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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO RULE 13d-2(a)
ORTEL CORPORATION
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of Class of Securities)
68749W102
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(CUSIP Number)
Pamela F. Craven
Vice President -- Law and Secretary
Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, NJ 07974
(908) 582-8500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 7, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
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* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 68749W102 13D Page 2 of 9 Pages
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<S> <C>
1 Name of Reporting Person
Lucent Technologies Inc.
I.R.S. Identification Number of Above Person
22-3408857
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2 Check The Appropriate Box if a Member of a Group (a) [ ]
(b) [X]
(c) [ ]
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3 SEC Use Only
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4 Source of Funds
OO
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5 Check Box if Disclosure of Legal Proceeding SIS Required
Pursuant to Item 2(D) Or 2(E) [ ]
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power
Number of Shares
Beneficially None
Owned By Each ---------------- ---------------------------------------
Reporting Person 8 Shared Voting Power
With
2,349,964
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9 Sole Dispositive Power
None
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10 Shared Dispositive Power
None
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11 Aggregate Amount Beneficially Owned By Each Reporting
Person
2,349,964
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12 Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
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13 Percent of Class Represented By Amount In Row (11)
19.6%
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14 Type of Reporting Person
CO
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CUSIP No. 68749W102 Page 3 of 9 Pages
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ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the
common stock, par value $0.001 per share ("Ortel Common Stock"), of Ortel
Corporation, a Delaware corporation ("Ortel"). The address of the principal
executive offices of Ortel is 2015 West Chestnut Street, Alhambra, CA, 91803.
ITEM 2. IDENTITY AND BACKGROUND.
Lucent Technologies Inc. ("Lucent") is a Delaware corporation with
its principal office and business at 600 Mountain Avenue, Murray Hill, NJ 07974.
Lucent designs, builds and delivers a wide range of private and public networks,
communication systems and software, business telephone systems and
microelectronic components.
The attached Schedule I is a list of the directors and executive
officers of Lucent which contains the following information with respect to each
such person:
(a) name;
(b) business address;
(c) present principal occupation or employment and the name,
principal business and address of any corporation or other organization in which
such employment is conducted; and
(d) citizenship.
During the last five years, neither Lucent nor, to the best of
Lucent's knowledge, any person named in Schedule I (i) has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of which such person was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Voting Agreement dated as of February 7, 2000 (the
"Voting Agreement") between Lucent and Sumitomo Osaka Cement Co., Ltd.
("Sumitomo Osaka"), Lucent may be deemed to be the beneficial owner of 2,349,964
shares of Ortel Common Stock. See the response to Item 5. Sumitomo Osaka entered
into the Voting Agreement to induce Lucent to enter into the Agreement and Plan
of Merger dated as of February 7, 2000 (the "Merger Agreement"), among Lucent,
Solara Acquisition Inc., a Delaware corporation and wholly owned subsidiary of
Lucent ("Acquisition"), and Ortel.
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CUSIP No. 68749W102 Page 4 of 9 Pages
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The descriptions of the Merger Agreement and the Voting Agreement
contained herein are qualified in their entirety by reference to such
agreements, which are attached hereto as Exhibits 1 and 2.
ITEM 4. PURPOSE OF TRANSACTION.
The Voting Agreement was entered into as a condition to the
willingness of Lucent to enter into the Merger Agreement and to increase the
likelihood that the approval of Ortel's stockholders required in connection with
the merger of Acquisition with and into Ortel (the "Merger") pursuant to the
terms of the Merger Agreement will be obtained. In the Merger, Ortel will
continue as the surviving corporation (the "Surviving Corporation") and as a
wholly owned subsidiary of Lucent.
In addition to providing for the Merger, the Merger Agreement
restricts Ortel from, among other things, engaging in certain transactions,
including extraordinary corporate transactions (other than the Merger), selling
certain assets, changing its capitalization (including by purchasing any of its
capital stock or by issuing any capital stock or other voting securities),
amending its certificate of incorporation or by-laws, paying dividends,
incurring indebtedness, making loans or advances to other persons, making
certain acquisitions and making certain capital expenditures, and otherwise
requires Ortel to operate in the ordinary course of business. The restrictions
described in this paragraph are subject to certain exceptions.
