AGREEMENT AND PLAN OF MERGER
Dated as of August 17, 1999
By and Among
LUCENT TECHNOLOGIES INC.,
DALLAS MERGER INC.
And
EXCEL SWITCHING CORPORATION
TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger......................................... 2
SECTION 1.02. Closing............................................ 2
SECTION 1.03. Effective Time..................................... 2
SECTION 1.04. Effects of the Merger.............................. 3
SECTION 1.05. Articles of Organization and By-laws............... 3
SECTION 1.06. Board of Directors and Officers.................... 3
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock............................ 4
(a) Capital Stock of Sub ...................... 4
(b) Cancelation of Treasury Stock and
Lucent-Owned Stock..................... 4
(c) Conversion of Excel Common Stock........... 4
(d) Dissenting Shares.......................... 4
(e) Anti-Dilution Provisions................... 5
SECTION 2.02. Exchange of Certificates........................... 5
(a) Exchange Agent............................. 5
(b) Exchange Procedures........................ 6
(c) Distributions with Respect to
Unexchanged Shares..................... 7
(d) No Further Ownership Rights in Excel
Common Stock........................... 7
(e) No Fractional Shares....................... 8
(f) Termination of Exchange Fund............... 9
(g) No Liability............................... 10
(h) Investment of Exchange Fund................ 10
(i) Lost Certificates.......................... 10
2
Page
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of Excel............ 10
(a) Organization, Standing and Corporate
Power.................................. 11
(b) Subsidiaries............................... 11
(c) Capital Structure.......................... 11
(d) Authority; Noncontravention................ 13
(e) SEC Documents; Undisclosed
Liabilities............................ 15
(f) Information Supplied....................... 16
(g) Absence of Certain Changes or Events....... 16
(h) Litigation................................. 17
(i) Compliance with Applicable Laws............ 18
(j) Absence of Changes in Benefit Plans........ 19
(k) ERISA Compliance........................... 19
(l) Taxes...................................... 22
(m) Voting Requirements........................ 23
(n) Accounting Matters......................... 23
(o) Brokers.................................... 23
(p) Takeover Statutes.......................... 23
(q) Opinion of Financial Advisor............... 24
(r) Intellectual Property; Year 2000........... 24
(s) Certain Contracts.......................... 26
(t) Title to Properties........................ 26
(u) Business Relationships .................... 27
SECTION 3.02. Representations and Warranties of Lucent
and Sub.......................................... 27
(a) Organization, Standing and Corporate
Power.................................. 27
(b) Capital Structure.......................... 27
(c) Authority; Noncontravention................ 28
(d) SEC Documents; Undisclosed
Liabilities ........................... 30
(e) Information Supplied....................... 31
(f) Absence of Certain Changes or Events....... 31
(g) Voting Requirements ....................... 31
(h) Tax Matters................................ 31
(i) Accounting Matters......................... 32
(j) Interim Operations of Sub ................. 32
3
Page
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business................................ 32
(a) Conduct of Business by Excel............... 32
(b) Advice of Changes.......................... 35
SECTION 4.02. No Solicitation.................................... 36
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the
Excel Proxy Statement; Excel
Stockholders Meeting............................. 37
SECTION 5.02. Letters of Excel's Accountants..................... 39
SECTION 5.03. Letters of Lucent's Accountants.................... 39
SECTION 5.04. Access to Information; Confidentiality............. 39
SECTION 5.05. Commercially Reasonable Efforts.................... 40
SECTION 5.06. Stock Options...................................... 41
SECTION 5.07. Employee Matters................................... 43
SECTION 5.08. Indemnification, Exculpation and
Insurance....................................... 44
SECTION 5.09. Fees and Expenses.................................. 45
SECTION 5.10. Public Announcements............................... 45
SECTION 5.11. Affiliates......................................... 45
SECTION 5.12. NYSE Listing....................................... 46
SECTION 5.13. Litigation......................................... 46
SECTION 5.14. Tax Treatment...................................... 46
SECTION 5.15. Pooling of Interests............................... 46
SECTION 5.16. Stockholder Agreement Legend....................... 46
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To
Effect the Merger................................ 47
(a) Excel Stockholders Approval................ 47
(b) HSR Act.................................... 47
4
Page
(c) No Litigation.............................. 47
(d) Form S-4................................... 47
(e) NYSE Listing............................... 47
(f) Pooling Letters............................ 48
SECTION 6.02. Conditions to Obligations of Lucent and Sub........ 48
(a) Representations and Warranties............. 48
(b) Performance of Obligations of Excel........ 48
(c) Tax Opinions .............................. 48
SECTION 6.03. Conditions to Obligations of Excel................. 49
