Lucent
specifically for inclusion or incorporation by reference in the Company Proxy
Statement.
2.8. Absence of Certain Changes. Except for liabilities incurred in
connection with this Agreement or the Option Agreement or the transactions
contemplated hereby or thereby and except as disclosed in the Company SEC
Documents filed and publicly available prior to the date of this Agreement (as
amended to the date of this Agreement, the "Company Filed SEC Documents"), since
December 31, 1998, the Company and its Subsidiaries have conducted their
business only in the ordinary course, and there has not been:
(a) any event or occurrence which could reasonably be expected to have
a Material Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock;
(c) any split, combination or reclassification of any of the Company'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 the Company's capital stock, except for issuances of Company Common
Stock upon the exercise of Company Stock Options under the Company Stock
Plans, in each case awarded prior to the date hereof in accordance with
their present terms;
(d) (i) any granting by the Company or any of its Subsidiaries to any
current or former director, executive officer or other key employee of the
Company 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 Company Filed SEC Documents,
(ii) any granting by the Company or any of its Subsidiaries to any such
current or former director, executive officer or key employee of any
increase in severance or termination pay, except in the ordinary course of
business consistent with past practice, (iii) any entry by the Company 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 key employee, or (iv) any amendment to, or
modification of, any Company Stock Option;
(e) except insofar as may have been required by a change in generally
accepted accounting principles, any change in accounting methods,
principles or practices by the Company;
(f) any tax election that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the Company or
any of its tax attributes or any settlement or compromise of any material
income tax liability;
A-12
<PAGE> 103
(g) any impairment, damage, destruction, loss or claim, whether or not
covered by insurance, or condemnation or other taking which could
reasonably be expected to have a Material Adverse Effect on the company;
(h) any issuance, delivery or agreement (conditionally or
unconditionally) to issue or deliver any bonds, notes or other debt
securities, or the incurrence of or agreement to incur any indebtedness for
borrowed money, other than in the ordinary course of business consistent
with past practice or the entry into any lease the obligations of which, in
accordance with GAAP, would be capitalized;
(i) any material amendment or termination of any agreement to which the
Company or any of its Subsidiaries is a party and is or should be set forth
on Item 2.11 of the Company Disclosure Schedule;
(j) any undertaking or commitment to undertake capital expenditures
exceeding $100,000 for any single project or related series of projects;
(k) any sale, lease (as lessor), transfer or other disposition of,
mortgage, pledge, or imposition of any Lien on, any of the assets reflected
on the Company's most recent audited financial statement included in the
Company Filed SEC Documents or any assets acquired by the Company or any of
its Subsidiaries after the date of such audited financial statement, except
for inventory and personal property sold or otherwise disposed of for fair
value in the ordinary course of its business consistent with past practice
and except for Permitted Liens;
(l) cancellation of any debts owed to or claims held by the Company or
any of its Subsidiaries (including the settlement of any claims or
litigation) other than in the ordinary course of its business consistent
with past practice;
(m) acceleration or delay in collection of accounts receivable in
advance of or beyond their regular due dates or the dates when the same
would have been collected in the ordinary course of its business consistent
with past practice;
(n) acceleration or delay in payment of any account payable or other
liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of its business
consistent with past practice; and
(o) entry into or commitment to enter into any other material
transaction except in the ordinary course of business.
2.9. Properties. (a) Each of the Company and its Subsidiaries has good
and valid title to or a valid leasehold interest in all its properties and
assets reflected on the most recently audited balance sheet contained in the
Company Filed SEC Documents or acquired after the date thereof except for (i)
properties and assets sold or otherwise disposed of in the ordinary course of
business since the date of such balance sheet and (ii) properties and assets the
loss of which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect on the Company.
(b) Neither the Company nor any or its Subsidiaries owns any real
property.
A-13
<PAGE> 104
2.10. Leases. Item 2.10 of the Company Disclosure Schedule lists all
outstanding leases, both capital and operating, or licenses, pursuant to which
the Company or any of its Subsidiaries has (i) obtained the right to use or
occupy any real or personal property under arrangements where the remaining
obligation is more than $50,000, inclusive of any renewal rights or (ii) granted
to any other Person the right to use any material item of machinery, equipment,
furniture, vehicle or other personal property of the Company or any of its
Subsidiaries having an original cost of $50,000 or more.
2.11. Contracts. Item 2.11 of the Company Disclosure Schedule lists any
of the following not otherwise listed on any other item of the Company
Disclosure Schedule:
(a) each written contract or commitment which creates an obligation on
the part of the Company or any of its Subsidiaries in excess of $100,000;
(b) each written debt instrument, including, without limitation, any
loan agreement, line of credit, promissory note, security agreement or
other evidence of indebtedness, where the Company or any of its
Subsidiaries is a lender, borrower or guarantor, in a principal amount in
excess of $100,000;
(c) each written contract or commitment restricting the Company or any
of its Subsidiaries from engaging in any industry or in any line of
business in any location;
(d) each written contract or commitment in excess of $10,000 to which
the Company or any of its Subsidiaries is a party for any charitable
contribution;
(e) each written joint venture or partnership agreement to which the
Company or any of its Subsidiaries is a party;
(f) each written agreement in excess of $25,000 to which the Company or
any of its Subsidiaries is a party with respect to any assignment,
discounting or reduction of any receivables of the Company or such
Subsidiary;
(g) each written distributorship, sales agency, sales representative,
reseller or marketing agreement to which the Company or any of its
Subsidiaries is a party;
(h) each agreement, option or commitment or right with, or held by, any
third party to acquire any assets or properties, or any interest therein,
of the Company or any of its Subsidiaries, having a value in excess of
$100,000, except for contracts for the sale of inventory, machinery or
equipment in the ordinary course of business;
(i) each written employment contract entered into by the Company or any
of its Subsidiaries; and
(j) each supply agreement to which the Company or any of its
Subsidiaries is a party that the Company or such Subsidiary could not
readily replace without a Material Adverse Effect on the Company.
There are (i) no oral contracts or commitments of the types described in
this Section 2.11 which create an obligation on the part of the Company or any
of its Subsidiaries in excess of $25,000 and (ii) no contracts or commitments
between the Company or any of its Subsidiaries and any Affiliate (other than a
wholly-owned Subsidiary).
A-14
<PAGE> 105
2.12. Absence of Default. Each of the leases, contracts and other
agreements listed or required to be listed in Items 2.10, 2.11 and 2.15 of the
Company Disclosure Schedule that create obligations on any Person in excess of
$100,000 constitutes a valid and binding obligation of the parties thereto and
is in full force and effect and will continue in full force and effect after the
Effective Time, in each case, without breaching the terms thereof or resulting
in the forfeiture or impairment of any rights thereunder and without the
consent, approval or act of, or the making of any filing with, any other Person.
Each of the Company and its Subsidiaries has fulfilled and performed in all
material respects its obligations under each such lease, contract or other
agreement to which it is a party to the extent such obligations are required by
the terms thereof to have been fulfilled or performed through the date hereof
(except for any such lease, contract or other agreement which, by its terms,
will expire prior to the Effective Time) and neither the Company nor any such
Subsidiary is, and, neither the Company nor any such Subsidiary is alleged in
writing to be, in breach or default under, nor is there or is there alleged in
writing to be any basis for termination of, any such lease, contract or other
agreement. To the best knowledge of the Company, no other party to any such
lease, contract or other agreement has breached or defaulted thereunder. No
event has occurred and no condition or state of facts exists which, with the
passage of time or the giving of notice or both, would constitute such a default
or breach by the Company or, to the best knowledge of the Company, by any such
other party. The Company is not currently renegotiating any such lease, contract
or other agreement or paying liquidated damages in lieu of performance
thereunder. Complete and correct copies of each such lease, contract or other
agreement and any amendments thereto have heretofore been delivered to Lucent.
2.13. Litigation. Item 2.13 of the Disclosure Schedule sets forth (i)
any actions, suits, arbitrations, legal or administrative proceedings or
investigations pending or, to the best knowledge of the Company, threatened
against the Company or any of its Subsidiaries; (ii) any judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
as to which any of the assets, properties or business of the Company or any of
its Subsidiaries is subject; and (iii) any actions, suits, arbitrations or
proceedings as to which the Company or any such Subsidiary is the plaintiff or
the Company or any such Subsidiary is contemplating commencing legal action
against any other Person. None of the matters, if any, listed on Item 2.13 of
the Disclosure Schedule could reasonably be expected to have a Material Adverse
Effect on the Company.
2.14. Compliance with Law.
(a) Each of the Company and its Subsidiaries has complied in all material
respects with, and is not in violation of, in any material respect, any law,
ordinance or governmental rule or regulation (collectively, "Laws") to which it
or its business is subject;
(b) Each of the Company and its Subsidiaries has obtained all licenses,
permits, certificates or other governmental authorizations (collectively
"Authorizations") necessary for the ownership or use of its assets and
properties or the conduct of its business
A-15
<PAGE> 106
other than Authorizations (i) which are ministerial in nature and which the
Company or such Subsidiary has no reason to believe would not be issued in due
course and (ii) which, the failure of the Company or such Subsidiary to possess,
would not subject the Company and its Subsidiaries to penalties other than fines
not to exceed $50,000 in the aggregate ("Immaterial Authorizations"); and
(c) Neither the Company nor any of its Subsidiaries has received notice of
violation of, or knows of any violation of, any Laws to which it or its business
is subject or any Authorization necessary for the ownership or use of its assets
and properties or the conduct of its business (other than Immaterial
Authorizations).
2.15. Intellectual Property; Year 2000. (a) The Company 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 the Company and its Subsidiaries.
(b) To the Company's best knowledge, neither the Company nor any of its
Subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights or other proprietary
information of any other Person. Neither the Company nor any of its Subsidiaries
has received any written charge, complaint, claim, demand or notice alleging any
such interference, infringement, misappropriation or violation (including any
claim that the Company or any such Subsidiary must license or refrain from using
any Intellectual Property Rights or other proprietary information of any other
Person) which has not been settled or otherwise fully resolved. To the Company's
best knowledge, no other Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
Rights or other proprietary information of the Company or any of its
Subsidiaries.
(c) Assuming that Lucent continues to operate the business of the Company
and its Subsidiaries as presently conducted and proposed to be conducted, then,
to the Company's best knowledge, Lucent's use of the Intellectual Property
Rights or other proprietary information which is material to the conduct of the
business of the Company and its Subsidiaries, taken as a whole, will not
interfere with, infringe upon, misappropriate or otherwise come into conflict
with the Intellectual Property Rights or other proprietary information of any
other Person.
(d) Each employee, agent, consultant or contractor who has materially
contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company, any
of its Subsidiaries or any predecessor in interest thereto either: (i) is a
party to a "work-for-hire" agreement under which the Company or such Subsidiary
is deemed to be the original owner/author of all property rights therein; or
(ii) has executed an assignment or an agreement to assign in favor of the
Company, such Subsidiary or such predecessor in interest, as applicable all
right, title and interest in such material.
A-16
<PAGE> 107
(e) The Company has taken all necessary steps directed at ensuring that its
and its Subsidiaries' 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 non-Company products (e.g.,
hardware, software and firmware) material to the conduct of the business of the
Company and used in or in combination with the Company's products, exchange data
with the Company's products in the same manner on dates in both the Twentieth
and Twenty-First centuries. Further, the Company has taken all necessary steps
to assure that the year 2000 date change will not adversely affect its
operations or the systems and facilities that support the operations of the
Company and its Subsidiaries, except as could not reasonably be expected to have
a Material Adverse Effect on the Company. The Company believes that it has
sufficient resources to complete all necessary customer upgrades so that the
Company's products used by such customers will be capable 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.
2.16. Taxes. (a) Each of the Company 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 could not reasonably be expected to have a
Material Adverse Effect. The Company and each of its Subsidiaries has paid (or
the Company has paid on its behalf) all Taxes shown as due on such returns, and
the most recent financial statements contained in the Company Filed SEC
Documents reflect an adequate reserve for all taxes payable by the Company and
its Subsidiaries for all taxable periods and portions thereof accrued through
the date of such financial statements.
(b) No deficiencies for any taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that are not adequately reserved
for, except for deficiencies that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect on the Company. The
federal income tax returns of the Company and each of its Subsidiaries
consolidated in such returns have closed by virtue of the applicable statute of
limitations.
(c) Neither the Company nor any of its Subsidiaries has taken any action or
knows of any fact, agreement, plan or other circumstance that could reasonably
be expected to prevent the Merger from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
A-17
<PAGE> 108
(d) The Company Benefit Plans and other Company 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 the
Company or any of its Subsidiaries under any such plan or arrangement and, to
the best knowledge of the Company, no fact or circumstance exists that could
reasonably be expected to cause such disallowance to apply to any such amounts.
(e) Neither the Company 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.
(f) Neither the Company nor any of its Subsidiaries is a party (other than
as an investor) to any industrial development bond.
2.17. Benefit Plans. (a) Item 2.17 of the Company Disclosure Schedule
contains a list and brief description of all "employee pension benefit plans"
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (sometimes referred to as "Pension Plans"),
"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
(sometimes referred to as "Welfare Plans") and all other Benefit Plans (together
with the Pension Plans and Welfare Plans, the "Company Benefit Plans")
maintained, or contributed to, by the Company, any of its Subsidiaries or any
Person that, together with the Company or any of its Subsidiaries, is treated as
a single employer under Section 414(b), (c), (m) or (o) of the Code (the
Company, such Subsidiaries and each such other Person, a "Commonly Controlled
Entity") for the benefit of any current or any former employees, officers or
directors of the Company. The Company has made available to Lucent true,
complete and correct copies of (i) each Company Benefit Plan (or, in the case of
any unwritten Company Benefit Plans, descriptions thereof), (ii) the most recent
annual report on Form 5500 filed with the Internal Revenue Service (the "IRS")
with respect to each Company Benefit Plan (if any such report was required),
(iii) the most recent summary plan description for each Company Benefit Plan for
which such summary plan description is required, (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan and (v) all
correspondence with the IRS or the United States Department of Labor relating to
any outstanding controversy or audit.
