<PAGE> 1
As filed with the Securities and Exchange Commission on March 1, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
LUCENT TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<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:
MICHAEL J. HOLLIDAY PATRICK T. SEAVER
LUCENT TECHNOLOGIES INC. KEVIN B. ESPINOLA
600 MOUNTAIN AVENUE LATHAM & WATKINS
MURRAY HILL, NEW JERSEY 07974 650 TOWN CENTER DRIVE, 20TH FLOOR
(908) 582-8500 COSTA MESA, CALIFORNIA 92626
(714) 540-1235
-----------------------
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 the Securities
Act registration number of the earlier effective registration statement for the
same offering. / /
CALCULATION OF REGISTRATION FEE
<PAGE> 2
<TABLE>
<CAPTION>
===============================================================================================================================
Title of each class of Proposed maximum Proposed maximum Amount of
securities to be Amount to be offering price per aggregate offering registration
registered registered(1) share price(2) fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par
value per share, and related
preferred stock purchase
rights(3) 54,519,127 shares Not Applicable $2,753,128,940.19 $726,826.04
===============================================================================================================================
</TABLE>
(1) Based on the maximum number of shares to be issued in connection with
the merger, calculated as the product obtained by multiplying (a) an
exchange ratio of 3.1350 shares of the registrant's common stock for
each share of Ortel common stock, par value $0.001 per share, by (b)
17,390,471, the sum of (i) the aggregate number of shares of Ortel
common stock outstanding on February 28, 2000 (other than shares owned
by Solara Acquisition Inc., a wholly owned subsidiary of the
registrant, or the registrant or any of its subsidiaries) and (ii) the
aggregate number of shares of Ortel common stock issuable pursuant to
outstanding options prior to the date the merger is expected to be
consummated.
(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act, and calculated pursuant
to Rule 457(f) under the Securities Act. Pursuant to Rule 457(f)(1)
under the Securities Act, the proposed maximum aggregate offering price
of the registrant's common stock was calculated in accordance with Rule
457(c) under the Securities Act as: (a) 158.3125, the average of the
high and low prices per share of Ortel common stock on February 23,
2000 as reported on The Nasdaq National Market, multiplied by
(b) 17,390,471, the maximum number of shares of Ortel common stock
computed as described in clause (b) of Note (1).
(3) 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> 3
[ORTEL LOGO]
2015 West Chestnut Street
Alhambra, California 91803
, 2000
Dear Stockholder:
You are cordially invited to attend our special meeting of stockholders
on , 2000, at a.m., local time, at .
At the special meeting, we will ask you to vote on the merger of Ortel
and Lucent Technologies Inc. In the merger, you will receive 3.1350 shares of
Lucent common stock in exchange for each share of Ortel common stock that you
own. Lucent common stock is listed on the New York Stock Exchange under the
trading symbol "LU" and on , 2000, Lucent common stock closed at $
per share. You will receive cash for any fractional share of Lucent common stock
which you would otherwise receive in the merger.
Your vote is very important. We cannot complete the merger unless
holders of a majority of the outstanding shares of Ortel common stock vote to
approve the merger agreement. Only stockholders who hold shares of Ortel common
stock at the close of business on , 2000 will be entitled to vote at the
special meeting.
THE ENCLOSED PROXY STATEMENT/PROSPECTUS GIVES YOU DETAILED INFORMATION
ABOUT THE PROPOSED MERGER AND INCLUDES THE MERGER AGREEMENT AS AN ANNEX. WE
ENCOURAGE YOU TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS, INCLUDING ITS
ANNEXES. YOU SHOULD CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING
TO THE MERGER" ON PAGE 14 OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS BEFORE
VOTING.
AFTER CAREFUL CONSIDERATION, THE ORTEL BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE
MERGER IS ADVISABLE AND FAIR TO YOU AND IN YOUR BEST INTERESTS AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
Please complete, sign and return your proxy.
Thank you for your cooperation.
Sincerely,
Stephen R. Rizzone
President, Chief Executive Officer
and Chairman of the Board
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 ,
2000, AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT , 2000.
<PAGE> 4
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates important business and financial
information about Lucent and Ortel 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:
Lucent Technologies Inc. Ortel Corporation
c/o The Bank of New York 2015 West Chestnut Street
Church Street Station Alhambra, California 91803
P.O. Box 11009 Telephone: 626-281-3636
New York, New York 10286-1009 Attention: Investor Relations
Telephone: 1-888-LUCENT6
If you would like to request documents, please do so by , 2000
in order to receive them before the Ortel special meeting.
See "Where You Can Find More Information" (page 63).
<PAGE> 5
[ORTEL LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2000
To the Stockholders of Ortel Corporation:
We will hold a special meeting of the stockholders of Ortel Corporation
on , 2000, at a.m., local time, at
for the following purpose:
To consider and vote upon a proposal to adopt the merger
agreement among Lucent Technologies Inc., Solara Acquisition
Inc., a wholly owned subsidiary of Lucent, and Ortel. Under
the merger agreement, each outstanding share of Ortel common
stock will be converted into the right to receive 3.1350
shares of Lucent common stock.
We will transact no other business at the special meeting, except
business that may be properly brought before the special meeting or any
adjournment of it by the Ortel board of directors.
Only holders of record of shares of Ortel common stock at the close of
business on , 2000, the record date for the special meeting, are
entitled to notice of, and to vote at, the special meeting and any adjournments
or postponements of it.
We cannot complete the merger unless holders of a majority of the
outstanding shares of Ortel common stock vote to adopt the merger agreement.
Holders of Ortel common stock will not have appraisal rights under Delaware law
in connection with the merger.
FOR MORE INFORMATION ABOUT THE MERGER, PLEASE REVIEW THE ACCOMPANYING
PROXY STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED AS ANNEX A.
All Ortel stockholders are cordially invited to attend the special
meeting in person. However, 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. Executed proxies with no instructions will be voted "FOR" the
adoption of the merger agreement.
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. IF THE MERGER
IS COMPLETED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE EXCHANGE OF YOUR
CERTIFICATES.
By Order of the Board of Directors,
Nadav Bar Chaim
Secretary
Alhambra, California
, 2000
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING..................................................... i
SUMMARY............................................................................................................ 1
General................................................................................................... 1
The Companies............................................................................................. 2
The Special Meeting....................................................................................... 4
The Merger................................................................................................ 4
Selected Historical Financial Data -- Lucent.............................................................. 11
Selected Historical Financial Data -- Ortel............................................................... 13
RISK FACTORS RELATING TO THE MERGER................................................................................ 14
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........................................ 14
The price of Lucent common stock may be affected by factors different from those affecting
the price of Ortel common stock.................................................................. 14
THE COMPANIES...................................................................................................... 15
Ortel..................................................................................................... 15
Lucent.................................................................................................... 15
Recent Developments....................................................................................... 15
Material Contracts between Lucent and Ortel............................................................... 15
THE SPECIAL MEETING................................................................................................ 16
Date, Time and Place...................................................................................... 16
Purpose of Special Meeting................................................................................ 16
Record Date; Stock Entitled to Vote; Quorum............................................................... 16
Votes Required............................................................................................ 16
Voting Agreement.......................................................................................... 16
Voting of Proxies......................................................................................... 17
Revocability of Proxies................................................................................... 17
Solicitation of Proxies................................................................................... 18
THE MERGER......................................................................................................... 19
Background to the Merger.................................................................................. 19
Reasons for the Merger ................................................................................... 22
Recommendation of the Ortel Board of Directors............................................................ 25
Fairness Opinion of SoundView Technology Group, Inc....................................................... 25
Interests of Ortel's Directors and Management in the Merger............................................... 31
Stock Options............................................................................................. 34
Accounting Treatment...................................................................................... 34
Form of the Merger........................................................................................ 34
Merger Consideration...................................................................................... 34
Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares.......................... 35
</TABLE>
<PAGE> 7
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Effective Time of the Merger.............................................................................. 36
Stock Exchange Listing of Lucent Common Stock............................................................. 36
Delisting and Deregistration of Ortel Common Stock........................................................ 36
Certain Material United States Federal Income Tax Consequences of the Merger.............................. 36
Regulatory Matters........................................................................................ 38
Appraisal Rights.......................................................................................... 38
Resale of Lucent Common Stock............................................................................. 38
THE MERGER AGREEMENT............................................................................................... 39
Conditions to the Merger.................................................................................. 39
No Solicitation........................................................................................... 41
Termination of the Merger Agreement....................................................................... 42
Termination Fees.......................................................................................... 43
Conduct of Business Pending the Merger.................................................................... 44
Amendment; Extension and Waiver........................................................................... 46
Expenses.................................................................................................. 46
Representations and Warranties............................................................................ 47
Indemnification and Insurance............................................................................. 48
Amendments to Ortel's Certificate of Incorporation........................................................ 48
Amendments to the Ortel By-Laws........................................................................... 49
Non-Competition and Non-Disclosure Agreements............................................................. 49
THE STOCK OPTION AGREEMENT......................................................................................... 49
General................................................................................................... 49
Exercise of the Option.................................................................................... 49
Adjustment to Number and Type of Shares................................................................... 50
Limit on Total Profit of Lucent........................................................................... 51
Registration Rights and Listing........................................................................... 51
Assignability; Transfers.................................................................................. 51
Effect of Stock Option Agreement.......................................................................... 52
COMPARATIVE STOCK PRICES AND DIVIDENDS............................................................................. 53
DESCRIPTION OF LUCENT CAPITAL STOCK................................................................................ 54
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND ORTEL.................................................... 54
Capitalization............................................................................................ 54
Voting Rights............................................................................................. 55
Number, Election, Vacancy and Removal of Directors........................................................ 55
Amendments to Certificate of Incorporation................................................................ 56
Amendments to By-Laws..................................................................................... 56
Stockholder Action........................................................................................ 57
Notice of Certain Stockholder Actions..................................................................... 57
</TABLE>
<PAGE> 8
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Special Stockholder Meetings.............................................................................. 58
Limitation of Personal Liability of Directors and Indemnification......................................... 58
Dividends................................................................................................. 59
Conversion................................................................................................ 59
Rights Plan............................................................................................... 59
LEGAL MATTERS...................................................................................................... 62
EXPERTS............................................................................................................ 62
OTHER MATTERS...................................................................................................... 63
WHERE YOU CAN FIND MORE INFORMATION................................................................................ 63
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.................................................................. 66
</TABLE>
Annexes
Annex A Agreement and Plan of Merger
Annex B Stock Option Agreement
Annex C Opinion of SoundView Technology Group, Inc.
Annex D Voting Agreement
<PAGE> 9
QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING
Q: WHY IS ORTEL MERGING?
A: This is a unique opportunity for Ortel to join and become part of
Lucent, one of the world's leading designers, developers and
manufacturers of communications systems, software and products. By
utilizing Lucent's international presence, sales, marketing and
manufacturing infrastructure and expertise, Ortel management believes
that the company will be able to accelerate the development and
distribution of its products in the future and to offer its customers
more complete end-to-end solutions.
Q: WHY IS THE ORTEL BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR
ADOPTION OF THE MERGER AGREEMENT?
A: In reaching its decision to approve the merger agreement and the merger
and to recommend adoption of the merger agreement by Ortel
stockholders, the Ortel board of directors consulted with Ortel
management, as well as Ortel's financial and legal advisors, and
considered the terms of the proposed merger agreement and the
transactions contemplated by the merger agreement. In addition, the
Ortel board of directors considered each of the items set forth on
pages 22 to 25. Based on those consultations and considerations, the
Ortel board of directors unanimously approved the merger agreement and
the merger, and believes that the terms of the merger agreement and the
merger are advisable and fair to, and in the best interests of, Ortel
and its stockholders.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive 3.1350 shares of Lucent
common stock for each share of Ortel common stock that you own.
Q: WHAT IF THE MERGER IS NOT COMPLETED?
A: If the merger is not completed, Ortel will continue to operate as an
independent company. None of Lucent, Ortel or any third party is under
any obligation to make or consider any alternative proposal regarding
the purchase of your Ortel common stock. Ortel may be required to pay a
termination fee under the merger agreement if the merger is not
completed for certain reasons.
Q: WHERE CAN I GET INFORMATION REGARDING LUCENT, ORTEL AND THE MERGER?
A: We urge you to read and consider the information contained in this
proxy statement/prospectus, including its annexes. You also may want to
review the documents referenced under "Where You Can Find More
Information."
i
<PAGE> 10
Q: WHO MAY VOTE AT THE SPECIAL MEETING?
A: All stockholders of record as of the close of business on ,
2000 may vote. You are entitled to one vote per share of Ortel common
stock that you own on the record date.
Q: HOW DO I VOTE?
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 adoption of the merger
agreement. IF YOU ABSTAIN FROM VOTING OR DO NOT VOTE YOUR SHARES BY
PROXY OR IN PERSON, IT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST
ADOPTION OF THE MERGER AGREEMENT.
The special meeting will take place on , 2000 at a.m.,
local time, at .
You may attend the special meeting and vote your shares in person,
rather than signing and mailing your proxy.
Q: IF MY SHARES ARE HELD IN A BROKERAGE ACCOUNT OR IN "STREET NAME" BY MY
BROKER, HOW DO I VOTE?
A: Your broker will vote your shares only if you provide instructions on
how to vote. You should follow the directions provided by your broker
regarding how to instruct your broker to vote your shares. If you do
not instruct your broker, your shares will not be voted, which will
have the same effect as a vote against the adoption of the merger
agreement.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You may change your vote in one of three ways at any time before
your proxy is voted at the special meeting. First, you may send a
written notice stating that you would like to revoke your proxy.
Second, you may complete and submit a new, later dated proxy. Third,
you may attend the special meeting and vote in person. If you
choose either of the first two methods, you must submit your notice of
revocation or your new proxy to the Secretary of Ortel Corporation at
the following address: Ortel Corporation, 2015 West Chestnut Street,
Alhambra, California 91803, Attention: Secretary.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger has been completed, you will receive written
instructions for exchanging your stock certificates. Please do not send
in your stock certificates with your proxy.
ii
<PAGE> 11
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 second calendar quarter of 2000.
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:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Telephone: 212-929-5500 or 1-800-322-2285
iii
<PAGE> 12
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, the documents attached to the proxy
statement/prospectus as annexes and the other documents to which we refer you.
In addition, we incorporate by reference important business and financial
information about Ortel and Lucent into this proxy statement/prospectus. You may
obtain the information incorporated by reference without charge by following the
instructions in the section "Where You Can Find More Information" on page 63. 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
In the merger, you will receive 3.1350 shares of Lucent common stock
for each share of Ortel common stock that you own. You will receive cash for any
fractional share of Lucent common stock that you would otherwise receive in the
merger.
OWNERSHIP OF LUCENT FOLLOWING THE MERGER
Based on the number of outstanding shares of Ortel common stock on the
record date, we anticipate that Ortel stockholders will receive in the aggregate
approximately shares of Lucent common stock in the merger. Based on that
number and on the number of outstanding shares of Lucent common stock on the
record date, following the merger former Ortel stockholders will own
approximately % of the outstanding shares of Lucent common stock.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
(PAGE 36)
The merger is intended to qualify as a reorganization within the
meaning of the Internal Revenue Code of 1986. It is a condition to the
completion of the merger that Ortel receive an opinion from its counsel, Latham
& Watkins, and that Lucent receive an opinion from its counsel, Sidley & Austin,
each 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, unless you are subject to special tax treatment under 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 Ortel common
stock for Lucent common stock in the merger, except for any cash received in
lieu of a fractional share 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> 13
FAIRNESS OPINION OF SOUNDVIEW TECHNOLOGY GROUP, INC. (PAGE 25)
In deciding to approve the merger, the Ortel board of directors
considered the opinion dated February 6, 2000 of its financial advisor,
SoundView Technology Group, Inc., as to the fairness to Ortel stockholders from
a financial point of view of the 3.1350 exchange ratio in the merger. The full
text of SoundView's opinion, including the assumptions made, procedures
followed, matters considered, and the scope of the review undertaken by
SoundView in connection with its opinion, is attached as Annex C to this proxy
statement/prospectus. WE ENCOURAGE YOU TO READ SOUNDVIEW'S OPINION CAREFULLY AND
IN ITS ENTIRETY.
RECOMMENDATION OF THE ORTEL BOARD OF DIRECTORS (PAGE 25)
The Ortel board of directors believes that the terms of the merger and
the merger agreement are advisable and fair to, and in the best interests of,
Ortel and its stockholders and unanimously recommends that stockholders vote
"FOR" the adoption of the merger agreement.
To review the background and reasons for the merger in greater detail,
as well as certain risks related to the merger, see pages 19 to 25 and page 14.
INTERESTS OF ORTEL'S DIRECTORS AND MANAGEMENT IN THE MERGER (PAGE 31)
Ortel stockholders should note that a number of directors and officers
of Ortel have interests in the merger as directors or officers that are
different from, or in addition to, those of a stockholder. If the merger is
completed, certain indemnification arrangements for current directors and
officers of Ortel will be continued and it is expected that most of the current
executive officers of Ortel will be retained as employees of or consultants to
Lucent. Ortel also has agreed to pay up to $15 million to Stephen R. Rizzone and
up to $4.5 million to certain other Ortel employees if the merger is completed.
In addition, several of Ortel's officers may be entitled to severance payments
under existing employment agreements as a result of the merger. In addition,
directors and employees with stock options to acquire Ortel common stock will
have these options converted to stock options to acquire Lucent common stock,
and stock options held by directors and certain officers will become
or under certain circumstances may become fully vested as a result of the
merger.
APPRAISAL RIGHTS (PAGE 38)
Ortel stockholders are not entitled to appraisal rights in connection
with the merger.
THE COMPANIES (PAGE 15)
ORTEL CORPORATION
Ortel has been focused on developing fiber optic technology since the
founding of the company in 1980. Ortel designs, develops and manufactures
optoelectronic components used by communication system suppliers in the cable
television and telecommunications industries. Ortel's technology, expertise and
close working relationships with leading industry participants have allowed
Ortel to become a leading supplier of optoelectronic components in the cable
television industry and, more recently, have enabled Ortel to establish a
presence in the
2
<PAGE> 14
telecommunications industry. Ortel's products include laser and photodiode
chips, packaged lasers, transmitters and receivers. Ortel's products allow
Ortel's customers to provide cable system operators and telecommunication
service providers with communication systems that enable the transmission of
optical signals over longer distances, with improved signal quality and higher
bandwidth capacity.
LUCENT TECHNOLOGIES INC.
Lucent is one of the world's leading designers, developers and
manufacturers of communications systems, software and products. Lucent is a
global leader in the sale of public and private communications systems,
supplying systems and software to most of the world's largest network operators
and service providers. 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's research and development activities are conducted through
Bell Laboratories, one of the world's foremost industrial research and
development organizations.
RECENT DEVELOPMENTS (PAGE 15)
On March 1, 2000, Lucent announced a plan to spin off its PBX,
SYSTIMAX(R) structured cabling and LAN-based data businesses to its
stockholders, forming a separate company that will focus directly and
independently on the enterprise networking market. The spin-off is expected to
be accomplished through a tax-free distribution of shares to Lucent's
stockholders to be completed by the close of Lucent's fourth fiscal quarter of
2000, which ends on September 30. The new enterprise business will have
approximately 34,000 employees worldwide and will operate independently from
Lucent with its own brand, board of directors, management and research and
development organizations. For additional information, please see Lucent's
current report on Form 8-K filed March 1, 2000.
MARKET PRICE AND DIVIDEND INFORMATION (PAGE 53)
Shares of Lucent common stock are listed on the New York Stock
Exchange. Shares of Ortel common stock are listed on The Nasdaq National Market.
The following table presents as of February 4, 2000, the last full trading day
prior to the public announcement of the proposed merger, and as of , 2000,
the last day for which information in the table could be calculated prior to the
date of this proxy statement/prospectus:
- 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 Ortel common
stock, as reported on The Nasdaq National Market and
- the market value of one share of Ortel 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 Ortel 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 3.1350.
<TABLE>
<CAPTION>
EQUIVALENT
LUCENT ORTEL PRICE PER SHARE
COMMON COMMON OF ORTEL
DATE STOCK STOCK COMMON STOCK
- ---- ----- ----- ------------
<S> <C> <C> <C>
February 4, 2000 $ 57.563 $ 177.125 $ 180.460
, 2000 $ $ $
</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. Ortel has never paid dividends to its stockholders.
3
<PAGE> 15
THE SPECIAL MEETING (PAGE 16)
The special meeting of Ortel stockholders will be held at
at a.m., local time, on , 2000. At the special
meeting, all Ortel stockholders who held shares of Ortel common stock at the
close of business on , 2000 will be asked to adopt the merger agreement.
RECORD DATE; VOTING POWER
Ortel stockholders are entitled to vote at the special meeting if they
owned shares of Ortel common stock as of the close of business on , 2000,
the record date.
On the record date, there were shares of Ortel common stock
entitled to vote at the special meeting. Stockholders will have one vote for
each share of Ortel common stock that they owned on the record date.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Ortel common stock
outstanding on the record date is required to adopt the merger agreement.
VOTING AGREEMENT
On February 7, 2000, Sumitomo Osaka Cement Co., Ltd., which owned
approximately % of the outstanding Ortel common stock as of the record date,
entered into a voting agreement with Lucent pursuant to which Sumitomo Osaka
Cement has agreed to vote the Ortel common stock it owns "FOR" adoption of the
merger agreement. The voting agreement is attached as Annex D. Sumitomo Osaka
Cement has also granted an irrevocable proxy and a power of attorney to Lucent
representatives to vote its shares of Ortel common stock "FOR" adoption of the
merger agreement.
Each of the directors and executive officers of Ortel has advised Ortel
that he intends to vote all shares of Ortel common stock over which he has or
shares voting control "FOR" adoption of the merger agreement.
THE MERGER (PAGE 19)
The merger agreement is attached as Annex A to this proxy
statement/prospectus. We encourage you to read the entire merger agreement
carefully. It is the principal document governing the merger.
CONDITIONS TO THE MERGER (PAGE 39)
Lucent and Ortel will complete the merger only if they satisfy or, in
some cases, waive several conditions, including all the following:
4
<PAGE> 16
- holders of a majority of the outstanding shares of Ortel
common stock must adopt the merger agreement
- the waiting period required under United States antitrust laws
must expire or be terminated
- no legal restraints or prohibitions are in effect, and no
suits, actions or proceedings by any governmental authority
are pending which prevent the consummation of the merger or
are reasonably likely to have a material adverse effect on
Lucent or Ortel
- 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
- the Lucent common stock to be issued to Ortel stockholders
pursuant to the merger must be authorized for listing on the
New York Stock Exchange
- Ortel and Lucent must comply with their respective agreements
and conditions under the merger agreement in all material
respects
- the respective representations and warranties of Ortel and
Lucent contained in the merger agreement must be true and
correct, except where the failure of those representations and
warranties to be true and correct does not have, and could not
reasonably be expected to have, individually or in the
aggregate, a material adverse effect on Ortel and Lucent,
respectively
- in the case of Lucent, the rights issued pursuant to the Ortel
rights agreement may not have become nonredeemable,
exercisable, distributable or triggered and
- Ortel must receive from Latham & Watkins, and Lucent must
receive from Sidley & Austin, on the date on which the
registration statement is declared effective by the Securities
and Exchange Commission and on the date on which the merger is
to be completed an opinion, on the basis of certain facts,
representations and assumptions as set forth in the opinion,
stating that the merger will be treated for United States
federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code.
NO SOLICITATION (PAGE 41)
The merger agreement provides that Ortel will not, and will not
authorize or permit any of its officers, directors, 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 Ortel 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 Ortel of the merger agreement, is more favorable and superior to Ortel
stockholders than the terms of the merger with Lucent, Ortel may:
5
<PAGE> 17
- furnish under a customary confidentiality agreement
information about Ortel to any person making the superior
proposal and
- participate in discussions or negotiations regarding the
superior proposal.
TERMINATION OF THE MERGER AGREEMENT (PAGE 42)
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after adoption of the merger
agreement by the Ortel stockholders, as summarized below:
- Lucent and Ortel can mutually agree to terminate the merger
agreement at any time without completing the merger
- Lucent or Ortel can terminate the merger agreement if:
(1) the merger is not completed by December 31, 2000,
provided that this right to terminate will not be
available to a party whose failure to perform any of
its obligations under the merger agreement has caused
or resulted in the failure of the merger to be
completed by that date
(2) holders of a majority of the outstanding shares of
Ortel common stock do not adopt the merger agreement
(3) a court, governmental authority or other legal action
permanently prohibits the completion of the merger or
(4) any other party materially breaches any of its
obligations under the merger agreement and does not
cure the breach within 30 days of notice by the other
party
- Ortel can terminate the merger agreement before the special
meeting if the Ortel board of directors receives an
unsolicited proposal by a third party to acquire Ortel on
terms determined by the Ortel board of directors, based on the
advice of a financial advisor of nationally recognized
reputation, to be more favorable to Ortel stockholders than
the terms of the merger with Lucent or
- Lucent can terminate the merger agreement if Ortel or any of
its directors or officers participates in discussions or
negotiations with third parties regarding certain takeover
proposals or furnishes information to third parties in breach
of the merger agreement.
TERMINATION FEES (PAGE 43)
Ortel must pay Lucent a termination fee of $90 million if:
- Ortel stockholders receive a takeover proposal, a takeover
proposal otherwise becomes publicly known or anyone publicly
announces its intention to make a takeover proposal, and
thereafter Lucent or Ortel terminates the merger agreement
6
<PAGE> 18
because either (1) the merger is not completed by December 31,
2000 or (2) the Ortel stockholders have not adopted the merger
agreement at an Ortel stockholders meeting, and within nine
months of the termination Ortel or any of its subsidiaries
enters into any definitive agreement with respect to, or
consummates, any takeover proposal
- Ortel terminates the merger agreement because Ortel receives
before the special meeting an unsolicited proposal by a third
party to acquire Ortel on terms determined by the Ortel board
of directors to be more favorable to the Ortel stockholders
than the terms of the merger with Lucent or
- Lucent terminates the merger agreement because Ortel or any of
its directors or officers participates in discussions or
negotiations with third parties regarding certain takeover
proposals or furnishes information to third parties in breach
of the merger agreement.
STOCK OPTION AGREEMENT (PAGE 49)
Ortel has granted an option to Lucent to purchase shares of Ortel
common stock equal to approximately 19.9% of the number of outstanding shares of
Ortel common stock at a price per share of $177.125 if certain events occur that
entitle Lucent to receive the termination fee under the merger agreement. The
option agreement limits to $105 million the total amount Lucent may receive from
(1) the stock option and (2) any termination fee payable by Ortel if the merger
agreement is terminated.
NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS (PAGE 49)
As a condition to the merger, certain officers of Ortel must enter into
non-competition and non- disclosure agreements with Lucent and Ortel. Under
these agreements, each of these employees agrees with Lucent and Ortel that, for
a specified period, the employee will not, without the express written consent
of Lucent, compete with the activities currently conducted by Ortel.
REGULATORY MATTERS (PAGE 38)
United States antitrust laws prohibit Lucent and Ortel 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 Ortel each filed
the required notification and report forms with the Antitrust Division and the
Federal Trade Commission on February 25, 2000. 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 ,
2000.
7
<PAGE> 19
ACCOUNTING TREATMENT (PAGE 34)
The merger will be accounted for under the "purchase" method of
accounting in accordance with generally accepted accounting principles. Lucent
expects a significant portion of the purchase price to be allocated to goodwill
and other intangible assets. The merger is also expected to result in a charge
against earnings for in-process research and development.
EXPENSES (PAGE 46)
Lucent and Ortel will each pay its own expenses incidental to the
preparation of the merger agreement, the carrying out of the provisions of the
merger agreement and the completion of the merger whether or not the merger is
completed, except that Lucent and Ortel 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.
8
<PAGE> 20
COMPARATIVE PER SHARE INFORMATION
We have summarized below the per common share information for each of
Lucent and Ortel on a historical basis, for Lucent on a pro forma basis and for
Ortel on a pro forma equivalent basis. On February 11, 2000, Lucent's historical
results were restated to include the results of International Network Services
and Excel Switching Corporation, which merged with Lucent in transactions that
were each accounted for as a pooling of interests. All per share data has been
restated to account for Lucent's two-for-one stock split effective on April 1,
1999. Lucent's fiscal year ends on September 30 and Ortel's fiscal year ends on
April 30.
The unaudited "pro forma Lucent" and the unaudited "pro forma
equivalent -- Ortel" information assumes that the merger of Ortel and Lucent
will be accounted for as a purchase. The unaudited "pro forma Lucent"
information is derived from the historical financial information of Lucent at or
for the three months ended December 31, 1999 and at or for the year ended
September 30, 1999, and the financial information of Ortel at or for the three
months ended January 30, 2000 and at or for the twelve months ended October 31,
1999, respectively, and assumes the merger of Lucent and Ortel occurred at the
beginning of the earliest period presented. The Ortel financial information for
the twelve months ended October 31, 1999 is derived from the historical
financial information of Ortel for the year ended April 30, 1999 less the
six-month period ended October 31, 1998 plus the six-month period ended October
31, 1999.
The unaudited "pro forma Lucent" net income includes pro forma
adjustments for the amortization of goodwill and other intangible assets. These
adjustments are based on preliminary estimates; the final amounts of these
adjustments may vary. Ortel's results for the nine-month period ended January
30, 2000 and Lucent's results for the three-month period ended December 31, 1999
may not be indicative of results for the full year.
"Pro forma Lucent" basic earnings per common share was calculated using
the weighted average number of Lucent common shares outstanding and adding the
weighted average number of Ortel common shares outstanding, assuming all
Ortel common stock was converted to Lucent common stock at the 3.1350
exchange ratio.
"Pro forma Lucent" diluted earnings per share was calculated by
dividing "pro forma Lucent" net income by the sum of the weighted average number
of "pro forma Lucent" common shares outstanding plus all additional "pro forma
Lucent" common shares that would have been outstanding if potentially dilutive
securities or common stock equivalents had been issued.
"Pro forma Lucent" book value per share was calculated by dividing the
sum of Lucent historical book value and the purchase price of Ortel (fair value
of the net assets acquired plus goodwill) by the "pro forma Lucent" common
shares outstanding during the period.
The unaudited "pro forma equivalent -- Ortel" information was
calculated by multiplying the corresponding "pro forma Lucent" data by the
3.1350 exchange ratio. This information shows how each share of Ortel common
stock would have participated in the net earnings, cash dividends and book value
of Lucent if the merger had been completed at the beginning of the
9
<PAGE> 21
earliest period presented. However, these amounts do not necessarily reflect
future per share levels of net earnings, cash dividends or book value of Lucent.
STOCKHOLDERS SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH
LUCENT'S AND ORTEL'S HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES
INCLUDED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS OR IN THE DOCUMENTS
DESCRIBED UNDER "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 63.
<TABLE>
<CAPTION>
AT OR FOR THE THREE AT OR FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
LUCENT - HISTORICAL
Basic earnings per common share $0.40 $1.54
Diluted earnings per common share 0.38 1.49
Cash dividends declared per common share 0.04 0.08
Book value per common share 5.06 4.43
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE NINE AT OR FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
JANUARY 30, 2000 APRIL 30, 1999
---------------- --------------
<S> <C> <C>
ORTEL - HISTORICAL
Basic loss per common share $(0.53) $(0.51)
Diluted loss per common share (0.53) (0.48)
Cash dividends declared per common share N/A N/A
Book value per common share 6.39 6.28
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE AT OR FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
PRO FORMA LUCENT
Basic earnings per common share $0.36 $1.38
Diluted earnings per common share 0.34 1.33
Cash dividends declared per common share 0.04 0.08
Book value per common share 5.91 5.31
</TABLE>
<TABLE>
<CAPTION>
AT OR FOR THE THREE AT OR FOR THE TWELVE
MONTHS ENDED MONTHS ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
PRO FORMA EQUIVALENT - ORTEL
Basic earnings per common share $1.13 $4.33
Diluted earnings per common share 1.07 4.17
Cash dividends declared per common share 0.13 0.25
Book value per common share 18.53 16.65
N/A - not applicable
</TABLE>
10
<PAGE> 22
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 were restated to include the results of International
Network Services and Excel Switching Corporation, which merged with Lucent in
transactions that were each accounted for as a pooling of interests.
Effective October 1, 1998, Lucent changed its method of accounting for
calculating the market-related value of plan assets used in determining the
expected return-on-asset component of annual net pension and post-retirement
benefit costs. 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 $0.41 per diluted common share, for the first fiscal quarter of
1999. This accounting change also resulted in a reduction in benefit costs in
the year ended September 30, 1999 that increased income by $427 million ($260
million after-tax, or $0.08 per basic and diluted share) as compared with the
previous accounting method.
The following selected historical financial data of Lucent at September
30, 1999 and 1998, and for each of the three years in the period ended September
30, 1999 are derived from audited historical financial statements incorporated
by reference in this proxy statement/prospectus. The selected historical
financial data of Lucent at September 30, 1997 and 1996 and December 31, 1995
and for each of the years ended September 30, 1996 and December 31, 1995, and
for the nine-month period ended September 30, 1996, is 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 three
months ended December 31, 1999 and December 31, 1998, is derived from unaudited
condensed financial statements incorporated by reference in this proxy
statement/prospectus and, in the opinion of Lucent's management, include all
necessary adjustments for a fair presentation of that data in
11
<PAGE> 23
conformity with generally accepted accounting principles. Results for the
three-month period ended December 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 63.
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE AT OR FOR THE
AT OR FOR THE THREE TWELVE NINE MONTHS TWELVE MONTHS
MONTHS MONTHS ENDED ENDED ENDED
ENDED DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
INCOME 1999 1998 1999 1998 1997 1996 1996 1995
- ------ ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT DATA:
Revenues $ 9,905 $ 9,842 $ 38,774 $ 32,108 $ 27,802 $ 24,321 $ 16,726 $ 21,770
Operating income
(loss) 1,699 1,966 5,444 2,680 1,632 (641) 747 (911)
Income (loss)
before
cumulative
effect of
accounting
change 1,250 1,236 3,481 1,065 470 (596) 388 (808)
Net income
(loss) 1,250 2,544 4,789 1,065 470 (596) 388 (808)
Basic earnings
(loss) per
common share 0.40 0.83 1.54 0.35 0.16 (0.22) 0.14 (0.33)
Diluted earnings
(loss) per
common share 0.38 0.80 1.49 0.34 0.16 (0.22) 0.14 (0.33)
Dividends
declared per
common share 0.04 0.04 0.08 0.078 0.056 0.038 0.038 --
BALANCE SHEET
DATA:
Total assets $ 38,634 $ 34,636 $ 39,250 $ 29,711 $ 25,256 $ 23,632 $ 23,632 $ 20,250
Total debt 6,504 6,176 7,038 4,649 4,208 4,003 4,003 4,023
Shareowners'
equity 16,079 10,878 13,936 7,960 4,570 3,479 3,479 1,925
</TABLE>
Dollars in millions, except for per share amounts
12
<PAGE> 24
SELECTED HISTORICAL FINANCIAL DATA--ORTEL
The following selected historical consolidated financial information of
Ortel at and for the fiscal years ended April 30, 1999, 1998 and 1997 is derived
from audited historical financial statements incorporated by reference in this
proxy statement/prospectus.
The selected historical financial data of Ortel at and for the twelve
months ended April 30, 1996 and 1995 is derived from audited financial
statements not incorporated by reference in this proxy statement/prospectus. The
selected financial data of Ortel at and for the nine-month periods ended January
30, 2000 and January 31, 1999 is derived from unaudited financial statements
incorporated by reference in this proxy statement/prospectus, which, in the
opinion of Ortel's management, includes all necessary adjustments for a fair
presentation of the data in conformity with generally accepted accounting
principles. However, results of operations for any interim period are not
necessarily indicative of results for the full year. For each of the fiscal
years ended April 30, 1999, 1998, 1997, 1996 and 1995 and for the nine months
ended January 31, 1999, Ortel has restated its financial statements for
discontinued operations.
THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH ORTEL'S
HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE
IN THIS PROXY STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON
PAGE 63.
<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
THE NINE MONTHS ENDED THE TWELVE
MONTHS ENDED
APRIL 30,
JANUARY 30, JANUARY 31,
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(Dollars in millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues 58 49 65 64 75 55 50
Operating income (loss) (4) 1 0 7 18 5 11
Income from continuing
operations (2) 1 2 7 14 4 7
Cumulative effect of
accounting change (1) - - - - - -
Loss from discontinued
operations and disposal
of discontinued
operations, net of tax (3) (7) (8) (4) (6) (2) (1)
Net income (loss) (6) (6) (6) 3 8 2 6
Income (loss) per
common share - basic:
Income (loss) from
continuing operations (0.19) 0.12 0.17 0.56 1.24 0.36 0.74
Cumulative effect of
accounting change (0.08) - - - - - -
Discontinued operations (0.26) (0.59) (0.68) (0.32) (0.51) (0.15) (0.12)
---- ---- ---- ---- ---- ---- ----
Net income (loss) per
share (0.53) (0.47) (0.51) 0.24 0.73 0.21 0.62
Income (loss) per
common share - diluted:
Income (loss) from
continuing operations (0.19) 0.12 0.16 0.51 1.13 0.33 0.65
Cumulative effect of
accounting change (0.08) - - - - - -
Discontinued operations (0.26) (0.56) (0.64) (0.29) (0.47) (0.14) (0.10)
---- ---- ---- ---- ---- ---- ----
Net income (loss) per
share (0.53) (0.44) (0.48) 0.22 0.66 0.19 0.55
Dividends declared per
common share N/A N/A N/A N/A N/A N/A N/A
BALANCE SHEET DATA:
Total assets 100 88 89 90 91 77 74
Shareowners' equity 82 76 75 79 75 66 64
N/A -- Not applicable
</TABLE>
13
<PAGE> 25
RISK FACTORS RELATING TO THE MERGER
In addition to the other information included and incorporated by
reference in this proxy statement/prospectus, Ortel stockholders should consider
carefully the matters described below in determining whether to adopt 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 Ortel common stock will be converted into the right
to receive 3.1350 shares of Lucent common stock. This exchange
ratio is fixed and will not be adjusted for any increase or
decrease in the price of Lucent common stock or Ortel common
stock. The prices of Lucent common stock and Ortel 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 Ortel, the timing of the
completion of the merger, the prospects of post-merger
operations, 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 Ortel common stock on the date of the
special meeting may not be indicative of their respective
prices on the date the merger is completed. The Ortel board of
directors urges Ortel stockholders to obtain current market
quotations for Lucent common stock and Ortel common stock.
- THE PRICE OF LUCENT COMMON STOCK MAY BE AFFECTED BY FACTORS
DIFFERENT FROM THOSE AFFECTING THE PRICE OF ORTEL COMMON
STOCK. Upon completion of the merger, holders of Ortel common
stock will become holders of Lucent common stock. Lucent's
business differs from that of Ortel, and Lucent's results of
operations, as well as the price of Lucent common stock, may
be affected by factors different from those affecting Ortel's
results of operations and the price of Ortel common stock. For
a discussion of Lucent's and Ortel'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, 1999, as amended, Lucent's Quarterly Report on
Form 10-Q for the fiscal quarter ended December 31, 1999,
Lucent's Form 8-K, filed February 11, 2000 to restate
financial results for the merger of Lucent and INS and the
merger of Lucent and Excel, Lucent's Form 8-K filed March 1,
2000 and Ortel's Annual Report on Form 10-K for the fiscal
year ended April 30, 1999, which are incorporated by reference
in this proxy statement/prospectus.
14
<PAGE> 26
THE COMPANIES
ORTEL
Ortel has been focused on developing fiber optic technology since the
founding of the company in 1980. Ortel designs, develops and manufactures
optoelectronic components used by communication system suppliers in the cable
television and telecommunications industries. Ortel's technology, expertise and
close working relationships with leading industry participants have allowed
Ortel to become a leading supplier of optoelectronic components in the cable
television industry and, more recently, have enabled Ortel to establish a
presence in the telecommunications industry. Ortel's products include laser and
photodiode chips, packaged lasers, transmitters and receivers. Ortel's products
allow Ortel's customers to provide cable system operators and telecommunication
service providers with communication systems that enable the transmission of
optical signals over longer distances, with improved signal quality and higher
bandwidth capacity.
Ortel was incorporated in April 1980 under the laws of California and
was reincorporated in October 1994 under the laws of Delaware. Additional
information regarding Ortel is contained in Ortel's filings with the Securities
and Exchange Commission. See "Where You Can Find More Information" on page 63.
LUCENT
Lucent is one of the world's leading designers, developers and
manufacturers of communications systems, software and products. Lucent is a
global leader in the sale of public and private communications systems,
supplying systems and software to most of the world's largest network operators
and service providers. 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's research and development activities are conducted 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 63.
RECENT DEVELOPMENTS
On March 1, 2000, Lucent announced a plan to spin off its PBX,
SYSTIMAX(R) structured cabling and LAN-based data businesses to its
stockholders, forming a separate company that will focus directly and
independently on the enterprise networking market. The spin-off is expected to
be accomplished through a tax-free distribution of shares to Lucent's
stockholders to be completed by the close of Lucent's fourth fiscal quarter of
2000, which ends on September 30. The new enterprise business will have
approximately 34,000 employees worldwide and will operate independently from
Lucent with its own brand, board of directors, management and research and
development organizations. For additional information, please see Lucent's
current report on Form 8-K filed March 1, 2000.
MATERIAL CONTRACTS BETWEEN LUCENT AND ORTEL
On December 9, 1999, Ortel and Lucent entered into a commercial
agreement. Under the terms of the agreement, Ortel will provide fully-qualified
uncooled 980 nanometer pump laser chips to Lucent's Microelectronics Group for
use in its Erbium doped fiber amplifier modules.
15
<PAGE> 27
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to stockholders of
Ortel as part of the solicitation of proxies by the Ortel board of directors for
use at the special meeting.
DATE, TIME AND PLACE
The special meeting will be held at ,
at a.m., local time, on , 2000.
PURPOSE OF SPECIAL MEETING
At the special meeting, holders of Ortel common stock will be asked to
adopt the merger agreement. The Ortel board of directors has determined that the
merger is advisable and fair to, and in the best interests of, Ortel
stockholders, has unanimously approved the merger agreement and the merger, and
unanimously recommends that Ortel stockholders vote "FOR" adoption of the merger
agreement.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of Ortel common stock at the close of business
on , 2000, the record date, are entitled to notice of and to vote at the
special meeting. On the record date, shares of Ortel common stock were
issued and outstanding and held by approximately holders of record. A
quorum is present at the special meeting for purposes of the vote of the holders
of Ortel common stock if a majority of the shares of Ortel common stock which
are issued and outstanding and entitled to vote on the record date are
represented in person or by proxy. Shares of Ortel common stock represented at
the special meeting but not voting, including abstentions and broker non-votes,
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. If 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 Ortel common stock on the record date are entitled to one vote per share of
common stock at the special meeting.
VOTES REQUIRED
The affirmative vote of a majority of the shares of Ortel common stock
is required to adopt the merger agreement. IF YOU ABSTAIN FROM VOTING OR DO NOT
VOTE, EITHER IN PERSON OR BY PROXY, IT WILL HAVE THE EFFECT OF A VOTE AGAINST
ADOPTION OF THE MERGER AGREEMENT.
VOTING AGREEMENT
On February 7, 2000, Sumitomo Osaka Cement entered into a voting
agreement with Lucent pursuant to which it has agreed to vote the Ortel common
stock it owns "FOR" adoption of the merger agreement. The voting agreement is
attached as Annex D. On the record date, Sumitomo Osaka Cement owned and was
entitled to vote approximately % of the outstanding shares of Ortel common
stock.
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<PAGE> 28
On the record date, directors and executive officers of Ortel
beneficially owned approximately % of the outstanding shares of Ortel common
stock. Each of the directors and executive officers of Ortel has advised Ortel
that he intends to vote all shares of Ortel common stock over which he has or
shares voting control "FOR" adoption 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" ADOPTION OF THE MERGER AGREEMENT.
Only shares voted for adoption of the merger agreement, including
properly executed proxies that do not contain voting instructions, will be
counted as favorable votes for the merger agreement. If you abstain from voting
or do not vote, either in person or by proxy, it will count as a vote against
adoption of the merger agreement. Brokers who hold shares of Ortel common stock
in street name for customers who are the beneficial owners of such shares may
not give a proxy to vote those customers' shares in the absence of specific
instructions from those customers. Those non-voted shares are referred to as
broker non-votes and count as votes against adoption of the merger agreement.
Ortel does not expect that any matter other than the proposal to adopt
the merger agreement will be brought before the special meeting. If, however,
the Ortel board of directors properly presents other matters, the persons named
as proxies will vote on those other matters in accordance with their judgment.
In addition, the persons named as proxies may propose and vote for one or more
adjournments or postponements of the special meeting, including adjournments or
postponements to permit further solicitation of proxies. No proxy voted against
the proposal to adopt the merger agreement will be voted in favor of any
adjournment or postponement.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form of proxy does not preclude
you from voting in person at the special meeting. You may revoke a proxy at any
time prior to its exercise by:
- filing with the secretary of Ortel, before the proxy is voted
at the special meeting, a duly executed written notice of
revocation of proxy which is dated later than the proxy
- before the proxy is voted at the special meeting, submitting a
duly executed later dated proxy to the secretary of Ortel or
- voting in person at the special meeting, although attendance
at the special meeting will not itself constitute revocation
of a proxy.
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<PAGE> 29
Any written notice of revocation or subsequent proxy should be sent to
Ortel Corporation, 2015 West Chestnut Street, Alhambra, California 91803,
Attention: Secretary, or hand delivered to the Secretary of Ortel at or before
the taking of the vote at the special meeting.
SOLICITATION OF PROXIES
Ortel will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by mail, the directors, officers and
employees of Ortel and its subsidiaries may solicit proxies from stockholders by
telephone or other electronic means or in person. Ortel has retained the
services of MacKenzie Partners to assist in the solicitation of proxies by
Ortel. Ortel will pay $6,000, plus reimbursement of some out-of-pocket expenses,
to MacKenzie Partners for its services. Ortel 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. Ortel will
reimburse any of these custodians, nominees and fiduciaries for their reasonable
out-of-pocket expenses in doing so.
PLEASE DO NOT SEND STOCK CERTIFICATES WITH YOUR PROXY. A transmittal
form with instructions for the exchange of Ortel common stock certificates will
be mailed to you as soon as practicable after completion of the merger.
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<PAGE> 30
THE MERGER
The following discussion summarizes the material terms of the merger,
the merger agreement and the stock option agreement. We urge stockholders 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
At the meeting of the Ortel board of directors in September 1999 and
again in December 1999, the board discussed the ongoing consolidation in the
optoelectronic components industry and the risks and opportunities that such
consolidation presented for Ortel. The board discussed the benefits and risks of
remaining independent in a consolidating industry and the risks and benefits of
combining with a strategic partner. While, from time to time, Ortel had received
inquiries of interest from various companies about possible business
combinations, none of the inquiries had ever resulted in substantive
discussions.
On December 9, 1999, Lucent and Ortel entered into a commercial
agreement pursuant to which Ortel agreed to supply Lucent with components for
incorporation into one of Lucent's products. In connection with the negotiation
of the commercial agreement, the management of the two companies discussed other
potential business opportunities.
In late December 1999, Lucent management began considering a possible
business combination with Ortel.
On January 5, 2000, a meeting was held among Terence Bentley, Director
- -- Corporate Development, Michael Bond, Business Development Vice President,
Ettore J. Coringrato, Manager of Optoelectronics, Microelectronics and
Communications Technologies, Daniel A. DiLeo, President of Optoelectronics,
Microelectronics and Communications Technologies, all of Lucent, and Stephen R.
Rizzone, Chairman of the Ortel board of directors, President and Chief Executive
Officer, George B. Holmes, Vice President -- Worldwide Sales and Jeffrey S.
Rittichier, Vice President -- Marketing, all of Ortel, to discuss a possible
business combination between the two companies.
From January 7 through January 17, 2000, in a series of telephone
conferences, Mr. Bentley and Mr. Rizzone continued to discuss a possible
combination between the two companies, including a process for the exchange of
information about each company and the receipt of necessary internal approvals.
On January 10, 2000, Lucent and Ortel entered into a confidentiality agreement
for the exchange of information which contained customary terms and conditions.
At a telephonic meeting of the Ortel board of directors on January 10,
2000, Mr. Rizzone informed the board of his conversations with the
representatives of Lucent as well as of his discussions with the representatives
of another company which had indicated an interest in a business combination
with Ortel. The board discussed in general the merits of a business combination
given the current business environment. The board also discussed whether it was
in
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<PAGE> 31
the best interests of Ortel for management to divert any of its attention from
executing Ortel's strategic plan to pursue discussions with Lucent or any other
company. After discussion, the board determined that it would be in Ortel's best
interests for management to continue its current discussions regarding the two
possible business combinations. In addition, the board authorized management to
engage SoundView Technology Group, Inc. as a financial advisor to Ortel (a) to
solicit indications of interest in a possible business combination from selected
other companies and (b) to assist Ortel in the current and any resulting
discussions or negotiations.
Based in part on conversations with SoundView and earlier contacts he
had with other companies, on January 12, 2000, Mr. Rizzone traveled to northern
California for separate meetings with executives of three companies which had
indicated they potentially would be interested in a business combination with
Ortel. Later in the week, representatives of two of these companies contacted
Mr. Rizzone and indicated that they had no current interest in pursuing a
business combination. Representatives of the third company, which Ortel had
previously had conversations with, exchanged information with and continued
discussions with Ortel until early February when that company indicated that it
was not willing to pursue a business combination on terms that Ortel believed
were at least comparable to those being negotiated with Lucent.
On January 13, 2000, Ortel formally retained SoundView to provide
financial advisory services in connection with Ortel's interest in pursuing a
business combination.
From January 18 through January 21, 2000, Mr. Bentley discussed with
Mr. Rizzone and Roger Hay, Vice President -- Finance and Chief Financial Officer
of Ortel, the exchange of information between the two companies.
On January 19, 2000, Lucent obtained preliminary approval from the
office of the Chief Executive Officer to continue discussions with Ortel.
On January 20, 2000, Mr. Rizzone, Mr. Hay, Mr. Bentley and Mr. Bond had
a telephonic meeting. During the meeting, Mr. Bentley and Mr. Bond informed Mr.
Rizzone and Mr. Hay of Lucent's further interest in pursuing a business
combination of the two companies. During the discussion, Lucent proposed various
principal terms of such a transaction, including:
- Lucent's requirement that any transaction be an "at market"
transaction
- the anticipation that the transaction would be treated as a
tax-free reorganization
- Lucent's preference that the transaction be accounted for as a
purchase and
- Ortel's granting of a stock option to Lucent to acquire an
amount of Ortel common stock equal to 19.9% of the outstanding
common stock.
On January 21, 2000, the Ortel board of directors held a telephonic
meeting at which Mr. Rizzone reviewed the progress of discussions since the
previous telephonic board meeting. After
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<PAGE> 32
discussion, the board authorized Ortel management to continue pursuing
discussions of a business combination with Lucent and to provide Lucent with
more detailed information about Ortel.
From January 24 through January 28, 2000, Mr. Bentley and Mr. Rizzone
discussed certain material terms of a possible business combination, including
the vesting of stock options held by senior management, certain compensation
payable to Mr. Rizzone upon completion of the business combination and certain
non-competition and non-disclosure agreements for certain Ortel officers.
On January 25 and 26, 2000, representatives of Lucent, including
Lucent's financial and legal advisors, conducted due diligence at the offices of
Latham & Watkins, counsel to Ortel, in Costa Mesa, California regarding the
businesses and operations of Ortel.
On January 25, 2000, the Ortel board of directors held a telephonic
meeting to discuss the status of the ongoing discussions. During the meeting,
Mr. Rizzone updated the board concerning the due diligence process and the
discussions that Ortel management had had with Lucent regarding the principal
terms of a transaction.
On January 27, 2000, Mr. Bentley and Mr. Hay discussed certain
accounting and financial information relating to Lucent and Ortel.
On January 29, 2000, representatives of Lucent and Ortel discussed the
terms of the proposed transaction and the findings from the due diligence
conducted by Lucent.
On January 31, 2000, the Ortel board of directors held another
telephonic meeting to discuss the status of the ongoing discussions. Mr. Rizzone
informed the board that Lucent had reiterated its interest in pursuing a
transaction at the market value of Ortel common stock, as Lucent management
indicated that it considered the current market price of Ortel common stock to
already reflect a premium. Paul Mejean of SoundView indicated to the board that
he believed that Lucent would submit a final proposal by the end of the week.
Mr. Bond and Mr. Bentley of Lucent, Mr. Rizzone of Ortel and Mr. Mejean
of SoundView held numerous telephone conferences from January 31 through
February 5, 2000 to discuss the terms and conditions of a possible business
combination. On January 31, 2000, Lucent's legal advisors submitted a proposed
merger agreement to Ortel's legal counsel. From January 31 through February 6,
2000, Ortel management and their financial and legal advisors conducted due
diligence concerning Lucent.
On February 2, 2000, the Ortel board of directors held a special
meeting in Pasadena, California. During the meeting, Mr. Rizzone described the
offer to acquire Ortel submitted by Lucent and Ortel's legal counsel described
the status of the negotiation of the merger agreement. The offer reflected
Lucent's intention to pursue an "at market" transaction. After much discussion,
the board authorized management to continue negotiations but directed that the
terms on which the board could accept an "at market" offer would have to be
consistent with the exercise of its fiduciary duties to Ortel stockholders.