(a) Representations and Warranties............. 49
(b) Performance of Obligations of Lucent
and Sub................................ 49
(c) Tax Opinions............................... 49
SECTION 6.04. Frustration of Closing Conditions.................. 49
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination........................................ 50
SECTION 7.02. Effect of Termination.............................. 51
SECTION 7.03. Amendment.......................................... 51
SECTION 7.04. Extension; Waiver.................................. 51
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and
Warranties....................................... 52
SECTION 8.02. Notices............................................ 52
SECTION 8.03. Definitions........................................ 53
SECTION 8.04. Interpretation..................................... 55
SECTION 8.05. Counterparts....................................... 55
SECTION 8.06. Entire Agreement; No Third-Party
Beneficiaries.................................... 56
SECTION 8.07. Governing Law...................................... 56
SECTION 8.08. Assignment......................................... 56
SECTION 8.09. Enforcement........................................ 56
SECTION 8.10. Severability....................................... 58
5
Annex I Index of Defined Terms
Exhibit A Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of August 17, 1999, among LUCENT TECHNOLOGIES INC., a Delaware
corporation ("Lucent"), DALLAS MERGER INC., a Massachusetts
corporation and a wholly owned subsidiary of Lucent ("Sub"),
and EXCEL SWITCHING CORPORATION, a Massachusetts corporation
("Excel").
WHEREAS the respective Boards of Directors of Lucent, Sub and Excel
have approved and declared advisable this Agreement and the merger of Sub with
and into Excel (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, whereby each issued and outstanding share of
common stock, par value $.01 per share, of Excel ("Excel Common Stock"), other
than shares owned by Lucent, Sub or Excel, and other than Dissenting Shares
will be converted into the right to receive the Merger Consideration;
WHEREAS the respective Boards of Directors of Lucent, Sub and Excel
have each determined that the Merger and the other transactions contemplated
hereby are consistent with, and in furtherance of, their respective business
strategies and goals and that the products and services of Excel will
complement and enhance the products and services of Lucent;
WHEREAS simultaneously with the execution and delivery of this
Agreement and as a condition and inducement to the willingness of Lucent and
Sub to enter into this Agreement, Lucent and certain principal stockholders of
Excel (the "Principal Stockholders") are entering into an agreement (the
"Stockholders Agreement") pursuant to which the Principal Stockholders will
agree to vote to approve the Merger Agreement and to take certain other
actions in furtherance of the Merger upon the terms and subject to the
conditions set forth in the Stockholders Agreement;
WHEREAS for U.S. federal income tax purposes, it is intended that
(a) the Merger will qualify as a reorganization under the provisions of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and the rules and regulations promulgated thereunder, and (b) this Agreement
constitutes a plan of reorganization;
WHEREAS for financial accounting purposes, it is intended that the
Merger will be accounted for as a pooling of interests transaction;
2
WHEREAS under the Massachusetts Business Corporation Law (the
"MBCL"), in order to effect the Merger, the Company is required to obtain the
vote of the holders of two-thirds of the outstanding shares of Excel Common
Stock to approve this Agreement (the "Excel Stockholders Approval"); and
WHEREAS Lucent, Sub and Excel desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the MBCL, Sub
shall be merged with and into Excel at the Effective Time. Following the
Effective Time, Excel shall (a) be the surviving corporation (the "Surviving
Corporation"), (b) continue its corporate existence under the laws of the
Commonwealth of Massachusetts and (c) succeed to and assume all the rights and
obligations of Sub in accordance with the MBCL.
SECTION 1.02. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. (New York City time) on a date to be specified
by the parties hereto (the "Closing Date"), which shall be no later than the
second business day after satisfaction or waiver of the conditions set forth
in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions), at the offices of Cravath, Swaine & Xxxxx, Worldwide Plaza, 000
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another time, date or place is
agreed to by the parties hereto.
SECTION 1.03. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file articles of merger or other appropriate documents (in any such
case, the "Articles of Merger") with the Secretary of State of the
Commonwealth of Massachusetts executed in accordance with
3
the relevant provisions of the MBCL and shall make all other filings or
recordings required under the MBCL. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Secretary of State of
the Commonwealth of Massachusetts in accordance with the provisions of Section
78 of the MBCL or at such subsequent date or time as Lucent and Excel shall
agree and specify in the Articles of Merger (the time the Merger becomes
effective being hereinafter referred to as the "Effective Time"); provided
that such date shall not be more than 30 days after the date of such filing.