(b) Since the date of the most recent audited financial statements included
in the Company Filed SEC Documents, there has not been any adoption or amendment
in any material respect by the Company, any of its Subsidiaries or any Commonly
Controlled Entity of any Company Benefit Plans, or any material change in any
actuarial or other assumption used to calculate funding obligations with respect
to any Pension Plans of the Company, or any change in the manner in which
contributions to any Pension Plans of the Company are made or the basis on which
such contributions are determined.
A-18
<PAGE> 109
2.18. ERISA Compliance. (a) With respect to the Company Benefit Plans,
no event has occurred and, to the best knowledge of the Company, there exists no
condition or set of circumstances, in connection with which the Company or any
of its Subsidiaries could be subject to any liability that individually or in
the aggregate could reasonably be expected to have a Material Adverse Effect
under ERISA, the Code or any other applicable law.
(b) Each Benefit Plan has been administered in accordance with its terms,
except for any failures so to administer any Benefit Plan that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company. The Company, its Subsidiaries and all the Company 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 could not reasonably be expected to have a Material Adverse
Effect. Each 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
Company 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 best knowledge of the Company, no fact
or event has occurred since that date of any determination letter from the IRS
which could reasonably be expected to affect adversely the qualified status of
any such Benefit Plan or the exempt status of any such trust. There are no
pending or, to the best knowledge of the Company, threatened lawsuits, claims,
grievances, investigations or audits of any Benefit Plan that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(c) Neither the Company nor any of its Subsidiaries has incurred any
liability under Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course). No 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. To the
best knowledge of the Company, there are no facts or circumstances that could
reasonably be expected to materially change the funded status of any Benefit
Plan that is a "defined benefit" plan (as defined in Section 3(35) of ERISA)
since the date of the most recent actuarial report for such plan. No Benefit
Plan is a "multi employer plan" within the meaning of Section 3(37) of ERISA.
(d) No employee of the Company will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
Benefit Plan as a result of the transactions contemplated by this Agreement or
the Option Agreement. No amount payable, or economic benefit provided, by the
Company or its Subsidiaries (including any acceleration of the time of payment
or vesting of any benefit) could be considered an "excess parachute payment"
under Section 280G of the Code as a result of the transactions contemplated by
this Agreement or the Option Agreement. No Person is entitled to receive any
additional payment from the Company or its
A-19
<PAGE> 110
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 the Company or any of its Subsidiaries has not granted to
any Person any right to receive any Parachute Gross-Up Payment.
(e) Neither the Company nor any of its Subsidiaries has any liability or
obligation under any "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) to provide life insurance or medical benefits after termination
of employment to any employee or dependent other than as required by Part 6 of
Title I of ERISA.
2.19. Employment Matters. (a) Each of the Company and its Subsidiaries
has complied in all material respects with all applicable laws, rules and
regulations respecting employment and employment practices, terms and conditions
of employment, wages and hours, and neither the Company nor any of its
Subsidiaries is liable for any arrears of wages or any taxes or penalties for
failure to comply with any such laws, rules or regulations; (b) the Company
believes that the Company's and its Subsidiaries' relations with their
respective employees is satisfactory; (c) there are no controversies pending or,
to the best knowledge of the Company, threatened between the Company or any of
its Subsidiaries and any of their respective employees, which controversies have
or could have a Material Adverse Effect on the Company; (d) neither the Company
nor any Subsidiary is a party to any collective bargaining agreement or other
labor union contract applicable to Persons employed by the Company or any such
Subsidiary, nor, to the best knowledge of the Company, are there any activities
or proceedings of any labor union to organize any such employees; (e) there are
no unfair labor practice complaints pending against the Company or any of its
Subsidiaries before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any of its
Subsidiaries; (f) there is no strike, slowdown, work stoppage or lockout
existing, or, to the best knowledge of the Company, threatened, by or with
respect to any employees of the Company or any of its Subsidiaries; (g) no
charges are pending before the Equal Employment Opportunity Commission or any
state, local or foreign agency responsible for the prevention of unlawful
employment practices with respect to the Company or any of its Subsidiaries; (h)
there are no claims pending against the Company or any of its Subsidiaries
before any workers' compensation board; and (i) neither the Company nor any of
its Subsidiaries has received notice that any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws intends to
conduct an investigation of or relating to the Company or any of its
Subsidiaries and, to the best knowledge of the Company, no such investigation is
in progress.
2.20. Environmental Laws. The Company has not received any notice or
claim (and is not aware of any facts that would form a reasonable basis for any
claim), or entered into any negotiations or agreements with any other Person,
and, to the best knowledge of the Company, neither the Company nor any of its
Subsidiaries is the subject of any investigation by any governmental or
regulatory authority, domestic or foreign, relating to any material or
potentially material liability or remedial action under any Environmental Laws.
There are no pending or, to the best knowledge of the
A-20
<PAGE> 111
Company, threatened, actions, suits or proceedings against the Company, any of
its Subsidiaries or any of their respective properties, assets or operations
asserting any such material liability or seeking any material remedial action in
connection with any Environmental Laws.
2.21. Voting Requirements. The affirmative vote of the holders of
two-thirds of the voting power of all outstanding shares of Company Common Stock
at the Company Shareholders Meeting to adopt this Agreement (the "Company
Shareholder Approval") is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve and adopt this Agreement, the
Option Agreement and the transactions contemplated hereby and thereby. The Board
of Directors of the Company (at a meeting duly called and held) has (i)
unanimously approved this Agreement and the Option Agreement, (ii) determined
that the Merger is fair to and in the best interests of the Company's
shareholders, (iii) resolved (subject to Section 5.2) to recommend this
Agreement and the Merger to such holders for approval and adoption and (iv)
directed (subject to Section 5.2) that this Agreement be submitted to the
Company's shareholders. The Company hereby agrees to the inclusion in the Lucent
Registration Statement and the Company Proxy Statement of the recommendation of
such Board of Directors.
2.22. State Takeover Statutes. The Board of Directors of the Company
(including the disinterested directors thereof) has unanimously approved the
terms of this Agreement and the Option Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement and the Option
Agreement and such approval is sufficient to render inapplicable to the Merger
and any of such other transactions the provisions of Chapter 23B.19 of the WBCL.
To the Company's knowledge, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby and by the Option Agreement
or any of the transactions contemplated hereby or thereby and no provision of
the articles of incorporation, by-laws or other governing instruments of the
Company or any of its Subsidiaries would, directly or indirectly, restrict or
impair the ability of Lucent to vote, or otherwise exercise the rights of a
shareholder with respect to, shares of capital stock or other equity interest of
the Company and its Subsidiaries that may be acquired or controlled by Lucent as
contemplated by this Agreement or the Option Agreement.
2.23. Accounting Matters. (a) Neither the Company nor any of its
Affiliates has taken 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.
(b) The number of shares of Company Common Stock to be included in the
Offering will be 2,846,000 and such number of shares of Company Common Stock
will be greater than or equal to the minimum number of shares of Company Common
Stock that are required for the Merger to be accounted for as a pooling of
interests under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations (assuming that no shares of Company Common Stock are
repurchased as a result of fractional shares of Company Common Stock or
dissenters' rights arising in connection with the transactions contemplated by
this Agreement).
A-21
<PAGE> 112
2.24. Brokers. No broker, investment banker, financial advisor or other
Person, other than BT Alex. Brown Incorporated, the fees and expenses of which
will be paid by the Company, 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 and the Option Agreement based upon arrangements
made by or on behalf of the Company. The Company 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.
2.25. Opinion of Financial Advisor. The Company has received the
opinion of BT Alex. Brown 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 holders of shares of the Company Common Stock (other than Lucent and
its affiliates), a signed copy of which opinion has been or will promptly be
delivered to Lucent.
2.26. Minute Books. The minute books of the Company made available to
Lucent contain a complete and accurate summary of all meetings of directors and
shareholders or actions by written resolutions since the time of incorporation
of the Company through the date of this Agreement, and reflect all transactions
referred to in such minutes and resolutions accurately, except for omissions
which are not material.
2.27. Complete Copies of Materials. The Company has delivered or made
available to Lucent true and complete copies of each material document in
connection with their legal and accounting review of the Company.
2.28. Disclosure. None of the representations or warranties of the
Company contained herein, none of the information contained in the Company
Disclosure Schedule, and none of the other information or documents furnished or
to be furnished to Lucent or Acquisition by the Company or any of its
Subsidiaries or pursuant to the terms of this Agreement, when taken as a whole,
contains, or at the Effective Time will contain, any untrue statement of a
material fact or omits, or at the Effective Time will omit, to state a material
fact required to be stated herein or therein necessary to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading in any material respect.
3. Representations and Warranties of Lucent and Acquisition. Except as
set forth on the Disclosure Schedule delivered by Lucent to the Company 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 Acquisition represent and warrant to the Company as
follows:
3.1. Organization, Standing and Corporate Power. Each of Lucent and
Acquisition is a corporation or other legal entity duly organized, validly
existing and in good standing 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, except for those
jurisdictions where the failure to be so organized, existing or in good standing
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on Lucent. Each of Lucent and Acquisition
A-22
<PAGE> 113
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
properties 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 could not reasonably be expected to
have a Material Adverse Effect on Lucent.
3.2. Capital Structure. The authorized capital stock of Lucent consists
of (i) 6,000,000,000 shares of common stock, par value $.01 per share (the
"Lucent Common Stock") and (ii) 250,000,000 shares of preferred stock, par value
$1.00 per share ("Lucent Authorized Preferred Stock"), of which 7,500,000 shares
have been designated Series A Junior Participating Preferred Stock (the "Lucent
Junior Preferred Stock"). 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 shareholders 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.
3.3. Authority. Each of Lucent and Acquisition has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. Lucent has all requisite corporate
power and authority to enter into the Option Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of this Agreement
by Lucent and Acquisition, and the execution and delivery of the Option
Agreement by Lucent, and the consummation by Lucent and Acquisition of the
transactions contemplated by this Agreement and the consummation by Lucent of
the transactions contemplated by the Option Agreement have been duly authorized
by all necessary corporate action on the part of Lucent and Acquisition, as
applicable. This Agreement has been duly executed and delivered by Lucent and
Acquisition and, constitutes the legal, valid and binding obligation of Lucent
and Acquisition, enforceable against each of them in accordance with its terms.
The Option Agreement has been duly executed and delivered by Lucent, and,
constitutes a legal, valid and binding obligation of Lucent, enforceable against
Lucent in accordance with its terms.
3.4. No Conflict. (a) The execution and delivery of this Agreement and
the Option Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and compliance with the
provisions of this Agreement and the Option 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, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of Lucent or
Acquisition or any of Lucent's other Subsidiaries under, (i) the charter
documents of Lucent or Acquisition, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license or similar authorization applicable to Lucent or
Acquisition or any of Lucent's
A-23
<PAGE> 114
other Subsidiaries or their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in Section 3.4(b), any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Lucent or any of its Subsidiaries or their respective properties or assets,
other than, in the case of paragraph (b), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate could
not reasonably be expected to have a Material Adverse Effect on Lucent.
(b) 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 Acquisition in connection with the
execution and delivery of this Agreement by Lucent and Acquisition or the
execution and delivery of the Option Agreement by Lucent or the consummation by
Lucent and Acquisition of the transactions contemplated by this Agreement or the
consummation by Lucent of the transactions contemplated by the Option Agreement,
except for (i) 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 laws and regulations; (ii) the filing with the SEC of (A) the Lucent
Registration Statement 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
and the Option Agreement and the transactions contemplated by this Agreement and
the Option Agreement; (iii) the filing of the Articles of Merger with the
Secretary of State of the State of Washington and appropriate documents with the
relevant authorities of other states in which Lucent is qualified to do
business; (iv) 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; (v) filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws and (vi) such consents,
approvals, orders or authorizations the failure of which to be made or obtained
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on Lucent.
3.5. Litigation. Item 3.5 of the Lucent Disclosure Schedule sets forth
(i) any actions, suits, arbitrations, legal or administrative proceedings or
investigations pending or, to the best knowledge of Lucent, threatened against
Lucent or any of its Subsidiaries; (ii) any judgment, order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal as to which any
of the assets, properties or business of Lucent or any of its Subsidiaries is
subject; and (iii) any actions, suits, arbitrations or proceedings as to which
Lucent or any such Subsidiary is the plaintiff or Lucent or any such Subsidiary
is contemplating commencing legal action against any other Person. None of the
matters, if any, listed on Item 3.5 of the Lucent Disclosure Schedule could
reasonably be expected to have a Material Adverse Effect on Lucent.
3.6. 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 (the "Lucent SEC Documents"). As of their respective dates, the
Lucent SEC Documents
A-24
<PAGE> 115
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Lucent SEC Documents and, except to
the extent that information contained in any Lucent SEC Document has been
revised or superseded by a later filed Lucent SEC Document, none of the Lucent
SEC Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Lucent included in
the Lucent SEC Documents comply as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial position of Lucent and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal recurring year-end audit adjustments).
Except for liabilities (i) reflected in such financial statements or in the
notes thereto, (ii) incurred in the ordinary course of business consistent with
past practice since the date of the most recent audited financial statements
included in the Lucent Filed SEC Documents, (iii) incurred in connection with
this Agreement or the Option Agreement or the transactions contemplated hereby
or thereby, or (iv) disclosed in Item 3.6 of the Lucent Disclosure Schedule,
neither Lucent nor any of its Subsidiaries has any liabilities or obligations of
any nature which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on Lucent.
3.7. Information Supplied. None of the information supplied or to be
supplied by Lucent specifically for inclusion or incorporation by reference in
(i) the Lucent Registration Statement, at the time the Lucent Registration
Statement becomes effective under the Securities Act, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Company Proxy Statement will, at the date it is first mailed to the
Company's shareholders or at the time of the Company Shareholders 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 Lucent Registration Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Lucent with respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for inclusion or
incorporation by reference in the Lucent Registration Statement.