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<PAGE> 33
On February 4, 2000, the Ortel board of directors again held a
telephonic meeting to discuss the potential transaction with Lucent. At the
meeting, Mr. Rizzone updated the board concerning the negotiations with Lucent.
Ortel's legal counsel reported on the negotiation of the proposed merger
agreement.
From February 4 through February 6, 2000, representatives of Lucent and
Ortel, together with their financial and legal advisors, held numerous
conference calls to discuss and negotiate the terms and conditions of the merger
agreement, the stock option agreement and other transaction related documents.
On February 6, 2000 the Ortel board of directors held a special
meeting in Pasadena, California to discuss the final terms of Lucent's proposal
to acquire Ortel. Prior to the meeting, each board member received a draft copy
of the proposed merger agreement and certain publicly available financial
information about Lucent and the proposed merger. At the meeting, Ortel
management and legal and financial advisors of Ortel reviewed with the board:
- the strategic rationale for, and financial analyses relating
to, the proposed merger
- the potential benefits and risks of the transaction with
Lucent and
- the principal terms of the merger agreement and related
documents.
In addition, at the meeting SoundView provided its opinion that the
exchange ratio was fair, from a financial point of view, to the Ortel
stockholders. Following lengthy discussion, the Ortel board of directors
determined that the proposed merger was advisable and unanimously approved the
merger agreement and stock option agreement, and unanimously resolved to
recommend that the Ortel stockholders adopt the merger agreement.
On the morning of February 7, 2000, the Lucent board of directors met
by telephone conference call to consider the terms of the merger and the
definitive agreements, and, after deliberation, approved the merger agreement
and the stock option agreement with Ortel and the voting agreement with Sumitomo
Osaka Cement.
The merger agreement, the stock option agreement, the voting agreement
between Lucent and Sumitomo Osaka Cement, and the letter agreement between
Lucent and Ortel regarding senior management were signed by the parties on the
morning of February 7, 2000, and prior to the commencement of trading, Lucent
and Ortel issued a joint press release announcing the execution of the merger
agreement.
REASONS FOR THE MERGER
In reaching its decision to approve the merger agreement and the merger
and to recommend adoption of the merger agreement by Ortel stockholders, the
Ortel board of directors consulted with Ortel management, as well as its
financial and legal advisors, and independently considered the proposed merger
agreement and the transactions contemplated by the merger agreement. In
unanimously approving the merger agreement and the merger, the Ortel board of
directors considered a number of factors, including all the following:
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<PAGE> 34
- current industry, market and economic conditions
- the ongoing consolidation in the telecommunications equipment
sector generally
- the belief that a business combination with Lucent presents
improved business prospects as compared to remaining
independent
- the potential to expand Ortel's international presence and to
accelerate the development of relationships with communication
system suppliers in the data communications and
telecommunications industries through Lucent's established
relationships, sales and marketing resources and distribution
channels
- the potential to accelerate the development of Ortel's
products in the future and to offer its customers more
complete end-to-end solutions by leveraging Lucent's
technology, expertise and products
- the ability to expand Ortel's sales and marketing
infrastructure by leveraging Lucent's extensive sales and
marketing resources, which Ortel management believes will
provide Ortel with opportunities to develop relationships with
additional communication system suppliers
- the ability to expand Ortel's customer base and reduce Ortel's
reliance upon key customers
- the complementary nature of Ortel's and Lucent's product
offerings across a range of products
- Ortel's business, assets, management, competitive position,
operating performance, trading performance and prospects,
including Ortel's prospects if Ortel were to continue as an
independent company
- Lucent's business, financial conditions, results of
operations, assets, management, competitive position,
operating performance, trading performance and prospects and
- Lucent's financial condition after the transaction, including
its market capitalization, revenues, profits and earnings per
share.
In the course of deliberations, the Ortel board of directors also
considered a number of additional factors relevant to the merger, including:
- the possibility of strategic alternatives to the merger for
enhancing long-term stockholder value, including soliciting
offers from other companies
- the exchange ratio
- the market price of Ortel common stock over the last several
years and the potential for an increase and decrease in the
market price of Ortel common stock in the future
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<PAGE> 35
- the market price of Lucent common stock over the last several
years and the anticipated relative stability of Lucent common
stock
- the potential for improved trading liquidity for Ortel
stockholders
- the opinion of SoundView that, as of the date of the merger
agreement and subject to the considerations set forth in the
opinion, the exchange ratio is fair to Ortel stockholders from
a financial point of view
- the terms and conditions of the merger agreement, including
termination fees, the grant of a stock option to Lucent and
closing conditions
- the expected qualification of the merger as a tax-free
reorganization under Section 368(a) of the Internal Revenue
Code
- the transaction being accounted for as a purchase rather than
as a pooling of interests which will result in Lucent
incurring substantial charges to earnings over the next
several years
- the impact of the merger on Ortel's customers, suppliers and
employees
- the likelihood of the merger being approved by the appropriate
regulatory authorities
- the likelihood that the merger would be completed and
- the effect of the public announcement of the merger on the
market price of Ortel common stock and Lucent common stock.
The Ortel board of directors also identified and considered a number of
potentially negative factors in its deliberations concerning the merger,
including:
- the risk that, despite Ortel's and Lucent's efforts after the
merger, the combined company may lose key personnel
- the risk that a significant number of Ortel's customers and
suppliers might cease doing business with Ortel after the
merger
- the difficulty of managing operations in the different
geographic locations in which Ortel and Lucent operate and
- the risk that the potential benefits of the merger might not
be fully realized.
The Ortel board of directors determined that these risks were unlikely
to occur, that Ortel and Lucent could avoid or mitigate these and other risks,
and that, overall, these risks were outweighed by the potential benefits of the
merger.
The above discussion of the factors considered by the Ortel board of
directors in making its decision is not intended to be exhaustive. In view of
the variety of factors considered in
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<PAGE> 36
connection with its evaluation of the merger agreement and the merger, the Ortel
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 Ortel board of
directors may have given different weight to different factors.
RECOMMENDATION OF THE ORTEL BOARD OF DIRECTORS
After careful consideration, the Ortel board of directors unanimously
determined that the terms of the merger agreement and the merger are advisable
and fair to, and in the best interests of, Ortel and its stockholders and has
unanimously approved the merger agreement and the merger. The Ortel board of
directors unanimously recommends that the Ortel stockholders vote "FOR" the
adoption of the merger agreement.
FAIRNESS OPINION OF SOUNDVIEW TECHNOLOGY GROUP, INC.
SoundView Technology Group, Inc. was retained by the Ortel board of
directors to render an opinion as to whether the exchange ratio is fair, from a
financial point of view, to the holders of the outstanding shares of Ortel
common stock.
At a meeting of the Ortel board of directors on February 6, 2000,
SoundView delivered its written opinion to the Ortel board of directors to the
effect that, as of such date, based upon the facts and circumstances as they
existed at that time, and subject to certain assumptions made, matters
considered and limits of review set forth therein, the exchange ratio was fair,
from a financial point of view, to the holders of the outstanding shares of
Ortel common stock.
The full text of the written opinion of SoundView, dated February 6,
2000, including, among other things, the assumptions made, matters considered,
and the scope and limitations of the review undertaken and procedures followed
by SoundView in rendering its opinion, is included in Annex C to this proxy
statement/prospectus and is incorporated herein by reference. The summary of the
opinion of SoundView set forth below does not purport to be a complete
description of the analysis performed by SoundView in connection with rendering
the opinion and is qualified in its entirety by reference to the full text of
the opinion. Ortel stockholders are urged to read carefully the written opinion
of SoundView in its entirety.
SoundView's opinion is directed only to the fairness of the exchange
ratio, from a financial point of view, to the holders of the outstanding shares
of Ortel common stock. SoundView's opinion was expressly intended for the
benefit and use of the Ortel board of directors in its consideration of the
merger and is not intended to be and does not constitute a recommendation to the
Ortel board of directors or any Ortel stockholder as to how such stockholder
should vote with respect to the proposed merger.
In connection with rendering its opinion, SoundView, among other
things:
- reviewed the draft merger agreement and the specific terms of
the merger set forth therein, and assumed that the merger
agreement would not vary in any regard that is material to
SoundView's analysis
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<PAGE> 37
- reviewed Ortel's financial and operating information for the
three-year period ended April 30, 1999 and the six-month
period ended October 31, 1999
- reviewed Lucent's financial and operating information for the
three-year period ended December 31, 1999
- reviewed certain financial and operating information regarding
the businesses, operations and prospects of Ortel, including
forecasts and projections, provided to SoundView by Ortel
management
- reviewed certain financial and operating information regarding
the businesses, operations and prospects of Lucent, including
forecasts and projections, published and disseminated by stock
market research analysts who follow Lucent (internal financial
forecasts and projections prepared by Lucent were not made
available for SoundView's review)
- reviewed certain publicly available financial information
concerning certain other companies SoundView deemed to be
reasonably similar to Ortel and Lucent and the trading markets
for these companies' securities
- reviewed the financial terms of the merger and compared them
with the financial terms, to the extent publicly available, of
certain recent mergers and acquisitions that SoundView deemed
relevant and
- performed such other analyses, examinations and procedures,
reviewed such other agreements and documents, and considered
such other factors as SoundView deemed, in its sole judgment,
to be necessary, appropriate or relevant to render its
opinion.
SoundView also took into account its assessment of general economic,
market and financial conditions and its experience in similar transactions, as
well as its experience in securities valuation in general. SoundView's opinion
is necessarily based on economic, market, financial and other conditions as in
effect on, and the information available to it as of February 6, 2000.
Subsequent developments may affect SoundView's opinion, and SoundView does not
have any obligation to update, revise or reaffirm its opinion.
In arriving at its opinion, SoundView did not make, obtain or assume
any responsibility for any independent evaluation or appraisal of the properties
and facilities or of the assets and liabilities (contingent or otherwise) of
either Ortel or Lucent. SoundView relied upon the accuracy and completeness of
the financial and other information supplied to or otherwise used by it in
arriving at its opinion, and did not attempt independently to verify, or
undertake any obligation to verify, such information. SoundView also relied upon
the assurances of the management of Ortel that it was not aware of any facts
that would make such information inaccurate or misleading. In addition SoundView
assumed that the forecasts and projections provided to it by Ortel represented
the best currently available estimates and judgments of Ortel's management as to
the future financial condition and results of operations of Ortel and assumed
that such forecasts and projections were reasonably prepared based on such
currently
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available estimates and judgments. SoundView assumed no responsibility for and
expressed no view as to such forecasts and projections or the assumptions on
which they were based.
SoundView did not express any view as to the price at which Lucent
common stock will trade prior to or subsequent to the closing of the merger. Its
opinion did not constitute a recommendation of the merger over any other
alternative transactions which may have been available to Ortel and did not
address the underlying business decision of the Ortel board of directors to
proceed with or effect the merger.
In accordance with customary investment banking practice, SoundView
employed generally accepted valuation methods in reaching its opinion. The
following is a summary of the material financial analyses utilized by SoundView
in connection with rendering its opinion.
COMPARABLE PUBLICLY TRADED COMPANIES ANALYSES
ORTEL. Using publicly available information, SoundView compared certain
financial, market and operating information of selected publicly traded
photonic component manufacturers that were, in SoundView's judgment,
similar to Ortel. The companies analyzed by SoundView in connection with this
analysis were:
- Finisar Corporation
- Harmonic, Inc.
- JDS Uniphase Corporation and
- SDL, Inc.
For each of the selected companies, SoundView calculated a multiple of
market capitalization to projected calendar 2000 and 2001 revenues. SoundView
also calculated the 2000 and 2001 revenue growth rate for each of the selected
companies. The results of this analysis were as follows:
<TABLE>
<CAPTION>
Ortel Comparable Companies
Ortel(1) Low Mean Median High
------ --- ---- ------ ----
<S> <C> <C> <C> <C> <C>
Market Capitalization / 2000 Revenue (Projected) 23.9 x 13.6 x 31.9 x 34.0 x 46.0 x
2000 Revenue Growth Rate 48.0% 45.7% 66.5% 61.2% 97.7%
Market Capitalization / 2001 Revenue (Projected) 16.0 x 10.9 x 21.7 x 22.8 x 30.3 x
2001 Revenue Growth Rate 49.4% 24.8% 43.8% 48.8% 53.0%
</TABLE>
(1) Market capitalization computed based on closing prices of the applicable
companies' common stock on February 4, 2000.
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<PAGE> 39
LUCENT. Using publicly available information, SoundView analyzed
certain financial, market and operating information of selected publicly traded
telecommunications companies that were, in SoundView's judgment, similar to
Lucent. The companies analyzed by SoundView in connection with this analysis
were:
- - Alcatel
- - Ciena Corporation
- - Cisco Systems, Inc.
- - Nortel Networks Corporation and
- - Tellabs, Inc.
For each of the selected companies, SoundView calculated a multiple of
market capitalization to projected calendar 2000 and 2001 revenues. The results
of this analysis were as follows:
<TABLE>
<CAPTION>
Lucent Comparable Companies
---------------------------
Lucent(1) Low Mean Median High
------- --- ---- ------ ----
<S> <C> <C> <C> <C> <C>
Market Capitalization / 2000 Revenue (Projected) (2) 4.1 x 1.8 x 10.0 x 8.0 x 20.1 x
Market Capitalization / 2001 Revenue (Projected) (2) 3.4 x 1.8 x 7.9 x 7.5 x 14.7 x
</TABLE>
(1) Revenues are for the calendar years ended December 31.
(2) Market capitalization computed based on closing prices of the applicable
companies' common stock on February 4, 2000.
COMPARABLE TRANSACTIONS ANALYSIS
Using publicly available information, SoundView analyzed the purchase
prices and multiples paid in seven selected merger and acquisition transactions
announced between January 28, 1999 and January 17, 2000 involving photonic
component manufacturers that, in SoundView's judgment, were generally comparable
to the business of Ortel. The transactions analyzed by SoundView in connection
with this analysis were:
Acquiror Target
JDS Uniphase Corporation E-TEK Dynamics, Inc.
Corning Incorporated Oak Industries Inc.
JDS Uniphase Corporation Optical Coating Laboratory, Inc.
SDL, Inc. IOC International plc
Uniphase Corporation JDS Fitel Inc.
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<PAGE> 40
For each of the target companies in the selected transactions,
SoundView calculated a multiple of equity value to last twelve months, or LTM,
revenue and LTM net income, respectively, and a multiple of equity value to
one-year forward revenues and net income, respectively, as of the date the
transaction was announced. The results of this analysis were as follows:
<TABLE>
<CAPTION>
Comparable Transactions
-----------------------
Ortel Low Mean Median High
----- --- ---- ------ ----
<S> <C> <C> <C> <C> <C>
Equity Value (1) / LTM Revenue 35.4 x 3.5 x 18.3 x 8.3 x 63.9 x
Equity Value (1) / LTM Net Income NM 38.8 x 141.6 x 91.6 x 344.5 x
Equity Value (1) / One-Year Revenue (2) 23.9 x 2.9 x 13.0 x 5.9 x 37.4 x
Equity Value (1) / One-Year Net Income (3) 338.8 x 27.5 x 102.1 x 56.5 x 267.8 x
</TABLE>
(1) Equity value for this transaction was computed based on the closing price
of Ortel common stock on February 4, 2000 and the average price of Lucent
common stock during the three-trading day period preceding February 4,
2000. Equity value for each of the comparable transactions was computed
based on the price per share consideration paid in the applicable
transaction and the applicable target company's outstanding number of
fully-diluted shares at the announcement date calculated using the
treasury stock method.
(2) Equity value divided by projected revenue for the one-year period after
the applicable announcement date.
(3) Equity value divided by projected net income for the one-year period after
the applicable announcement date.
SoundView noted that no company or transaction used in the
foregoing analysis is directly comparable to Ortel or the merger. SoundView also
noted that none of these transactions took place under market conditions or
competitive conditions or circumstances that, as of the date of SoundView's
opinion, were directly comparable to the merger. Accordingly, SoundView did not
rely solely on the mathematical results of the analysis, but also made
qualitative judgments concerning the differences in financial and operating
characteristics of these companies and transactions and other factors and issues
that could affect the value of the companies or transactions to which Ortel or
the merger are being compared.
CONTRIBUTION ANALYSIS
SoundView analyzed Ortel's contribution to the projected operating
performance of Lucent. SoundView calculated the percentage of Ortel's
contribution to Lucent's pro forma projected 2000 and 2001 revenue, operating
income and net income, respectively. The results of this analysis were as
follows:
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<TABLE>
<CAPTION>
Pro Forma Calendar Year 2000E Pro Forma Calendar Year 2001E
----------------------------- -----------------------------
Operating Net Operating Net
Revenue Income Income Revenue Income Income
------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Ortel Contribution 0.2% 0.1% 0.2% 0.3% 0.3% 0.3%
</TABLE>
Based on the exchange ratio and the number of outstanding
shares of Lucent common stock on a fully-diluted basis as of February 4, 2000,
the holders of the shares of Ortel common stock will, upon consummation of the
merger, own approximately 1.4% of the outstanding shares of Lucent common stock
on a fully-diluted basis giving effect to the merger.
IMPLIED EXCHANGE RATIO ANALYSIS
SoundView calculated implied exchange ratios using an implied market
capitalization of Ortel. SoundView applied the multiples of projected 2000
revenue and net income, respectively, from the comparable transactions analysis
to Ortel's projected 2000 revenue and net income. SoundView also applied the
multiples of projected 2000 revenue and net income, respectively, from the
comparable companies analysis for Ortel. SoundView then adjusted the multiples
of projected 2000 revenue and net income, respectively, from the comparable
companies analysis for Ortel's 2000 revenue growth rate. SoundView calculated a
range of implied exchange ratios based on the average closing price of Lucent
common stock during the three trading days preceding February 4, 2000. Based on
calendar 2000 revenue multiples, the analysis implied an exchange ratio range of
1.67 to 4.11. Based on calendar 2000 net income multiples, the analysis implied
an exchange ratio range of 0.93 to 2.07.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. While the
foregoing summary describes all material analyses and factors considered by
SoundView in rendering its opinion, the summary does not purport to be a
complete description of SoundView's analyses. SoundView believes that its
analyses and summaries should be considered as a whole, and that selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying SoundView's opinion. In arriving at its fairness determination,
SoundView considered the results of all of its analyses as a whole and did not
attribute particular weight to any analysis or factor. As noted above, no
company or transaction used in any of the foregoing analyses as a comparison is
directly comparable to Ortel or Lucent or the contemplated transaction.
These analyses were prepared solely for purposes of SoundView's
providing its opinion to the Ortel board of directors as to the fairness from a
financial point of view of the exchange ratio to the holders of the outstanding
shares of Ortel common stock and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of Ortel, Lucent, SoundView nor
any other person assumes responsibility if future results are materially
different
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<PAGE> 42
from those forecast. As described above, SoundView's opinion to the Ortel board
of directors was one of many factors taken into consideration by the board of
directors of Ortel in making its determination to approve the merger agreement.
SoundView is a nationally recognized investment banking firm. As part
of its investment banking services, SoundView is frequently engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of securities, private placements and valuations for corporate and
other purposes. SoundView was retained by the Ortel board of directors to act as
its financial advisor in connection with the merger based upon SoundView's
experience as a financial advisor in mergers and acquisitions, as well as
SoundView's familiarity with the photonic component and telecommunications
industries.
Except as described above, SoundView has not rendered material
financial advisory or investment banking services to Ortel or to Lucent during
the last three years. In the ordinary course of its business, SoundView may
actively trade the securities of Lucent or Ortel for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or short
position in such securities.
Pursuant to a letter agreement dated January 13, 2000, as amended,
Ortel engaged SoundView to render its opinion in connection with the merger.
Pursuant to the terms of the letter agreement, Ortel has agreed to pay SoundView
a fee equal to $3 million. Ortel has also agreed to reimburse SoundView for its
reasonable out-of-pocket expenses, including the fees and disbursements of its
counsel, and to indemnify SoundView against certain liabilities, including
liabilities under the federal securities laws. The Securities and Exchange
Commission has taken the position that such indemnification under the federal
securities laws may not be enforceable if it is found to be against public
policy.
INTERESTS OF ORTEL'S DIRECTORS AND MANAGEMENT IN THE MERGER
In considering the recommendation of the Ortel board of directors in
favor of the merger, you should be aware that certain directors and executive
officers of Ortel have interests in the merger that are different from, or in
addition to, the interests of Ortel stockholders. These interests relate to or
arise from, among other things:
- the continued indemnification of current directors and officers of
Ortel pursuant to the merger agreement
- the retention of certain officers of Ortel as employees or
consultants of Lucent
- directors and employees with stock options to acquire Ortel common
stock will have these options converted to stock options to
acquire Lucent common stock pursuant to the merger agreement and
options held by Ortel's directors and certain executive officers
will become or under certain circumstances may become fully vested
as a result of the merger
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<PAGE> 43
- certain officers are parties to employment agreements that provide
for severance payments and the acceleration of stock options if
they are terminated by Ortel or resign for "good reason"
(including a substantial reduction in responsibilities) following
a "change in control," such as the merger, and
- a letter agreement among Ortel, Lucent and Stephen R. Rizzone
relating to special payments to Mr. Rizzone and other Ortel
employees upon completion of the merger.
These interests are described below, and except as described below
those persons have, to the knowledge of Lucent and Ortel, no material interest
in the merger apart from those of stockholders generally. The Ortel board of
directors was aware of, and considered the interests of, its directors and
executive officers in approving the merger agreement and the merger.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that all rights of indemnification from
liabilities existing in favor of the current and former directors or officers of
Ortel and its subsidiaries as provided in Ortel's respective certificate of
incorporation and by-laws and certain indemnification agreements of Ortel 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 Ortel's directors' and officers' liability insurance policy, on terms no less
advantageous 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 Ortel for its existing insurance coverage. If
Lucent cannot maintain the existing or equivalent insurance coverage without
exceeding the 200% cap, Lucent is required to maintain only that amount of
insurance coverage which can be obtained by paying an annual premium equal to
the 200% cap.
ORTEL EXECUTIVE OFFICERS
Most of Ortel's current executive officers are expected to be retained
as employees of or consultants to Lucent after the merger.
The merger agreement provides that all stock options to acquire Ortel
common stock will be assumed by Lucent. As a result, each stock option to
acquire Ortel common stock held by Ortel's directors and executive officers will
be converted to a stock option to acquire Lucent common stock. In addition, each
of the stock options held by Ortel's directors, including Mr. Rizzone, will
become fully vested and exercisable upon completion of the merger. In the
aggregate, options covering shares of Ortel common stock held by Ortel's
directors and executive officers will become fully vested and exercisable as a
result of the merger. In addition, the stock options held by some of Ortel's
other officers will also become fully vested and exercisable under certain
circumstances as a result of the merger as set forth in agreements they have
with Ortel.
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<PAGE> 44
Some of Ortel's executive officers may also be entitled to severance
payments if they are terminated by Ortel or resign for "good reason" following a
"change in control," such as 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 Ortel
after the merger that are the same as those made generally available to
non-represented employees of Lucent hired after December 31, 1999. These
benefits will be made available as soon as practicable after the merger. Until
these benefits are made available, Lucent has agreed that it will provide the
same benefits that were provided to employees of Ortel on February 7, 2000.
With respect to each Lucent benefit in which Ortel employees
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 Ortel will be treated as service with
Lucent. This service will also apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
pre-existing condition limitations. Each Lucent benefit plan will waive
pre-existing condition limitations to the extent waived under the applicable
Ortel benefit plan. Ortel's employees will receive credit under each Lucent
benefit plan for amounts paid under a corresponding Ortel benefit plan during
the same benefit period for purposes of applying deductibles, co-payments and
out-of-pocket maximums.
SPECIAL PAYMENTS
Ortel has agreed to pay Mr. Rizzone up to $15 million if the merger is
completed. Of this amount, Ortel will pay up to $9 million to Mr. Rizzone upon
completion of the merger as consideration for Mr. Rizzone entering into a
non-competition and non-disclosure agreement having a term of five years and $6
million pursuant to an agreement having a term of three years related to Mr.
Rizzone's continued employment with Lucent and, if such employment is
terminated, for Mr. Rizzone's consulting services.
In addition, Ortel has agreed to pay an aggregate of $4.5 million upon
the completion of the merger to employees of Ortel designated by Mr. Rizzone.
Ortel management anticipates entering into separate letter agreements with some
of these employees before the closing of the merger. The letter agreement also
provides that in the event Nadav Bar-Chaim, Hank Blauvelt, Sandra Caraveo, John
Dessel, George Holmes, George Pontiakos, Jeff Rittichier or Jeff Schlageter
(each of whom is currently an officer of Ortel) are terminated by Ortel other
than for cause within one year of the completion of the merger, all unvested
options held by the terminated employee at that time will become fully
exercisable.
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<PAGE> 45
STOCK OPTIONS
Under the merger agreement, at the effective time of the merger, Lucent
will assume each stock option plan of Ortel and all stock options and agreements
granted under those plans and agreements to acquire shares of Ortel common
stock. Each stock option outstanding at the effective time 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 Ortel common stock subject to
that Ortel option multiplied by the 3.1350 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 Ortel common
stock subject to that Ortel option divided by the 3.1350 exchange ratio, rounded
to the nearest one hundredth of a cent. As of February 7, 2000, the number of
shares of Ortel common stock reserved for issuance pursuant to outstanding Ortel
stock options under the plans was 4,203,226.
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 Ortel stock option plans and agreements, and list the
shares issuable under those stock options on the New York Stock Exchange. 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 Ortel stock options. The registration statement will be kept
effective (and the current status of the prospectus or prospectuses required by
that registration statement shall be maintained) for so long as any assumed
Ortel options remain outstanding.
ACCOUNTING TREATMENT
The merger will be accounted for under the "purchase" method of
accounting in accordance with generally accepted accounting principles. Lucent
expects a significant portion of the purchase price to be allocated to goodwill
and other intangible assets. The merger is also expected to result in a charge
against Lucent's earnings for in-process research and development.
FORM OF THE MERGER
Subject to the terms and conditions of the merger agreement and in
accordance with Delaware law, at the effective time of the merger, Solara
Acquisition Inc., a wholly owned subsidiary of Lucent, will merge with and into
Ortel. Ortel will survive the merger and become a wholly owned subsidiary of
Lucent. Ortel will continue operations under the name "Ortel Corporation."
MERGER CONSIDERATION
At the effective time of the merger, each outstanding share of Ortel
common stock will be converted into the right to receive 3.1350 shares of Lucent
common stock, except that treasury stock and stock held by Solara Acquisition or
Lucent will be canceled. Stockholders will receive
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<PAGE> 46
cash for any fractional share that they would otherwise receive in the merger.