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects as provided in the applicable provisions of the MBCL (including
Section 80 thereof).
SECTION 1.05. Articles of Organization and By-laws. (a) The Restated
Articles of Organization of Excel, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time of the Merger so
that Article IV of such Restated Articles of Organization reads in its
entirety as follows: "The total number of shares of all classes of stock which
the corporation shall have authority to issue is 200,000 shares of Common
Stock, par value $1.00 per share." and, as so amended, such Restated Articles
of Organization shall be the Restated Articles of Organization of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
(b) The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Board of Directors and Officers. (a) The directors of
Sub immediately prior to the Effective Time shall be the directors of the
Surviving Corporation until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
(b) The officers of Sub immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected
and qualified, as the case may be.
4
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Excel Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
(b) Cancelation of Treasury Stock and Lucent-Owned Stock. Each
share of Excel Common Stock that is owned by Excel, Sub or Lucent shall
no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and no consideration shall be delivered or
deliverable in exchange therefor.
(c) Conversion of Excel Common Stock. Subject to Section 2.01(d) and
Section 2.02(e), each issued and outstanding share of Excel Common Stock
(other than shares to be canceled in accordance with Section 2.01(b))
shall be converted into the right to receive 0.558 (the "Exchange Ratio")
fully paid and nonassessable shares of common stock, par value $.01 per
share, of Lucent ("Lucent Common Stock") (the "Merger Consideration"). As
of the Effective Time, all such shares of Excel Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate representing any
such shares of Excel Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration and
any cash in lieu of fractional shares of Lucent Common Stock to be issued
or paid in consideration therefor upon surrender of such certificate in
accordance with Section 2.02, without interest.
(d) Dissenting Shares. (i) Notwithstanding anything in this
Agreement to the contrary and unless otherwise provided by applicable
law, shares of Excel Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are owned by
stockholders who have properly perfected their rights of appraisal within
the meaning of Section 85 of
5
Chapter 156B of the MBCL (the "Dissenting Shares") shall not be converted
into the right to receive the Merger Consideration, unless and until such
stockholders shall have failed to perfect or shall have effectively
withdrawn or lost their right of payment under applicable law, but,
instead, the holders thereof shall be entitled to payment of the
appraised value of such Dissenting Shares in accordance with the
provisions of the MBCL. If any such holder shall have failed to perfect
or shall have effectively withdrawn or lost such right of appraisal, each
share of Excel Common Stock held by such stockholder shall thereupon be
deemed to have been converted into the right to receive and become
exchangeable for, at the Effective Time, the Merger Consideration in the
manner provided in Section 2.01(c).
(ii) Excel shall give Lucent (A) prompt notice of any objections
filed pursuant to the MBCL received by Excel, withdrawals of such
objections and any other instruments served in connection with such
objections pursuant to the MBCL and received by Excel and (B) the
opportunity to direct all negotiations and proceedings with respect to
objections under the MBCL consistent with the obligations of Excel
thereunder. Excel shall not, except with the prior written consent of
Lucent, (x) make any payment with respect to any such objection, (y)
offer to settle or settle any such objection or (z) waive any failure to
timely deliver a written objection in accordance with the MBCL.
(e) Anti-Dilution Provisions. In the event Lucent changes (or
establishes a record date for changing) the number of shares of Lucent
Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination, exchange of shares or similar transaction
with respect to the outstanding Lucent Common Stock and the record date
therefor shall be prior to the Effective Time, the Exchange Ratio shall
be proportionately adjusted to reflect such stock split, stock dividend,
recapitalization, subdivision, reclassification, combination, exchange of
shares or similar transaction.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As of
the Effective Time, Lucent shall enter into an agreement with such bank or
trust company as may be designated by Lucent (the "Exchange Agent"), which
shall provide that Lucent shall deposit with the Exchange
6
Agent as of the Effective Time, for the benefit of the holders of shares
of Excel Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the shares of
Lucent Common Stock (such shares of Lucent Common Stock, together with
any dividends or distributions with respect thereto with a record date
after the Effective Time, any Excess Shares and any cash (including cash
proceeds from the sale of the Excess Shares) payable in lieu of any
fractional shares of Lucent Common Stock being hereinafter referred to as
the "Exchange Fund") issuable pursuant to Section 2.01 in exchange for
outstanding shares of Excel Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding shares of Excel Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.01, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Lucent and Excel may reasonably specify) and (ii) instructions for use in
surrendering the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancelation to the Exchange Agent, together
with such letter of transmittal, duly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such
Certificate shall receive in exchange therefor a certificate representing that
number of whole shares of Lucent Common Stock which such holder has the right
to receive pursuant to the provisions of this Article II, certain dividends or