A-25
<PAGE> 116
3.8. Absence of Certain Changes. Except for liabilities incurred in
connection with this Agreement or the Option Agreement or the transactions
contemplated hereby or thereby and except as disclosed in the Lucent SEC
Documents filed and publicly available prior to the date of this Agreement
("Lucent Filed SEC Documents"), since September 30, 1998, Lucent and its
Subsidiaries have conducted their business only in the ordinary course, and
there has not been (i) any event or occurrence which could have a Material
Adverse Effect on Lucent, (ii) except insofar as may have been or required by a
change in GAAP, any change in accounting methods, principles or practices by
Lucent materially affecting its assets, liabilities or business, (iii) any tax
election that individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect on Lucent or any of its tax attributes or any
settlement or compromise of any material income tax liability, or (iv) any
split, combination or reclassification of any of Lucent'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 Lucent's capital stock, except
for (A) the two-for-one stock split to be completed on April 1, 1999 and (B)
issuances of Lucent Common Stock upon the exercise of outstanding stock options
or other rights to purchase or receive Lucent Common Stock granted under the
1996 Long Term Incentive Program, the 1997 Long Term Incentive Plan, the Global
Founders Grant, the 1998 Global Ownership Grant and various plans of companies
acquired by Lucent, in each case awarded prior to the date hereof in accordance
with their present terms.
3.9. Accounting Matters. Neither Lucent nor any of its affiliates has
taken 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.
3.10. Brokers. No broker, investment banker, financial advisor or other
Person 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 and the Option Agreement based upon arrangements made by or on
behalf of Lucent.
3.11. Interim Operations of Acquisition. Acquisition was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
3.12. Taxes. Neither Lucent nor any of its Subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
A-26
<PAGE> 117
4. Conduct Pending Closing.
4.1. Conduct of Business Pending Closing. From the date hereof until
the Closing, the Company shall (and shall cause each of its Subsidiaries to):
(a) maintain its existence in good standing;
(b) maintain the general character of its business and properties and
conduct its business in the ordinary and usual manner consistent with past
practices, except as expressly permitted by this Agreement;
(c) maintain business and accounting records consistent with past
practices; and
(d) use its reasonable best efforts (i) to preserve its business
intact, (ii) to keep available to the Company the services of its present
officers and employees, and (iii) to preserve for the Company or such
Subsidiary the goodwill of its suppliers, customers and others having
business relations with the Company or such Subsidiary.
4.2. Prohibited Actions Pending Closing. Unless otherwise provided for
herein or approved by Lucent in writing, from the date hereof until the Closing,
the Company shall not (and shall not permit any of its Subsidiaries to):
(a) amend or otherwise change its Articles of Incorporation or By-laws;
(b) issue or sell or authorize for issuance or sale (other than (i) any
issuance of Company Common Stock upon the exercise of any outstanding
option or warrant to purchase Company Common Stock which option or warrant
was issued prior to the date hereof in accordance with the terms of the
relevant stock option or warrant agreement, or (ii) the issuance of Company
Common Stock pursuant to the Option Agreement or the Offering), or grant
any options or make other agreements with respect to, any shares of its
capital stock or any other of its securities, except for those provisions
of the agreement with the Exchange Agent which provisions are in
furtherance of this Agreement;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise with respect to any of its
capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any Person, or
make any loans or advances, except (i) short-term borrowings incurred in
the ordinary course of business (or to refinance existing or maturing
indebtedness) and (ii) intercompany indebtedness between the Company and
any of its Subsidiaries or between Subsidiaries;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) enter into
A-27
<PAGE> 118
any contract or agreement other than in the ordinary course of business,
consistent with past practice; (iii) authorize any capital commitment which
is in excess of $50,000 or capital expenditures which are, in the
aggregate, in excess of $100,000; or (iv) enter into or amend any contract,
agreement, commitment or arrangement with respect to any matter set forth
in Section 4.2(e) or this Section 4.2(f);
(g) mortgage, pledge or subject to Lien, any of its assets or
properties or agree to do so except for Permitted Liens;
(h) sell, lease, license, 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;
(i) assume, guarantee or otherwise become responsible for the
obligations of any other Person or agree to so do;
(j) enter into or agree to enter into any employment agreement;
(k) take any action, other than in the ordinary course of business and
consistent with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivables);
(l) make any Tax election or settle or compromise any material federal,
state, local or foreign income Tax liability;
(m) settle or compromise any pending or threatened suit, action or
claim which is material or which relates to any of the transactions
contemplated by this Agreement;
(n) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the most recently audited balance sheet contained in
the Company SEC Documents or subsequently incurred in the ordinary course
of business and consistent with past practice;
(o) except in connection with the sale of the Company's products in the
ordinary course of business and consistent with past practice, sell,
assign, transfer, license, sublicense, pledge or otherwise encumber any of
the Intellectual Property Rights;
(p) 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 Company Benefit Plan or any
other agreement, plan or policy involving the Company or its Subsidiaries,
and one or more of its directors, officers or employees, or materially
change any actuarial or other assumption used to calculate funding
obligations with respect to any pension plan, or
A-28
<PAGE> 119
change the manner in which contributions to any pension plan are made or
the basis on which such contributions are determined;
(q) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially
increase benefits or compensation expenses of the Company or its
Subsidiaries, or as contemplated hereby or by the terms of any employment
agreement in existence on the date hereof, increase the cash compensation
of any director, executive officer or other key 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; provided that nothing contained herein
shall prohibit the Company from paying 1998 bonuses that have been earned
under its incentive bonus plans in accordance with the terms of such plans
as in effect on the date hereof consistent with past practice; or
(r) announce an intention, commit or agree to do any of the foregoing.
5. Additional Agreements.
5.1. Access; Documents; Supplemental Information. (a) From and after
the date hereof until the Closing, the Company shall afford, shall cause its
Subsidiaries to afford and, with respect to clause (ii) below, shall use its
reasonable best efforts to cause the independent certified public accountants
for the Company to afford, (i) to the officers, independent certified public
accountants, counsel and other representatives of Acquisition and Lucent, upon
reasonable notice, free and full access at all reasonable times to the
properties, books and records including tax returns filed and those in the
process of being prepared by the Company or any of its Subsidiaries and the
right to consult with the officers, employees, accountants, counsel and other
representatives of the Company or any of its Subsidiaries in order that
Acquisition and Lucent may have full opportunity to make such investigations as
they shall reasonably desire to make of the operations, properties, business,
financial condition and prospects of the Company and its Subsidiaries, (ii) to
the independent certified public accountants of Acquisition and Lucent, free and
full access at all reasonable times to the work papers and other records of the
accountants relating to the Company and its Subsidiaries, and (iii) to
Acquisition and Lucent and their representatives, such additional financial and
operating data and other information as to the properties, operations, business,
financial condition and prospects of the Company and its Subsidiaries as
Acquisition and Lucent shall from time to time reasonably require.
(b) From the date of this Agreement through and including the Closing,
Acquisition, Lucent and the Company agree to furnish to each other copies of any
notices, documents, requests, court papers, or other materials received from any
governmental agency or any other third party with respect to the transactions
contemplated by this Agreement, except where it is obvious from such notice,
document, request, court paper or other material that the other party was
already furnished with a copy thereof.
(c) Except as required by law, the Company and Lucent shall not, and shall
not permit any of their respective Subsidiaries to, voluntarily take any action
that would, or
A-29
<PAGE> 120
that could reasonably be expected to, result in (i) any of the representations
and warranties of such party set forth in this Agreement or the Option Agreement
that are qualified as to materiality becoming untrue at the Effective Time, (ii)
any of such representations and warranties that are not so qualified becoming
untrue in any material respect at the Effective Time, or (iii) any of the
conditions to the Merger set forth in Article 6 not being satisfied.
(d) The Company shall give prompt notice to Lucent, and Lucent shall give
prompt notice to the Company, of (a) the occurrence, or non-occurrence, of any
event which would be likely to cause (i) any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
or (ii) any covenant, condition or agreement contained in this Agreement not to
be complied with or satisfied; and (ii) any failure of the Company, Lucent or
Acquisition, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided that the delivery of any notice pursuant to this Section 5.1(d) shall
not limit or otherwise affect the remedies available to the party receiving such
notice.
(e) The Company shall deliver to Lucent, without charge, a copy of any
filing made by the Company with the SEC under the Exchange Act, including,
without limitation, any Form 10-Q, 8-K or 10-K, not later than five business
days after the date of such filing with the SEC.
(f) Lucent shall deliver to the Company, without charge, a copy of any
filing made by Lucent with the SEC under the Exchange Act, including, without
limitation, any Form 10-Q, 8-K or 10-K, not later than five business days after
the date of such filing with the SEC.
5.2. No Solicitation by the Company. (a) The Company 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 designed to facilitate, any inquiries or the making of any proposal
which constitutes a Takeover Proposal (as defined below) or (ii) participate in
any discussions or negotiations regarding any Takeover Proposal; provided, that
if, at any time prior to the date of the Company Shareholders Meeting (the
"Applicable Period"), the Board of Directors of the Company determines in good
faith, after consultation with outside counsel, that it is legally advisable to
do so in order to comply with its fiduciary duties to the Company's shareholders
under applicable law, the Company may, in response to a Superior Proposal (as
defined below) which was not solicited by it or which did not otherwise result
from a breach of this Section 5.2, and subject to providing prior written notice
of its decision to take such action to Lucent (a "Section 5.2 Notice") and
compliance with Section 5.2(c), (A) furnish information with respect to the
Company and its Subsidiaries to any Person making a Superior Proposal pursuant
to a customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (B) participate in discussions
A-30
<PAGE> 121
or negotiations regarding such Superior Proposal. For purposes of this
Agreement, a "Takeover Proposal" means any inquiry, proposal or offer from any
Person (i) relating to any direct or indirect acquisition or purchase of (A) a
business that constitutes 15% or more of the net revenues, net income or the
assets of the Company and its Subsidiaries, taken as a whole, (B) 15% or more of
any class of equity securities of the Company or (C) any material equity
interest in any Subsidiary of the Company, (ii) relating to any tender offer or
exchange offer that if consummated would result in any Person beneficially
owning 15% or more of any class of equity securities of the Company or any
material equity interest in any of its Subsidiaries, or (iii) relating to any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
(b) Except as expressly permitted by this Section 5.2, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose publicly to withdraw or modify, in a manner adverse to Lucent, the
approval or recommendation by such Board of Directors or such committee of the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal, or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal, other than any such agreement entered into concurrently with
a termination pursuant to the next sentence in order to facilitate such action.
Notwithstanding the foregoing, during the Applicable Period, in response to a
Superior Proposal which was not solicited by the Company and which did not
otherwise result from a breach of Section 5.2(a), the Board of Directors of the
Company may (subject to this and the following sentences) terminate this
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into any Acquisition Agreement with respect to any
Superior Proposal), but only at a time that is during the Applicable Period and
is after the third business day following Lucent's receipt of written notice
advising Lucent that the Board of Directors of the Company is prepared to accept
a Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the Person making such Superior Proposal. For
purposes of this Agreement, a "Superior Proposal" means any proposal made by a
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on the advice of a financial advisor of nationally recognized reputation)
to be more favorable to the Company's shareholders than the Merger and for which
financing, to the extent required, is then committed or which, in the good faith
judgment of the Board of Directors of the Company, is reasonably capable of
being obtained by such third party.
A-31
<PAGE> 122
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.2, the Company shall promptly advise Lucent orally
and in writing of any request for information or of any Takeover Proposal, the
material terms and conditions of such request or Takeover Proposal and the
identity of the Person making such request or Takeover Proposal. The Company
will keep Lucent informed of the status and material terms and conditions
(including amendments or proposed amendments) of any such request or Takeover
Proposal.
(d) Nothing contained in this Section 5.2 shall prohibit the Company from
taking and disclosing to its shareholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's shareholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; provided, that,
except as expressly permitted by this Section 5.2, neither the Company nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose publicly to approve
or recommend, a Takeover Proposal.
5.3. Preparation of the Lucent Registration Statement and Company Proxy
Statement; Company Shareholders Meeting. (a) As soon as practicable following
the date of this Agreement, the Company shall prepare and file with the SEC the
Company Proxy Statement and Lucent shall prepare and file with the SEC the
Lucent Registration Statement, in which the Company Proxy Statement will be
included as a prospectus. Each of the Company and Lucent shall use its
reasonable best efforts to have the Lucent Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing.
The Company will use its reasonable best efforts to cause the Company Proxy
Statement to be mailed to the Company's shareholders as promptly as practicable
after the Lucent Registration Statement 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) required to be taken under any applicable
state securities laws in connection with the issuance of Lucent Common Stock in
the Merger and the Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably requested in
connection with any such action. No filing of, or amendment or supplement to,
the Lucent Registration Statement will be made by Lucent, or the Company Proxy
Statement will be made by the Company, without providing the other party the
opportunity to review and comment thereon. Lucent will advise the Company,
promptly after it receives notice thereof, of the time when the Lucent
Registration Statement 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
Lucent Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information. The Company will inform Lucent,
promptly after it receives notice thereof, of any request by the SEC for the
amendment of the
A-32
<PAGE> 123
Company 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 the Company or Lucent, or any of their respective
affiliates, officers or directors, should be discovered by the Company or Lucent
which should be set forth in an amendment or supplement to any of the Lucent
Registration Statement or the Company 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 that
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 shareholders of the Company.
(b) The Company shall, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Company Shareholders Meeting") for the purpose of obtaining
the Company Shareholder Approval and shall, through its Board of Directors,
recommend to its shareholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby. Without limiting the
generality of the foregoing but subject to its rights to terminate this
Agreement pursuant to Section 5.2(b), the Company agrees that its obligations
pursuant to the first sentence of this Section 5.3(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Takeover Proposal.
5.4. Letter of the Company's Accountants; Letter of Lucent's Accountants.
(a) The Company shall use its reasonable best efforts to cause its independent
public accountants to deliver to Lucent two letters from the Company's
independent public accountants, one dated a date within two business days before
the date on which the Lucent Registration Statement 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
Lucent Registration Statement. The Company shall also provide reasonable
cooperation to each of Lucent's independent public accountants and the Company's
independent public accountants to enable them to issue the letters referred to
in Section 6.1(h) and shall use its reasonable best efforts to cause them to do
so.