As of the effective time of the merger, all shares of Ortel common stock will no
longer be outstanding and will automatically be canceled. At that time, each
holder of a certificate representing shares of Ortel common stock will cease to
have any rights as a stockholder 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 was determined through arm's-length negotiations between
Lucent and Ortel.
Based on the number of outstanding shares of Lucent common stock and
Ortel common stock as of the record date, the holders of Ortel common stock
immediately prior to the merger would own approximately % of the outstanding
shares of Lucent common stock immediately after the merger. After the merger,
each outstanding option to purchase Ortel common stock will be converted into an
option to purchase shares of Lucent common stock.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
The conversion of Ortel 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 Ortel stockholder. The transmittal
letter will contain instructions for obtaining shares of Lucent common stock in
exchange for shares of Ortel common stock. PLEASE DO NOT SEND STOCK CERTIFICATES
WITH THE ENCLOSED PROXY.
After the merger, each certificate that previously represented shares
of Ortel 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 Ortel 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 share of Lucent common stock. When
holders surrender those certificates, they will receive any unpaid dividends and
any cash for any fractional share of Lucent common stock without interest.
In the event of a transfer of ownership of Ortel common stock which is
not registered in the records of Ortel'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 and
- the person requesting the issuance (1) pays to the exchange agent
any transfer or other taxes resulting from the issuance of shares
of Lucent common stock in a name other than that on the
surrendered certificate, or (2) establishes to the satisfaction of
the exchange agent that any tax has been paid or is not
applicable.
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All shares of Lucent common stock issued upon conversion of shares of
Ortel 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 Ortel common stock.
No fractional share of Lucent common stock will be issued to any Ortel
stockholder upon surrender for exchange of certificates previously representing
Ortel common stock. In lieu of any fractional share, the stockholder 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 preceding the date on which the merger
is completed by (2) the fractional share to which the stockholder would
otherwise be entitled.
EFFECTIVE TIME OF THE MERGER
The merger will become effective upon the filing of a certificate of
merger with the Secretary of State of the State of Delaware, or at such later
time as stated in the certificate of merger or agreed upon by Lucent and Ortel.
The filing of the certificate of merger will occur at the time of the closing of
the merger.
STOCK EXCHANGE LISTING OF LUCENT COMMON STOCK
It is a condition to the completion of the merger that Lucent common
stock issued to Ortel stockholders in the merger be authorized for listing on
the New York Stock Exchange, subject to official notice of issuance.
DELISTING AND DEREGISTRATION OF ORTEL COMMON STOCK
If the merger is completed, Ortel common stock will be delisted from
The Nasdaq National Market and will be deregistered under the Securities
Exchange Act of 1934.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following summary of the material United States federal income tax
consequences of the merger to the holders of Ortel common stock who hold their
Ortel common stock as a capital asset is based upon current provisions of the
Internal Revenue Code of 1986, as amended, currently applicable Treasury
regulations and judicial and administrative rulings and decisions as of the date
hereof. The following summary is not binding on the Internal Revenue Service, or
the IRS, and no rulings have been or will be sought from the IRS regarding any
matters relating to the merger. In addition, legislative, judicial or
administrative changes may be forthcoming that could alter or modify the
statements set forth herein, possibly on a retroactive basis. The summary does
not purport to deal with all aspects of the federal income taxation that may be
relevant to particular holders of Ortel common stock in light of their
individual circumstances, nor with certain types of holders who are subject to
special treatment under the federal income tax laws (e.g., tax-exempt
organizations; insurance companies; financial institutions; broker-dealers;
persons who hold such stock as part of a hedge, appreciated financial position,
straddle or conversion transaction; holders whose functional currency is not the
U.S. dollar; holders who acquired their stock pursuant to the exercise of
employee stock options or otherwise as compensation; and holders who are neither
citizens nor residents of the United States, or that are
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foreign corporations, foreign partnerships or foreign estates or trusts for
United States federal income tax purposes). Also, the summary assumes that each
holder holds his or her shares of Ortel common stock as capital assets. Finally,
no foreign, state or local tax considerations are addressed herein.
CONSEQUENTLY, EACH HOLDER OF ORTEL COMMON STOCK IS STRONGLY URGED TO CONSULT HIS
OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE MERGER IN LIGHT OF
EACH SUCH HOLDER'S PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
Completion of the merger is conditioned upon, among other things, the
receipt by Ortel and Lucent of tax opinions of Latham & Watkins and Sidley &
Austin, respectively, each dated as of the closing date, to the effect that the
merger will qualify for United States federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. These opinions will be based on customary assumptions and representations
made by Ortel, the acquisition subsidiary, and Lucent. An opinion of counsel
represents counsel's best legal judgment and is not binding on the IRS or any
court.
CONSEQUENCES OF THE MERGER
Provided that the merger qualifies as a reorganization, and based on
the above assumptions and qualifications, the merger will generally result in
the following federal income tax consequences:
- no gain or loss will be recognized by Ortel or Lucent solely as a
result of the merger
- no gain or loss will be recognized by Ortel's stockholders who
exchange their Ortel common stock solely for Lucent common stock
(except to the extent of cash received in lieu of fractional
shares)
- the holding period of Lucent common stock received will include
the holding period of shares of Ortel common stock surrendered in
the merger
- the aggregate tax basis of Lucent common stock received by Ortel
stockholders who exchange all of their Ortel common stock for
Lucent common stock in the merger will be the same as the
aggregate tax basis of Ortel common stock surrendered in the
merger (reduced by any portion of such tax basis allocable to a
fractional share of Lucent common stock for which cash is
received) and
- cash payments received by Ortel stockholders in lieu of a
fractional share of Lucent common stock will be treated as capital
gain or loss measured by the difference, if any, between the cash
payment received and the portion of the tax basis in the shares of
Ortel common stock allocable to the fractional share; this gain or
loss will be long-term capital gain or loss if the holder's
holding period in the Ortel common stock exchanged for the
fractional share of Lucent common stock is more than one year at
the time the merger is completed.
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BACKUP WITHHOLDING
Backup withholding at the rate of 31% may apply with respect to certain
cash payments received by an Ortel stockholder in connection with the merger
unless either:
- the recipient is a corporation or comes within certain other
exempt categories and, when required, demonstrates this fact or
- the recipient provides a correct taxpayer identification number,
certifies as to no loss of exemption from backup withholding and
otherwise complies with applicable requirements of the backup
withholding rules.
An Ortel stockholder who does not provide Lucent with his correct
taxpayer identification number may be subject to penalties imposed by the IRS.
Any amounts withheld under the backup withholding rules may be allowed as a
refund or a credit against the holder's federal income tax liability, provided
that the required information is furnished to the IRS.
REGULATORY MATTERS
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 Ortel each
filed a Notification and Report Form with the Antitrust Division of the
Department of Justice and the Federal Trade Commission on February 25, 2000. The
applicable waiting period expired on , 2000. 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 Ortel. 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.
APPRAISAL RIGHTS
Under Delaware corporate law, holders of Ortel common stock are not
entitled to appraisal rights in connection with the merger because, on the
record date, Ortel common stock was designated and quoted for trading on The
Nasdaq National Market and will be converted into shares of Lucent common stock,
which at the effective time of the merger will be listed on the New York Stock
Exchange.
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 Ortel stockholder who may be deemed to be an "affiliate" of
Ortel for purposes of paragraphs (c) and (d) of Rule 145 under the Securities
Act. An affiliate of Ortel is any individual or entity that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, Ortel or Lucent. It is expected that each affiliate
will agree not to transfer any Lucent common stock received in the merger unless
(1) the disposition is made in conformity with the provisions of Rule 145 under
the Securities Act, (2) the disposition has been
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<PAGE> 50
registered under the Securities Act, or (3) in the opinion of counsel reasonably
acceptable to Lucent, the disposition is otherwise exempt from registration
under the Securities Act. The merger agreement requires Ortel to use its
reasonable best efforts to cause its affiliates to enter into these agreements
and conditions Lucent's obligation to effect the merger on the receipt of these
agreements. 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
The following description summarizes the material provisions of the
merger agreement. We urge stockholders to read carefully the merger agreement,
which is attached as Annex A to this proxy statement/prospectus.
CONDITIONS TO THE MERGER
Each party's obligation to complete the merger is subject to the
satisfaction or waiver of various conditions which include, in addition to other
customary closing conditions, all the following:
- holders of a majority of the outstanding shares of Ortel common
stock must adopt the merger agreement
- the waiting period and any extension thereof applicable to the
merger under United States antitrust laws must expire or be
terminated
- no judgment, order, decree, statute, law, ordinance, rule or
regulation entered, enacted, enforced, promulgated 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 the merger or
(2) otherwise would be reasonably likely to have a material
adverse effect, as described below, on Lucent or Ortel; provided,
that each of the parties will have used its reasonable best
efforts (i) to prevent the entry of any legal restraint or
prohibition and (ii) to appeal as promptly as possible any legal
restraint or prohibition that may be entered
- Lucent's 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
- the shares of Lucent common stock issuable to Ortel in the merger
must be authorized for listing on the New York Stock Exchange,
subject to official notice of issuance
- each of Ortel and Lucent must have, in all material respects,
performed the various obligations and complied with the various
conditions required by the merger agreement
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- the representations and warranties of each party set forth in the
merger agreement must be true and correct as of the date of the
merger agreement and as of the date on which the merger is to be
completed as if made at and as of the date on which the merger is
to be completed, except to the extent expressly made as of an
earlier date, in which case as of such date, except where the
failure of such representations and warranties to be true and
correct, without giving effect to any included limitation as to
"materially" or "material adverse effect," does not have, and
could not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the party
- in the case of Lucent only, the rights issued pursuant to Ortel's
rights agreement may not have become nonredeemable, exercisable,
distributable or triggered
- Ortel must receive from Latham & Watkins, and Lucent must receive
from Sidley & Austin, on the date on which the registration
statement is declared effective by the Securities and Exchange
Commission and on the date on which the merger is to be completed
an opinion in each case dated as of those dates, to the effect
that on the basis of certain facts, representations and
assumptions set forth in the opinions, the merger will be treated
for United States federal income tax purposes as a reorganization
with the meaning of Section 368(a) of the Internal Revenue Code
- officers of Lucent and Ortel each signing and delivering
representation letters relating to certain tax matters and
- in the case of Lucent only, certain officers of Ortel must enter
into non-competition and non-disclosure agreements with Ortel and
Lucent, and those agreements must be in full force and effect.
The merger agreement defines a "material adverse effect" when used in
connection with Lucent or Ortel as any condition or event that:
- has a material adverse effect on the assets, business, financial
condition or results of operations of Lucent or Ortel, as
applicable, in each case, taken as a whole with its subsidiaries,
other than any condition or event
(1) relating to the economy in general
(2) relating to the industries in which that party
operates in general
(3) 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 or
(4) in the case of Ortel, litigation commenced or
threatened against Ortel or any member of its board
of directors in respect of the merger agreement
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- materially impairs the ability of Lucent or Ortel to perform its
obligations under the merger agreement or the stock option
agreement or
- prevents or materially delays the consummation of the transactions
contemplated by the merger agreement.
NO SOLICITATION
The merger agreement provides that Ortel will not, and will not
authorize or permit any of its directors, officers or employees, or any
investment banker, financial advisor, attorney, accountant or other
representative retained by it or any of its subsidiaries to, directly or
indirectly through another person:
- solicit, initiate or encourage, including by way of furnishing
information, or take any other action to facilitate, any inquiries
or the making of any proposal that is or may reasonably be
expected to lead to a takeover proposal, as described below, or
- participate in any discussions or negotiations regarding any
takeover proposal;
provided that if, at any time prior to the date of the special meeting, the
Ortel board of directors determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to Ortel stockholders under applicable law, Ortel and its
representatives, in response to a superior proposal, as described below, which
was not solicited by Ortel or which did not otherwise result from a breach of
the merger agreement, subject to Ortel (1) providing Lucent with prior written
notice of Ortel's decision to enter into the negotiations, and (2) orally and in
writing promptly advising Lucent of the material terms and conditions of the
takeover proposal and the identity of the person making the takeover proposal,
Ortel may:
- furnish under a customary confidentiality agreement information
about Ortel and its subsidiaries to any person making a superior
proposal and
- 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 any direct or indirect acquisition or
purchase of 15% or more of the assets of Ortel and its
subsidiaries, taken as a whole, or 15% or more of any class or
series of equity securities of Ortel or any of its subsidiaries,
any tender offer or exchange offer that if completed would result
in any person beneficially owning 15% or more of any class or
series of equity securities of Ortel or any of its subsidiaries,
or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction
involving Ortel or any of its subsidiaries and
- the term "superior proposal" means any proposal made by a third
party to acquire, directly or indirectly, for consideration
consisting of cash and/or securities, more than
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<PAGE> 53
50% of the combined voting power of the shares of Ortel common
stock then outstanding or all or substantially all the assets of
Ortel on terms that the Ortel 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 the
Ortel stockholders than the merger and for which financing, to the
extent required, is then committed or which, in the good faith
judgment of the Ortel board of directors, is reasonably capable of
being obtained.
Neither the Ortel board of directors nor any committee of the board of
directors will:
- withdraw or modify, or propose publicly to withdraw or modify, in
a manner adverse to Lucent, the approval or recommendation by the
Ortel board of directors or such committee of the merger or the
merger agreement
- approve or recommend, or propose publicly to approve or recommend,
any takeover proposal or
- approve or recommend, or propose to approve or recommend, or
execute or enter into any letter of intent, agreement in
principle, acquisition agreement, option agreement or other
similar agreement related to any takeover proposal, other than any
such agreement entered into concurrently with a termination as
described in the next sentence in order to facilitate such action.
Notwithstanding the foregoing, in response to a superior proposal received prior
to the date of the special meeting which was not solicited by Ortel and which
did not otherwise result from a breach of the provisions of the merger agreement
described above, if the Ortel board of directors determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Ortel stockholders under applicable law,
the Ortel board of directors may terminate the merger agreement and enter into a
definitive agreement regarding the superior proposal, but only at a time prior
to the special meeting and that is after the tenth business day following
Lucent's receipt of written notice advising Lucent that the board of directors
is prepared to accept a superior proposal. Ortel must pay a fee in the amount of
$90 million to Lucent upon termination. See " -- Termination of
the Merger Agreement" and " -- Termination Fees."
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated at any time before the effective
time of the merger, whether before or after adoption of the merger agreement by
the Ortel stockholders:
- by mutual agreement of Lucent and Ortel
- by Lucent or Ortel, if the merger has not been completed by
December 31, 2000; provided, that this right to terminate the
merger agreement will not be available to a party whose failure to
perform any of its obligations under the merger agreement has been
the cause of, or resulted in, the failure of the merger to be
completed by that date
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<PAGE> 54
- by Lucent or Ortel, 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 or Ortel if holders of a majority of the shares of Ortel
common stock do not adopt the merger agreement at an Ortel
stockholders meeting or any adjournment or postponement of that
meeting
- by Lucent, if Ortel has materially breached its obligations under
the merger agreement, unless the breach is cured within 30
calendar days after notice to Ortel
- by Ortel, if Lucent has materially breached its obligations under
the merger agreement, unless the breach is cured within 30
calendar days after notice to Lucent
- by Ortel, at any time prior to the date of the special meeting of
stockholders, in response to a superior proposal which was not
solicited by Ortel and which did not otherwise result from a
breach of the provisions of the merger agreement, if Ortel has
complied with certain notice requirements and paid the termination
fee or
- by Lucent, if Ortel or any of its directors or officers
participated in discussions or negotiations with third parties
regarding certain takeover proposals or furnished information to
third parties in breach of the merger agreement.
TERMINATION FEES
Under certain circumstances, if the merger agreement is terminated,
Ortel must pay Lucent a termination fee of $90 million. Ortel must pay Lucent
the termination fee if:
- Ortel stockholders receive a takeover proposal, a takeover
proposal otherwise becomes publicly known or anyone publicly
announces its intention to make a takeover proposal, and
thereafter Lucent or Ortel terminates the merger agreement because
either (1) the merger is not completed by December 31, 2000 or (2)
the Ortel stockholders have not adopted the merger agreement at an
Ortel stockholders meeting, and within nine months of the
termination Ortel or any of its subsidiaries enters into any
definitive agreement with respect to, or consummates, any takeover
proposal
- Ortel terminates the merger agreement because before the date of
the special meeting Ortel receives an unsolicited proposal by a
third party to acquire Ortel on terms determined by the Ortel
board of directors to be more favorable to the Ortel stockholders
than the terms of the merger with Lucent or
- Lucent terminates the merger agreement because Ortel or any of its
directors or officers participates in discussions or negotiations
with third parties regarding certain
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<PAGE> 55
takeover proposals or furnishes information to third parties in
breach of the merger agreement.
The merger agreement further provides that if Ortel fails to pay the
termination fee when due and, in order to obtain payment of the fee, Lucent
commences a suit which results in a judgment against Ortel for the fee, Ortel
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 fee.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the merger agreement, Ortel has agreed that, until the
closing of the merger, it will, and cause 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 and
- use its reasonable best efforts to preserve its business intact,
to keep available to Ortel the services of its present officers
and employees and to preserve for Ortel and each of its
subsidiaries the goodwill of its suppliers, customers and others
having material business relations with Ortel or the subsidiary.
In addition, Ortel 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 certificate of incorporation or
by-laws
- issue or 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 any other of its securities other than (1)
any issuance of Ortel common stock upon the exercise of any
outstanding option or warrant to purchase Ortel common stock which
option or warrant was issued prior to the date of the merger
agreement in accordance with the terms of the relevant stock
option or warrant agreement, (2) the issuance of shares of Ortel
common stock pursuant to the stock option agreement with Lucent or
(3) the issuance of stock options to new employee hires consistent
with past practice
- 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
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<PAGE> 56
- 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, or amend any agreement for
indebtedness except (1) short-term borrowings incurred in the
ordinary course of business or to refinance existing or maturing
indebtedness and (2) intercompany indebtedness between Ortel and
any of its subsidiaries or between subsidiaries
- 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 $500,000 or
capital expenditures which are, in the aggregate, in excess of $2
million
- mortgage, pledge or subject to lien, any of its assets or
properties or agree to do so except for certain permitted liens
- sell, lease, license, mortgage or encumber 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 material 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 or in accordance with their terms, of
liabilities reflected or reserved against in the most recently
audited balance sheet (and notes thereto) filed by Ortel 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 or licensing of Ortel's
products in the ordinary course of business and consistent with
past practice, sell, assign, transfer, license,
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<PAGE> 57
sublicense, pledge or otherwise encumber any of the intellectual
property rights of Ortel or its subsidiaries
- 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 Ortel benefit plan or any other agreement, plan or policy
involving Ortel 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
- 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 Ortel
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 1999 bonuses that have been earned under Ortel'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 or
- announce an intention, commit or agree to do any of the foregoing.
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 adopted
by the Ortel stockholders, no amendment may be entered into which
by law requires further approval by Ortel stockholders unless that
further approval is obtained and
- at any time before the effective time of the merger, a party may,
by written instrument signed on behalf of that party, (1) extend
the time for performance of any of the obligations or other acts
of any other party to the merger agreement, (2) waive any
inaccuracies in representations and warranties of any other party
contained in the merger agreement or in any document delivered
pursuant to the merger agreement, or (3) 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 Ortel will share equally (1) the costs and
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<PAGE> 58
expenses incurred in connection with filing, printing and mailing this proxy
statement/prospectus and the registration statement of which it is a part
including Securities and Exchange Commission filing fees and (2) the filing fees
for the pre-merger 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 and
Ortel
- subsidiaries of Ortel
- the capital structure of Lucent and Ortel
- 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, Solara Acquisition and Ortel
- documents filed by each of Lucent and Ortel 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 Ortel
- the accuracy of information supplied by each of Lucent and Ortel
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 Ortel
- compliance with applicable laws by Ortel
- matters relating to the benefit plans of Ortel
- matters relating to Ortel's compliance the Employee Retirement
Income Security Act
- filing of tax returns and payment of taxes by Ortel
- required stockholder vote of Ortel regarding the adoption of the
merger agreement
- approval of the merger agreement and recommendation for the merger
by the Ortel board of directors
- matters relating to the Ortel rights agreement
- satisfaction of certain state takeover statutes' requirements by
Ortel
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<PAGE> 59
- absence of actions by Lucent or Ortel 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 and
financial advisors by each of Lucent and Ortel
- receipt of fairness opinion by Ortel from SoundView
- intellectual property and year 2000 matters of Ortel
- outstanding and pending material litigation of each of Lucent and
Ortel
- good and valid title to property of Ortel
- certain leases and contracts entered into by Ortel and absence of
default by Ortel under those leases and contracts
- bank accounts, letters of credit and power of attorneys of Ortel
- certain employment matters regarding Ortel
- liability of Ortel under environmental laws and
- interim operations of Solara Acquisition.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that all rights of indemnification from
liabilities existing in favor of the current and former directors or officers of
Ortel and its subsidiaries as provided in Ortel's certificate of incorporation
and by-laws and in certain indemnification agreements of Ortel 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 must 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 Ortel's directors' and officers' liability insurance policy, on terms
no less advantageous 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 Ortel 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 ORTEL'S CERTIFICATE OF INCORPORATION
As of the effective time of the merger, the Ortel certificate of
incorporation will be amended to be substantially identical to the certificate
of incorporation of Solara Acquisition immediately prior to the merger. For a
summary of certain provisions of the current Ortel
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<PAGE> 60
certificate of incorporation and the associated rights of Ortel stockholders,
see "Comparison of Rights of Common Stockholders of Lucent and Ortel" on
page 54.
AMENDMENTS TO THE ORTEL BY-LAWS
The merger agreement provides that the by-laws of Solara Acquisition,
as in effect immediately prior to the merger, will be the by-laws of the
surviving corporation following the merger. For a summary of certain provisions
of the current Ortel by-laws and the associated rights of Ortel stockholders,
see "Comparison of Rights of Common Stockholders of Lucent and Ortel" on
page 54.
NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS
As a condition to the merger, each of Stephen R. Rizzone, George M.
Pontiakos, Nadav Bar-Chaim, Jeffrey S. Rittichier and George B. Holmes must
enter into non-competition and non-disclosure agreements with Ortel. Each of
these officers has agreed with Lucent and Ortel that, for a specified period,
the employee will not directly or indirectly, compete with the activities
currently conducted by Ortel without the express written consent of Lucent. The
non-competition period for each stockholder generally will end two years from
the date of the merger, with the exception of Stephen R. Rizzone, whose period
will end five years from the date of the non-competition and non-disclosure
agreement.
THE STOCK OPTION AGREEMENT
The following description summarizes the material provisions of the
stock option agreement. We urge stockholders to read carefully the stock option
agreement, which is attached as Annex B to this proxy statement/prospectus.
GENERAL
Immediately following the execution and delivery of the merger
agreement, Lucent and Ortel entered into a stock option agreement under which
Ortel granted Lucent an option to purchase up to 2,550,041 shares of Ortel
common stock, or that number of shares of Ortel common stock equal to 19.9% of
the then outstanding shares of Ortel common stock, in each case, without giving
effect to shares of Ortel common stock subject to or issued under the option, at
a purchase price of $177.125 per share.
EXERCISE OF THE OPTION
Except as described below, Lucent may exercise the option 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 agreement. The right to purchase shares under the stock option agreement
will expire at earlier to occur of the effective time of the merger and 15
months after the occurrence of the event entitling Lucent to receive the
termination fee.
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Lucent may exercise the option with respect to all or a portion of the
option shares by delivering to Ortel 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 and obtaining any other necessary regulatory
approvals.
If Lucent receives notice that a regulatory approval will not be
granted or has not been obtained within six months of the date of the exercise
notice, Lucent may exercise its right to cancel the option with respect to a
certain number of option shares (up to the number of option shares for which
regulatory approval will not be granted or has not been obtained) in exchange
for cash. The amount of cash will be equal to that number of shares of Ortel
common stock multiplied by the difference between:
- the average closing price 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 Ortel common stock is listed or quoted, as
reported in The Wall Street Journal (Northeast edition), or, if
not reported thereby, any other authoritative source) of shares of
Ortel common stock for the 10 trading days commencing on the 12th
trading day immediately preceding the option closing date and
- the purchase price per share.
ADJUSTMENT 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 Ortel 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 Ortel common stock
subject to the option will also be adjusted in the event Ortel issues additional
shares of common stock, so that, after that issuance, the number of shares of
Ortel common stock subject to the option represents 19.9% of the shares of Ortel
common stock then issued and outstanding, without giving effect to shares
subject to or issued under the option.
If Ortel enters into an agreement:
- to consolidate with or merge into any person other than Lucent or
one of its subsidiaries and Ortel will not be the surviving
corporation
- to permit any person other than Lucent or one of its subsidiaries
to merge into Ortel and Ortel will be the surviving corporation,
but the shares of Ortel common stock outstanding immediately
before the merger will be exchanged for other securities or
property, or the shares of Ortel common stock outstanding
immediately prior to the merger will, after the merger, represent
less than 50% of the outstanding voting securities of the merged
entity or
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- to sell or otherwise transfer all or substantially all its assets
to any person other than Lucent or one of its subsidiaries
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 Ortel common stock if the
option had been exercised immediately prior to that consolidation, merger, sale
or transfer, or the record date of that event.
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 $105 million 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:
- reduce the number of shares of Ortel common stock subject to the
option
- deliver to Ortel for cancellation shares of Ortel common stock
previously purchased by Lucent or
- pay cash to Ortel
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 $105 million after
taking into account the foregoing actions.
In addition, the stock option agreement provides that the option may
not be exercised by Lucent for a number of option shares that would result in a
"notional total profit" which, together with the termination fee payable to
Lucent pursuant to the merger agreement, would exceed $105 million. The stock
option agreement defines "notional total profit" as total profit from the option
assuming that the option shares were sold for cash at the closing market price
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 Ortel common stock is listed or quoted) for Ortel
common stock as of the close of business on the preceding trading day, less
customary brokerage commissions.
REGISTRATION RIGHTS AND LISTING
Lucent has certain rights to require registration under the securities
laws by Ortel 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 Ortel without the prior written consent of the other. The shares subject to
the option may not be sold, assigned,
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<PAGE> 63
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 Ortel. 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 Ortel 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 Ortel from considering or proposing an acquisition,
even if those persons were prepared to offer higher consideration per share for
Ortel common stock than that implicit in the 3.1350 exchange ratio or a higher
price per share for Ortel common stock than the market price.
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<PAGE> 64
COMPARATIVE STOCK PRICES AND DIVIDENDS
Lucent common stock is listed for trading on the New York Stock
Exchange under the trading symbol "LU" and Ortel common stock is quoted on The
Nasdaq National Market under the trading symbol "ORTL." 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 Ortel common stock on The Nasdaq National Market.