other distributions in accordance with Section 2.02(c) and cash in lieu of any
fractional share of Lucent Common Stock in accordance with Section 2.02(e),
and the Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Excel Common Stock which is not registered in
the transfer records of Excel, a certificate representing the proper number of
shares of Lucent Common Stock may be issued to a person other than the person
in whose name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance shall pay any transfer or other taxes required
by reason of the issuance of shares of Lucent Common Stock to a person other
than the registered holder of such Certificate or establish to the
satisfaction of Lucent that such tax has been paid or
7
is not applicable. Until surrendered as contemplated by this Section 2.02(b),
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration and any cash in lieu of fractional shares of Lucent Common Stock
to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with this Section 2.02. No interest shall be paid or
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions with respect to Lucent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Lucent Common Stock represented
thereby, and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.02(e), and all such dividends, other
distributions and cash in lieu of fractional shares of Lucent Common Stock
shall be paid by Lucent to the Exchange Agent and shall be included in the
Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of applicable escheat
or similar laws, following surrender of any such Certificate there shall be
paid to the holder of the certificate representing whole shares of Lucent
Common Stock issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Lucent Common Stock, and the amount of any cash payable in lieu of a
fractional share of Lucent Common Stock to which such holder is entitled
pursuant to Section 2.02(e) and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment date subsequent
to such surrender payable with respect to such whole shares of Lucent Common
Stock.
(d) No Further Ownership Rights in Excel Common Stock. All shares of
Lucent Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to this Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Excel Common Stock
theretofore represented by such Certificates, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by Excel
8
on such shares of Excel Common Stock which remain unpaid at the Effective
Time, and there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Excel Common
Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No certificates or scrip representing
fractional shares of Lucent Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution of Lucent shall
relate to such fractional share interests and such fractional share interests
will not entitle the owner thereof to vote or to any rights of a stockholder
of Lucent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of whole shares of
Lucent Common Stock delivered to the Exchange Agent by Lucent pursuant to
Section 2.02(a) over (B) the aggregate number of whole shares of Lucent Common
Stock to be distributed to former holders of Excel Common Stock pursuant to
Section 2.02(b) (such excess being herein called the "Excess Shares").
Following the Effective Time, the Exchange Agent shall, on behalf of former
stockholders of Excel, sell the Excess Shares at then-prevailing prices on the
New York Stock Exchange, Inc. (the "NYSE"), all in the manner provided in
Section 2.02(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. The Exchange Agent shall use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in
light of prevailing market conditions. Until the net proceeds of such sale or
sales have been distributed to the holders of Certificates formerly
representing Excel Common Stock, the Exchange Agent shall hold such proceeds
in trust for such holders (the "Common Shares Trust"). Excel shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Common Shares Trust to which each former
9
holder of Excel Common Stock is entitled, if any, by multiplying the amount of
the aggregate net proceeds comprising the Common Shares Trust by a fraction,
the numerator of which is the amount of the fractional share interest to which
such former holder of Excel Common Stock is entitled (after taking into
account all shares of Excel Common Stock held at the Effective Time by such
holder) and the denominator of which is the aggregate amount of fractional
share interests to which all former holders of Excel Common Stock are
entitled.
(iv) Notwithstanding the provisions of Section 2.02(e)(ii) and
(iii), Lucent may elect at its option, exercised prior to the Effective Time,
in lieu of the issuance and sale of Excess Shares and the making of the
payments hereinabove contemplated, to pay each former holder of Excel Common
Stock an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such former holder (after taking into
account all shares of Excel Common Stock held at the Effective Time by such
holder) would otherwise be entitled by (B) the closing price for a share of
Lucent Common Stock as reported on the NYSE Composite Transaction Tape (as
reported in The Wall Street Journal, or, if not reported thereby, any other
authoritative source) on the Closing Date, and, in such case, all references
herein to the cash proceeds of the sale of the Excess Shares and similar
references shall be deemed to mean and refer to the payments calculated as set
forth in this Section 2.02(e)(iv).
(v) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Certificates formerly representing
Excel Common Stock with respect to any fractional share interests, the
Exchange Agent shall make available such amounts to such holders of
Certificates formerly representing Excel Common Stock subject to and in
accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of the Certificates for six months
after the Effective Time shall be delivered to Lucent, upon demand, and any
holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Lucent for payment of their claim for
Merger Consideration, any dividends or distributions with respect to Lucent
Common Stock and any cash in lieu of fractional shares of Lucent Common Stock.