(b) Lucent shall use its reasonable best efforts to cause its independent
public accountants to deliver to the Company two letters from Lucent's
independent public accountants, one dated a date within two business days before
the date on which the Lucent Registration Statement shall become effective and
one dated a date within two business days before the Closing Date, each
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Lucent Registration Statement. Lucent shall
A-33
<PAGE> 124
provide reasonable cooperation to each of Lucent's independent public
accountants and the Company's independent public accountants to enable them to
issue the letters referred to in Section 6.1(h) and shall use its reasonable
best efforts to cause them to do so.
5.5. Reasonable Best Efforts. (a) Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use its
reasonable best 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 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 Option Agreement, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings 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, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Option Agreement or the consummation of the transactions contemplated by
this Agreement or the Option Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) 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 Option Agreement.
(b) In connection with and without limiting the foregoing, the Company and
Lucent 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 Agreement, the Option Agreement or any of the other transactions
contemplated by this Agreement or the Option Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Merger, this Agreement, the Option Agreement or any other transaction
contemplated by this Agreement or the Option Agreement, take all action
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement and the Option Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and the Option 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 Option
Agreement.
5.6 Stock Options. (a) As soon as practicable following the date of
this Agreement, the Board of Directors of the Company (or, if appropriate, any
committee administering the Company 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 Company Stock Options granted
under the Company Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each Company Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted into
an option to acquire, on the same terms and conditions as were applicable
under such Company Stock
A-34
<PAGE> 125
Option the number of shares of Lucent Common Stock (rounded down to the
nearest whole share) equal to (A) the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to the
Effective Time multiplied by (B) the Exchange Ratio, at an exercise price
per share of Lucent Common Stock (rounded up to the nearest whole cent)
equal to (x) the exercise price per share of such Company Common Stock
immediately prior to the Effective Time divided by (y) the Exchange Ratio
(each, as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Company Stock Plans as the Company
and Lucent may agree are appropriate to give effect to the Merger,
including as provided in Section 5.7.
(b) As soon as practicable after the Effective Time, Lucent shall deliver
to the holders of Company Stock Options appropriate notices setting forth such
holders' rights pursuant to the respective Company Stock Plans and the
agreements evidencing the grants of such Company Stock Options and that such
Company Stock Options and agreements shall be assumed by Lucent and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 5.6 after giving effect to the Merger).
(c) A holder of an Adjusted Option may exercise such Adjusted Option in
whole or in part in accordance with its terms by delivering a properly executed
notice of exercise to Lucent, together with the consideration therefor and the
federal withholding tax information, if any, required in accordance with the
related Company Stock Plan.
(d) Except as otherwise contemplated by this Section 5.6 and except to the
extent required under the respective terms of the Company Stock Options all
restrictions or limitations on transfer and vesting with respect to Company
Stock Options awarded under the Company Stock Plans or any other plan, program
or arrangement of the Company 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.
(e) Effective as of April 2, 1999, the Company shall amend the 1991
Employee Stock Purchase Plan to terminate all current and future offering
periods.
5.7. Company Stock Plans. At the Effective Time, by virtue of the
Merger, the Company Stock Plans and the Company Stock Option granted thereunder
shall be assumed by Lucent, with the result that all obligations of the Company
under the Company Stock Plans, including with respect to awards outstanding at
the Effective Time under each Company Stock Plan, shall be obligations of Lucent
following the Effective Time; provided, that in the case of any Company Stock
Option to which Section 421 of the Code applies by reason of its qualification
under Section 422 or Section 423 of the Code, the option price, number of shares
purchasable pursuant to such Company Stock Option and the terms and conditions
of exercise of such Company Stock Option shall be determined in order to comply
with Section 424 of the Code.
A-35
<PAGE> 126
Prior to the Effective Time, Lucent shall take all necessary actions (including,
if required to comply with Section 162(m) of the Code (and the regulations
thereunder) or applicable law or rule of the NYSE, obtaining the approval of its
shareholders at the next regularly scheduled annual meeting of Lucent following
the Effective Time) for the assumption of the Company Stock Plans, including the
reservation, issuance and listing of Lucent Common Stock in a number at least
equal to the number of shares of Lucent Common Stock that will be subject to the
Adjusted Options. As soon as practicable following the Effective Time, Lucent
shall prepare and file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares of Lucent Common Stock
determined in accordance with the preceding sentence. Such registration
statement shall be kept effective (and the current status of the prospectus or
prospectuses required thereby shall be maintained) at least for so long as the
Adjusted Options or any unsettled awards granted under the Company Stock Plans
after the Effective Time remain outstanding.
5.8. Employee Benefit Plans; Existing Agreement. (a) As soon as
practicable after the Effective Time (the "Benefits Date"), Lucent shall
provide, or cause to be provided, employee benefit plans, programs and
arrangements to employees of the Company that are the same as those made
generally available to 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 the Company) (the "Continuation
Period"), Lucent shall provide, or cause to be provided, the employee benefit
plans, programs and arrangements of the Company provided to employees of the
Company as of the date hereof.
(b) With respect to each benefit plan, program practice, policy or
arrangement maintained by Lucent (the "Lucent Plans") in which employees of the
Company subsequently participate, for purposes of determining vesting and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of pension benefits), service with the Company
(or predecessor employers to the extent the Company provides past service
credit) shall be treated as service with Lucent; provided, that such service
shall not be recognized to the extent that such recognition would result in a
duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any pre-existing condition limitations. Each Lucent Plan shall
waive pre-existing condition limitations to the same extent waived under the
applicable Company Benefit Plan. Company Employees shall be given credit for
amounts paid under a corresponding benefit plan during the same period for
purposes of applying deductibles, copayments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and conditions of
the Lucent Plan.
5.9. Indemnification. (a) From and after the Effective Time, Lucent
shall, or shall cause the Surviving Corporation to, fulfill and honor in all
respects the obligations of the Company to indemnify each Person who is or was a
director or officer (an "Indemnified Party") of the Company or any of its
Subsidiaries pursuant to any
A-36
<PAGE> 127
indemnifications provision of the Company's Articles of Incorporation or By-laws
as each is in effect on the date hereof.
(b) For a period of six years after the Effective Time, Lucent shall cause
to be maintained in effect the current officers' and directors' liability
insurance maintained by the Company with respect to the Indemnified Parties
(provided that Lucent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous to the Indemnified Parties than such existing insurance) covering
acts or omissions occurring prior to the Effective Time; provided, that Lucent
shall not be required in order to maintain or procure such coverage to pay an
annual premium in excess of 200% of the current annual premium paid by the
Company for its existing coverage (the "Cap"); and provided, further, that if
existing coverage cannot be maintained or equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, Lucent shall only be required to obtain as much coverage as can be obtained
by paying an annual premium equal to the Cap. The current annual premium paid by
the Company for its existing coverage is set forth in Item 5.9(b) of the Company
Disclosure Schedule.
(c) This Section 5.9 shall survive the closing of all the transactions
contemplated hereby, is intended to benefit the Indemnified Parties and their
respective heirs and personal representative (each of which shall be entitled to
enforce this Section 5.9 against Lucent and the Surviving Corporation, as the
case may be, as a third-party beneficiary of this Agreement).
5.10. Fees and Expenses. (a) Except as provided in this Section 5.10,
all fees and expenses incurred in connection with the Merger, this Agreement,
the Option Agreement and the transactions contemplated by this Agreement and the
Option 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 the
Company shall bear and pay one-half of (i) the costs and expenses incurred in
connection with the filing, printing and mailing of the Lucent Registration
Statement, the Company Proxy Statement (including SEC filing fees) and (ii) the
filing fees for the pre-merger notification and report forms under the HSR Act.
(b) In the event that (i) a bona fide Takeover Proposal shall have been
made directly to the shareholders of the Company generally or shall have
otherwise become publicly known or any Person shall have publicly announced an
intention (whether or not conditional) to make a Takeover Proposal and
thereafter this Agreement is terminated by either Lucent or the Company pursuant
to Section 10(b)(i), or (ii) this Agreement is terminated (A) by Lucent,
Acquisition or the Company pursuant to Section 10(c), (B) by the Company
pursuant to Section 10(e) or (C) by Lucent pursuant to Section 10(d), then the
Company shall promptly, but in no event later than the date of such termination,
pay Lucent a fee equal to $2,815,000 (the "Termination Fee"), payable by wire
transfer of same day funds; provided, that no Termination Fee shall be payable
to Lucent pursuant to clause (i) of this Section 5.10(b) unless within nine (9)
months of such termination the Company or any of its Subsidiaries enters into
any definitive agreement with respect to, or consummates, any Takeover Proposal.
The
A-37
<PAGE> 128
Company acknowledges that the agreements contained in this Section 5.10(b) are
an integral part of the transactions contemplated by this Agreement and that,
without these agreements, Lucent would not enter into this Agreement.
Accordingly, if the Company fails promptly to pay the amount due pursuant to
this Section 5.10(b), and, in order to obtain such payment, Lucent commences a
suit which results in a judgment against the Company for the fee set forth in
this Section 5.10(b), the Company shall pay to Lucent its costs and expenses
(including attorneys' fees and expenses) in connection with such suit, together
with interest on the amount of the fee at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
5.11. Public Announcements. Lucent and the Company 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 Option 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, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national trading system. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement and the
Option Agreement shall be in the form heretofore agreed to by the parties.
5.12. Affiliates. As soon as practicable after the date hereof, the
Company shall deliver to Lucent a letter identifying all Persons who are, at the
time this Agreement is submitted for adoption by the shareholders of the
Company, "affiliates" 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. The Company shall use its reasonable best
efforts to cause each such Person to deliver to Lucent as of the Closing Date, a
written agreement substantially in the form attached as Exhibit C hereto. Lucent
shall use its reasonable best efforts to cause all Persons who are "affiliates"
of Lucent for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations to comply with the fourth paragraph of
Exhibit D hereto.
5.13. NYSE Listing. Lucent shall use its reasonable best 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. The Company
shall use its reasonable best efforts to cause the shares of Company Common
Stock to be issued pursuant to the Option Agreement to be approved for listing
on Nasdaq, subject to official notice of issuance, as promptly as practicable
after the date hereof, and in any event prior to the Closing Date.
5.14. Shareholder Litigation. The Company shall give Lucent the
opportunity to participate in the defense of any shareholder litigation against
the Company and/or its directors relating to the transactions contemplated by
this Agreement and the Option Agreement.
A-38
<PAGE> 129
5.15. Pooling of Interests. (a) Each of the Company and Lucent shall
use its reasonable best efforts to cause the transactions contemplated by this
Agreement, including the Merger and the Option 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 Lucent's and the Company's
managements' conclusion that such accounting treatment is appropriate for the
Merger to be concurred with by each of the Company's and Lucent's auditors and
by the SEC, respectively, and each of the Company and Lucent agrees that it
shall voluntarily take no action that would cause such accounting treatment not
to be obtained.
(b) Prior to the Effective Time, the Company shall issue and sell in a
public offering or private placement as designated by Lucent and reasonably
acceptable to the Company (the "Offering") such number of shares of Company
Common Stock as may be necessary so that the Merger would be accounted for as a
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations. The Offering shall be on terms and
conditions and at a price per share determined by the Company and reasonably
acceptable to Lucent, and shall be co-managed or co-offered, as the case may be,
by underwriters or agents selected by the Company and Lucent.
5.16. Reorganization. Each of Lucent and the Company shall use its
reasonable best efforts to cause the business combination to be effected by the
Merger to be qualified as a "reorganization" described in Section 368(a) of the
Code.
6. Conditions Precedent.
6.1. Conditions Precedent to Each Party's Obligation to Effect the
Merger. The respective obligations of each party hereto to effect the Merger
shall be subject to the fulfillment or satisfaction, prior to or on the Closing
Date of the following conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall have
been obtained.
(b) HSR Act; Other Approvals. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been
terminated or shall have expired. All other authorizations, consents,
orders, declarations or approvals of, or filings with, or terminations or
expirations of waiting periods imposed by, any governmental or regulatory
authority, domestic or foreign, which the failure to obtain, make or occur
would have the effect of making the Merger or any of the transactions
contemplated hereby illegal or would have a Material Adverse Effect on
Lucent or the Company (as Surviving Corporation), assuming the Merger had
taken place, shall have been obtained, made or occurred.
(c) Representation Letters. Each of the Company and Lucent shall have
executed and delivered a letter of representation relating to certain tax
matters substantially in the form of Exhibits E-1 and E-2.
(d) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or
A-39
<PAGE> 130
other Governmental Entity of competent jurisdiction or other legal
restraint or prohibition (collectively, "Restraints") shall be in effect,
and there shall not be pending 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
the Company or Lucent, as applicable; provided, that each of the parties
shall have used its reasonable best efforts to prevent the entry of any
such Restraints and to appeal as promptly as possible any such Restraints
that may be entered.
(e) Lucent Registration Statement. The Lucent Registration Statement
shall have become effective in accordance with the provisions of the
Securities Act. No stop order suspending the effectiveness of the Lucent
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated or, to the knowledge of Lucent
or the Company, threatened by the SEC.
(f) Stock Exchange Listing. The shares of Lucent Common Stock
issuable in accordance with the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
(g) Completion of Offering. The Offering shall have been completed
and the shares of Company Common Stock offered in connection therewith
shall have been disposed of as contemplated by Section 5.15(b).
(h) Pooling Letters. Each of Lucent and the Company shall have
received letters, dated as of the Closing Date, in each case addressed to
Lucent and the Company, from KPMG Peat Marwick LLP and Pricewaterhouse
Coopers LLP stating in substance that pooling of interests accounting is
appropriate for the Merger under Opinion 16 of the Accounting Principles
Board and applicable SEC rules and regulations.
(i) Company's Restated 1987 Stock Option Plan. The Board of Directors
of the Company shall have taken all necessary or appropriate action to
ensure that the cash-out provisions set forth in Section 7.1.3 of the
Company's Restated 1987 Stock Option Plan, as amended (the "1987 Stock
Option Plan"), do not apply upon the occurrence of a "Change in Control"
(as defined in the 1987 Stock Option Plan).