Lucent's per share data has been restated to account for Lucent's two-for-one
stock splits effective on April 1, 1999, and on April 1, 1998. For current price
information, stockholders are urged to consult publicly available sources.
<TABLE>
<CAPTION>
LUCENT ORTEL
COMMON STOCK COMMON STOCK
---------------------------------- -------------------------------------------
DIVIDENDS DIVIDENDS
CALENDAR PERIOD HIGH LOW DECLARED HIGH LOW DECLARED
- --------------- ---- --- -------- ---- --- --------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter 15 5/32 11 3/16 0.000 25 5/8 10 7/8 N/A
Second Quarter 18 35/64 12 15/32 0.019 19 1/4 11 3/8 N/A
Third Quarter 22 11/16 18 3/64 0.019 25 16 5/8 N/A
Fourth Quarter 22 35/64 18 3/32 0.038 24 14 N/A
1998
First Quarter 32 1/16 18 23/64 0.000 16 1/4 10 11/16 N/A
Second Quarter 41 27/32 32 0.020 17 12 1/2 N/A
Third Quarter 54 1/4 34 3/16 0.020 20 1/4 10 5/8 N/A
Fourth Quarter 56 15/16 26 23/32 0.040 15 7/8 7 1/4 N/A
1999
First Quarter 60 47 0.000 12 1/8 6 1/2 N/A
Second Quarter 68 11/16 51 7/8 0.020 13 7/8 6 N/A
Third Quarter 79 3/4 60 0.020 19 3/4 10 1/4 N/A
Fourth Quarter 84 3/16 55 1/16 0.040 120 13 7/8 N/A
2000
First Quarter
(through , 2000)
</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 Ortel common stock on The Nasdaq National Market on February 4,
2000, the last trading day before the public announcement of the merger
agreement, and on , 2000, the last trading day before the date of this
proxy statement/prospectus:
<TABLE>
<CAPTION>
LUCENT ORTEL
COMMON STOCK COMMON STOCK
------------ ------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
February 4, 2000 $58 1/4 $56 7/8 $189 1/2 $170 1/16
, 2000
</TABLE>
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<PAGE> 65
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 Ortel" on page 54.
The total authorized shares of capital stock of Lucent consist of (1)
10 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 January 31, 2000, approximately 3.2 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.
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND ORTEL
The rights of Lucent and Ortel stockholders are currently governed by
the Delaware General Corporation Law, and the respective certificates of
incorporation and by-laws of Lucent and Ortel. Upon completion of the merger,
the rights of Ortel stockholders 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 Ortel 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. Stockholders should read carefully the relevant
provisions of the Delaware General Corporation Law, Lucent's certificate of
incorporation and by-laws and Ortel's certificate of incorporation and by-laws.
CAPITALIZATION
LUCENT. Lucent's authorized capital stock is described above under
"Description of Lucent Capital Stock."
ORTEL. The total authorized shares of capital stock of Ortel consist of
(1) 25,000,000 shares of common stock, $.001 par value per share, and (2)
5,000,000 shares of preferred stock,
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$.001 par value per share. On the record date, there were shares of Ortel
common stock outstanding and no shares of Ortel preferred stock were issued and
outstanding.
The Ortel board of directors is authorized to issue up to 5,000,000
shares of undesignated preferred stock, to determine the powers, preferences and
rights and the qualifications, limitations or restrictions granted to or imposed
upon any unissued series of undesignated preferred stock and to fix the number
of shares constituting any series and the designation of such series, without
any further vote or action by the Ortel stockholders. The Ortel board of
directors can issue preferred stock with voting, liquidation, dividend and other
rights superior to the rights of the Ortel common stock. Furthermore, such Ortel
preferred stock may have other rights, including economic rights, senior to the
Ortel common stock, and as a result, the issuance of such preferred stock could
cause a decrease in the market value of the Ortel common stock.
VOTING RIGHTS
LUCENT. 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.
ORTEL. Each holder of Ortel common stock is entitled to one vote for
each share held of record and may not cumulate votes for the election of
directors.
NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS
LUCENT. Lucent's board of directors has seven members. 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. Due to the retirement of two
directors from the Lucent board, one class of directors currently consists of a
single director.
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 until the next succeeding annual meeting of stockholders
following his election by the directors, and if elected by the stockholders at
such meeting, 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.
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.
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ORTEL. The Ortel board of directors has eight members. Ortel's
certificate of incorporation provides that the number of directors shall be
fixed from time to time by or pursuant to Ortel's by-laws. Ortel's by-laws
provide that the Ortel board of directors consists of at least seven and no more
than eleven directors and that the exact number of directors be determined by
resolution of the board of directors. As permitted under the Delaware General
Corporation Law, Ortel's certificate of incorporation also provides that the
Ortel board of directors consists of three classes of directors, with the
directors in each class serving on the Ortel board of directors for
approximately three years each and the term of office of one class expiring each
year.
Ortel's certificate of incorporation and by-laws provide that vacancies
and newly created directorships resulting from an increase in the authorized
number of directors will be filled solely by the affirmative vote of a majority
of the directors then in office, even though less than a quorum, or by a sole
remaining director, and the directors so chosen hold office for the remainder of
the full term of the new directorship created or the directorship in which the
vacancy occurred and until their successors are duly elected and qualified. No
decrease in the number of directors will shorten the term of any incumbent
director.
Under Ortel's certificate of incorporation, any or all of the directors
may be removed from office only for cause by the affirmative vote of at least
two-thirds of the outstanding shares of Ortel common stock.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
LUCENT. 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.
ORTEL. Ortel's certificate of incorporation provides that the
affirmative vote of at least two-thirds of the outstanding shares of Ortel
common stock will be required to amend, repeal or adopt any provision
inconsistent with Articles Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh, Twelfth, Thirteenth or Fourteenth, which relate to the Ortel board of
directors, stockholder action, amendment of Ortel's by-laws, indemnification by
Ortel and limitation on personal liability of directors of Ortel.
AMENDMENTS TO BY-LAWS
LUCENT. 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 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
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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, 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.
ORTEL. Ortel's certificate of incorporation authorizes the adoption,
amendment or repeal of any of Ortel's by-laws:
- by its board of directors with the approval of a majority of the
total number of authorized directors, whether or not there exist
any vacancies in previously authorized directorships at the time
any resolution providing for adoption, amendment or repeal is
presented to the board and
- by the Ortel stockholders with the affirmative vote of the holders
of at least two-thirds of the outstanding shares of Ortel common
stock.
STOCKHOLDER ACTION
LUCENT. 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.
ORTEL. Ortel's certificate of incorporation provides that any action
required or permitted to be taken by the Ortel stockholders may be taken only
upon the vote of the Ortel stockholders at an annual or special meeting duly
called and may not be effected by written consent.
NOTICE OF CERTAIN STOCKHOLDER 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 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.
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ORTEL. Ortel's certificate of incorporation and by-laws provide that a
stockholder must give advance written notice of nominations for election of
directors and to properly bring business or proposals before an annual meeting
of stockholders. Under Ortel's certificate of incorporation and by-laws, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of Ortel not less than 60 days prior to the
scheduled annual meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however, that if less
than 70 days' notice or prior public disclosure of the date of the scheduled
annual meeting is given or made, notice by the stockholder, to be timely, must
be so delivered or received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which such public disclosure
was made.
SPECIAL STOCKHOLDER MEETINGS
LUCENT. 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.
ORTEL. Ortel's certificate of incorporation and by-laws provide that a
special meeting of the Ortel stockholders may be called at any time only by the
board of directors, the chairman of the board of directors or the president.
Ortel's certificate of incorporation and by-laws provide that no other person
may call a special meeting of the Ortel stockholders.
LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND INDEMNIFICATION
LUCENT. Lucent's certificate of incorporation provides that a director
will not 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
regarding unlawful payment of dividends or unlawful stock
purchases or redemptions or
- for any transaction from which the director derived an improper
personal benefit.
Lucent's certificate of incorporation provides a right to
indemnification to directors and officers of Lucent subject to the limitations
under the Delaware General Corporation Law.
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.
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ORTEL. Ortel's certificate of incorporation provides that a director
will not be personally liable to Ortel 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 Ortel 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
regarding unlawful payment of dividends or unlawful stock
purchases or redemptions or
- for any transaction from which the director derived an improper
personal benefit.
Ortel's certificate of incorporation provides a right to
indemnification to directors and officers of Ortel subject to the limitations
under the Delaware General Corporation Law.
In addition, Ortel 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.
DIVIDENDS
LUCENT. 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.
ORTEL. Ortel's by-laws provide that dividends may be declared by the
Ortel board of directors at any regular or special meeting in any manner
pursuant to law, and subject to Ortel's certificate of incorporation.
CONVERSION
LUCENT. Holders of Lucent common stock have no rights to convert their
shares into any other securities.
ORTEL. Holders of Ortel common stock have no rights to convert their
shares into any other securities.
RIGHTS PLAN
LUCENT. Lucent has a rights agreement with The Bank of New York as
rights agent. The following description of the rights agreement is qualified in
its entirety by reference to the terms and conditions of the rights agreement.
Stockholders should read carefully the rights agreement. See "Where You Can Find
More Information" on page 63.
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
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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 or
- 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.
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.
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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.
ORTEL. Ortel has a stockholders rights agreement with American Stock
Transfer and Trust Company as rights agent. The following description of the
rights agreement is qualified in its entirety by reference to the terms and
conditions of the rights agreement. Stockholders should read carefully the
rights agreement. See "Where You Can Find More Information" on page 63.
Under the rights agreement, a right is attached to each share of Ortel
common stock outstanding and, when exercisable, entitles the registered holder
to purchase from Ortel one one-hundredth of a share of junior preferred stock,
par value $1.00 per share, at a purchase price of $140 per one one-hundredth of
a share, subject to customary anti-dilution adjustments.
The rights will not be exercisable until the earlier of:
- the tenth day following a public announcement that a person or
group has acquired beneficial ownership of 15% or more of the
outstanding shares of Ortel common stock or
- the tenth day following the commencement of, or announcement of an
intention to make, a tender or exchange offer by a person or
group, the consummation of such offer would result in a person or
group acquiring beneficial ownership of 15% or more of the
outstanding shares of Ortel common stock.
The rights will expire on March 2, 2005, unless that date is extended or unless
the rights are earlier redeemed or exchanged by Ortel, or are terminated by the
consummation of an acquisition agreement with a third party if such agreement
has been approved by the Ortel board of directors prior to such consummation, in
each case as summarized below.
In the event that a person or group acquires beneficial ownership of
15% or more of the outstanding shares of Ortel common stock or merges, or
otherwise combines with, Ortel and the Ortel common stock remains outstanding,
each holder of a right, other than rights beneficially owned by that person or
group or its transferees, which become void, will have the right to receive upon
exercise that number of shares of Ortel common stock equal to the result
obtained by multiplying $140 by the number of one one-hundredths of a share of
junior preferred stock for which a right is exercisable and dividing that
product by 50% of the current per share market price of Ortel common stock.
At any time prior to the tenth day following a public announcement that
a person or group has acquired beneficial ownership of 15% or more of the
outstanding shares of Ortel common stock, the Ortel board of directors may
redeem the rights in whole, but not in part, at a redemption price of $0.01 per
right, subject to customary anti-dilution provisions.
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Prior to the earlier of the tenth day following a public announcement
that a person or group has acquired beneficial ownership of 15% or more of the
outstanding shares of Ortel common stock or the commencement of, or announcement
of an intention to make, a tender or exchange offer by a person or group, the
consummation of such offer would result in a person or group acquiring
beneficial ownership of 15% or more of the outstanding shares of Ortel common
stock, Ortel may amend the terms of the rights without the consent of the
holders of the rights and otherwise subject to the terms of the stockholders
rights agreement.
At any time after a person or group acquires beneficial ownership of
15% or more of the outstanding shares of Ortel common stock and prior to the
acquisition by that person or group of 50% or more of the then outstanding
shares of Ortel common stock, the Ortel 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 Ortel common stock.
The rights are not intended to prevent a takeover of Ortel. They are
designed to deal with the possibility of unilateral actions by hostile acquirers
that could deprive the Ortel board of directors and the Ortel stockholders of
their ability to determine Ortel's destiny and obtain the highest price for the
Ortel common stock. The rights should not interfere with any merger or other
business combination approved by the Ortel board of directors prior to the time
that a person or group has acquired such 15% beneficial ownership since the
rights by its terms terminate in that event.
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 February 29, 2000, Pamela F.
Craven owned 1,096 shares of Lucent common stock and options and stock units for
507,150 shares of Lucent common stock.
Certain United States federal income tax consequences of the merger
will be passed upon for Ortel by its counsel Latham & Watkins. Certain
United States federal income tax consequences will be passed upon for Lucent by
its special counsel Sidley & Austin.
EXPERTS
The consolidated financial statements of Lucent incorporated in this
proxy statement/prospectus by reference in Exhibit 99.1 to Lucent's Current
Report on Form 8-K dated February 10, 2000 for the year ended September 30, 1999
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements and schedule of Ortel as of April
30, 1999 and 1998, and for each of the years ended in the three-year period
ended April 30, 1999, have been incorporated by reference in this proxy
statement/prospectus and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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Representatives of KPMG LLP are not expected to be present at the
special meeting.
OTHER MATTERS
As of the date of this proxy statement/prospectus, the Ortel board of
directors knows of no matters that will be presented for consideration at the
special meeting of stockholders other than as described in this proxy
statement/prospectus.
WHERE YOU CAN FIND MORE INFORMATION
Lucent and Ortel 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 Ortel file with the Securities and Exchange Commission at the Securities and
Exchange Commission's public reference rooms at the following locations:
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
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.
Lucent filed a registration statement on Form S-4 on February 29, 2000
to register with the Securities and Exchange Commission the Lucent common stock
to be issued to Ortel stockholders in the merger. This proxy
statement/prospectus is a part of that registration statement. 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 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 Ortel previously filed with the Securities and
Exchange Commission. These
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documents contain important business and financial information about Lucent that
is not included in or delivered with this proxy statement/prospectus.
<TABLE>
<CAPTION>
LUCENT FILINGS
(FILE NO. 001-11639) PERIOD
- -------------------- ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended September 30, 1999, as amended by Form 8-K filed
on February 11, 2000
Quarterly Report on Form 10-Q Quarter ended December 31, 1999
Current Reports on Form 8-K Filed October 29, 1999, November 19, 1999, January 7, 2000,
February 11, 2000 and March 1, 2000
Proxy Statement Filed December 21, 1999
The description of Lucent common stock Filed under Section 12 of the Exchange Act on February 26,
and Lucent rights to acquire junior 1996, as amended by Amendment No. 1 thereto filed on Form 10/A
preferred stock set forth in the on March 12, 1996, Amendment No. 2 thereto filed on Form 10/A
Lucent Registration Statement on Form 10 on March 22, 1996 and Amendment No. 3 thereto filed on Form
10/A on April 1, 1996, including any amendments or reports filed
for the purpose of updating such descriptions
</TABLE>
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<TABLE>
<CAPTION>
ORTEL FILINGS
(FILE NO. 0-22528) PERIOD
- ------------------ ------
<S> <C>
Annual Report on Form 10-K Fiscal Year ended April 30, 1999
Quarterly Reports on Form 10-Q Quarters ended August 1, 1999 and October 31, 1999
Current Reports on Form 8-K Filed February 9, 2000
Proxy Statement Filed August 20, 1999
The description of Ortel common stock Filed October 6, 1994
set forth in the Ortel Registration
Statement on Form 8-A
</TABLE>
Lucent and Ortel 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 Ortel has
supplied all such information relating to Ortel.
Ortel stockholders should not send in their Ortel certificates until
they receive the transmittal materials from the exchange agent. Ortel
stockholders of record who have further questions about their share certificates
or the exchange of their Ortel common stock for Lucent common stock should call
the exchange agent.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through the companies,
the Securities and Exchange Commission or the Securities and Exchange
Commission's Internet web site as described above. Documents incorporated by
reference are available from the companies without charge, excluding all
exhibits, except that if Lucent has specifically incorporated by reference an
exhibit in this proxy statement/prospectus, the exhibit will also be provided
without charge. Stockholders may obtain documents incorporated by reference in
this proxy statement/prospectus by requesting them in writing or by telephone
from the Lucent at the following address:
Lucent Technologies Inc. Ortel Corporation
c/o The Bank of New York 2015 West Chestnut Street
Church Street Station Alhambra, California 91803
P.O. Box 11009 Telephone: 626-281-3636
New York, New York 10286-1009 Attention: Investor Relations
Telephone: 1-888-LUCENT6
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You should rely only on the information contained or incorporated by reference
in this proxy statement/prospectus. Neither Lucent nor Ortel has 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
. You should not assume that the information contained in this
proxy statement/prospectus is accurate as of any date other than that date.
Neither the mailing of this proxy statement/prospectus to stockholders nor the
issuance of Lucent common stock in the merger creates any implication to the
contrary.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 with respect to the financial condition, results of operations, business
strategies, operating efficiencies or synergies, competitive positions, growth
opportunities for existing products, plans and objectives of management, markets
for stock of Lucent and Ortel 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 Ortel, wherever they occur in this proxy statement/prospectus, are
necessarily estimates reflecting the best judgment of the senior management of
Lucent and Ortel 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 Ortel,
including their respective product lines and
- the effects of vigorous competition in the markets in which Lucent
and Ortel 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, 1999 of Lucent, including any amendments and the
Annual Report on Form 10-K for the year ended April 30, 1999 of Ortel, 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 Ortel 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.
66
<PAGE> 78
ANNEX A
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
SOLARA ACQUISITION INC.,
AND
ORTEL CORPORATION
-------------------------------------------
Dated as of February 7, 2000
-------------------------------------------
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<PAGE> 79
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. The Merger.................................................................................2
----------
1.1. General........................................................................2
-------
1.2. Certificate of Incorporation...................................................2
----------------------------
1.3. By-Laws........................................................................2
-------
1.4. Directors and Officers.........................................................2
----------------------
1.5. Conversion of Securities.......................................................3
------------------------
1.6. Adjustment of the Exchange Ratio...............................................3
--------------------------------
1.7. No Fractional Shares...........................................................3
--------------------
1.8. Exchange Procedures; Distributions with Respect to
--------------------------------------------------
Unexchanged Shares; Stock Transfer Books.......................................4
----------------------------------------
1.9. No Further Ownership Rights in Company Common Stock............................5
---------------------------------------------------
1.10. Return of Exchange Fund........................................................6
-----------------------
1.11. Further Assurances.............................................................6
------------------
2. Representations and Warranties of the Company..............................................6
---------------------------------------------
2.1. Organization...................................................................6
------------
2.2. Subsidiaries...................................................................7
------------
2.3. Capital Structure..............................................................7
-----------------
2.4. Authority......................................................................8
---------
2.5. No Conflict....................................................................8
-----------
2.6. SEC Documents; Undisclosed Liabilities.........................................9
--------------------------------------
2.7. Lucent Registration Statement; Company Proxy Statement.........................10
------------------------------------------------------
2.8. Absence of Certain Changes.....................................................10
--------------------------
2.9. Properties.....................................................................12
----------
2.10. Leases.........................................................................12
------
2.11. Contracts......................................................................12
---------
2.12. Absence of Default.............................................................12
------------------
2.13. Litigation.....................................................................13
----------
2.14. Compliance with Law............................................................13
-------------------
2.15. Intellectual Property; Year 2000...............................................13
--------------------------------
2.16. Taxes..........................................................................15
-----
2.17. Absence of Changes in Benefit Plans............................................16
-----------------------------------
2.18. ERISA Compliance...............................................................16
----------------
2.19. Environmental Laws.............................................................18
------------------
2.20. Voting Requirements; Board Approval and Recommendation.........................18
------------------------------------------------------
2.21. State Takeover Statutes........................................................18
-----------------------
2.22. Company Rights Agreement.......................................................19
------------------------
2.23. Brokers........................................................................19
-------
2.24. Opinion of Financial Advisor...................................................19
----------------------------
2.25. Disclosure.....................................................................19
----------
</TABLE>
-i-
<PAGE> 80
<TABLE>
<S> <C>
3. Representations and Warranties of Lucent and Acquisition...................................19
--------------------------------------------------------
3.1. Organization, Standing and Corporate Power.....................................19
------------------------------------------
3.2. Capital Structure..............................................................20
-----------------
3.3. Authority......................................................................20
---------
3.4. No Conflict....................................................................20
-----------
3.5. Litigation.....................................................................21
----------
3.6. SEC Documents; Undisclosed Liabilities.........................................21
--------------------------------------
3.7. Information Supplied...........................................................22
--------------------
3.8. Absence of Certain Changes.....................................................22
--------------------------
3.9. Brokers........................................................................23
-------
3.10. Interim Operations of Acquisition..............................................23
---------------------------------
3.11. Taxes..........................................................................23
-----
4. Conduct Pending Closing....................................................................23
-----------------------
4.1. Conduct of Business Pending Closing............................................23
-----------------------------------
4.2. Prohibited Actions Pending Closing.............................................24
----------------------------------
5. Additional Agreements......................................................................26
---------------------
5.1. Access; Documents; Supplemental Information....................................26
-------------------------------------------
5.2. No Solicitation by the Company.................................................27
------------------------------
5.3. Preparation of the Lucent Registration Statement
and Company Proxy Statement; Company Stockholders Meeting......................28
---------------------------------------------------------
5.4. Letter of the Company's Accountants; Letter of Lucent's Accountants............30
-------------------------------------------------------------------
5.5. Reasonable Best Efforts........................................................30
-----------------------
5.6. Stock Options..................................................................31
-------------
5.7. Company Stock Plans............................................................31
-------------------
5.8. Employee Benefit Plans; Existing Agreement.....................................32
------------------------------------------
5.9. Indemnification................................................................33
---------------
5.10. Fees and Expenses..............................................................33
-----------------
5.11. Public Announcements...........................................................34
--------------------
5.12. Affiliates.....................................................................34
----------
5.13. Listings.......................................................................34
--------
5.14. Stockholder Litigation.........................................................34
----------------------
5.15. Reorganization.................................................................35
--------------
5.16. Company Rights Agreement.......................................................35
------------------------
6. Conditions Precedent.......................................................................35
--------------------
6.1. Conditions Precedent to Each Party's Obligation to Effect the Merger...........35
--------------------------------------------------------------------
6.2. Conditions Precedent to Obligations of Acquisition and Lucent..................36
-------------------------------------------------------------
6.3. Conditions Precedent to the Company's Obligations..............................37
-------------------------------------------------
6.4 Frustration of Closing Conditions. ............................................37
---------------------------------
7. Non-Survival of Representation and Warranties..............................................37
---------------------------------------------
8. Contents of Agreement; Parties in Interest; etc............................................38
-----------------------------------------------
</TABLE>
-ii-
<PAGE> 81
<TABLE>
<S> <C>
9. Assignment and Binding Effect..............................................................38
-----------------------------
10. Termination................................................................................38
-----------
11. Definitions................................................................................39
-----------
12. Notices....................................................................................41
-------
13. Amendment..................................................................................42
---------
14. Extensions; Waiver.........................................................................42
------------------
15. Governing Law..............................................................................43
-------------
16. No Benefit to Others.......................................................................43
--------------------
17. Effect of Termination......................................................................43
---------------------
18. Severability...............................................................................43
------------
19. Section Headings...........................................................................43
----------------
20. Schedules and Exhibits.....................................................................43
----------------------
21. Counterparts...............................................................................43
------------
</TABLE>
-iii-
<PAGE> 82
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 7, 2000
("Agreement"), by and among LUCENT TECHNOLOGIES INC., a Delaware corporation
("Lucent"), SOLARA ACQUISITION INC., a Delaware corporation ("Acquisition"), and
ORTEL CORPORATION, a Delaware corporation (the "Company").
BACKGROUND
A. The Company is a Delaware corporation with its registered
office located at 32 Loockerman Square, Suite L-100, Dover, Delaware, and has
authorized 25,000,000 shares of common stock, par value $.001 per share
("Company Common Stock"), of which 12,814,280 shares of Company Common Stock are
issued and outstanding, and 5,000,000 shares of preferred stock, par value $.001
per share ("Company Preferred Stock"), of which no shares of Company Preferred
Stock are issued and outstanding. The Company is engaged principally in the
business of designing, manufacturing and supplying advanced optoelectronic
technologies.
B. Lucent is a Delaware corporation with its registered office
located at 1013 Centre Road, Wilmington, Delaware.
C. Acquisition is a wholly-owned subsidiary of Lucent and was
formed to merge with and into the Company so that, as a result of the merger,
the Company will survive and become a wholly-owned subsidiary of Lucent.
Acquisition is a Delaware corporation with its registered office located at 1013
Centre Road, Wilmington, Delaware, and has authorized an aggregate of 1,000
shares of common stock, no par value per share ("Acquisition Common Stock").
D. The Board of Directors of each of 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
Delaware General Corporation Law (the "DGCL"), 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 stockholders.
E. The Board of Directors of each of Lucent, Acquisition and the
Company have approved this Agreement, the Merger and the transactions
contemplated hereby.
F. 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.
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 shares of Company Common Stock, upon the terms and subject to
the conditions set forth therein.
<PAGE> 83
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. The Merger.
1.1. General. (a) Upon the terms and subject to the
conditions of this Agreement and in accordance with the DGCL, at the Effective
Time, (i) Acquisition shall be merged with and into the Company, (ii) the
separate corporate existence of Acquisition shall cease and (iii) the Company
shall be the surviving corporation (the "Surviving Corporation") and shall
continue its corporate existence under the laws of the State of Delaware.
(b) The Merger shall become effective at the time of filing
of a certificate of merger substantially in the form of Exhibit A attached
hereto (the "Certificate of Merger"), with the Secretary of State of the State
of Delaware in accordance with the provisions of Section 251 of the DGCL, or at
such later date as the parties may mutually agree (the "Effective Time").
Subject to the terms and conditions of this Agreement, the Company and
Acquisition shall duly execute and file the Certificate of Merger with the
Secretary of State of the State of Delaware at the time of the Closing. The
closing of the Merger (the "Closing") shall take place at the offices of Sidley
& Austin, 875 Third Avenue, New York, New York, at 10:00 a.m., two business days
after the date on which the last of the conditions set forth in Section 6 shall
have been satisfied or waived, or on such other date, time and place as the
parties may mutually agree (the "Closing Date").
(c) At the Effective Time, the effect of the Merger shall be
as provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and
Acquisition shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2. Certificate of Incorporation. The Certificate of
Incorporation of 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 Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable 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 or by applicable law.
1.4. Directors and Officers. From and after the Effective
Time, (a) the directors of Acquisition at the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws
A-2
<PAGE> 84
of the Surviving Corporation, and (b) the officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case, until their respective successors are duly elected or appointed and
qualified.