10
(g) No Liability. None of Lucent, Sub, Excel or the Exchange Agent
shall be liable to any person in respect of any shares of Lucent Common Stock,
any dividends or distributions with respect thereto, any cash in lieu of
fractional shares of Lucent Common Stock or any cash from the Exchange Fund,
in each case delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to one year after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration, any dividends or
distributions payable to the holder of such Certificate or any cash payable to
the holder of such Certificate formerly representing Excel Common Stock
pursuant to this Article II, would otherwise escheat to or become the property
of any Governmental Entity), any such Merger Consideration, dividends or
distributions in respect of such Certificate or such cash shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund, as directed by Lucent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Lucent.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificate the applicable Merger Consideration with respect
thereto and, if applicable, any unpaid dividends and distributions on shares
of Lucent Common Stock deliverable in respect thereof and any cash in lieu of
fractional shares, in each case pursuant to this Agreement.
ARTICLE III
Representations and Warranties
SECTION 3.01. Representations and Warranties of Excel. Except as
disclosed in the Excel SEC Documents filed and publicly available prior to the
date of this Agreement
11
(the "Excel Filed SEC Documents") or as set forth on the Disclosure Schedule
delivered by Excel to Lucent prior to the execution of this Agreement (the
"Excel Disclosure Schedule") and making reference to the particular subsection
of this Agreement to which exception is being taken, Excel represents and
warrants to Lucent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each of Excel and
its subsidiaries is a corporation or other legal entity duly organized,
validly existing and in good standing (with respect to jurisdictions
which recognize such concept) under the laws of the jurisdiction in which
it is organized and has the requisite corporate or other power, as the
case may be, and authority to carry on its business as now being
conducted. Each of Excel and its subsidiaries is duly qualified or
licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
assets makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be
in good standing individually or in the aggregate is not reasonably
likely to have a Material Adverse Effect on Excel. Excel has made
available to Lucent prior to the execution of this Agreement complete and
correct copies of its articles of organization and by-laws, each as
amended to the date of this Agreement, and the comparable charter and
organizational documents of each subsidiary of Excel, in each case as
amended to the date of this Agreement.
(b) Subsidiaries. Section 3.01(b) of the Excel Disclosure Schedule
sets forth a true and complete list of each of Excel's subsidiaries. All
the outstanding shares of capital stock of, or other equity interests in,
each subsidiary of Excel have been validly issued, are fully paid and
nonassessable and are owned directly or indirectly by Excel or a wholly
owned subsidiary of Excel, free and clear of all pledges, claims, liens,
charges, encumbrances, mortgages and security interests of any kind or
nature whatsoever (collectively, "Liens") and free of any restriction on
the right to vote, sell or otherwise dispose of such capital stock or
other ownership interests except restrictions under applicable law.
(c) Capital Structure. The authorized capital stock of Excel
consists of 100 million shares of Excel Common Stock and 10 million
shares of preferred stock,
12
par value $.01 per share, of Excel ("Excel Authorized Preferred Stock").
At the close of business on August 17, 1999, (i) 36,946,110 shares of
Excel Common Stock were issued and outstanding; (ii) no shares of Excel
Common Stock were held by Excel in its treasury; (iii) no shares of Excel
Authorized Preferred Stock were issued and outstanding; and (iv)
13,192,509 shares of Excel Common Stock were reserved for issuance
pursuant to the Stock Option Program for non-qualified stock options, the
Excel Amended and Restated 1997 Stock Option Plan, the Excel Amended and
Restated 1997 Non-Employee Director Stock Option Plan, the Excel Employee
Stock Purchase Plan and the RAScom, Inc. 1996 Stock Plan (such plans,
collectively, the "Excel Stock Plans") (of which 10,696,040 are subject
to outstanding Excel Stock Options). There are no outstanding stock
appreciation rights or rights (other than the Excel Stock Options) to
receive shares of Excel Common Stock on a deferred basis granted under
the Excel Stock Plans or otherwise. Section 3.01(c) of the Excel
Disclosure Schedule sets forth a complete and correct list, as of August
17, 1999, of each holder of outstanding stock options or other rights to
purchase or receive Excel Common Stock granted under the Excel Stock
Plans (collectively, "Excel Stock Options"), the date on which such
holder was originally employed by Excel, the number of shares of Excel
Common Stock subject to each such Excel Stock Option, the name of the
Excel Stock Plan pursuant to which such Excel Stock Options were granted
and the exercise prices of such Excel Stock Options. No bonds,
debentures, notes or other indebtedness of Excel having the right to vote
(or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of Excel or any of its
subsidiaries may vote are issued or outstanding or subject to issuance.