6.2. Conditions Precedent to Obligations of Acquisition and Lucent. All
obligations of Acquisition and Lucent under this Agreement are subject to the
fulfillment or satisfaction, prior to or on the Closing Date, of each of the
following conditions precedent:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed and complied in all material respects with all
agreements and conditions contained in this Agreement that are required to
be performed or complied with by it prior to or at the Closing. Each of the
Company's representations and warranties contained in Section 2 of this
Agreement to the extent it is qualified by Material Adverse Effect shall be
true and correct and each of the Company's representations and warranties
to the extent it is not so qualified by Material Adverse Effect, shall be
true and correct in all material respects, in
A-40
<PAGE> 131
each case, on and as of the Closing with the same effect as though such
representations and warranties were made on and as of the Closing, except
for changes permitted by this Agreement and except to the extent that such
representations and warranties expressly relate to an earlier date, in
which case such representations and warranties shall be as of such earlier
date. Lucent and Acquisition shall have received a certificate dated the
Closing Date and signed by the Chairman, President or a Vice-President of
the Company, certifying that, the conditions specified in this Section
6.2(a) have been satisfied.
(b) No Material Adverse Change. No event or events shall have
occurred that could reasonably be expected to have a Material Adverse
Effect on the Company, and Lucent shall have received a certificate signed
on behalf of the Company by its Chief Executive Officer and Chief Financial
Officer to such effect.
(c) Consents. The Company shall have received all necessary consents
or waivers, in form and substance satisfactory to Lucent and Acquisition,
from the other parties to each contract, lease or agreement to which the
Company is a party, except where the failure to receive such consent would
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company.
(d) Non-Disclosure and Non-Competition Agreements. Each of the
individuals listed on Item 6.2(d) of the Company Disclosure Schedule shall
have entered into the Non-Disclosure and Non-Competition Agreements with
the Surviving Corporation and Lucent, each substantially in the form of
Exhibit F hereto, and such agreements shall be in full force and effect.
(e) Affiliates. Lucent shall have received from each Person named in
the letter referred to in Section 5.12, an executed copy of an agreement
substantially in the form of Exhibit C.
6.3. Conditions Precedent to the Company's Obligations. All obligations
of the Company under this Agreement are subject to the fulfillment or
satisfaction, prior to or on the Closing Date, of each of the following
conditions precedent:
(a) Performance of Obligations; Representations and
Warranties. Acquisition and Lucent shall have performed and complied in
all material respects with all agreements and conditions contained in this
Agreement that are required to be performed or complied with by them prior
to or at the Closing. Each of the representations and warranties of
Acquisition and Lucent contained in Section 3 of this Agreement to the
extent it is qualified by Material Adverse Effect shall be true and correct
and each of the representations and warranties of Acquisition and Lucent to
the extent it is not so qualified by Material Adverse Effect shall be true
and correct in all material respects, in each case, on and as of the
Closing with the same effect as though such representations and warranties
were made on and as of the Closing except for changes permitted by this
Agreement and except to the extent that such representations and warranties
expressly relate to an earlier date, in which case such representations and
warranties shall be as of such earlier date. The Company shall have
received certificates dated the Closing Date and signed by the
A-41
<PAGE> 132
President or a Vice-President of Acquisition and an authorized signatory of
Lucent, certifying that the conditions specified in this Section 6.3(a)
have been satisfied.
(b) Tax Opinion. The Company shall have received from Perkins Coie
LLP, on the date on which the Lucent Registration Statement 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 reorganization within the meaning
of Section 368(a) of the Code.
(c) No Material Adverse Change. No event or events shall have
occurred that could reasonably be expected to have a Material Adverse
Effect on Lucent, and the Company shall have received a certificate signed
on behalf of Lucent by an authorized signatory thereof.
(d) Affiliates. The Company shall have received from each Person
named in the letter referred to in Section 5.12, an executed copy of an
agreement substantially in the form of Exhibit D.
7. Non-Survival of Representation and Warranties.
7.1. 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 shall not limit any
covenant or agreement by the parties which contemplates performance after the
Effective Time.
8. Contents of Agreement; Parties in Interest; etc. This Agreement and
the agreements referred to or contemplated herein and the letter agreement dated
September 25, 1998, as amended by letter agreement dated November 1, 1998,
concerning confidentiality (the "Confidentiality Agreement") set forth the
entire understanding of the parties hereto with respect to the transactions
contemplated hereby, and, except as set forth in this Agreement, such other
agreements and the Exhibits hereto and the Confidentiality Agreement, there are
no representations or warranties, express or implied, made by any party to this
Agreement with respect to the subject matter of this Agreement and the
Confidentiality Agreement. Except for the matters set forth in the
Confidentiality Agreement, any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement and the agreements referred to
or contemplated herein.
9. Assignment and Binding Effect. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party;
provided, that Acquisition may assign its rights and obligations under this
Agreement to any directly or indirectly wholly-owned Subsidiary of Lucent, upon
written notice to the Company if the assignee shall assume the obligations of
Acquisition hereunder and Lucent shall remain liable for its obligations
hereunder. All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
A-42
<PAGE> 133
10. Termination. This Agreement may be terminated, and the Merger may
be abandoned at any time prior to the Effective Time whether before or after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the shareholders of the Company or the shareholders of Acquisition:
(a) by the agreement of each of the Board of Directors of Lucent,
Acquisition and the Company;
(b) by Lucent, Acquisition or the Company if (i) the Effective Time
shall not have occurred by September 30, 1999; provided that the right to
terminate this Agreement under this Section 10(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to
occur on or before such date; or (ii) any court of competent jurisdiction
in the United States or other United States governmental authority shall
have issued an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(c) by Lucent, Acquisition or the Company, if the Company Shareholder
Approval shall not have been obtained at a Company Shareholders Meeting
duly convened therefor or at any adjournment or postponement thereof;
(d) by Lucent, if the Company or any of its directors or officers shall
participate in discussions or negotiations in breach (other than an
immaterial breach) of Section 5.2;
(e) by the Company in accordance with Section 5.2(b); provided that, in
order for the termination of this Agreement pursuant to this paragraph (e)
to be deemed effective, the Company shall have complied with all provisions
of Section 5.2, including the notice provisions therein, and with
applicable requirements, including the payment of the Termination Fee;
(f) by the Company, in the event Lucent or Acquisition materially
breaches its obligations under this Agreement, unless such breach is cured
within 15 days after notice to Lucent by the Company; or
(g) by Lucent or Acquisition, in the event the Company materially
breaches its obligations under this Agreement unless such breach is cured
within 15 days after notice by Lucent or Acquisition.
11. Definitions. As used in this Agreement the terms set forth below
shall have the following meanings:
(a) "Affiliate" of a Person means any other Person who directly or
indirectly through one or more intermediaries controls, is controlled by or
is under common control with, such Person. As used in this definition,
"control" means the possession of the power, directly or indirectly, to
direct or cause the direction of the management and policies of a Person
whether through the ownership of voting securities, by contract or
otherwise.
A-43
<PAGE> 134
(b) "Benefit Plan" shall mean any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other material plan,
arrangement or understanding (whether or not legally binding) providing
material benefits to any current or former employee, officer or director of
the Company.
(c) "best knowledge" of any Person which is not an individual means,
with respect to any specific matter, the knowledge, after due inquiry, of
such Person's executive officers and any other officer or persons having
primary responsibility for such matter.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Environmental Laws" shall mean all applicable federal, state,
local or foreign laws, rules and regulations, orders, decrees, judgments,
permits, filings and licenses relating (i) to protection and clean-up of
the environment and activities or conditions related thereto, including
those relating to the generation, handling, disposal, transportation or
release of Hazardous Substances and (ii) the health or safety of employees
in the workplace environment, all as amended from time to time, and shall
also include any common law theory based on nuisance, trespass, negligence
or other tortious conduct.
(f) "Exchange Agent" shall mean The Bank of New York or another bank or
trust company designated as the exchange agent by Lucent (which designation
shall be reasonably acceptable to the Company).
(g) "GAAP" shall mean generally accepted accounting principles.
(h) "Hazardous Substances" shall mean any and all hazardous and toxic
substances, wastes or materials, any pollutants, contaminants, or dangerous
materials (including, but not limited to, polychlorinated biphenyls, PCBs,
friable asbestos, volatile and semi-volatile organic compounds, oil,
petroleum products and fractions, and any materials which include hazardous
constituents or become hazardous, toxic, or dangerous when their
composition or state is changed), or any other similar substances or
materials which are included under or regulated by any Environmental Laws.
(i) "Liens" shall mean any mortgage, pledge, lien, security interest,
conditional or installment sale agreement, encumbrance, charge or other
claims of third parties of any kind.
(j) "Material Adverse Effect" on a Person shall mean (unless otherwise
specified) any condition or event that: (i) has a material adverse effect
on the assets, business, financial condition, operations or prospects of
such Person and its Subsidiaries, taken as a whole, other than any
condition or event (A) relating to the economy in general, (B) relating to
the industries in which such party operates in general, (C) arising out of
or resulting from actions contemplated by the parties in connection with,
or which is attributable to, the announcement of this Agreement
A-44
<PAGE> 135
and the transactions contemplated hereby (including loss of Personnel,
customers or suppliers or the delay or cancellation of orders for products)
or (D) in the case of the Company, litigation brought or threatened against
the Company or any member of its Board of Directors in respect of this
Agreement; (ii) materially impairs the ability of such Person to perform
its obligations under this Agreement or the Option Agreement; or (iii)
prevents or materially delays the consummation of transactions contemplated
under this Agreement.
(k) "Permitted Liens" shall mean (i) Liens for taxes, assessments, or
similar charges, incurred in the ordinary course of business that are not
yet due and payable or are being contested in good faith; (ii) pledges or
deposits made in the ordinary course of business; (iii) Liens of mechanics,
materialmen, warehousemen or other like Liens securing obligations incurred
in the ordinary course of business that are not yet due and payable or are
being contested in good faith; and (iv) similar Liens and encumbrances
which are incurred in the ordinary course of business and which do not in
the aggregate materially detract from the value of such assets or
properties or materially impair the use thereof in the operation of such
business.
(l) "Person" shall mean any individual, corporation, partnership,
limited partnership, limited liability company, trust, association or
entity or government agency or authority.
(m) "reasonable best efforts" shall mean prompt, substantial and
persistent efforts as a prudent Person desirous of achieving a result would
use in similar circumstances; provided that the Company, Lucent or
Acquisition, as applicable, shall be required to expend only such resources
as are commercially reasonable in the applicable circumstances.
(n) "Subsidiary" of a Person shall mean any corporation, partnership,
joint venture or other entity in which such Person (i) owns, directly or
indirectly, 50% or more of the outstanding voting securities or equity
interests or (ii) is a general partner.
(o) "Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall
include all (i) federal, state, local or foreign net income, gross income,
gross receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or
environmental tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed by any
governmental authority, (ii) liability for the payment of any amounts
described in (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group and (iii) 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 obligation to indemnify any other
Person with respect to the payment of any amounts of the type described in
clause (i) or (ii).
A-45
<PAGE> 136
(p) "Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
12. Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered to the
party personally or sent to the party by facsimile transmission (promptly
followed by a hard-copy delivered in accordance with this Section 12) or by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to Acquisition or Lucent:
Lucent Technologies Inc.
211 Mount Airy Road
3C150
Basking Ridge, NJ 07920
Att: President, BCS
Telephone No: separately supplied
Facsimile No: separately supplied
with copies to:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Att: Pamela F. Craven
Vice President-Law
Telephone No: separately supplied
Facsimile No: separately supplied
If to the Company:
Mosaix, Inc.
6464 185th Avenue N.E.
Redmond, WA 98052
Att: W. Bradford Weller
Telephone No: separately supplied
Facsimile No: separately supplied
A-46
<PAGE> 137
with a copy to:
Perkins Coie LLP
1201 Third Avenue
40th Floor
Seattle, WA 98101-3099
Att: Michael Stansbury, Esq.
Telephone No: (206) 583-8771
Facsimile No: (206) 287-3292
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.
13. Amendment. This Agreement may be amended, modified or supplemented
at any time before or after the Company Shareholder Approval, provided that
after any such approval there shall not be made any amendment that by Law
requires further approval by the shareholders of the Company or the approval of
the shareholders of Lucent without the further approval of such shareholders.
Any amendment, modification or revision of this Agreement and any waiver of
compliance or consent with respect hereto shall be effective only by a written
instrument executed by each of the parties hereto.
14. Extensions; 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 13, 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 shall not constitute a waiver of such rights.
15. Governing Law. This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of New York as applied to
contracts made and fully performed in such state, except insofar as the WBCL
shall be mandatorily applicable to the Merger and the rights of shareholders in
connection therewith.
16. No Benefit to Others. The representations, warranties, covenants
and agreements contained in this Agreement are for the sole benefit of the
parties hereto, and their respective successors and assigns, and they shall not
be construed as conferring, and are not intended to confer, any rights on any
other Person.
17. Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect.
A-47
<PAGE> 138
Upon such determination, the parties hereto shall negotiate in good faith to
modify this Agreement so as to give effect to the original intent of the parties
to the fullest extent permitted by applicable law.
18. Section Headings. All section headings are for convenience only and
shall in no way modify or restrict any of the terms or provisions hereof.
19. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and the Company,
Acquisition and Lucent may become a party hereto by executing a counterpart
hereof. This Agreement and any counterpart so executed shall be deemed to be one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement as of the date first above written.
LUCENT TECHNOLOGIES INC.
By:
------------------------------------
Name:
Title:
NOAH ACQUISITION INC.
By:
------------------------------------
Name:
Title:
MOSAIX, INC.