1.5. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of 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, no 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 1.7, 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 3.1350 (such number as
adjusted in accordance with Section 1.6, the "Exchange Ratio") of a validly
issued, fully paid and nonassessable share of Lucent Common Stock. 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 such shares shall cease to have any
rights with respect thereto, other than the right to receive (i) 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 1.7;
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. No Fractional Shares. No certificates or scrip
representing fractional shares of Lucent Common Stock shall be issued upon the
surrender for exchange of Certificates and such fractional share shall not
entitle the record or beneficial owner thereof to vote or to any other rights as
a stockholder of Lucent. In lieu of receiving any such fractional share, the
stockholder shall receive cash (without interest) in an amount rounded to the
nearest whole cent, determined by multiplying (i) the per share closing price on
the New York Stock Exchange, Inc. (the "NYSE") of Lucent Common Stock (as
reported on the NYSE Composite Transactions Tape as such Tape is reported in the
Wall Street Journal or another recognized business
A-3
<PAGE> 85
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.
1.8. 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 1.7 and
1.8(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 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 1.7 and (C) certain dividends and distributions in accordance with
Section 1.8(c), and the Certificates so surrendered shall then be canceled.
Subject to Section 1.7 and Section 1.8(c), until surrendered as contemplated by
this Section 1.8(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 1.7 until such holder shall have surrendered
its Certificates pursuant to this Section 1.8. 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
A-4
<PAGE> 86
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 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 1.7 and 1.8(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.
1.9. No Further Ownership Rights in Company Common Stock. All
certificates representing shares of Lucent Common Stock delivered upon the
surrender for exchange of the Certificates in accordance with the terms hereof
(including any cash paid pursuant to Section 1.7) 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.
A-5
<PAGE> 87
1.10. 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 and distributions payable in
respect thereof) which are delivered to a public official pursuant to an
official request under any applicable abandoned property, escheat or similar
law.
1.11. 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, 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 the Company. 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 on the Company. The Company has made available to Lucent prior to the
execution of this Agreement complete and correct copies of its certificate of
A-6
<PAGE> 88
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 sets forth a true and complete list of each of the Company's
Subsidiaries. All the outstanding shares of capital stock of, or other equity
interest in, each Subsidiary of the Company have been validly issued, including
in compliance with all applicable federal and state securities laws, are fully
paid and nonassessable and are owned directly or indirectly by the Company, free
and clear of all Liens and free of any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests except
restrictions under applicable law.
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 February 4, 2000,
(i) 12,814,280 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) 250,000 shares of Company Preferred Stock have been designated as Series A
junior participating preferred stock, par value $.001 per share, and reserved
for issuance upon exercise of the right (the "Company Right") to purchase junior
preferred stock, par value $.001 per share, pursuant to the Rights Agreement
dated as of March 3, 1995 (the "Company Rights Agreement"), between the Company
and First Interstate Bank of California,; (iv) no shares of Company Preferred
Stock were issued and outstanding; (v) not more than 10,026,630 shares of
Company Common Stock were reserved for issuance pursuant to the 1990 Stock
Option Plan, the 1994 Equity Participation Plan, the 1999 Non-Qualified Stock
Option Plan and the Stephen R. Rizzone Non-Qualified Stock Option Agreement
(such plans or agreement, collectively, the "Company Stock Plans"), of which
4,203,226 shares are subject to outstanding Company Stock Options. All
outstanding shares of capital stock of the Company are, and all shares which may
be issued will be, 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.
(b) Except as set forth in paragraph (a), at the close of
business on February 4, 2000, 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 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") or the Company Rights Agreement) 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 February 4, 2000, of the number of shares of
Company Common Stock subject to Company Stock Options and the exercise prices
thereof.
(c) 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 stockholders of the
Company may vote are issued or outstanding.
A-7
<PAGE> 89
(d) Except as set forth in this Section 2.3 and except for
changes since February 4, 2000, resulting from the issuance of shares of Company
Common Stock pursuant to the Company Stock Options outstanding as of February 4,
2000, 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, (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 February 4,
2000, 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.
Except as set forth in Item 2.3(d) of the Company Disclosure Schedule, 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 as set forth in Item 2.3(e) of the Company Disclosure Schedule and 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 Stockholder
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 Stockholder Approval. 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) Except as set forth in Item 2.5 of the
Company Disclosure Schedule, 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
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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 the Company or any of its Subsidiaries under, (i) the certificate 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 Stockholders
Meeting for the approval by the stockholders 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
Certificate of Merger with the Secretary of State of the State of Delaware 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 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 May 1, 1998, all required registration statements,
reports, schedules, forms, statements, proxy or information statements and other
documents (including exhibits and all other information 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
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"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 stockholders and the time of the Company Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they 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 representation 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 (i) for liabilities
incurred in connection with this Agreement or the Option Agreement or the
transactions contemplated hereby or thereby, (ii) as disclosed in the Company
SEC Documents filed and publicly available
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prior to the date of this Agreement (as amended to the date of this Agreement,
the "Company Filed SEC Documents"), (iii) with respect to the matters set forth
in subsection (d) below that do not, individually or in the aggregate, exceed
$5,000,000, and (iv) as set forth in Item 2.8 of the Company Disclosure
Schedule, since April 30, 1999, the Company and its Subsidiaries have conducted
their business only in the ordinary course, and there has not been:
(a) any Material Adverse Effect in 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
financial statements included in the Company's quarterly report on Form 10-Q
that is part of 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, except in the ordinary course of
business consistent with past practice 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;
(g) 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;
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(h) entry into or commitment to enter into any other
material transaction except in the ordinary course of business consistent with
past practice; for the purposes of this subsection (h), a "material transaction"
is one that would be required by the Company to be disclosed in the Company SEC
Documents or in response to Item 2.10 or 2.11 of the Company Disclosure
Schedule.
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 recent balance sheet contained in the Company's
quarterly report on Form 10-Q that is part of 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) Except as set forth in Item 2.9(b) of the Company
Disclosure Schedule, neither the Company nor any or its Subsidiaries owns any
real property. As to the Company's owned real property, the Company or a
Subsidiary (i) has good and marketable and insurable title to, such properties,
free and clear of all Liens, except for Permitted Liens, has, and Lucent
immediately after the Closing will have, access to public roads or valid
easements over private streets or private property for such ingress to and
egress from such properties, except for such items that, individually or in the
aggregate, do not materially interfere with the Company's ability to conduct its
business as currently conducted.
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 is required to make payments
of over $250,000 per annum.
2.11. Contracts. Except as set forth on Item 2.11 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any (a) non-competition agreement or any other similar
agreement or obligation which purports to limit in any material respect the
manner in which, or the localities in which, the business of the Company and its
Subsidiaries is conducted or by which the Company manufactures or distributes
its products, (b) material agreement that contains a change in control provision
for which Lucent would not receive the benefits of such agreement upon the
consummation of the transactions contemplated hereby, (c) agreement that would
create rights to any Person against Lucent or any of its Affiliates (other than
rights that would remain solely against the Company as in effect on the Closing
Date), or (d) joint venture or partnership agreement to which the Company or any
of its Subsidiaries is a party.
2.12. Absence of Default. Except as set forth in Item 2.12 of
the Company Disclosure Schedule, each of the Company and its Subsidiaries has
fulfilled and performed in all material respects its obligations under each of
the leases, contracts and other agreements listed or required to be listed in
Items 2.10 and 2.11 of the Company Disclosure Schedule 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
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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 with, and is not in violation of, any law, ordinance
or governmental rule or regulation (collectively, "Laws") to which it or its
business is subject, except where the failure to comply with such Laws could not
reasonably be expected to have a Material Adverse Effect on the Company.
(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 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, could not reasonably be expected
to have a Material Adverse Effect on the Company.
(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, except for
any such violation which could not reasonably be expected to have a Material
Adverse Effect on the Company.
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
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intellectual property rights and computer programs (the "Intellectual Property
Rights"), in each case, 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 infringed upon any patent rights of any other
Person, except (i) as set forth in Item 2.15 of the Company Disclosure Schedule
and (ii) for any such infringement which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. In addition, neither the Company nor any of its Subsidiaries has
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property Rights (other than patent rights) or other proprietary
information of any other Person, except for any such infringement which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. 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, except for any such interference, infringement, misappropriation
or conflict which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
(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, or substantially similar 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,
except for failures to do so that individually or in the aggregate could not
reasonably be expected to be material to the Company.
(e) The Company has completed a program directed at ensuring
that its and its Subsidiaries' products (including prior and current products
and technology and products and technology currently under development) are
capable upon installation of (i) operating in the same manner and in accordance
with their specifications on dates in both the Twentieth and Twenty-First
centuries and (ii) accurately processing, providing and receiving date data
from,
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into and between the Twentieth and Twenty-First centuries, including the years
1999 and 2000, and (iii) recognizing year 2000 as a leap year, provided that all
non-Company products (e.g., hardware, software or firmware) used in or in
combination with the Company's products properly exchange data with the
Company's products in the same manner on dates in both the Twentieth and
Twenty-First centuries. In addition, the Company has installed all available
Year 2000-related customer upgrades and 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. Finally, in conjunction with the Year 2000 date
transitions, the Company has not experienced any material date-related failures
of its systems and has no knowledge of any date-related issued experience by its
customers with respect to the Company's products.
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 on the Company. 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. Except as set forth in Item 2.16 of the Company Disclosure
Schedule, 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.
(d) Except as set forth in Item 2.16 of the Company
Disclosure Schedule, 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.
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(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. Absence of Changes in Benefit Plans. Except as set forth
in Item 2.17 of the Company Disclosure Schedule, 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 by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, welfare benefit or other
plan, arrangement or understanding providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries
(collectively, the "Company Benefit Plans"), or any change in any actuarial or
other assumption used to calculate funding obligations with respect to any the
Company pension plans, or any change in the manner in which contributions to any
the Company pension plans are made or the basis on which such contributions are
determined.
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 on the Company under the Employee Retirement Income Security Act
of 1974, as amended ("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. Except as set forth in Item 2.18(b)
of the Company Disclosure Schedule, 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 Internal Revenue Service (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
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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) Except as set forth in Item 2.18(d) of the Company
Disclosure Schedule, 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. Except as set forth in Item 2.18(d) of
the Company Disclosure Schedule, 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. Except as
set forth in Item 2.18(d) of the Company Disclosure Schedule, no Person is
entitled to receive any additional payment from the Company or its Subsidiaries
or any other Person (a "Parachute Gross-Up Payment") in the event that the
excise tax of Section 4999 of the Code is imposed on such Person. Except as set
forth in Item 2.18(d) of the Company Disclosure Schedule, 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) Except as set forth in Item 2.18(e) of the Company
Disclosure Schedule, 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.
(f) The Company and its Subsidiaries are in compliance with
all federal, state and local requirements regarding employment, except for any
failures to comply that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries is a party to any collective bargaining or other
labor union contract applicable to persons employed by the Company or any of its
Subsidiaries and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. As of the date of this Agreement, there is
no labor dispute, strike or work stoppage against the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened which may
interfere with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage individually or
in the aggregate could not reasonably be expected to have a Material
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Adverse Effect on the Company. As of the date of this Agreement, to the
knowledge of the Company, none of the Company, any of its Subsidiaries or any of
their respective representatives or employees has committed any unfair labor
practice in connection with the operation of the respective business of the
Company or any of its Subsidiaries, and there is no charge or complaint against
the Company or any of its Subsidiaries by the National Labor Relations Board or
any comparable governmental agency pending or threatened in writing, in each
case except where such actions, charges or complaints, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company.
2.19. Environmental Laws. The Company has not received any
notice or claim (and is not aware of any facts that would form a reasonable
basis for any claim), or entered into any negotiations or agreements with any
other Person, and, to the best knowledge of the Company, 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 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
liability or seeking any remedial action in connection with any Environmental
Laws, which, in either case, could not reasonably be expected to have a Material
Adverse Effect on the Company.
2.20. Voting Requirements; Board Approval and Recommendation.
(a) The affirmative vote of the holders of a majority of all outstanding shares
of Company Common Stock at the Company Stockholders Meeting to adopt this
Agreement (the "Company Stockholder 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.
(b) The Board of Directors of the Company, by resolutions
duly adopted by unanimous vote of those voting at a meeting duly called and held
and not subsequently rescinded or modified in any way (the "Company Board
Approval"), has duly (i) determined that this Agreement, the Option Agreement
and the Merger are fair to and in the best interests of the Company and its
stockholders, and has declared the Merger to be advisable, (ii) approved this
Agreement, the Option Agreement, the Merger and the other transactions
contemplated hereby and thereby, (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 stockholders for consideration. 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.
2.21. State Takeover Statutes. The Board of Directors of the
Company (including the disinterested directors thereof) has 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 Option Agreement,
and such approval constitutes approval of the Merger and the other transactions
contemplated by this Agreement and the Option Agreement by the Company's Board
of Directors under the provisions of Section 203 of the DGCL and represents
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all the action necessary to ensure that such Section 203 does not apply to
Lucent in connection with the Merger and the other transactions contemplated by
this Agreement and the Option Agreement. To the knowledge of the Company, no
other state takeover statute is applicable to the Merger or the other
transactions contemplated hereby and by the Option Agreement.
2.22. Company Rights Agreement. The Company has taken all
necessary action (i) to render the Company Rights inapplicable to the Merger and
the other transactions contemplated by this Agreement or the Option Agreement
and (ii) to ensure that (x) neither Lucent nor any of its affiliates is an
Acquiring Person (as defined in the Company Rights Agreement) and (y) a
Distribution Date (as defined in the Company Rights Agreement) does not occur by
reason of the announcement or consummation of the Merger or the consummation of
any of the other transactions contemplated by this Agreement or the Option
Agreement.
2.23. Brokers. No broker, investment banker, financial advisor
or other Person, other than SoundView Technology Group, Inc., or its successor,
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.
2.24. Opinion of Financial Advisor. The Company has received
the opinion of SoundView Technology Group, Inc., or its successor, 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.
2.25. 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
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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. Each of Lucent and
Acquisition 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.
3.2. Capital Structure. Except as set forth in Item 3.3 of
the Lucent Disclosure Schedule, the authorized capital stock of Lucent consists
of (i) 6,000,000,000 shares of common stock, par value $.01 per share ("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 ("Lucent Junior
Preferred Stock"). As of December 31, 1999, (i) approximately 3,178,657,861
shares of Lucent Common Stock were issued and outstanding, (ii) no shares of
Lucent Junior Stock Preferred Stock were issued and outstanding and (iii) other
than the Lucent Junior Preferred Stock, no other shares of Lucent Authorized
Preferred Stock are issued and outstanding. As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of Lucent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of Lucent may vote are issued or
outstanding. All outstanding shares of capital stock of Lucent are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
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
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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 certificate of
incorporation or by-laws 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 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 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.
(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
Certificate of Merger with the Secretary of State of the State of Delaware 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.
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, in each case (i), (ii) and (iii) which could reasonably be
expected to have a Material Adverse Effect on Lucent, its Subsidiaries and
Acquisition taken as a whole.
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, 1998 (the "Lucent SEC Documents"). As of their respective
dates, the Lucent SEC Documents complied in all material
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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. 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.
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 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 stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The 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.
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 (the "Lucent Filed SEC Documents"), since September 30, 1999, 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, (ii) except insofar
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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 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 issuances of Lucent Common Stock upon the exercise of
outstanding stock options or other rights to purchase or receive Lucent Common
Stock granted under stock compensation plans maintained by Lucent, various plans
of companies acquired by Lucent, and warrants issued by companies acquired by
Lucent, in each case awarded prior to the date hereof in accordance with their
present terms.
3.9. 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.
3.10. Interim Operations of Acquisition. Acquisition was
formed solely for the purpose of engaging in transactions of the type
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
3.11. 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.
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 material
business relations with the Company or such Subsidiary.
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4.2. Prohibited Actions Pending Closing. Unless otherwise
provided for herein or approved by Lucent in writing (which Lucent approval in
the case of any matters covered under subsection (j) below cannot be
unreasonably withheld), 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 Certificate 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 grant any options or make
other agreements with respect to, any shares of its capital stock or any other
of its securities, except for the issuance of stock options to new employee
hires consistent with past practice and 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 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 $500,000 or capital expenditures which are, in
the aggregate, in excess of $2,000,000, 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;
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(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 material 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 or in accordance with their terms, of liabilities reflected or reserved
against in the most recently audited balance sheet (and the notes thereto)
included 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 of the Company or its Subsidiaries;
(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 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 1999 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
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(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, reasonable access during normal business
hours 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,
reasonable access during normal business hours 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 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
Section 6 not being satisfied.
(d) The Company shall give prompt notice to Lucent, and
Lucent shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence, of any event which would be likely to cause (A) any
representation or warranty contained in this Agreement or the Option Agreement
to be untrue or inaccurate in any material respect or (B) any covenant,
condition or agreement contained in this Agreement or the Option 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.
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(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 to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any time prior to the date
of the Company Stockholders Meeting (the "Applicable Period"), the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
and its representatives may, in response to a Superior Proposal which was not
solicited by it or which did not otherwise result from a breach of this Section
5.2(a), and subject to providing prior written notice of its decision to take
such action to Lucent and compliance with Section 5.2(c), (x) 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 (y)
participate in discussions or negotiations regarding such Superior Proposal. For
purposes of this Agreement, "Takeover Proposal" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of 15% or more of the assets of the Company and its Subsidiaries, taken as a
whole, or 15% or more of any class or series of equity securities of the Company
or any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class or series of equity securities of the Company or any of its Subsidiaries,
or 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) 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) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent, agreement in principle, merger
agreement, acquisition agreement, option agreement or other similar agreement or
propose publicly or agree to do any of the foregoing (each, an "Acquisition
Agreement") related to any
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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), if the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law, the Board of Directors of the
Company may (subject to this and the following sentence) 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 tenth 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 the 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 stockholders 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.
(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 (and
no later than 48 hours) 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 stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders 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 Stockholders 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
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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
stockholders 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 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 stockholders of the Company.
(b) The Company shall, as soon as practicable following the
date of this Agreement, establish a record date (which will be as soon as
practicable following the date of this Agreement) for, duly call, give notice
of, convene and hold a meeting of its stockholders (the "Company Stockholders
Meeting") solely for the purpose of obtaining the Company Stockholder Approval.
The Company shall, through its Board of Directors, recommend to its stockholders
the approval and adoption of this Agreement, the Merger and the other
transactions contemplated hereby. Without limiting the generality of the
foregoing but subject to its right 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.
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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.
(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.
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 reasonably 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 reasonably 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
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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 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 to the nearest one-hundredth of a 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 applicable withholding taxes.
(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.
5.7. Company Stock Plans. At the Effective Time, by virtue of
the Merger, the Company Stock Plans and the Company Stock Options granted
thereunder shall be assumed by
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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. 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 stockholders 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, 1999. From the Effective Time to the Benefits Date
(which the parties acknowledge may occur on different dates with respect to
different plans, programs or arrangements of the Company) (the "Continuation
Period"), Lucent shall provide, or cause to be provided, the employee benefit
plans, programs and arrangements of the Company provided to employees of the
Company as of the date hereof.
(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 for the plan year in which the Effective Time occurs.
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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 (i) 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 indemnifications provision of the Company's
Certificate of Incorporation or By-laws as each is in effect on the date hereof
and (ii) any indemnification agreements of the Company listed in Item 5.9(a) of
the Company Disclosure Schedule (as each is in effect on the date hereof), the
existence of which does not constitute a breach of this Agreement, shall be
assumed by the Surviving Corporation in the Merger, without further action, as
of the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms, and Lucent shall cause the
Surviving Corporation to honor all such rights.
(b) 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 stockholders 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
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Company pursuant to Section 10(b)(i) or 10(c), or (ii) this Agreement is
terminated by the Company pursuant to Section 10(e) or (iii) this Agreement is
terminated 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 $90 million (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 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 stockholders of
the Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. 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.
5.13. Listings. 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. Stockholder Litigation. The Company shall give Lucent
the opportunity to participate in the defense of any stockholder litigation
against the Company and/or its directors relating to the transactions
contemplated by this Agreement and the Option Agreement.
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5.15. Reorganization. Each of Lucent, Acquisition and the
Company shall not take any action and shall not fail to take any action which
action or failure to act would prevent, or would be likely to prevent, the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
5.16. Company Rights Agreement. (a) The Board of Directors of
the Company shall take all further action (in addition to that referred to in
Section 2.22) requested in writing by Lucent (including redeeming the Company
Rights immediately prior to the Effective Time of the Merger or amending the
Company Rights Agreement) in order to render the Company Rights inapplicable to
the Merger and the other transactions contemplated by this Agreement and the
Option Agreement. Except as requested in writing by Lucent or as permitted by
Section 5.16(b), prior to the Company Stockholders Meeting, the Board of
Directors of the Company shall not (i) amend the Company Rights Agreement or
(ii) take any action with respect to, or, except as specifically permitted by
Section 5.16(b), make any determination under, the Company Rights Agreement
(including a redemption of the Company Rights).
(b) If, to the extent permitted by Section 5.2, the Board of
Directors of the Company approves or recommends a Superior Proposal, the Company
may take appropriate action under the Company Rights Agreement solely in order
to render the Company Rights inapplicable to such Superior Proposal; provided,
that the foregoing shall not permit the Company to make any determination under,
or take any action with respect to, the Company Rights Agreement in order to
render the Company Rights applicable to the Merger or any of the other
transaction contemplated by this Agreement or the Option Agreement, or to redeem
the Company Rights.
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 each of the following conditions precedent:
(a) Stockholder Approval. The Company Stockholder Approval
shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) 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 D-1 and D-2.
(d) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued
by any court or other Governmental Entity of competent jurisdiction or other
legal restraint or prohibition
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(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.
(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.
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 additional 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 shall be true and correct as of the date hereof and as of the Closing
with the same effect as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. 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) Tax Opinion. Lucent shall have received a written
opinion from Sidley & Austin, counsel to Lucent, on the date on which the Form
S-4 is declared effective by the SEC and on the Closing Date, in each case dated
as of such respective date, to the effect that on the basis of certain facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon representation letters signed by officers of Lucent,
Acquisition and the Company substantially in the forms attached as Exhibits D-1
and D-2 to this Agreement.
(c) Non-Disclosure and Non-Competition Agreements. Each of
the individuals listed on Item 6.2(c) of the Company Disclosure Schedule shall
have entered into the
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Non-Disclosure and Non-Competition Agreements with the Surviving Corporation and
Lucent, each substantially in the form of Exhibit E hereto, and such agreements
shall be in full force and effect.
(d) 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.
(e) Company Rights Agreement. The Company Rights shall not
have become nonredeemable, exercisable, distributable or triggered pursuant to
the terms of the Company Rights Agreement.
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
additional 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 shall be true and correct as of the
date hereof and as of the Closing with the same effect as if made at and as of
such time (except to the extent expressly made as of an earlier date, in which
case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as
to "materiality" or "Material Adverse Effect" set forth therein) does not have,
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Lucent. The Company shall have received
certificates dated the Closing Date and signed by the President or a
Vice-President of Acquisition and an authorized signatory of Lucent, certifying
that the conditions specified in this Section 6.3(a) have been satisfied.
(b) Tax Opinion. The Company shall have received a written
opinion from Latham & Watkins, counsel to the Company, on the date on which the
Form S-4 is declared effective by the SEC and on the Closing Date, in each case
dated as of such respective date, to the effect that on the basis of certain
facts, representations and assumptions set forth in such opinion, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, such counsel
shall be entitled to rely upon representation letters signed by officers of
Lucent, Acquisition and the Company substantially in the forms attached as
Exhibits D-1 and D-2 to this Agreement.
6.4 Frustration of Closing Conditions. None of the Company,
Lucent or Acquisition may rely on the failure of any condition set forth in
Sections 6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure
was caused by such party's failure to use reasonable efforts to consummate the
Merger and the other transactions contemplated by this Agreement and the Option
Agreement, as required by and subject to Section 5.5
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7. Non-Survival of Representation 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 expressly requires
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 January 10, 2000, 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.
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 stockholders of the Company or the stockholders 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 either: (i)
the Effective Time shall not have occurred by December 31, 2000; 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
Stockholder Approval shall not have been obtained at a Company Stockholders
Meeting duly convened therefor or at any adjournment or postponement thereof;
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(d) by Lucent, if the Company or any of its directors or
officers shall participate in discussions or negotiations or furnish information
in 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 30 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 30 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.
(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.
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(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 or results of operations of
such party 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 and the transactions contemplated hereby
or (D) in the case of the Company, litigation commenced 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;
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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).
(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.
Microelectronics and Communications Technologies Group
2 Oak Way
Berkley Heights, New Jersey 07920-2332
Att: President
Telephone No: separately supplied
Facsimile No: separately supplied
with copies to:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
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<PAGE> 123
Murray Hill, NJ 07974
Att: Pamela F. Craven
Vice President and Secretary
Telephone No: separately supplied
Facsimile No: separately supplied
If to the Company:
Ortel Corporation
2015 West Chestnut Street
Alhambra, California 91803
Att: President and Chief Executive Officer
Telephone No: separately supplied
Facsimile No: separately supplied
with a copy to:
Latham & Watkins
650 Town Center Drive, 20th Floor
Costa Mesa, California 92626
Att: Patrick T. Seaver, Esq.
Telephone No: separately supplied
Facsimile No: separately supplied
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 Stockholder Approval,
provided that after any such approval there shall not be made any amendment that
by Law requires further approval by the stockholders of the Company or the
approval of the stockholders of Lucent without the further approval of such
stockholders. 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.
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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 DGCL shall be mandatorily applicable to the Merger and the rights of
stockholders in connection therewith.
16. No Benefit to Others. Except as expressly set forth in Section
5.9, 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. Effect of Termination. In the event of termination of this
Agreement by either the Company, Acquisition or Lucent as provided in Section
10, this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Lucent, Acquisition or the Company, other
than the provisions of Section 2.23, Section 5.10, Section 7 through (and
including) Section 21 but excluding Section 10, which provisions survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
18. Severability. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.
19. Section Headings. All section headings are for convenience
only and shall in no way modify or restrict any of the terms or provisions
hereof.
20. Schedules and Exhibits. All Schedules and Exhibits referred to
herein are intended to be and hereby are specifically made a part of this
Agreement.
21. 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.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have duly executed this Agreement as of the date first above
written.
LUCENT TECHNOLOGIES INC.
By: /s/ John T. Dickson
-------------------------------------
Name: John T. Dickson
Title: Executive VP and CEO, Microelectronics
and Communications Technologies
SOLARA ACQUISITION INC.