All outstanding shares of capital stock of Excel are, and all shares
which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and will be delivered free and clear
of all Liens (other than Liens created by or imposed upon the holders
thereof) and not subject to preemptive rights. Except as set forth in
this Section 3.01(c) (including pursuant to the conversion or exercise of
the securities referred to above), and except for changes since June 30,
1999, resulting from the issuance of Excel Common Stock as expressly
permitted by Section 4.01(a)(ii), (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of Excel or any of its subsidiaries (other than shares of
13
capital stock or other voting securities of such subsidiaries that are
directly or indirectly owned by Excel), (B) any securities of Excel or
any of its subsidiaries convertible into or exchangeable or exercisable
for shares of capital stock or other voting securities of, or other
ownership interests in, Excel or any of its subsidiaries, (C) any
warrants, calls, options or other rights to acquire from Excel or any of
its subsidiaries, and no obligation of Excel or any of its subsidiaries
to issue, any capital stock or other voting securities of, or other
ownership interests in, or any securities convertible into or
exchangeable or exercisable for any capital stock or other voting
securities of, or other ownership interests in, Excel or any of its
subsidiaries and (y) there are not any outstanding obligations of Excel
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
such securities or to issue, deliver or sell, or cause to be issued,
delivered or sold, any such securities. Excel is not a party to any
voting agreement with respect to the voting of any such securities. Other
than the capital stock of, or other equity interests in, its
subsidiaries, Excel does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity.
(d) Authority; Noncontravention. Excel has all requisite corporate
power and authority to enter into this Agreement and, subject to
obtaining the Excel Stockholders Approval, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by
Excel and the consummation by Excel of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Excel, subject, in the case of the Merger, to obtaining the Excel
Stockholders Approval. This Agreement has been duly executed and
delivered by Excel and, assuming the due authorization, execution and
delivery by each of the other parties hereto, constitutes a legal, valid
and binding obligation of Excel, enforceable against Excel in accordance
with its terms. The execution and delivery of this Agreement do not, and
the consummation of the Merger and the other transactions contemplated
hereby and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancelation or acceleration of any obligation or to the loss
of a benefit under, or result in the creation of any Lien
14
upon any of the properties or assets of Excel or any of its subsidiaries
under, (i) the Restated Articles of Organization or by-laws of Excel or
the comparable organizational documents of any of its subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or
other contract, agreement, obligation, commitment, arrangement,
understanding, instrument, permit, concession, franchise, license or
similar authorization applicable to Excel or any of its subsidiaries or
their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, (A) any judgment, order or decree or (B) any statute, law,
ordinance, rule or regulation, in each case applicable to Excel or any of
its subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights, losses or Liens that individually or in the aggregate
are not reasonably likely to (x) have a Material Adverse Effect on Excel,
(y) materially impair the ability of Excel to perform its obligations
under this Agreement or (z) prevent or materially delay the consummation
of the transactions contemplated hereby. No consent, approval, order or
authorization of, action by or in respect of, or registration,
declaration or filing with, any federal, state, local or foreign
government, any court, administrative, regulatory or other governmental
agency, commission or authority or any non-governmental self-regulatory
agency, commission or authority (each a "Governmental Entity") is
required by or with respect to Excel or any of its subsidiaries in
connection with the execution and delivery of this Agreement by Excel or
the consummation by Excel of the transactions contemplated hereby, except
for (1) the filing of a premerger notification and report form by Excel
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and any applicable filings and approvals under
similar foreign antitrust or competition laws and regulations; (2) the
filing with the Securities and Exchange Commission (the "SEC") of (A) a
proxy statement relating to the Excel Stockholders Meeting (such proxy
statement, as amended or supplemented from time to time, the "Excel Proxy
Statement"), and (B) such reports under Section 13(a), 13(d), 15(d) or
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as may be required in connection with this Agreement, the
Stockholders Agreement and the transactions contemplated by this
Agreement and the Stockholders Agreement; (3) the filing of the Articles
15
of Merger (and any other merger documents as required by the MBCL) with
the Secretary of State of the Commonwealth of Massachusetts and
appropriate documents with the relevant authorities of other states in
which Excel is qualified to do business; and (4) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made individually or in
the aggregate is not reasonably likely to (x) have a Material Adverse
Effect on Excel, (y) materially impair the ability of Excel to perform
its obligations under this Agreement or (z) prevent or materially delay
the consummation of the transactions contemplated hereby.