By:
------------------------------------
Name:
Title:
A-48
<PAGE> 139
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM LOCATION OF DEFINITION
- ------------ ----------------------
<S> <C>
Acquisition................................................. Preamble
Acquisition Agreement....................................... Section 5.2(b)
Acquisition Common Stock.................................... Recitals
Affiliate................................................... Section 11(a)
Agreement................................................... Preamble
Applicable Period........................................... Section 5.2(a)
Articles of Merger.......................................... Section 1.1(b)
Authorizations.............................................. Section 2.14(b)
Benefit Plan................................................ Section 11(b)
Benefits Date............................................... Section 5.8
best knowledge.............................................. Section 11(c)
Cap......................................................... Section 5.9(b)
Certificate of Merger....................................... Section 1.1(b)
Certificates................................................ Section 1.9(b)
Closing..................................................... Section 1.1(b)
Closing Date................................................ Section 1.1(b)
Code........................................................ Section 11(d)
Commonly Controlled Entity.................................. Section 2.17(a)
Company..................................................... Preamble
Company Benefit Plans....................................... Section 2.17(a)
Company Common Stock........................................ Recitals
Company Disclosure Schedule................................. Section 2
Company Filed SEC Document.................................. Section 2.8
Company Preferred Stock..................................... Recitals
Company Proxy Statement..................................... Section 2.5(b)
Company SEC Documents....................................... Section 2.6
Company Shareholder Approval................................ Section 2.21
Company Shareholders Meeting................................ Section 5.3(b)
Company Stock Options....................................... Section 2.3(b)
Company Stock Plans......................................... Section 2.3(a)
Confidentiality Agreement................................... Section 8
Continuation Period......................................... Section 5.8
Dissenting Shares........................................... Section 1.7(a)
Effective Time.............................................. Section 1.1(b)
Environmental Laws.......................................... Section 11(e)
ERISA....................................................... Section 2.17(a)
Exchange Act................................................ Section 2.5(b)
Exchange Agent.............................................. Section 11(f)
Exchange Fund............................................... Section 1.9(a)
</TABLE>
A-i
<PAGE> 140
<TABLE>
<CAPTION>
DEFINED TERM LOCATION OF DEFINITION
- ------------ ----------------------
<S> <C>
Exchange Ratio.............................................. Section 1.5(c)
GAAP........................................................ Section 11(g)
Governmental Entity......................................... Section 2.5(b)
Hazardous Substances........................................ Section 11(h)
HSR Act..................................................... Section 2.5(b)
Immaterial Authorizations................................... Section 2.14(b)
Indemnified Party........................................... Section 5.9(a)
Intellectual Property Rights................................ Section 2.15(a)
IRS......................................................... Section 2.17(a)
Laws........................................................ Section 2.14(a)
Liens....................................................... Section 11(i)
Lucent...................................................... Preamble
Lucent Authorized Preferred Stock........................... Section 3.2
Lucent Common Stock......................................... Section 3.2
Lucent Disclosure Schedule.................................. Section 3
Lucent Filed SEC Documents.................................. Section 3.8
Lucent Junior Preferred Stock............................... Section 3.2
Lucent Plans................................................ Section 5.8(b)
Lucent Registration Statement............................... Section 2.7
Lucent SEC Documents........................................ Section 3.6
Material Adverse Effect..................................... Section 11(j)
Merger...................................................... Recitals
Nasdaq...................................................... Section 2.5(b)
NYSE........................................................ Section 1.8
Offering.................................................... Section 5.15(b)
Option Agreement............................................ Recitals
Parachute Gross-Up Payment.................................. Section 2.18(d)
Pension Plans............................................... Section 2.17(a)
Permitted Liens............................................. Section 11(k)
Person...................................................... Section 11(l)
reasonable best efforts..................................... Section 11(m)
Restraints.................................................. Section 6.1(d)
Right....................................................... Section 1.5(c)
SARs........................................................ Section 2.3(b)
SEC......................................................... Section 2.5(b)
Section 5.2 Notice.......................................... Section 5.2
Securities Act.............................................. Section 2.6
Subsidiary.................................................. Section 11(n)
Superior Proposal........................................... Section 5.2(b)
Surviving Corporation....................................... Section 1.1(a)
Takeover Proposal........................................... Section 5.2(a)
</TABLE>
A-ii
<PAGE> 141
<TABLE>
<CAPTION>
DEFINED TERM LOCATION OF DEFINITION
- ------------ ----------------------
<S> <C>
Tax......................................................... Section 11(o)
Tax Return.................................................. Section 11(p)
Termination Fee............................................. Section 5.10(b)
WBCL........................................................ Recitals
Welfare Plans............................................... Section 2.17(a)
</TABLE>
A-iii
<PAGE> 142
ANNEX B
STOCK OPTION AGREEMENT dated as of April 2, 1999 (the "Agreement"), by and
between MOSAIX, INC., a Washington corporation ("Issuer"), and LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Grantee").
RECITALS
A. Grantee, Noah Acquisition Inc., a wholly owned subsidiary of Grantee
("Acquisition"), and Issuer have entered into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"; defined terms used but not
defined herein have the meanings set forth in the Merger Agreement), providing
for, among other things, the merger of Acquisition with and into Issuer, with
Issuer as the surviving corporation in the Merger and becoming a wholly owned
subsidiary of Grantee; and
B. As a condition and inducement to Grantee's willingness to enter into
the Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 2,092,757 (as adjusted as set forth herein) shares (the "Option
Shares") of common stock, par value $.01 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $10.50 (as adjusted as set forth herein) per
Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option, with
respect to any or all of the Option Shares at any time or times, subject to the
provisions of Section 2(c), after the occurrence of any event as a result of
which the Grantee is unconditionally entitled to receive the Termination Fee
pursuant to Section 5.10(b) of the Merger Agreement (a "Purchase Event");
provided, that (i) except as provided in the last sentence of this Section 2(a),
the Option will terminate and be of no further force and effect upon the
Effective Time, and (ii) any purchase of Option Shares upon exercise of the
Option will be subject to compliance with the HSR Act and the obtaining or
making of any consents, approvals, orders, notifications, filings or
authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares to Grantee illegal (the
"Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee
will be entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and the
termination of the Option will not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such termination.
(b) In the event that Grantee is entitled to and wishes to exercise the
Option, it will send to Issuer a written notice (an "Exercise Notice"; the date
of which being
B-1
<PAGE> 143
herein referred to as the "Notice Date") to that effect which Exercise Notice
also specifies the number of Option Shares, if any, Grantee wishes to purchase
pursuant to this Section 2(b), the denominations of the certificate or
certificates evidencing the Option Shares which Grantee wishes to purchase
pursuant to this Section 2(b) and a date (an "Option Closing Date"), subject to
the following sentence, not earlier than seven business days nor later than 20
business days from the Notice Date for the closing of such purchase (an "Option
Closing"). Any Option Closing will be at an agreed location and time in New
York, New York on the applicable Option Closing Date or at such later date as
may be necessary so as to comply with the first sentence of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any exercise
of the Option and purchase of Option Shares shall be subject to compliance with
applicable laws and regulations, which may prohibit the purchase of all the
Option Shares specified in the Exercise Notice without first obtaining or making
certain Regulatory Approvals. In such event, if the Option is otherwise
exercisable and Grantee wishes to exercise the Option, the Option may be
exercised in accordance with Section 2(b) and Grantee shall acquire the maximum
number of Option Shares specified in the Exercise Notice that Grantee is then
permitted to acquire under the applicable laws and regulations, and if Grantee
thereafter obtains the Regulatory Approvals to acquire the remaining balance of
the Option Shares specified in the Exercise Notice, then Grantee shall be
entitled to acquire such remaining balance. Issuer agrees to use its reasonable
best efforts to assist Grantee in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, then with respect to the number
of Option Shares for which such Regulatory Approval will not be issued or
granted or has not been issued or granted, Grantee shall have the right to send
to Issuer an Exercise Notice with respect to such number of Option Shares. If
Grantee sends to Issuer such an Exercise Notice, then Issuer shall pay to
Grantee on the Option Closing Date, in exchange for the cancellation of the
Option with respect to such number of Option Shares as Grantee specifies in the
Exercise Notice, an amount in cash equal to such number of Option Shares
multiplied by the difference between (i) the average closing price, for the 10
trading days commencing on the 12th trading day immediately preceding the Option
Closing Date, per share of Issuer Common Stock as reported on The Nasdaq
National Market (or, if not listed on The Nasdaq National Market, as reported on
any other national securities exchange or national securities quotation system
on which the Issuer Common Stock is listed or quoted, as reported in The Wall
Street Journal (Northeast edition), or, if not reported thereby, any other
authoritative source) (the "Closing Price") and (ii) the Purchase Price.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the
B-2
<PAGE> 144
number of Option Shares to be purchased at such Option Closing plus the amount
of any transfer, stamp or other similar taxes or charges imposed in connection
therewith.
(b) At any Option Closing, simultaneously with the delivery of immediately
available funds as provided in Section 3(a), Issuer will deliver to Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Option Closing, which Option Shares will be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever. If at the time of
issuance of Option Shares pursuant to an exercise of the Option hereunder,
Issuer shall have issued any securities similar to rights under a stockholder
rights plan, then each Option Share issued pursuant to such exercise will also
represent such a corresponding right with terms substantially the same as and at
least as favorable to Grantee as are provided under any such stockholder rights
plan then in effect.
(c) Certificates for the Option Shares delivered at an Option Closing will
have typed or printed thereon a restrictive legend which will read substantially
as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT
DATED AS OF APRIL 2, 1999, A COPY OF WHICH MAY BE OBTAINED FROM THE
SECRETARY OF MOSAIX, INC. AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and, subject to the expiration or
termination of any required waiting period under the HSR Act, to permit it
to issue, and, at all times from the date hereof until the obligation to
deliver Option Shares upon the exercise of the
B-3
<PAGE> 145
Option terminates, shall have reserved for issuance, upon exercise of the
Option, shares of Issuer Common Stock necessary for Grantee to exercise the
Option, and Issuer will take all necessary corporate action to authorize
and reserve for issuance all additional shares of Issuer Common Stock or
other securities which may be issued pursuant to Section 6 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common
Stock or other securities which may be issuable upon exercise of the Option
or any other securities which may be issued pursuant to Section 6, upon
issuance pursuant hereto, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever, including
without limitation any preemptive rights of any stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
Purchase Not for Distribution. Any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be transferred or
otherwise disposed of except in a transaction registered, or exempt from
registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In the event of
any change in Issuer Common Stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price thereof, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee will receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable. Subject to Section 1, and
without limiting the parties' relative rights and obligations under the Merger
Agreement, if any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 6(a)), the number of shares of Issuer Common Stock
subject to the Option will be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) Without limiting the parties' relative rights and obligations under the
Merger Agreement, in the event that Issuer enters into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer will not be the continuing or surviving corporation in
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer will be the continuing
or surviving corporation, but in connection with such merger, the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will be changed into or exchanged for stock or other securities of Issuer
or any other person or cash or any other property, or the shares of Issuer
Common Stock
B-4
<PAGE> 146
outstanding immediately prior to the consummation of such merger will, after
such merger, represent less than 50% of the outstanding voting securities of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Grantee or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction will make
proper provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be converted
into, or exchanged for, an option with identical terms appropriately adjusted to
acquire the number and class of shares or other securities or property that
Grantee would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such consolidation, merger, sale, or
transfer, or the record date therefor, as applicable and make any other
necessary adjustments.
(c) If a Purchase Event shall occur solely as a result of the failure to
obtain Company Shareholder Approval and on or prior to the date of the Company
Shareholder Meeting no Takeover Proposal shall have been made (a "Call Event"),
then the Issuer, upon notice to Grantee delivered within ten (10) days after the
occurrence of such Call Event (which notice shall be irrevocable), may elect (a
"Call Election") to purchase the Option for any amount equal to $563,000 payable
to Grantee in cash not later than twenty (20) days after the date of such
notice; provided, that if Issuer shall fail to exercise its Call Election during
such 10-day period, Grantee, upon notice to Issuer delivered within thirty (30)
days after such Call Event, may elect to cause Issuer to purchase the Option for
the amount and in the manner set forth in this sentence.
(d) (i) Notwithstanding any other provision of this Agreement, in no event
shall Grantee's Total Profit (as hereinafter defined) plus any Termination Fee
paid to Grantee pursuant to Section 5.10(b) of the Merger Agreement exceed in
the aggregate $3,378,000 and, if the total amount that otherwise would be
received by Grantee would exceed such amount, Grantee, at its election, shall
either (a) reduce the number of shares of Issuer Common Stock subject to the
Option, (b) deliver to Issuer for cancellation shares of Issuer Common Stock
previously purchased by Grantee, (c) pay cash to Issuer or (d) take any action
representing any combination of the preceding clauses (a), (b) and (c), so that
Grantee's actually realized Total Profit, when aggregated with such Termination
Fee so paid to Grantee, shall not exceed $3,378,000 after taking into account
the foregoing actions.
(ii) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (A) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 6(c) and (B) the net cash amounts or the fair market value of any
property received by Grantee pursuant to the sale of Option Shares (or other
securities).
7. Registration Rights. Issuer will, if requested by Grantee at any
time and from time to time within two years of the exercise of the Option, as
expeditiously as possible prepare and file up to three registration statements
under the Securities Act if such registration is necessary in order to permit
the sale or other disposition of any or all shares of securities that have been
acquired by or are issuable to Grantee upon exercise
B-5
<PAGE> 147
of the Option in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer will
use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Grantee agrees to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis so that upon consummation thereof no purchaser or transferee
will own beneficially more than 3.0% of the then-outstanding voting power of
Issuer. Issuer will use reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration statement
effective for such period not in excess of 120 calendar days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for up to 120 calendar days in the aggregate if the Board of Directors of Issuer
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Issuer or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Issuer or any other material transaction involving Issuer. Any
registration statement prepared and filed under this Section 7, and any sale
covered thereby, will be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of this
Section 7, Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the
right to participate in such registration, and such participation will not
affect the obligation of Issuer to effect demand registration statements for
Grantee under this Section 7; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer will include the
shares requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any registration
pursuant to this Section 7, Issuer and Grantee will provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification, and contribution in connection with such
registration.