Pursuant to the Merger Agreement, in connection with the Merger, the
directors of Acquisition, from and after the effective time of the Merger, will
be the directors of the Surviving Corporation. Pursuant to the Merger Agreement,
in connection with the Merger the certificate of incorporation of Ortel will be
amended and restated in its entirety. Among other changes, Article IV thereof
shall read as follows: "The total number of shares of stock which the
corporation shall have authority to issue is one thousand (1,000), all of which
are without par value. All such shares are of one class and are shares of Common
Stock". Such certificate of incorporation, as amended and restated, of Ortel
will be the certification of incorporation of the Surviving Corporation.
In connection with the Merger, it is expected that Ortel Common
Stock will be delisted from the NASDAQ National Market System and will become
eligible for termination of registration under the Securities Exchange Act of
1934, as amended.
The descriptions of the Merger Agreement and the Voting Agreement
contained herein are qualified in their entirety by reference to such
agreements, which are attached hereto as Exhibits 1 and 2.
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CUSIP No. 68749W102 Page 5 of 9 Pages
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As of February 7, 2000, 2,349,964 shares of Ortel Common Stock were
subject to the Voting Agreement. Such shares represented approximately 19.6% of
Ortel Common Stock issued and outstanding as of February 7, 2000.
Pursuant to the Voting Agreement, Sumitomo Osaka has agreed, among
other things, (i) to vote its shares of Ortel Common Stock (a) in favor of the
approval of the Merger Agreement, and the approval of the Merger and (b) with
respect to all other proposals, the approval or disapproval of which are
reasonably necessary to consummate the Merger, in such a manner as Acquisition
and Lucent may direct, (ii) subject to certain exceptions, not to sell, assign,
transfer, loan, tender, pledge or otherwise dispose of, or issue an option or
call with respect to, any of such shares or impair its shares, and (iii) to
grant irrevocable proxies and powers of attorney to the Vice President and/or
Vice President and Secretary of Acquisition with respect to matters necessary to
approve or disapprove the Merger, the Merger Agreement and any competing
transaction. Accordingly, pursuant to the Voting Agreement, Lucent may be deemed
to have acquired shared voting power with respect to the Ortel Common Stock
subject to the Voting Agreement.
The descriptions of the Merger Agreement and the Voting Agreement
contained herein are qualified in their entirety by reference to such
agreements, which are attached hereto as Exhibits 1 and 2.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The information set forth under Items 3, 4 and 5 above are
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Agreement and Plan of Merger dated as of
February 7, 2000, by and among Lucent, Acquisition and
Ortel.
Exhibit 2: Voting Agreement dated as of February 7, 2000 by and
among Lucent, Acquisition and Sumitomo Osaka
<PAGE> 6
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CUSIP No. 68749W102 Page 6 of 9 Pages
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(Signature)
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: February 16, 2000
LUCENT TECHNOLOGIES INC.
By: /s/ Pamela F. Craven
----------------------------
Name: Pamela F. Craven
Title: Vice President -- Law
and Secretary
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CUSIP No. 68749W102 Page 7 of 9 Pages
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SCHEDULE I
Name, business address and present
principal occupation or employment of
the directors and executive officers of
Lucent Technologies Inc.
Unless otherwise indicated, the business address of each director
and executive officer is 600 Mountain Avenue, Murray Hill, New Jersey 07974.
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Name, Business Address Principal Occupation Citizenship
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<S> <C> <C>
Paul A. Allaire Chairman of the Board of Xerox Corporation. United States of America
Xerox Corporation Director, Sara Lee Corp.; SmithKline Beecham
800 Long Ridge Road p.l.c.; J.P. Morgan & Co., Inc.; priceline.com
P.O. Box 1600 Incorporated
Stamford, CT 06904
John T. Dickson Executive Vice President and CEO, United States of America
Microelectronics and Communications Technologies
of Lucent
Carla A. Hills Chairman of the Board and Chief Executive United States of America
Hills & Company Officer of Hills & Company. Director, American
1200 Nineteenth St., N.W. International Group, Inc.; Chevron Corp; Time
Washington, DC 20036 Warner Inc.