(e) SEC Documents; Undisclosed Liabilities. Excel has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 1998 (collectively, the "Excel SEC Documents").
As of their respective dates, the Excel SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Excel SEC Documents, and none of the Excel SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any Excel SEC Document has been
revised or superseded by a later filed Excel SEC Document, none of the
Excel SEC Documents contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of Excel included in the Excel SEC Documents comply as to
form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto (the
"Accounting Rules"), have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects
16
the consolidated financial position of Excel and its consolidated
subsidiaries as of the dates thereof and the consolidated results of
their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal recurring year-end audit
adjustments and the absence of footnotes, if applicable). Except (i) as
set forth in the Excel Filed SEC Documents or (ii) for liabilities
incurred in connection with this Agreement or the transactions
contemplated hereby, neither Excel nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect on Excel.
(f) Information Supplied. None of the information supplied or to be
supplied by Excel specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with
the SEC by Lucent in connection with the issuance of Lucent Common Stock
in the Merger (the "Form S-4") will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) the Excel Proxy Statement will, at the date it is first mailed to
Excel's stockholders or at the time of the Excel Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading. The Excel Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act
and the rules and regulations thereunder. No representation or warranty
is made by Excel with respect to statements made or incorporated by
reference therein based on information supplied by Lucent or Sub
specifically for inclusion or incorporation by reference in the Excel
Proxy Statement.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the transactions
contemplated hereby and except as disclosed in the Excel Filed SEC
Documents, since March 31, 1999, Excel and its subsidiaries have
conducted their business only in the ordinary course and since such date
there has not been (1) any Material
17
Adverse Change in Excel, (2) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property)
with respect to any of Excel's capital stock, (3) any split, combination
or reclassification of any of Excel's capital stock or any issuance or
the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of Excel's capital stock, except
for issuances of Excel Common Stock as expressly permitted by Section
4.01(a)(ii), (4) (A) any granting by Excel or any of its subsidiaries to
any current or former director, executive officer or other employee of
Excel or its subsidiaries of any increase in compensation, bonus or other
benefits, except for normal increases in cash compensation in the
ordinary course of business consistent with past practice or as was
required under any employment agreements in effect as of the date of the
most recent audited financial statements included in the Excel Filed SEC
Documents, (B) any granting by Excel or any of its subsidiaries to any
such current or former director, executive officer or employee of any
increase in severance or termination pay, (C) any entry by Excel or any
of its subsidiaries into, or any amendments of, any employment, deferred
compensation, consulting, severance, termination or indemnification
agreement with any such current or former director, executive officer or
employee, or (D) any amendment to, or modification of, any Excel Stock
Option, (5) except insofar as may have been required by a change in GAAP,
any change in accounting methods, principles or practices by Excel or any
of its subsidiaries materially affecting their respective assets,
liabilities or businesses, (6) any tax election that individually or in
the aggregate is reasonably likely to adversely affect in any material
respect the tax liability or tax attributes of Excel or any of its
subsidiaries or (7) any settlement or compromise of any material income
tax liability.
(h) Litigation. There is no suit, action or proceeding pending or,
to the knowledge of Excel or any of its subsidiaries, threatened against
or affecting Excel or any of its subsidiaries that, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on
Excel nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Excel or any of its
subsidiaries having, or which is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Excel; provided
18
that for purposes of this paragraph (h) any such suit, action,
proceeding, judgment, decree, injunction, rule or order arising after the
date hereof shall not be deemed to have a Material Adverse Effect on
Excel if and to the extent such suit, action, proceeding, judgment,
decree, injunction, rule or order (or any relevant part thereof) is based
on this Agreement or the transactions contemplated hereby.
(i) Compliance with Applicable Laws. (i) Excel and its subsidiaries
hold all permits, licenses, variances, exemptions, orders, registrations
and approvals of all Governmental Entities (the "Excel Permits") that are
required for them to own, lease or operate their assets and to carry on
their businesses, except where the failure to hold any such Excel
Permits, individually or in the aggregate, is not reasonably likely to
have a Material Adverse Effect on Excel. Excel and its subsidiaries are
in compliance in all material respects with the terms of the Excel
Permits and all applicable statutes, laws, ordinances, rules and
regulations. No action, demand, requirement or investigation by any
Governmental Entity and no suit, action or proceeding by any person, in
each case with respect to Excel or any of its subsidiaries or any of
their respective properties, is pending or, to the knowledge of Excel,
threatened; provided that for purposes of this paragraph (i) any such
action, demand, requirement or investigation or any such suit, action or
proceeding arising after the date hereof shall not be deemed to have a
Material Adverse Effect on Excel if and to the extent such action,
demand, requirement or investigation or such suit, action or proceeding
(or any relevant part thereof) is based on this Agreement or the
transactions contemplated hereby.