If a requested registration pursuant to this Section 7 involves an
underwritten offering, the underwriter or underwriters thereof shall be a
nationally recognized firm or firms selected by Issuer. Notwithstanding anything
else contained in this Section 7, each requested registration shall be for a
number of shares of Issuer Common Stock which represent at least one-fourth of
the total of number of shares of Issuer Common Stock purchased by Grantee
hereunder.
B-6
<PAGE> 148
8. Transfers. The Option Shares may not be sold, assigned, transferred,
or otherwise disposed of except (i) in an underwritten public offering as
provided in Section 7 or (ii) to any purchaser or transferee who would not, to
the knowledge of Grantee after reasonable inquiry (which shall include obtaining
a representation from the purchaser or transferee), immediately following such
sale, assignment, transfer or disposal, beneficially own more than 3.0% of the
then-outstanding voting power of the Issuer; provided, that Grantee shall be
permitted to sell any Option Shares if such sale is made pursuant to a tender or
exchange offer that has been approved or recommended by a majority of the
members of the Board of Directors of Issuer (which majority shall include a
majority of directors who were directors as of the date hereof).
9. Listing. If Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on The Nasdaq National
Market (or any other national securities exchange or national securities
quotation system), Issuer, upon the request of Grantee, will promptly file an
application to list the shares of Issuer Common Stock or other securities to be
acquired upon exercise of the Option on The Nasdaq National Market (and any such
other national securities exchange or national securities quotation system) and
will use reasonable efforts to obtain approval of such listing as promptly as
practicable.
10. Loss or Mutilation. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered will constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any time be
enforceable by anyone.
11. Miscellaneous. (a) Expenses. Each of the parties hereto will bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants, and counsel.
(b) Amendment. This Agreement may not be amended, except by an instrument
in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive any
provision of this Agreement, or to extend the time for performance, will 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 will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement, the
Merger Agreement (including the documents and instruments attached thereto as
exhibits or schedules or delivered in connection therewith) and the
Confidentiality Agreement (i) constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter of this
B-7
<PAGE> 149
Agreement, and (ii) are not intended to confer upon any person other than the
parties any rights or remedies.
(e) Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.
(f) Notices. All notices, requests, claims, demands, and other
communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any of the rights,
interests, or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise, by Issuer or Grantee without
the prior written consent of the other. Any assignment or delegation in
violation of the preceding sentence will be void. Subject to the first and
second sentences of this Section 11(g), this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
(h) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee will execute and deliver all other documents and
instruments and take all other actions that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(i) Enforcement. The parties agree 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 will 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 New York or in New York
state court, the foregoing being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) 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 (iii) 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 New York or a New York state court.
(j) 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
B-8
<PAGE> 150
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, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first written above.
MOSAIX, INC
By:
--------------------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC.
By:
--------------------------------------
Name:
Title:
B-9
<PAGE> 151
ANNEX C
April 1, 1999
Board of Directors
Mosaix, Inc.
6464 185th Avenue NE
Redmond, WA 98052
Members of the Board:
We understand that Mosaix, Inc., a Washington corporation ("Company"),
Lucent Technologies, Inc., a Delaware corporation ("Parent"), and Noah
Acquisition Inc., a Washington corporation and wholly owned subsidiary of Parent
("Merger Sub"), propose to enter into an Agreement and Plan of Reorganization,
dated as of April 1, 1999 (the "Merger Agreement"), pursuant to which Merger Sub
will be merged with and into Company (the "Merger"). The Merger Agreement
provides, among other things, that each share of Company common stock issued and
outstanding prior to the effective time of the Merger will be converted into
0.19273 shares (the "Exchange Ratio") of common stock of Parent. We have
assumed, with your consent, that the Merger will qualify for
pooling-of-interests accounting treatment as a tax-free transaction for federal
income tax purposes. The terms of the Merger are described in more detail in the
Merger Agreement. As an inducement to Parent to enter into the Merger Agreement,
Company has entered into an option agreement (the "Option Agreement") in which
Company has, among other things, granted to Parent an option to purchase,
subject to the terms and conditions therein, up to 19.9% of the then outstanding
shares of Company Common Stock. You have request our opinion as to whether the
Exchange Ratio is fair, from a financial point of view, to the shareholders of
Company.
BT Alex. Brown Incorporated ("BT Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. We have acted as financial advisor to the Board of Directors of
Company in connection with the Merger and will receive a fee for our services, a
portion of which is contingent upon the consummation of the Merger and a portion
of which is payable upon delivery of this opinion. We previously have provided
investment banking services to Company and Parent in connection with matters
unrelated to the proposed Merger, for which services we have received
compensation. BT Alex. Brown regularly publishes research reports regarding the
telecommunications equipment industry and securities of publicly owned companies
in such industry. In the ordinary course of business, BT Alex. Brown may
actively trade the securities of Parent and Company for our own account and the
account of our customers and, accordingly, may at any time hold a long or short
position in securities of Parent and Company.
C-1
<PAGE> 152
In connection with this opinion, we have reviewed certain publicly
available financial and other information concerning Company and Parent and
certain internal analyses and other information regarding Company furnished to
us by Company. We have also held discussions with the members of the senior
management of Company regarding Company and the prospects of Company. We were
only granted very limited access to management of Parent for the purpose of
discussing Parent and the prospects of Parent and thus relied, with your
consent, to a greater extent than is our custom on publicly available
information regarding these topics. In addition, we have (i) reviewed the
reported prices and trading activity for the Company Common Stock and the Parent
Common Stock, (ii) compared certain financial information for Company with
similar information for certain publicly traded companies, (iii) reviewed the
financial terms of certain recent business combinations which we deemed
comparable in whole or in part, (iv) reviewed the terms of the Merger Agreement
and the Option Agreement, and (v) performed such other studies and analyses and
considered such other factors as we deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to the information relating to the prospects of Company
and Parent, we have assumed that such information reflects the best currently
available judgments and estimates of the management of Company and Parent,
respectively, as to the likely future financial performance of Company and
Parent. In addition, we have not made an independent evaluation or appraisal of
the assets or liabilities of Company, nor have we been furnished with any such
evaluations or appraisals. In rendering this opinion, we have not been asked to
consider, and we do not address, the relative merits of the Merger as compared
to any alternative business transactions. BT Alex. Brown is expressing no
opinion as to the price at which the Parent Common Stock will trade at any time.
Our opinion is based on market, economic and other conditions as they exist and
can be evaluated as of the date of this letter.
Our advisory services and the opinion expressed herein are for the use of
the Board of Directors of Company and do not constitute a recommendation to
Company's stockholders as to how they should vote at the stockholders' meeting
in connection with the Merger. We hereby consent, however, to the inclusion of
this opinion as an exhibit to any proxy or registration statement distributed in
connection to the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the Exchange Ratio is fair, from a financial point of view,
to the stockholders of Company.
Very truly yours,
--------------------------------------
BT ALEX. BROWN INCORPORATED
C-2
<PAGE> 153
ANNEX D
CHAPTER 23B.13 DISSENTERS' RIGHTS
23B.13.010. Definitions
As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and in
the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenters' shares, means the value of
the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
23B.13.020. Right to dissent
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by RCW
23B.11.030, 23B.11.080, or the articles of incorporation and the
shareholder is entitled to vote on the merger, or (ii) if the corporation
is a subsidiary that is merged with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in
D-1
<PAGE> 154
dissolution, but not including a sale pursuant to court order or a sale for
cash pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
(d) An amendment of the articles of incorporation that materially
reduces the number of shares owned by the shareholder to a fraction of a
share if the fractional share so created is to be acquired for cash under
RCW 23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any one
of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
23B.13.030. Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder dissents
with respect to all shares beneficially owned by any one person and notifies the
corporation in writing of the name and address of each person on whose behalf
the shareholder asserts dissenter's rights. The rights of a partial dissenter
under this subsection are determined as if the shares as to which the dissenter
dissents and the dissenter's other shares were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
D-2
<PAGE> 155
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
23B.13.200. Notice of dissenters' rights
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B.13.020 is
taken without a vote of shareholders, the corporation, within ten days after the
effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken and
send them the dissenters' notice described in RCW 23B.13.220.
23B.13.210. Notice of intent to demand payment
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1)
of this section is not entitled to payment for the shareholder's shares under
this chapter.
23B.13.220. Dissenters' notice
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
D-3
<PAGE> 156
(d) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days
after the date the notice in subsection (1) of this section is delivered;
and
(e) Be accompanied by a copy of this chapter.
23B.13.230. Duty to demand payment
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to RCW 23B.13.220(2)(c), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (1) of this section retains all other rights
of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
23B.13.240. Share restrictions
(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until the
effective date of the proposed corporate action.
23B.13.250. Payment
(1) Except as provided in RCW 23B.13.270, within thirty days of the later
of the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of
the shares;
(c) An explanation of how the interest was calculated;
D-4
<PAGE> 157
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
23B.13.260. Failure to take action
(1) If the corporation does not effect the proposed action within sixty
days after the date set for demanding payment and depositing share certificates,
the corporation shall return the deposited certificates and release any transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand
procedure.
23B.13.270 After-acquired shares
(1) A corporation may elect to withhold payment required by RCW 23B.13.250
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
23B.13.280. Procedure if shareholder dissatisfied with payment or offer
(1) A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250 or
offered under RCW 23B.13.270 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
D-5
<PAGE> 158
(2) A dissenter waives the right to demand payment under this section
unless the dissenter notifies the corporation of the dissenter's demand in
writing under subsection (1) of this section within thirty days after the
corporation made or offered payment for the dissenter's shares.
23B.13.300. Court action
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the sixty-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged with or whose shares were acquired by the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the corporation,
complied with the provisions of this chapter. If the court determines that such
shareholder has not complied with the provisions of this chapter, the
shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to it. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270.
D-6
<PAGE> 159
23B.13.310. Court costs and counsel fees
(1) The court in a proceeding commenced under RCW 23B.13.300 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess the costs against all
or some of the dissenters, in amounts the court finds equitable, to the extent
the court finds the dissenters acted arbitrarily, vexatiously, or not in good
faith in demanding payment under RCW 23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280; or
(b) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
D-7
<PAGE> 160
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 corporation 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 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.
II-1
<PAGE> 161
The registrant's Certificate of Incorporation also specifically authorizes
the registrant to maintain insurance and to grant similar indemnification rights
to employees or agents of the registrant. The directors and officers of the
registrant are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act 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 BT Alex. Brown Incorporated, attached as Annex C 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 amount 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 percent 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
II-2
<PAGE> 162
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
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 the paragraph 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 this 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> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Murray Hill, New
Jersey, on June 8, 1999.
LUCENT TECHNOLOGIES INC.
(Registrant)
By: /s/ JAMES S. LUSK
------------------------------------
Name: James S. Lusk
Title: Vice President and
Controller
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment thereto has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
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*
Drew Lewis*
Richard A. McGinn*
Paul H. O'Neill*
Donald S. Perkins*
Henry B. Schacht*
Franklin A. Thomas*
John A. Young*
</TABLE>
*By: /s/ JAMES S. LUSK
- --------------------------
(James S. Lusk,
attorney-in-fact)
*by power of attorney
Date: June 8, 1999
II-4
<PAGE> 164
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1** Agreement and Plan of Merger dated as of April 2, 1999 among
the registrant, Noah Acquisition Inc. and Mosaix, Inc.
(included as Annex A to the proxy statement/prospectus which
is part of this registration statement on Form S-4).
2.2 Stock Option Agreement dated as of April 2, 1999 between
Mosaix, as issuer, and the registrant, as grantee (included
as Annex B to the proxy statement/ prospectus which is part
of this registration statement on Form S-4).
3.1* Certificate of Incorporation of the registrant, as amended
effective February 17, 1999 (incorporated by reference to
Exhibit (3)(i) to the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1999).
3.2* By-Laws of the registrant, as amended effective February 17,
1999 (incorporated by reference to Exhibit (3)(ii) to the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999).
4.1* 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).
4.2* 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).
4.3* 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).
4.4 Other instruments in addition to Exhibit 4.3 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 Perkins Coie LLP as to certain United States
federal income tax consequences of the merger.
10.1* Separation and Distribution Agreement by and among the
registrant, AT&T Corp. and NCR Corporation, dated as of
February 1, 1996 and amended and restated as of March 29,
1996 (incorporated by reference to Exhibit 10.1 to
Registration Statement (No. 333-00703) on Form S-1).
10.2* Tax Sharing Agreement by and among the registrant, AT&T
Corp. and NCR Corporation, dated as of February 1, 1996 and
amended and restated as of March 29, 1996 (incorporated by
reference to Exhibit 10.6 to Registration Statement (No.
333-00703) on Form S-1).
</TABLE>
II-5
<PAGE> 165
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.3* Employee Benefits Agreement by and between AT&T and the
registrant, dated as of February 1, 1996 and amended and
restated as of March 29, 1996 (incorporated by reference to
Exhibit 10.2 to Registration Statement (No. 333-00703) on
Form S-1).
10.4* General Purchase Agreement by and between AT&T Corp. and the
registrant, dated February 1, 1996 and amended and restated
as of March 29, 1996 (incorporated by reference to Exhibit
10.3 to Registration Statement (No. 333-00703) on Form S-1).
10.5* Interim Services and Systems Replication Agreement by and
among AT&T, the registrant and NCR, dated as of February 1,
1996 and amended and restated as of March 29, 1996
(incorporated by reference to Exhibit 10.4 to Registration
Statement (No. 333-00703) on Form S-1).
10.6* Brand License Agreement by and between the registrant and
AT&T, dated as of February 1, 1996 (incorporated by
reference to Exhibit 10.5 to Registration Statement (No.
333-00703) on Form S-1).
10.7* Patent License Agreement among AT&T, NCR and the registrant,
effective as of March 29, 1996 (incorporated by reference to
Exhibit 10.7 to Registration Statement (No. 333-00703) on
Form S-1).
10.8* Amended and Restated Technology License Agreement among
AT&T, NCR and the registrant, effective as of March 29, 1996
(incorporated by reference to Exhibit 10.8 to Registration
Statement (No. 333-00703) on Form S-1).