By: /s/ John T. Dickson
--------------------------------------
Name: John T. Dickson
Title: President
ORTEL CORPORATION
By: /s/ Stephen R. Rizzone
--------------------------------------
Name: Stephen R. Rizzone
Title: President, Chief Executive Officer
and Chairman of the Board
<PAGE> 126
GLOSSARY OF DEFINED TERMS
Defined Term Location of Definition
Adjusted Option..................................................Section 5.6(a)
Acquisition......................................................Preamble
Acquisition Agreement............................................Section 5.2(b)
Acquisition Common Stock ........................................Recitals
Affiliate........................................................Section 11
Agreement........................................................Preamble
Applicable Period................................................Section 5.2(a)
Authorizations...................................................Section 2.14(b)
Benefit Plan.....................................................Section 11
Benefits Date ...................................................Section 5.8(a)
best knowledge...................................................Section 11
Cap..............................................................Section 5.9(b)
Certificate of Merger............................................Section 1.1(b)
Certificates.....................................................Section 1.8(b)
Closing..........................................................Section 1.1(b)
Closing Date.....................................................Section 1.1(b)
Code.............................................................Section 11
Company..........................................................Preamble
Company Benefit Plans............................................Section 2.17(a)
Company Board Approval...........................................Section 2.20(b)
Company Common Stock.............................................Recitals
Company Disclosure Schedule......................................Section 2
Company Filed SEC Documents......................................Section 2.8
Company Preferred Stock..........................................Recitals
Company Proxy Statement..........................................Section 2.5(b)
Company Rights...................................................Section 2.3
Company Rights Agreement.........................................Section 2.3
Company SEC Documents............................................Section 2.6
Company Stockholder Approval.....................................Section 2.20(a)
Company Stockholders 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(a)
DGCL.............................................................Recitals
Effective Time...................................................Section 1.1(b)
Environmental Laws...............................................Section 11
ERISA............................................................Section 2.18(a)
Exchange Act.....................................................Section 2.5(b)
Exchange Agent...................................................Section 11
Exchange Fund....................................................Section 1.8(a)
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Exchange Ratio...................................................Section 1.5(c)
GAAP.............................................................Section 11
Governmental Entity..............................................Section 2.5(b)
Hazardous Substances.............................................Section 11
HSR Act..........................................................Section 2.5(b)
Indemnified Party................................................Section 5.9(a)
Intellectual Property Rights.....................................Section 2.15(a)
IRS..............................................................Section 2.18(b)
Laws.............................................................Section 2.14(a)
Liens............................................................Section 11
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
Merger...........................................................Recitals
Nasdaq...........................................................Section 2.5(b)
NYSE.............................................................Section 1.7
Option Agreement.................................................Recitals
Parachute Gross-Up Payment.......................................Section 2.18(d)
Permitted Liens..................................................Section 11
Person...........................................................Section 11
reasonable best efforts..........................................Section 11
Restraints.......................................................Section 6.1(d)
SEC..............................................................Section 2.5(b)
Securities Act...................................................Section 2.6
Subsidiary.......................................................Section 11
Superior Proposal................................................Section 5.2(b)
Surviving Corporation............................................Section 1.1(a)
Takeover Proposal................................................Section 5.2(a)
Tax..............................................................Section 11
Tax Return.......................................................Section 11
Termination Fee..................................................Section 5.10(b)
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ANNEX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of February 7, 2000 (this "Agreement"),
by and between ORTEL CORPORATION, a Delaware corporation ("Issuer"), and LUCENT
TECHNOLOGIES INC., a Delaware corporation ("Grantee").
RECITALS
A. Grantee, Solara 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 respective 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 2,550,041 (as adjusted as set forth herein) shares (the "Option
Shares") of common stock, par value $.001 per share ("Issuer Common Stock"), of
Issuer at a purchase price of $177.125 (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
earliest to occur of (A) the Effective Time and (B) 15 months after the first
occurrence of a Purchase Event, 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 such notice being herein
<PAGE> 129
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 (as defined in the Merger Agreement) 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
exercise its Cash-Out Right pursuant to Section 6(c) with respect to such number
of Option Shares for which such Regulatory Approval will not be issued or
granted or has not been issued or granted.
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 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
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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
FEBRUARY 7, 2000, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
ORTEL CORPORATION 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 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
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<PAGE> 131
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 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
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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 at any time during the period commencing on a Purchase Event and
ending on the termination of the Option in accordance with Section 2, Grantee
sends to Issuer an Exercise Notice indicating Grantee's election to exercise its
right (the "Cash-Out Right") pursuant to this Section 6(c), 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.
Notwithstanding the termination of the Option, Grantee will be entitled to
exercise its rights under this Section 6(c) if it has exercised such rights in
accordance with the terms hereof prior to the termination of the Option.
(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 $105 million 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 $105 million after taking into account
the foregoing actions.
(ii) Notwithstanding any other provision of this Agreement, the Option
may not be exercised for a number of Option Shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which, together
with any Termination Fee theretofore paid to Grantee, would exceed $105 million;
provided, that nothing in this sentence shall restrict any exercise of the
Option permitted hereby on any subsequent date.
(iii) 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 the exercise of the Cash-Out Right under 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).
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(iv) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of such proposal
assuming for such purpose that the Option was exercised on such date for such
number of Option Shares and assuming that such Option Shares, together with all
other Option Shares held by Grantee and its affiliates as of such date, were
sold for cash at the closing market price on The Nasdaq National Market (or, if
shares of Issuer Common Stock are not then listed or traded on The Nasdaq
National Market, on any other national securities exchange or national quotation
system on which shares of Issuer Common Stock are so listed or traded) for
shares of Issuer Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
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 reasonably 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 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
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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.
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.
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(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 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
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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
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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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.
ORTEL CORPORATION
By: /s/ Stephen R. Rizzone
____________________________________
Name: Stephen R. Rizzone
Title: President, Chief Executive Officer
and Chairman of the Board
LUCENT TECHNOLOGIES INC.
By: /s/ John T. Dickson
____________________________________
Name: John T. Dickson
Title: Executive VP and CEO, Microelectronics
and Communications Technologies
<PAGE> 138
ANNEX C
OPINION OF SOUNDVIEW TECHNOLOGY GROUP, INC.
[SoundView Technology Group Logo]
February 6, 2000
Board of Directors
Ortel Corporation
2015 West Chestnut Street
Alhambra, CA 91803
Gentlemen:
We understand that Lucent Technologies, Inc. ("Lucent"), Solara
Acquisition Inc. ("Merger Sub"), a wholly owned subsidiary of Lucent, and Ortel
Corporation (the "Company") are entering into an agreement and plan of merger
(the "Merger Agreement") substantially in the form of the draft dated February
4, 2000 (the "Draft Merger Agreement") pursuant to which, among other things,
Merger Sub shall be merged with and into the Company in a transaction (the
"Merger") in which each share of common stock, par value $.001 per share, of the
Company (the "Company Common Stock"), subject to the conditions and limitations
set forth in the Draft Merger Agreement, shall be converted into the right to
receive 3.1350 shares (the "Exchange Ratio") of the common stock, par value $.01
per share, of Lucent. The terms and conditions of the Merger are set forth in
more detail in the Draft Merger Agreement, a copy of which has been furnished to
us.
You have requested the opinion of SoundView Technology Group, Inc.
("SoundView"), as investment bankers, as of this date, as to the fairness, from
a financial point of view, to the holders of the Company Common Stock (other
than Lucent, its affiliates and subsidiaries), of the Exchange Ratio.
In conducting our analysis and arriving at our opinion as expressed
herein, we have, among other things:
(i) reviewed the Draft Merger Agreement and the specific terms of
the Merger set forth therein, and have assumed that the Merger
Agreement will not vary in any regard that is material to our
analysis;
(ii) reviewed the Company's financial and operating information for
the three year period ended April 30, 1999 and the six-month
period ended October 31, 1999;
(iii) reviewed Lucent's financial and operating information for the
three year period ended December 31, 1999;
<PAGE> 139
Board of Directors
Ortel Corporation
February 6, 2000
Page 2
(iv) reviewed certain financial and operating information regarding
the businesses, operations and prospects of the Company,
including forecasts and projections, provided to us by the
management of the Company;
(v) reviewed certain financial and operating information regarding
the businesses, operations and prospects of Lucent, including
forecasts and projections, published and disseminated by stock
market research analysts who follow Lucent (internal financial
forecasts and projections prepared by Lucent were not made
available for our review);
(vi) reviewed certain publicly available financial information
concerning certain other companies we deemed to be reasonably
similar to the Company and Lucent and the trading markets for
certain of such companies' securities;
(vii) reviewed the financial terms of the Merger and compared them
with the financial terms, to the extent publicly available, of
certain recent mergers and acquisitions that we deemed
relevant; and
(viii) performed such other analyses, examinations and procedures,
reviewed such other agreements and documents, and considered
such other factors as we have deemed, in our sole judgment, to
be necessary, appropriate or relevant to render the opinion
set forth herein.
We have also taken into account our assessment of general economic,
market and financial conditions and our experience in similar transactions, as
well as our experience in securities valuation in general. Our opinion is
necessarily based upon economic, market, financial and other conditions as they
exist and can be evaluated on the date hereof and we assume no responsibility to
update or revise our opinion based upon events or circumstances occurring after
the date hereof. We reserve, however, the right to withdraw, revise or modify
our opinion based upon additional information which may be provided to or
obtained by us, which suggests, in our judgment, a material change in the
assumptions upon which our opinion is based.
In arriving at our opinion, we have not made, obtained or assumed any
responsibility for, any independent evaluation or appraisal of the properties
and facilities or of the assets and liabilities (contingent or otherwise) of any
of the Company, Lucent or their respective subsidiaries. We have assumed and
relied upon the accuracy and completeness of the financial and other information
supplied to or otherwise used by us in arriving at our opinion and have not
attempted independently to verify, or undertaken any obligation to verify, such
information. We have further relied upon the assurances of the management of the
Company that they were not aware of any facts that would make such information
inaccurate or misleading. In addition, we have assumed that the forecasts and
projections provided to SoundView by the Company and reviewed by SoundView
represent the best currently available estimates and judgments of the Company's
<PAGE> 140
Board of Directors
Ortel Corporation
February 6, 2000
Page 3
management as to the future financial condition and results of operations of the
Company, and have assumed that such forecasts and projections have been
reasonably prepared based on such currently available estimates and judgments.
We assume no responsibility for and express no view as to such forecasts and
projections or the assumptions on which they are based.
We do not express any opinion as to the price at which Lucent's stock
will trade prior to or subsequent to the closing of the Merger. This letter does
not constitute a recommendation of the Merger over any other alternative
transactions which may be available to the Company, does not address the
underlying business decision of the Board of Directors of the Company to proceed
with or effect the Merger or constitute a recommendation to the stockholders of
the Company as to how such stockholders should vote or as to any other action
such stockholders should take regarding the Merger.
SoundView, as part of its investment banking services, is regularly
engaged in the valuation of businesses and their securities in connection with
mergers, acquisitions, divestitures, restructurings, recapitalizations,
negotiated underwritings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate and other purposes.
We have been engaged to render the financial opinion as expressed herein and we
will receive a fee upon delivery of this opinion. We also, from time to time,
may in the future perform certain financial advisory services for the Company
for which we may receive a fee. In the ordinary course of business, we may
actively trade the securities of Lucent or the Company for our own account and
for the accounts of our customers and, accordingly, may at any time hold a short
or long position in such securities. The Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion.
This letter and the opinion expressed herein has been prepared for the
confidential use and benefit of the Board of Directors of the Company in its
consideration of the Merger, supersedes any previously rendered opinion and may
not be reproduced, summarized, described or referred to or given to any other
person or otherwise made public without our prior written consent, except the
Company may include this opinion in its entirety in any proxy statement or
information statement relating to the transaction sent to the Company's
stockholders.
<PAGE> 141
Board of Directors
Ortel Corporation
February 6, 2000
Page 4
Based upon and subject to the foregoing, it is our opinion as
investment bankers that, as of the date hereof, the Exchange Ratio is fair, from
a financial point of view, to the holders of the Company Common Stock (other
than Lucent, its affiliates and subsidiaries).
Very truly yours,
/s/ SoundView Technology Group, Inc.
SoundView Technology Group, Inc.
<PAGE> 142
ANNEX D
VOTING AGREEMENT
THIS VOTING AGREEMENT dated as of February 7, 2000 (the
"Agreement"), is made by and among LUCENT TECHNOLOGIES INC., a Delaware
corporation ("Lucent"), SOLARA ACQUISITION INC., a Delaware corporation
("Acquisition"), and SUMITOMO OSAKA CEMENT CO., LTD., a corporation organized
under the laws of Japan ("Stockholder").
PRELIMINARY STATEMENTS
Concurrently with the execution of this Agreement, Ortel
Corporation, a Delaware corporation (the "Company"), Lucent and Acquisition have
entered into a Agreement and Plan of Merger (as the same may be amended from
time to time, the "Merger Agreement"), providing for the merger of Acquisition
with and into the Company, with the Company being the surviving corporation (the
"Merger"), which Merger is subject to the approval of the holders of shares of
capital stock of the Company as provided in the Merger Agreement, the Delaware
General Corporation Law, as amended, and the Company's Certificate of
Incorporation, as amended.
Stockholder owns 2,349,964 shares of the Company common stock, par
value $.001 per share (the "Common Stock"). As used herein, the term "Shares"
includes all shares of such Common Stock as to which Stockholder (at any time
prior to the termination of this Agreement) is the beneficial owner or is
otherwise able to direct the voting thereof and all securities issued or
exchanges with respect to any such Shares upon any reclassification,
recapitalization, reorganization, merger, consolidation, spin-off, stock split,
combination, stock or other dividend or any other change in the Company's
capital structure.
To induce Lucent and Acquisition to enter into the Merger Agreement,
the Company has agreed, upon the terms and subject to the conditions set forth
herein, to cause Stockholder to execute this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the parties to this
Agreement agree as follows:
1. Stockholder's Representations and Warranties. Stockholder
represents and warrants to Lucent and Acquisition that (i) except as set forth
in Schedule 1 hereto, Stockholder owns the Shares, as the case may be, free and
clear of any mortgage, pledge, lien, security interest, claim, restriction on
voting or otherwise or other encumbrance and (ii) Stockholder has the right to
vote such Shares free of any mortgage, pledge, lien, security interest, claim,
restriction on voting or otherwise or other encumbrance (other than any general
fiduciary obligation imposed by law).
2. No Voting Trusts. Stockholder hereby revokes any and all
proxies and voting instructions with respect to the Shares previously given by
Stockholder and Stockholder agrees that it will not grant or give any other
proxies or voting instructions with respect to the voting of the Shares, enter
into any voting trust or other arrangement or agreement with respect
<PAGE> 143
to the voting of the Shares (and if given or executed, such proxies, voting
instructions, voting trust or other arrangement or agreement shall not be
effective), or agree, in any manner, to vote the Shares for or against any
proposal submitted to the stockholders of the Company except in furtherance of
the proposals set forth in paragraph 3 hereof.
3. Agreements with Respect to the Shares. (a) Stockholder agrees
during the term of this Agreement:
(i) to vote the Shares, to the extent entitled to vote, (y) in
favor of the approval of the Merger Agreement and the Merger, at every
meeting of the stockholders of the Company at which such matters are
considered and at every adjournment thereof and (z) with respect to all
other proposals the approval or disapproval of which are, directly or
indirectly, reasonably necessary to consummate the Merger, in such manner
as Acquisition or Lucent may direct;
(ii) not to solicit, encourage or recommend to other stockholders
of the Company that (w) they vote their shares of Common Stock or any such
other securities in any contrary manner, (x) they not vote their shares of
Common Stock at all, (y) they tender, exchange or otherwise dispose of
their shares of Common Stock pursuant to a Competing Transaction, as
hereinafter defined, or (z) they attempt to exercise any statutory
appraisal or other similar rights they may have; and
(iii) to take such action as required on the part of Stockholder to
satisfy conditions to closing set forth in the Merger Agreement including
without limitation entering into any such agreements, arrangements or
understandings contemplated by Section 6 thereof.
(b) Unless otherwise instructed in writing by Lucent or
Acquisition, during the term of this Agreement, Stockholder will vote the Shares
against any Competing Transaction.
(c) Except with the prior written consent of Lucent or
Acquisition, during the term of this Agreement, Stockholder agrees that
Stockholder will not, and shall use its reasonable best efforts not to permit
any employee, attorney, accountant, investment banker or other agent or
representative of Stockholder to initiate, solicit, negotiate, encourage, or
provide confidential information in order to facilitate, any Competing
Transaction.
(d) For purposes of this Agreement, a "Competing Transaction"
shall mean a transaction of any kind (including, without limitation, a merger,
consolidation, share exchange, reclassification, reorganization,
recapitalization, sale or encumbrance of substantially all the assets of the
Company outside the ordinary course of business, or sale or exchange by
stockholders of the Company of all or substantially all the shares of the
Company's capital stock) proposed by any person(s) in lieu of or in opposition
to the Merger Agreement and the Merger.
4. Proxies. In furtherance of the foregoing, Stockholder is
granting to Richard Bleicher, the Vice President of Acquisition, and/or Paul
Bento, the Vice President and
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<PAGE> 144
Secretary of Acquisition, or to his or her designee(s), irrevocable proxies and
powers of attorney (which may be in the form annexed hereto or such other form
consistent with the terms hereof and thereof as Lucent or Acquisition may
specify) to vote the Shares, to the extent such Shares are entitled to vote, and
hereby specifically agrees not to revoke such proxies granted under any
circumstances:
(a) at any and all meetings of stockholders of the Company, notice
of which meetings are given prior to the due and proper termination of
this Agreement, with respect to matters presented to the Company's
stockholders for vote which are, directly or indirectly, reasonably
necessary to approve or disapprove (i) the Merger or the Merger Agreement;
and (ii) any Competing Transaction; or
(b) with respect to actions to be taken by written consent of the
stockholders of the Company which, directly or indirectly, relates to or
affects any of the foregoing, and which consent is solicited prior to the
due and proper termination of this Agreement.
5. Limitation on Sales. During the term of this Agreement, except
pursuant to the Merger, Stockholder agrees not to sell, assign, transfer, loan,
tender, pledge, hypothecate, exchange, encumber or otherwise dispose of, or
issue an option or call with respect to, any of the Shares, or impair
Stockholder's Shares.
6. Termination of Agreements. Stockholder hereby consents to the
termination of the Key Shareholder Agreement dated as of March 26, 1990, among
the Company, Stockholder and certain other Key Shareholders described therein,
and the Agreement Concerning Certain Financing and Business Arrangements dated
as of March 26, 1990, between the Company and Stockholder, in each case as of
the Closing Date. Effective as of the Closing Date, Lucent hereby agrees to
cause the Surviving Corporation (as defined in the Merger Agreement) to continue
to comply with all of the terms and conditions of the International Distributor
and Selling Representative Agreement between the Company and Stockholder dated
as of July 1, 1995.
7. Specific Performance. Stockholder acknowledges that it will be
impossible to measure in money the damage to Lucent or Acquisition if
Stockholder fails to comply with the obligations imposed by this Agreement, and
that, in the event of any such failure, neither Lucent nor Acquisition will have
an adequate remedy at law or in damages. Accordingly, Stockholder agrees that
injunctive relief or any other equitable remedy, in addition to any remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of any such remedy on the basis that Lucent or Acquisition
has an adequate remedy at law. Stockholder agrees not to seek, and agrees to
waive any requirement for, the securing or posting of a bond in connection with
Lucent or Acquisition seeking or obtaining such equitable relief.
8. Reasonable Efforts. Stockholder will use all reasonable
efforts to cause to be satisfied the conditions to the obligations of the
Company to effect the Closing under the Merger Agreement.
D-3
<PAGE> 145
9. Publicity. Stockholder agrees that, from the date hereof
through the Closing Date, Stockholder shall not issue any public release or
announcement concerning the transactions contemplated by this Agreement and the
Merger Agreement without the prior consent of Lucent, except (i) Stockholder may
file an amendment to its Schedule 13G originally filed with the Securities and
Exchange Commission on April 24, 1995, and (ii) as such release or announcement
may, in the opinion of Stockholder's counsel, be required by applicable law, in
which case Stockholder shall allow Lucent reasonable time to comment on such
release or announcement in advance of such issuance.
10. Term of Agreement; Termination.
(a) The term of this Agreement shall commence on the date hereof
and shall terminate upon the earliest to occur of (i) the Effective Time of the
Merger (as defined in the Merger Agreement) and (ii) the due and proper
termination of the Merger Agreement in accordance with its terms. Upon such
termination, no party shall have any further obligations or liabilities
hereunder.
(b) The obligations of Stockholder set forth in this Agreement
shall not be effective or binding upon Stockholder until after such time as the
Merger Agreement is executed and delivered by Lucent, Acquisition and the
Company.
11. Miscellaneous. (a) Entire Agreement. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter of this Agreement and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter of this Agreement.
(b) Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and shall be
deemed to have been duly given on the next business day after the same is sent,
if delivered personally or sent by telecopy or overnight delivery, or five
calendar days after the same is sent, if sent by registered or certified mail,
return receipt requested, postage prepaid, as set forth below, or to such other
persons or addresses as may be designated in writing in accordance with the
terms hereof by the party to receive such notice.
If to Acquisition or Lucent:
Lucent Technologies Inc.
Microelectronics and Communications Technologies Group
2 Oak Way
Berkley Heights, New Jersey 07920-2332
Att: President
Telecopy: separately supplied
with a copy to:
D-4
<PAGE> 146
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, New Jersey 07094
Att: Pamela F. Craven
Vice President and Secretary
Telecopy: separately supplied
If to Stockholder:
Sumitomo Osaka Cement Co., Ltd.
1 Kanda, Mitoshiro-cho
Chiyoda-ku, Tokyo, 101-8677
Japan
Att: Tatsutoku Honda, Managing Director
Telecopy: separately supplied
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York as applied to
contracts made and fully performed in such state without giving effect to the
principles of conflict of laws thereof and except insofar as the Delaware
General Corporation Law, as amended, shall be mandatorily applicable to the
Merger and the rights of the stockholders of the Company in connection
therewith.
(d) Rules of Construction. The descriptive headings in this
Agreement are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement. Words
used in this Agreement, regardless of the gender and number specifically used,
shall be deemed and construed to include any other gender, masculine or
feminine, or neuter, and any other number, singular or plural, as the context
requires. As used in this Agreement, the word "including" is not limiting, and
the word "or" is not exclusive.
(e) Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of the parties to this Agreement and their legal
successors-in-interest, and nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, but all such counterparts together shall constitute but one
instrument.
(g) Assignment. No party hereto shall assign its rights and
obligations under this Agreement or any part thereof, nor shall any party assign
or delegate any of its rights or duties hereunder without the prior written
consent of the other party, and any assignment made
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<PAGE> 147
without such consent shall be void. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(h) Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
(i) Extension; Waiver. Any party to this Agreement may extend the
time for the performance of any of the obligations or other acts of any of the
other parties to this Agreement or waive compliance by any other party with any
of the agreements or conditions contained herein or any breach thereof. Any
agreement on the part of any 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.
(j) Severability. The provisions of this Agreement are severable
and, if any thereof are invalid or unenforceable in any jurisdiction, the same
and the other provisions hereof shall not be rendered otherwise invalid or
unenforceable.
(k) Fiduciary Duty as Director. The parties hereto acknowledge and
agree that Stockholder's obligations hereunder are solely in its capacity as a
stockholder of the Company, and that none of the provisions herein set forth
shall be deemed to restrict or limit any fiduciary duty any of the undersigned
or any of their respective affiliates, directors, officers or employees may have
as a member of the Board of Directors of the Company, as an executive officer of
the Company, or otherwise as a fiduciary to any person (other than any of the
stockholders of the Company) resulting from any circumstances other than as a
stockholder of the Company; provided that, no such duty shall excuse Stockholder
from its obligations as a stockholder of the Company to vote the Shares, to the
extent that they may be so voted, or otherwise perform any obligation as herein
provided and to otherwise comply with the terms and conditions of this
Agreement.
D-6
<PAGE> 148
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have duly executed this Voting Agreement on the date first above
written.
LUCENT TECHNOLOGIES INC.
By: /s/ John T. Dickson
------------------------------------
Name: John T. Dickson
Title: Executive VP and CEO, Microelectronics
and Communications Technologies
SOLARA ACQUISITION INC.
By: /s/ John T. Dickson
-------------------------------------
Name: John T. Dickson
Title: President
SUMITOMO OSAKA CEMENT CO., LTD.
By: /s/ Tatsutoku Honda
----------------------------------
Name: Tatsutoku Honda
Title: Managing Director
<PAGE> 149
FORM OF
IRREVOCABLE PROXY AND POWER OF ATTORNEY
The undersigned hereby appoints Richard Bleicher, the Vice President
of Solara Acquisition Inc. ("Acquisition") and/or Paul Bento, the Vice President
and Secretary of Acquisition, as the undersigned's attorney-in-fact and proxy,
with full power of substitution, for and in the undersigned's name, to vote,
express consent or disapproval, or otherwise act in such manner (including
pursuant to written consent, but excluding the right to assert, perfect and
prosecute dissenters' rights of appraisal) upon such matters as set forth in
Sections 3(a) and 3(b) of the Voting Agreement with respect to all of the shares
of Common Stock, par value $.001 per share, of Ortel Corporation., a Delaware
corporation (the "Company"), owned of record by the undersigned.
The proxy granted hereby shall be irrevocable and may be exercised
at any meeting of stockholders, notice of which is given, or in respect of any
written consent which is solicited prior to the due and proper termination of,
and subject to and in accordance with the terms and conditions of, the Voting
Agreement, dated of even date herewith, among the undersigned, Lucent
Technologies Inc., Acquisition and the stockholders of the Company signatory
thereto. This proxy is coupled with an interest sufficient in law to support
such proxy.
Dated: February 7, 2000
SUMITOMO OSAKA CEMENT CO., LTD.
By: /s/ Tatsutoku Honda
----------------------------
Name: Tatsutoku Honda
Title: Managing Director
D-i
<PAGE> 150
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
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<PAGE> 151
registrant thereunder in respect of any occurrence or matter arising prior to
any such repeal or modification.
The registrant's Certificate of Incorporation also specifically
authorizes the registrant to maintain insurance and to grant similar
indemnification rights to employees or agents of the registrant. The directors
and officers of the registrant are covered by insurance policies indemnifying
them against certain liabilities, including certain liabilities arising under
the Securities Act 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 SoundView Technology Group, Inc., attached as Annex C to
the proxy statement/prospectus which is 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.
II-2
<PAGE> 152
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes as follows:
(1) 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 paragraph (c)(1)
immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with
an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the
registration statement and will not be used until
such amendment is effective, and that, for purposes
of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification
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<PAGE> 153
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.
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<PAGE> 154
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Murray Hill, New
Jersey, on March 1, 2000.
LUCENT TECHNOLOGIES INC.