Richard A. McGinn Chairman of the Board and Chief Executive United States of America
Officer of Lucent. Director, Oracle
Corporation; American Express Company
Arun N. Netravali President, Bell Laboratories of Lucent United States of America
</TABLE>
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CUSIP No. 68749W102 Page 8 of 9 Pages
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Name, Business Address Principal Occupation Citizenship
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<S> <C> <C>
Paul H. O'Neill Chairman of the Board of Alcoa Inc.; Chairman of United States of America
ALCOA the Rand Corporation. Director, Eastman Kodak
201 Isabella Street Company; the National Association of Securities
Pittsburgh, PA 15212-5858 Dealers, Inc.; the Gerald R. Ford Foundation;
Manpower Demonstration Research Corporation
William T. O'Shea Executive Vice President and CEO, United States of America
Enterprise Networks of Lucent
Donald K. Peterson Executive Vice President and Chief Financial United States of America
Officer of Lucent
Richard J. Rawson Senior Vice President and General Counsel of United States of America
Lucent
Patricia F. Russo Executive Vice President and CEO, Service United States of America
Provider Networks of Lucent
Henry B. Schacht Director and Senior Advisor of E.M. Warburg, United States of America
E.M. Warburg, Pincus & Co., Pincus & Co., LLC. Director, The Chase
LLC, 466 Lexington Avenue Manhattan Corporation and The Chase Manhattan
New York, NY 10017 Bank, N.A.; Alcoa Inc.; Cummins Engine Company,
Inc.; Johnson & Johnson; Knoll, Inc.; The New
York Times Company
</TABLE>
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CUSIP No. 68749W102 Page 9 of 9 Pages
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Name, Business Address Principal Occupation Citizenship
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<S> <C> <C>
Franklin A. Thomas Consultant to the TFF Study Group. Director, United States of America
TFF Study Group Alcoa Inc.; Citigroup N.A.; Cummins Engine
Fuller Building Company, Inc.; Pepsico, Inc.; Conoco, Inc.
595 Madison Avenue
New York, NY 10022
Ben J. M. Verwaayen Vice Chairman of Lucent The Netherlands
John A. Young Vice Chairman of Novell, Inc.; Vice Chairman of United States of America
Hewlett-Packard Co. Smithkline Beecham p.l.c.;Director, Wells
3200 Hillview Avenue Fargo Bank, Wells Fargo & Co.,; Chevron Corp.;
Palo Alto, CA 94304 Affymetrix, Inc.; Novell, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
SOLARA ACQUISITION INC.,
AND
ORTEL CORPORATION
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Dated as of February 7, 2000
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<PAGE> 2
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> 3
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
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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
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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
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<PAGE> 6
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.
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<PAGE> 7
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
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<PAGE> 8
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.
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<PAGE> 9
(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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<PAGE> 10
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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<PAGE> 11
"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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<PAGE> 13
(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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<PAGE> 14
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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<PAGE> 15
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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<PAGE> 16
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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<PAGE> 17
(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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<PAGE> 18
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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<PAGE> 19
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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<PAGE> 20
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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<PAGE> 21
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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<PAGE> 23
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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<PAGE> 25
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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<PAGE> 26
(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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<PAGE> 37
(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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<PAGE> 38
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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<PAGE> 39
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;
-38-
<PAGE> 40
(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.
-39-
<PAGE> 41
(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;
-40-
<PAGE> 42
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
-41-
<PAGE> 43
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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<PAGE> 44
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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<PAGE> 45
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> 46
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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<PAGE> 47
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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<PAGE> 48
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>
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<PAGE> 49
<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............29
-------------------------------------------------------------------
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>
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<PAGE> 50
<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..............................................................................42
-------------
16. No Benefit to Others.......................................................................43
--------------------
17. Effect of Termination......................................................................44
---------------------
18. Severability...............................................................................43
------------
19. Section Headings...........................................................................43
----------------
20. Schedules and Exhibits.....................................................................43
----------------------
21. Counterparts...............................................................................43
------------
</TABLE>
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<PAGE> 1
EXHIBIT 2
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> 2
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> 3
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.
-3-
<PAGE> 4
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:
-4-
<PAGE> 5
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
-5-
<PAGE> 6
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.
-6-
<PAGE> 7
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> 8
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