10.9* Lucent Technologies Inc. Short Term Incentive Program
(incorporated by reference to Exhibit (10)(iii)(A)2 to the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
10.10* Lucent Technologies Inc. 1996 Long Term Incentive Program
(incorporated by reference to Exhibit (10)(iii)(A)1 to the
registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998).
10.11* Lucent Technologies Inc. Deferred Compensation Plan
(incorporated by reference to Exhibit (10)(iii)(A)3 to the
registrant's Annual Report on Form 10-K for the period ended
September 30, 1998).
10.12* Pension Plan for Non-Employee Directors of the registrant
(incorporated by reference to Exhibit 10.11 to Registration
Statement (No. 333-00703) on Form S-1) (this plan has been
terminated).
10.13* Lucent Technologies Inc. Stock Retainer Plan for
Non-Employee Directors (incorporated by reference to Exhibit
10(iii)(A)5 to the registrant's Annual Report on Form 10-K
for the period ended September 30, 1998).
10.14* Lucent Technologies Inc. Excess Benefit and Compensation
Plan (incorporated by reference to Exhibit (10)(iii)(A)5 to
the registrant's Annual Report on Form 10-K for Transition
Period ended September 30, 1996).
</TABLE>
II-6
<PAGE> 166
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.15* Lucent Technologies Inc. Mid-Career Pension Plan
(incorporated by reference to Exhibit (10)(iii)(A)6 to the
registrant's Annual Report on Form 10-K for Transition
Period ended September 30, 1996).
10.16* Lucent Technologies Inc. Non-Qualified Pension Plan
(incorporated by reference to Exhibit (10)(iii)(A)7 to the
registrant's Annual Report on Form 10-K for Transition
Period ended September 30, 1996).
10.17* Lucent Technologies Inc. Officer Long-Term Disability and
Survivor Protection Plan (incorporated by reference to
Exhibit (10)(iii)(A)8 to the registrant's Annual Report on
Form 10-K for Transition Period ended September 30, 1996).
10.18* Employment Agreement of Mr. Verwaayen dated June 12, 1997
(incorporated by reference to Exhibit (10)(iii)(A)9 to the
registrant's Annual Report on Form 10-K for the period ended
September 30, 1997).
10.19* Employment Agreement of Mr. Peterson dated August 8, 1995
(incorporated by reference to Exhibit (10)(iii)(A)10 to the
registrant's Annual Report on Form 10-K for the period ended
September 30, 1997).
10.20* Consulting Agreement of Mr. Schacht effective March 1, 1998
(incorporated by reference to Exhibit (10)(iii)(A)5 to the
registrant's Quarterly Report on Form 10-Q for the period
ended March 31, 1998).
10.21* Description of the Lucent Technologies Inc. Supplemental
Pension Plan (incorporated by reference to Exhibit
(10)(iii)(A)13 to the registrant's Annual Report on Form
10-K for the period ended September 30, 1998).
10.22* Lucent Technologies Inc. 1999 Stock Compensation Plan for
Non-Employee Directors (incorporated by reference to Exhibit
(10)(iii)(A)14 to the registrant's Annual Report on Form
10-K for the period ended September 30, 1998).
10.23* Lucent Technologies Inc. Voluntary Life Insurance Plan
(incorporated by reference to Exhibit (10)(iii)(A)15 to the
registrant's Annual Report on Form 10-K for the period ended
September 30, 1998).
21.1* List of Subsidiaries of the registrant (incorporated by
reference to Exhibit 21 to the registrant's Annual Report on
Form 10-K for the period ended September 30, 1998).
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 Independent Accountants.
23.3 Consent of KPMG LLP, Independent Auditors.
23.4 Consent of Perkins Coie LLP (included as part of Exhibit 8.1
to this registration statement).
23.5 Consent of BT Alex. Brown (included as part of Annex C to
the proxy statement/prospectus which is part of this
registration statement on Form S-4).
24.1 Powers of Attorney.
</TABLE>
II-7
<PAGE> 167
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
99.1 Form of Proxy to be mailed to holders of Mosaix common
stock.
</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.
II-8
<PAGE> 1
Exhibit 5.1
June 9, 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 on the date
hereof 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 2,988,279 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 April 2, 1999, among Lucent, Noah Acquisition Inc., a Washington corporation
and a wholly owned subsidiary of Lucent ("MergerSub"), and Mosaix, Inc., a
Washington corporation ("Mosaix"). The Merger Agreement provides for the merger
(the "Merger") of MergerSub with and into Mosaix, with Mosaix 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.
<PAGE> 2
Lucent Technologies Inc.
June 9, 1999
Page 2
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,
By: /s/ Pamela F. Craven
--------------------------------
Pamela F. Craven
<PAGE> 1
EXHIBIT 8.1
June 9, 1999
Mosaix, Inc.
6464 185th Avenue N.E.
Redmond, WA 98052
RE: TAX OPINION REGARDING MERGER OF NOAH ACQUISITION INC. INTO
MOSAIX, INC.
Ladies and Gentlemen:
We have been asked, as counsel to Mosaix, Inc., a Washington
corporation ("Mosaix"), to render this opinion regarding certain matters related
to the U.S. federal income tax consequences of the merger (the "Merger") of Noah
Acquisition Inc. (the "Subsidiary"), a Washington corporation and 100%
subsidiary of Lucent Technologies Inc., a Delaware corporation ("Lucent"),
pursuant to that certain Agreement and Plan of Merger, dated as of April 2, 1999
by and between Mosaix, the Subsidiary and Lucent (the "Agreement"). Capitalized
terms not otherwise defined herein shall have the same meanings given to them in
the Agreement or, if not defined therein, as described in the Registration
Statement on Form S-4 initially filed with the Securities and Exchange
Commission on June 9, 1999 relating to the Merger (the "S-4"). This opinion
letter is rendered pursuant to Section 6.3(b) of the Agreement.
In connection with our opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the relevant documents related to the Merger, including the Agreement and the
S-4. Furthermore, we have examined that certain Lucent Tax Representation
Letter, dated as of the date hereof, (the "Lucent Tax Certificate"), and that
certain Mosaix Tax Representation Letter, dated as of the date hereof, (the
"Mosaix Tax Certificate").
Our opinion is conditioned on, among other things, the initial and
continuing accuracy of the facts, information, covenants and representations set
forth in the documents referred to above, the representations given by Lucent in
the Lucent Tax Certificate and the representations given by Mosaix in the Mosaix
Tax Certificate. In rendering our opinion, we have assumed the accuracy of all
<PAGE> 2
June 8, 1999
Page 2
information and representations and the performance of all undertakings
contained in the reviewed documents as set forth above, the conformity of all
copies to the original documents, and the genuineness of all signatures. We have
not attempted to verify independently the accuracy of any information in any
such document, and we have assumed that such documents accurately and completely
set forth all material facts relevant to this opinion. If any of these facts or
assumptions are not correct, please advise us at once as our advice may be
affected by a change in such facts or assumptions.
Opinion. It is the opinion of Tax Counsel that, subject to the
foregoing and the limitations discussed below, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code;
Furthermore, in our opinion, the material federal income tax
consequences of the Merger for Mosaix stockholders who are citizens or residents
of the United States are as follows:
(1) No gain or loss will be recognized by holders of Mosaix common
stock solely upon their receipt of Lucent common stock solely in exchange for
Mosaix common stock in the merger, except to the extent of cash received in lieu
of a fractional shares of Lucent common stock.
(2) The aggregate tax basis of Lucent common stock received by Mosaix
shareholders in the merger will be the same as the aggregate tax basis of Mosaix
common stock surrendered in exchange therefore reduced by any amount allocable
to fractional share interests for which cash is received.
(3) The holding period of Lucent common stock received in the merger
will include the period for which the Mosaix common stock surrendered in
exchange therefor was held, provided that the Mosaix common stock is held as a
capital asset at the time of the merger.
(4) Cash payments received by holders of Mosaix common stock in lieu of
fractional shares will be treated as if a fractional shares of Lucent common
stock had been issued in the merger and then redeemed by Lucent. A shareholder
of Mosaix receiving such cash will generally recognize gain or loss upon such
cash payment, equal to the difference, if any, between such shareholder's
allocable basis in the fractional share and the amount of cash received. This
gain or loss will be a capital gain or loss if the Mosaix common stock is held
by such shareholder as a capital asset at the effective time of the merger.
(5) Mosaix will recognize no gain or loss solely as a result of the
merger.
2
<PAGE> 3
June 8, 1999
Page 3
However, as discussed above and as indicated in the S-4, if any of the
assumptions or representations set forth above prove incorrect, then the
conclusions set forth above may not be accurate, with the resulting consequences
discussed in the S-4 under the heading "THE MERGER - Material Federal Income Tax
Matters - Failure of the merger to qualify as a reorganization."
Limitations. Our opinion is limited to the specific matters described
in the S-4 under the caption "THE MERGER Material Federal Income Tax
Consequences." We give no opinion with respect to other tax matters, whether
federal, state or local, that may relate to the Merger. Our opinion may not
address issues that are material to an individual stockholder based on his or
her particular tax situation. No ruling will be requested from the Internal
Revenue Service ("IRS") regarding the Merger. Our opinion is not binding on the
IRS and does not constitute a guarantee that the IRS will not challenge the tax
treatment of the Merger.
In rendering our opinion, we have considered the applicable provisions
of the Code, Treasury Regulations promulgated thereunder and the pertinent
judicial authorities and interpretative rulings of the IRS. We caution that our
opinion is based on the federal income tax laws as they exist on the date
hereof. It is possible that subsequent changes in the tax law could be enacted
and applied retroactively to the Merger and that such changes could dictate a
materially different result than the result described in the opinions above.
This opinion is furnished in connection with the Merger. We consent to
the reference to our firm under the captions "THE MERGER--Material Federal
Income Tax Consequences," and "LEGAL MATTERS," and to the filing of this opinion
as an exhibit to the S-4.
Very truly yours,
/s/ PERKINS COIE LLP
------------------------
PERKINS COIE LLP
3
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Lucent Technologies Inc. on Form S-4 of our report, dated February 26, 1999,
except for the fifth paragraph of Note 1, as to which the date is April 1, 1999,
on our audit of the consolidated financial statements and financial statement
schedule of Lucent Technologies Inc. and subsidiaries 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 report is included in
the Current Report on Form 8-K/A #1 dated May 18, 1999. We also consent to the
reference to our firm under the caption 'Experts'.
/s/ PRICEWATERHOUSECOOPERS LLP
--------------------------------------
PricewaterhouseCoopers LLP
New York, New York
June 8, 1999
<PAGE> 1
Exhibit 23.3
Consent of Independent Auditors
The Board of Directors
Mosaix, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the proxy
statement/prospectus contained in the registration statement on Form S-4 of
Lucent Technologies Inc.
/s/ KPMG LLP
---------------------------
KPMG LLP
Seattle, WA
June 7, 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 Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Paul A. Allaire
Paul A. Allaire
Director
<PAGE> 2
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Carla A. Hills
Carla A. Hills
Director
<PAGE> 3
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Drew Lewis
Drew Lewis
Director
<PAGE> 4
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Richard A. McGinn
Richard A. McGinn
Chairman of the Board and
Chief Executive Officer
<PAGE> 5
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Paul H. O'Neill
Paul H. O'Neill
Director
<PAGE> 6
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Donald S. Perkins
Donald S. Perkins
Director
<PAGE> 7
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Henry B. Schacht
Henry B. Schacht
Director
<PAGE> 8
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ Franklin A. Thomas
Franklin A. Thomas
Director
<PAGE> 9
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 21st day of April, 1999.
By: /s/ John A. Young
John A. Young
Director
<PAGE> 10
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 22nd day of April, 1999.
By: /s/ Donald K. Peterson
Donald K. Peterson
Executive Vice President and
Chief Financial Officer
<PAGE> 11
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, Lucent Technologies Inc., a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements (on Form S-3, Form S-4, Form
S-8 or any other appropriate Form) with respect to the issuance of common
shares, par value $.01 per share, of the Company (including the related
Preferred Share Purchase Rights), in connection with the acquisition by the
Company of Mosaix, Inc., including the issuance of up to 200,000 common shares
and Preferred Share Purchase Rights under the Mosaix, Inc. Profit Sharing and
Salary Deferral Plan and Trust; and
WHEREAS, the Company proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
registration statement or registration statements with respect to the issuance
of up to 500,000 common shares, par value $.01 per share (including an equal
number of Preferred Share Purchase Rights), to be offered under the Ascend
Communications 401(k) Savings 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 April, 1999.
By: /s/ James S. Lusk
James S. Lusk
Vice President and Controller
<PAGE> 1
MOSAIX, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, JULY 12, 1999
The undersigned shareholder of Mosaix, Inc., revoking all prior proxies,
hereby appoints Nicholas A. Tiliacos and John J. Flavio, or either of them
acting singly, proxies, with full power of substitution, to vote all shares of
capital stock of Mosaix which the undersigned is entitled to vote at the special
meeting of shareholders to be held at Mosaix's offices, 6464 185th Avenue N.E.,
Redmond, Washington, on Monday, July 12, 1999, beginning at 9:00 a.m., local
time, and at any adjournments of the meeting, upon matters set forth in the
Notice of Special Meeting dated June 9, 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 meeting by the Mosaix board of
directors. Attendance of the undersigned at the meeting or any adjourned session
of the meeting 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 MOSAIX BOARD OF DIRECTORS. A
SHAREHOLDER 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.
(Please fill in the appropriate boxes on the other side)
<PAGE> 2
A. [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. To approve the Agreement and Plan of Merger dated as of April 2, 1999,
among Lucent Technologies Inc., Noah Acquisition Inc., a wholly owned
subsidiary of Lucent, and Mosaix, Inc.
FOR [ ]
AGAINST [ ]
ABSTAIN [ ]
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.
DATED: , 1999
Signature of Shareholder(s)
- ------------------------------------------------------
- ------------------------------------------------------
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 shareholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please sign full
partnership name by an authorized partner or other persons. If shares are held
by joint tenants, both should sign. Attorneys-in-fact, executors,
administrators, trustees, guardians or others signing in a representative
capacity should indicate the capacity in which they are signing.
Mark here if you plan to attend the meeting [ ]