(Registrant)
By: /s/ James S. Lusk
-------------------------------------
Name: James S. Lusk
Title: Senior Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this
amendment has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
<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 ###### By: /s/ James S. Lusk
OFFICER: # __________________________
# (James S. Lusk,
James S. Lusk Senior Vice President and Controller # attorney-in-fact)*
#
DIRECTORS: # * by power of attorney
Paul A. Allaire #
Carla A. Hills # Date: March 1, 2000
Richard A. #
McGinn #
Paul H. O'Neill #
Henry B. Schacht #
Franklin A. Thomas #
John A. Young ###
</TABLE>
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<PAGE> 155
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
2.1** Agreement and Plan of Merger dated as of February 7, 2000 by
and among the registrant, Solara Acquisition Inc. and Ortel
Corporation (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 February 7, 2000 by and
between the registrant and Ortel Corporation (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 , 2000.
3.2* Provisions of the By-Laws of the registrant, as amended
effective February 17, 1999, that define the rights of
security holders of the registrant (incorporated by reference
to Exhibit (3)(ii) to the registrant's Annual Report on Form
10-K for the year ended September 30, 1999).
4.1* 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 on Form S-3 No.
333-01223).
4.2 Other instruments in addition to Exhibit 4.1 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 Latham & Watkins 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 on Form S-1 No. 333-00703).
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 on Form S-1 No.
333-00703).
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 on Form S-1 No.
333-00703).
10.4* 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 on Form S-1
No. 333-00703).
</TABLE>
II-6
<PAGE> 156
<TABLE>
<CAPTION>
<S> <C>
10.5* 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).
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 on Form S-1 No.
333-00703).
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 on Form S-1 No.
333-00703).
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 on Form S-1 No. 333-00703).
10.9* Lucent Technologies Inc. Short Term Incentive Program
(incorporated by reference to Exhibit (10)(iii)(A)(2) to the
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
Quarterly Report on Form 10-Q for the quarter ended March 31,
1998).
10.11* Lucent Technologies Inc. 1996 Long Term Incentive Program
(Plan) Restricted Stock Unit Award Agreement (incorporated by
reference to Exhibit (10)(iii)(A)(3) to the registrant's
Annual Report on Form 10K for the period ended September 30,
1999).
10.12* Lucent Technologies Inc. 1996 Long Term Incentive Program
(Plan) Nonstatutory Stock Option Agreement (incorporated by
reference to Exhibit (10)(iii)(A)(4) to the registrant's
Annual Report on Form 10K for the period ended September 30,
1999).
10.13* 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).
10.14* Pension Plan for Lucent Non-Employee Directors (incorporated
by reference to Exhibit 10.11 to Registration Statement on
Form S-1 No. 333-00703)(this plan has been terminated).
10.15* 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).
10.16* 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).
10.17* 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).
</TABLE>
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<PAGE> 157
<TABLE>
<CAPTION>
<S> <C>
10.18* 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).
10.19* 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).
10.20* Employment Agreement of Mr. Verwaayen dated June 12, 1997
(incorporated by reference to Exhibit (10)(iii)(A)(1) to the
registrant's Annual Report on Form 10-K for the period ended
September 30, 1997).
10.21* Employment Agreement of Mr. Peterson dated August 8, 1995
(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).
10.22* Consulting Agreement of Mr. Schacht, effective March 1, 1998
(incorporated by reference to Exhibit (10)(iii)(A)(5) to the
Quarterly Report on Form 10-Q for the period ended March 31,
1998).
10.23* 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).
10.24* 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).
10.25* 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).
10.26 Voting Agreement dated as of February 7, 2000 by and among the
registrant, Solara Acquisition Inc. and Sumitomo Osaka Cement
Co., Ltd. (included as Annex D to the proxy
statement/prospectus which is part of this registration
statement on Form S-4).
23.1 Consent of Pamela F. Craven, Vice President--Law and Secretary
of the registrant (included as part of Exhibit 5.1 to this
registration statement).
23.2 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.3 Consent of KPMG LLP, Independent Accountants.
23.4 Consent of Latham & Watkins (included as part of Exhibit 8.1
to this registration statement).
23.5 Consent of SoundView Technology Group, Inc.
24.1 Powers of Attorney.
99.1 Form of Proxy to be mailed to holders of Ortel common stock.
99.2 Opinion of SoundView Technology Group, Inc. (included as Annex
D to the proxy statement/prospectus which is a part of this
registration statement on Form S-4).
</TABLE>
- ---------------
* Incorporated herein by reference.
**The registrant hereby agrees to furnish supplementally a copy of any omitted
schedules to this agreement to the Securities and Exchange Commission upon its
request
II-8
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
LUCENT TECHNOLOGIES INC.
-------------------
ARTICLE I
NAME
The name of the corporation (which is hereinafter referred to as the
"Corporation") is: "Lucent Technologies Inc."
ARTICLE II
REGISTERED AGENT
The address of the Corporation's registered office in the State of Delaware is
1013 Centre Road, Wilmington, Delaware 19805, county of New Castle. The name of
the Corporation's registered agent at such address is The Prentice Hall
Corporation System, Inc.
ARTICLE III
PURPOSE
The purpose of the Corporation shall be to engage in any lawful act or activity
for which corporations may be organized and incorporated under the General
Corporation Law of the State of Delaware (the "DGCL").
ARTICLE IV
CAPITAL STOCK
SECTION 1. The Corporation shall be authorized to issue 10,250,000,000 shares of
capital stock, of which 10,000,000,000 shares shall be shares of Common Stock,
$.01 par value ("Common Stock"), and 250,000,000 shares shall be shares of
Preferred Stock, $1.00 par value ("Preferred Stock").
SECTION 2. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for the issuance
of shares of Preferred Stock in series and, by filing a certificate pursuant to
the DGCL (hereinafter referred to as a "Preferred Stock Designation"), to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, privileges, preferences and rights
of the shares of each such series and the qualifications, limitations
<PAGE> 2
and restrictions thereof. The authority of the Board of Directors with respect
to each series shall include, but not be limited to, determination of the
following:
(a) the designation of the series, which may be by distinguishing number, letter
or title;
(b) the number of shares of the series, which number the Board of Directors may
thereafter (except where otherwise provided in the Preferred Stock Designation)
increase or decrease (but not below the number of shares thereof then
outstanding);
(c) whether dividends, if any, shall be cumulative or noncumulative, and, in the
case of shares of any series having cumulative dividend rights, the date or
dates or method of determining the date or dates from which dividends on the
shares of such series shall be cumulative;
(d) the rate of any dividends (or method of determining such dividends) payable
to the holders of the shares of such series, any conditions upon which such
dividends shall be paid and the date or dates or the method for determining the
date or dates upon which such dividends shall be payable;
(e) the price or prices (or method of determining such price or prices) at
which, the form of payment of such price or prices (which may be cash, property
or rights, including securities of the same or another corporation or other
entity) for which, the period or periods within which and the terms and
conditions upon which the shares of such series may be redeemed, in whole or in
part, at the option of the Corporation or at the option of the holder or holders
thereof or upon the happening of a specified event or events, if any;
(f) the obligation, if any, of the Corporation to purchase or redeem shares of
such series pursuant to a sinking fund or otherwise and the price or prices at
which, the form of payment of such price or prices (which may be cash, property
or rights, including securities of the same or another corporation or other
entity) for which, the period or periods within which and the terms and
conditions upon which the shares of such series shall be redeemed or purchased,
in whole or in part, pursuant to such obligation;
(g) the amount payable out of the assets of the Corporation to the holders of
shares of the series in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation;
(h) provisions, if any, for the conversion or exchange of the shares of such
series, at any time or times at the option of the holder or holders thereof or
at the option of the Corporation or upon the happening of a specified event or
events, into shares of any other class or classes or any other series of the
same or any other class or classes of stock, or any other security, of the
Corporation, or any other corporation or other entity, and the price or prices
or rate or rates of conversion or exchange and any adjustments applicable
thereto, and all other terms and conditions upon which such conversion or
exchange may be made;
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(i) restrictions on the issuance of shares of the same series or of any other
class or series, if any; and
(j) the voting rights, if any, of the holders of shares of the series.
SECTION 3. The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. The holders of shares of Common Stock
shall be entitled to one vote for each such share upon all proposals presented
to the stockholders on which the holders of Common Stock are entitled to vote.
Except as otherwise provided by law or by the resolution or resolutions adopted
by the Board of Directors designating the rights, powers and preferences of any
series of Preferred Stock, the Common Stock shall have the exclusive right to
vote for the election of directors and for all other purposes, and holders of
Preferred Stock shall not be entitled to receive notice of any meeting of
stockholders at which they are not entitled to vote. The number of authorized
shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the outstanding Common Stock, without a vote of the
holders of the Preferred Stock, or of any series thereof, unless a vote of any
such holders is required pursuant to any Preferred Stock Designation.
The Corporation shall be entitled to treat the person in whose name any share of
its stock is registered as the owner thereof for all purposes and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
on the part of any other person, whether or not the Corporation shall have
notice thereof, except as expressly provided by applicable law.
SECTION 4. There has been created a series of Preferred Stock, par value $1.00
per share, of the Corporation having the following designation, number of
shares, relative rights, preferences, and limitations:
(a) Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 25,000,000. Such number of shares may be increased or decreased
by resolution of the Board of Directors; provided that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
(b) Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A
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Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock,
and of any other junior stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share
amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of Common Stock);
provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is
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a date after the record date for the determination of holders of shares
of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which
events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series A Preferred Stock
in an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
(c) Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
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(d) Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series A Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4(d), purchase or otherwise acquire such
shares at such time and in such manner.
(e) Reacquired Shares. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their
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cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the Certificate of
Incorporation, or in any other Certificate of Designations creating a new series
of Preferred Stock or any similar stock or as otherwise required by law.
(f) Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (1)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(g) Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence
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with respect to the exchange or change of shares of Series A Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(h) No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
(i) Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
(j) Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
ARTICLE V
STOCKHOLDER ACTION
Effective as of the time at which AT&T Corp., a New York corporation, and its
affiliates shall cease to be the beneficial owner of an aggregate of at least a
majority of the then outstanding shares of Common Stock (the "Trigger Date"),
any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such holders.
Effective as of the Trigger Date, except as otherwise required by law and
subject to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, special
meetings of stockholders of the Corporation for any purpose or purposes may be
called only by the Board of Directors pursuant to a resolution stating the
purpose or purposes thereof approved by a majority of the total number of
Directors which the Corporation would have if there were no vacancies (the
"Whole Board") or by the Chairman of the Board of Directors of the Corporation
and, effective as of the Trigger Date, any power of stockholders to call a
special meeting is specifically denied. No business other than that stated in
the notice shall be transacted at any special meeting. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of all shares of the
Corporation entitled to vote generally in the election of directors (the "Voting
Stock") then outstanding, voting together as a single class, shall be required
to alter, amend, adopt any provision inconsistent with or repeal this Article V.
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ARTICLE VI
ELECTION OF DIRECTORS
Unless and except to the extent that the By-Laws of the Corporation shall so
require, the election of directors of the Corporation need not be by written
ballot.
ARTICLE VII
BOARD OF DIRECTORS
SECTION 1. NUMBER, ELECTION AND TERMS. Except as otherwise fixed by or pursuant
to the provisions of Article IV hereof relating to the rights of the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, the number of the Directors of the Corporation shall be fixed
from time to time exclusively pursuant to a resolution adopted by a majority of
the Whole Board (but shall not be less than three). The Directors, other than
those who may be elected by the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, one class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
1997, another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1998, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
1999, with each class to hold office until its successor is duly elected and
qualified. At each succeeding annual meeting of stockholders, directors elected
to succeed those directors whose terms then expire shall be elected for a term
of office to expire at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until such person's successor
shall have been duly elected and qualified.
SECTION 2. STOCKHOLDER NOMINATION OF DIRECTOR CANDIDATES; STOCKHOLDER PROPOSAL
OF BUSINESS. Advance notice of stockholder nominations for the election of
Directors and of the proposal of business by stockholders shall be given in the
manner provided in the By-Laws of the Corporation, as amended and in effect from
time to time.
SECTION 3. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Except as otherwise
provided for or fixed by or pursuant to the provisions of Article IV hereof
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
directors under specified circumstances, newly created directorships resulting
from any increase in the number of Directors and any vacancies on the Board of
Directors resulting from death, resignation, disqualification, removal or other
cause shall be filled by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any Director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the class of Directors in which the new directorship was created or the vacancy
occurred and until such Director's successor
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shall have been duly elected and qualified. No decrease in the number of
Directors constituting the Board of Directors shall shorten the term of any
incumbent Director.
SECTION 4. REMOVAL. Subject to the rights of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation to elect
Directors under specified circumstances, 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 Voting Stock then outstanding, voting together as a
single class.
SECTION 5. AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of all Voting Stock then
outstanding, voting together as a single class, shall be required to alter,
amend, adopt any provision inconsistent with or repeal this Article VII.
ARTICLE VIII
BY-LAWS
The By-Laws may be altered or repealed and new By-Laws may be adopted (1) 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 thereat, provided, however, that any proposed alteration or
repeal of, or the adoption of any By-Law inconsistent with, Section 2.2, 2.7 or
2.10 of Article II of the By-Laws or with Section 3.2, 3.9 or 3.11 of Article
III of the By-Laws or this sentence, by the stockholders shall require the
affirmative vote of the affirmative vote of the holders of at least 80% of the
voting power of all Voting Stock then outstanding, voting together as a single
class; and provided, further, however, that in the case of any such stockholder
action at a special meeting of stockholders, notice of the proposed alteration,
repeal or adoption of the new By-Law or By-Laws must be contained in the notice
of such special meeting, or (2) by the affirmative vote of a majority of the
Whole Board. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the voting power of all Voting Stock then outstanding, voting together as
a single class shall be required to alter, amend, adopt any provision
inconsistent with or repeal this Article VIII.
ARTICLE IX
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time from time to time to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and, except as set forth in Article X, all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject
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to the right reserved in this Article. Notwithstanding anything contained in
this Certificate of Incorporation to the contrary, the affirmative vote of the
holders of at least 80% of the Voting Stock then outstanding, voting together as
a single class, shall be required to alter, amend, adopt any provision
inconsistent with or repeal Article V, VII, VIII or this sentence.
ARTICLE X
LIMITED LIABILITY; INDEMNIFICATION
SECTION 1. LIMITED LIABILITY OF DIRECTORS. A director of the Corporation shall
not be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except, if required by the
DGCL, as amended from time to time, for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Neither the amendment nor repeal of Section 1 of this Article X shall eliminate
or reduce the effect of Section 1 of this Article X in respect of any matter
occurring, or any cause of action, suit or claim that, but for Section 1 of this
Article X would accrue or arise, prior to such amendment or repeal.
SECTION 2. INDEMNIFICATION AND INSURANCE.
(a) Right to Indemnification. Each person who was or is made a party 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 Corporation or is or was serving at the request of the
Corporation 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 Corporation to the fullest
extent authorized by the DGCL, 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 Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement, and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974, as in effect from
time to time) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
such person's heirs, executors and administrators; provided, however, that,
except as provided in paragraph (b) hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to
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indemnification conferred in this Section shall be a contract right and shall
include the right to have the Corporation pay the expenses incurred in defending
any such proceeding in advance of its final disposition; any advance payments to
be paid by the Corporation within 20 calendar days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time; provided, however, that, if and to the
extent the DGCL requires, the payment of such expenses incurred by a director or
officer in such person's capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, to the extent authorized from
time to time by the Board of Directors, grant rights to indemnification, and
rights to have the Corporation pay the expenses incurred in defending any
proceeding in advance of its final disposition, to any employee or agent of the
Corporation to the fullest extent of the provisions of this Article with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this
Section is not paid in full by the Corporation within 30 calendar days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standard of conduct which makes
it permissible under the DGCL for the Corporation to indemnify the claimant for
the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because the claimant has met the
applicable standard of conduct set forth in the DGCL, nor an actual
determination by the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise. No repeal or modification of this Article
shall in any way diminish or adversely affect the rights of any
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director, officer, employee or agent of the Corporation hereunder in respect of
any occurrence or matter arising prior to any such repeal or modification.
(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the DGCL.
(e) Severability. If any provision or provisions of this Article X shall be held
to be invalid, illegal or unenforceable for any reason whatsoever: (1) the
validity, legality and enforceability of the remaining provisions of this
Article X (including, without limitation, each portion of any paragraph of this
Article X containing any such provision held to be invalid, illegal or
unenforceable, that is not itself held to be invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (2) to the fullest
extent possible, the provisions of this Article X (including, without
limitation, each such portion of any paragraph of this Article X containing any
such provision held to be invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
-13-
<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF PAMELA F. CRAVEN]
February 29, 2000
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 pursuant to the
Securities Act of 1933 (the "Act"). The Registration Statement relates to the
proposed issuance by Lucent of up to 54,519,127 shares (the "Shares") of its
common stock, par value $0.01 per share (together with the attached rights to
purchase junior preferred stock), pursuant to the Agreement and Plan of Merger
(the "Merger Agreement") dated as of February 7, 2000, among Lucent, Solara
Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of Lucent
("MergerSub"), and Ortel Corporation, a Delaware corporation ("Ortel"). The
Merger Agreement provides for the merger of MergerSub with and into Ortel, with
Ortel 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
I hereby consent to the inclusion of this opinion as an
exhibit to the Registration Statement and to the reference to me and this
opinion in the proxy statement/prospectus that forms a part of the Registration
Statement. In giving such consent, I do not hereby admit that I am in the
category of persons whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Pamela F. Craven
2
<PAGE> 1
[LATHAM & WATKINS LETTERHEAD]
March , 2000 Exhibit 8.1
Ortel Corporation
2015 West Chestnut Street
Alhambra, California 91803
Re: Agreement and Plan of Merger dated as of February 7, 2000, by and
among Lucent Technologies Inc., Solara Acquisition Inc. and Ortel
Corporation
Ladies and Gentlemen:
We have acted as special counsel to Ortel Corporation, a Delaware
corporation (the "Company"), in connection with the proposed merger (the
"Merger") of Solara Acquisition Inc., a Delaware corporation ("Acquisition")
and wholly owned subsidiary of Lucent Technologies Inc., a Delaware corporation
("Lucent"), with and into the Company. All capitalized terms used but not
defined herein have the meanings ascribed to them in the Agreement and Plan of
Merger, dated as of February 7, 2000, among Lucent, Acquisition and the Company
(the "Merger Agreement").
In that connection, pursuant to Section 6.3(b) of the Merger Agreement,
you have requested our opinion regarding whether the Merger will be treated as
a reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). In rendering our opinion, we have assumed with your
consent that (i) the representations made by Lucent, Acquisition and the
Company in letters provided to us and Sidley & Austin, counsel to Lucent, dated
as of the date hereof are true, correct and complete, and will be true, correct
and complete as of the Effective Time (as if made as of the Effective Time),
and (ii) any representations made
<PAGE> 2
LATHAM & WATKINS
March , 2000
Page 2
in such letters "to the best knowledge of" or similarly qualified are true,
correct and complete without such qualification. We have also examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in (i) the Merger Agreement, (ii) the
registration statement on Form S-4 which includes the Proxy Statement/Prospectus
(the "Registration Statement") filed by Lucent with the Securities and Exchange
Commission (the "SEC"), and (iii) such other documents and corporate records as
we have deemed necessary or appropriate for purposes of our opinion.
In addition, we have assumed that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has
been due execution and delivery of all documents where due execution and
delivery are prerequisites to the effectiveness thereof;
2. The Merger will be consummated in the manner contemplated by the
Registration Statement and in accordance with the provisions of the Merger
Agreement, and will be effective under the laws of the State of Delaware;
3. All statements, descriptions and representations contained in any of the
documents referred to herein or otherwise made to us are true and correct
in all material respects, and no actions have been taken or will be taken
which are inconsistent with such statements, descriptions or
representations or which make any such statements, descriptions or
representations untrue or incorrect in any material respect; and
4. Any statements made in any of the documents referred to herein "to the
knowledge of" or similarly qualified are correct and will continue to be
true, correct and complete at all times up to and including the Closing
Date, in each case without such qualification.
If any of the above-described assumptions is untrue for any reason or if
the Merger is consummated in a manner that is inconsistent with the manner in
which it is described in the Merger Agreement and Registration Statement, our
opinion as expressed below may be adversely affected and may not be relied upon.
Based upon the foregoing, and subject to the qualifications and limitations
stated herein, we are of the opinion that for federal income tax purposes the
Merger will be treated as a reorganization within the meaning of Section 368(a)
of the Code.
In addition to the matters set forth above, this opinion is subject to the
exceptions, limitations and qualifications set forth below:
<PAGE> 3
LATHAM & WATKINS
March , 2000
Page 3
1. This opinion represents and is based upon our best judgment
regarding the application of United States Federal income tax laws arising
under the Code, judicial decisions, administrative regulations and published
rulings and procedures. Our opinion is not binding upon the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue
Service will not assert a contrary position. Furthermore, no assurance can be
given that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the accuracy of
the conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
United States federal income tax laws.
2. This opinion addresses only the matters set forth above and,
except as stated above, does not address any other United States federal,
state, local or foreign tax consequences that may result from the Merger or any
other transaction. In addition, we express no opinion as to any transaction
other than the Merger as described in the Merger Agreement or to any
transaction whatsoever, including the Merger, if, to the extent relevant to our
opinion, either all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of the Merger Agreement and without
waiver or breach of any provisions thereof or all of the representations,
warranties, statements and assumptions upon which we have relied are not true
and accurate at all relevant times. In the event that any one of the
statements, representations, warranties or assumptions upon which we have
relied to issue this opinion is incorrect, our opinion might be adversely
affected and may not be relied upon.
3. This opinion has been delivered to you for your use in connection
with the filing of the Registration Statement with the SEC and for the purpose
of satisfying the requirement set forth in Section 6.3(b) of the Merger
Agreement. It is not to be used, circulated, quoted or otherwise referred to
for any other purpose without our express written permission. In addition, this
opinion letter may not be relied upon by or furnished to any other person,
firm, corporation or entity without our prior written consent.
Very truly yours,
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Lucent Technologies Inc. of our report, dated January
20, 2000, relating to the consolidated financial statements and financial
statement schedule, which appears in Exhibit 99.1 to Lucent Technologies Inc.
Current Report on Form 8-K dated February 10, 2000. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/PRICEWATERHOUSECOOPERS LLP
-----------------------------
PRICEWATERHOUSECOOPERS LLP
New York, New York
February 29, 2000
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Ortel Corporation:
We consent to the incorporation by reference in the registration statement on
Form S-4 of Lucent Technologies Inc. of our report dated May 26, 1999, except
for note 12 which is as of June 2, 1999, with respect to the consolidated
balance sheets of Ortel Corporation as of April 30, 1999 and 1998, and the
related consolidated statements of operations and cash flows, and the related
schedule, which report appears in the April 30, 1999 annual report on Form 10-K
of Ortel Corporation, and to the reference to our firm under the heading
"Experts" in the proxy statement/prospectus.
/s/ KPMG LLP
KPMG LLP
Los Angeles, California
February 29, 2000
<PAGE> 1
Exhibit 23.5
Consent of SoundView Technology Group, Inc.
We hereby consent to the use of our name and to the description of our
opinion letter, dated February 6, 2000, in, and to the inclusion of such opinion
letter as Annex C to, the proxy statement/prospectus of Ortel Corporation,
constituting part of the registration statement on Form S-4 of Lucent
Technologies, Inc., filed with the Securities and Exchange Commission. In giving
such consent, we do not thereby admit that we come within the category of
persons whose consent is required under, or that we are experts with respect to
any part of such registration statement within the meaning of the term "experts"
as used in, the Securities Act of 1933, as amended, or the rules and regulations
of the Securities and Exchange Commission promulgated thereunder.
SOUNDVIEW TECHNOLOGY GROUP, INC.
By: /s/ Paul J. Mejean
- ----------------------------
Name: Paul J. Mejean
Title: Managing Director
February 29, 2000
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MAN 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, in connection with the
acquisition by the Company of Ortel Corporation, including up to 50,000 shares
to be offered under Ortel's 401(k) Plan; and
WHEREAS, the undersigned is a director and/or officer of the
Company, as indicated below his or her signature:
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Donald K. Peterson and James S. Lusk and each of them, as attorneys for
and in the name, place and stead of the undersigned, and in the capacity of the
undersigned as a director and/or officer of the Company, to execute and file any
such registration statement with respect to the above described common shares
and thereafter to execute and file any amended registration statement or
statements with respect thereto or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to all
intents and purposes, as the undersigned might or could do if personally present
at the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power
of Attorney this 16th day of February, 2000.
By: /s/ PAUL A. ALLAIRE
----------------------------------------
Paul A. Allaire
Director
By: /s/ CARLA A. HILLS
----------------------------------------
Carla A. Hills
Director
By: /s/ RICHARD A. McGINN
----------------------------------------
Richard A. McGinn
Chairman of the Board and
Chief Executive Officer
<PAGE> 2
By: /s/ PAUL H. O'NEILL
----------------------------------------
Paul H. O'Neill
Director
By: /s/ HENRY B. SCHACHT
----------------------------------------
Henry B. Schacht
Director
By: /s/ FRANKLIN A. THOMAS
----------------------------------------
Franklin A. Thomas
Director
By: /s/ JOHN A. YOUNG
----------------------------------------
John A. Young
Director
By: /s/ DONALD K. PETERSON
----------------------------------------
Donald K. Peterson
Executive Vice President and
Chief Financial Officer
By: /s/ JAMES S. LUSK
----------------------------------------
James S. Lusk
Senior Vice President and Controller
<PAGE> 1
EXHIBIT 99.1
ORTEL CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON , 2000
The undersigned stockholder of Ortel Corporation revoking all prior
proxies, hereby appoints Stephen R. Rizzone, Nadav Bar-Chaim and Roger Hay, or
each of them acting singly, proxies, with full power of substitution, to vote
all shares of Ortel common stock which the undersigned is entitled to vote at
the special meeting of stockholders to be held at
, on ,
2000, beginning at a.m., local time, and at any adjournment or postponement
of the meeting, upon matters set forth in the Notice of Special Meeting dated
,2000, 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 Ortel 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 will 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 ORTEL BOARD OF DIRECTORS. A
STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD
OF DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
(Please fill in the appropriate boxes on the other side)
<PAGE> 2
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
|X| PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
To adopt the Agreement and Plan of Merger dated as of February
7, 2000, among Lucent Technologies Inc., Solara Acquisition
Inc., a wholly owned subsidiary of Lucent, and Ortel Corporation.
FOR / /
AGAINST / /
ABSTAIN / /
</TABLE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF
NO DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSAL SET FORTH ABOVE, WILL BE
VOTED FOR SUCH PROPOSAL.
DATED: , 2000
- --------------------------
Signature of Stockholder(s)
Please promptly complete, date and sign this proxy promptly 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)
APPEARS ON THE STOCK CERTIFICATE.
If stockholder is a corporation, please sign full corporate name by
president or other authorized officer and, if a partnership, please sign 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 / /