(ii) To Excel's knowledge, there have been no Releases of any
Hazardous Materials at, on or under any facility or property currently or
formerly owned, leased, or operated by Excel or any of its subsidiaries
that, individually or in the aggregate, are reasonably likely to have a
Material Adverse Effect on Excel. Neither Excel nor any of its
subsidiaries is the subject of any pending or, to Excel's knowledge,
threatened investigation or proceeding under Environmental Law relating
in any manner to the off- site treatment, storage or disposal of any
Hazardous Materials generated at any facility or property currently or
formerly owned, leased or operated by Excel or any of its subsidiaries.
Neither Excel nor any of its subsidiaries has assumed or otherwise agreed
19
to be responsible for any liabilities arising under Environmental Law
where such assumption or responsibility, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on
Excel. The term "Environmental Law" means any and all applicable laws or
regulations or other requirements of any Governmental Entity concerning
the protection of human health or the environment. The term "Hazardous
Materials" means all explosive or regulated radioactive materials,
hazardous or toxic substances, wastes or chemicals, petroleum (including
crude oil or any fraction thereof) or petroleum distillates, asbestos or
asbestos-containing materials, and all other materials or chemicals
regulated under any Environmental Law. The term "Release" means any
spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, emanation or migration in, into, onto, or
through the environment.
(j) Absence of Changes in Benefit Plans. Since the date of the most
recent audited financial statements included in the Excel Filed SEC
Documents, there has not been any adoption or amendment in any material
respect (other than as required by law) by Excel or any of its
subsidiaries of any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical,
welfare benefit or other plan, arrangement or understanding providing
benefits to any current or former director, officer or employee of Excel
or any of its wholly owned subsidiaries (collectively, the "Excel Benefit
Plans"), or any change in any actuarial or other assumption used to
calculate funding obligations with respect to any Excel pension plans, or
any change in the manner in which contributions to any Excel pension
plans are made or the basis on which such contributions are determined.
(k) ERISA Compliance. (i) With respect to the Excel Benefit Plans,
no event has occurred and, to the knowledge of Excel, there exists no
condition or set of circumstances, in connection with which Excel or any
of its subsidiaries could be subject to any liability that individually
or in the aggregate is reasonably likely to have a Material Adverse
Effect on Excel under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Code or any other applicable law.
20
(ii) Each Excel Benefit Plan has been administered in accordance
with its terms, except for any failures so to administer any Excel
Benefit Plan that individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on Excel. Excel, its
subsidiaries and all the Excel Benefit Plans are in compliance with the
applicable provisions of ERISA, the Code and all other applicable laws
and the terms of all applicable collective bargaining agreements, except
for any failures to be in such compliance that individually or in the
aggregate are not reasonably likely to have a Material Adverse Effect on
Excel. Each Excel Benefit Plan that is intended to be qualified under
Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each trust
established in connection with any Excel Benefit Plan that is intended to
be exempt from federal income taxation under Section 501(a) of the Code
has received a determination letter from the IRS that such trust is so
exempt. To the knowledge of Excel, no fact or event has occurred since
that date of any determination letter from the IRS which is reasonably
likely to affect adversely the qualified status of any such Excel Benefit
Plan or the exempt status of any such trust. There are no pending or, to
the knowledge of Excel, threatened lawsuits, claims, grievances,
investigations or audits of any Excel Benefit Plan that, individually or
in the aggregate, are reasonably likely to have a Material Adverse Effect
on Excel.
(iii) No Excel Benefit Plan is a "defined benefit" plan (as defined
in Section 3(35) of ERISA) or is subject to the minimum funding
requirements of Section 302 of ERISA or Section 412 of the Code and
neither Excel nor any of its subsidiaries has incurred any liability
under Title IV of ERISA which has not been satisfied in full. No Excel
Benefit Plan has incurred an "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code) whether or
not waived. No Excel Benefit Plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA and neither Excel nor any of its
subsidiaries or affiliates has been required to contribute to any such
multiemployer plan in the past six years.
(iv) Excel and its subsidiaries are in compliance with all federal,
state and local requirements regarding employment, except for any
failures to comply that individually or in the aggregate are not
21
reasonably likely to have a Material Adverse Effect on Excel. Neither
Excel nor any of its subsidiaries is a party to any collective bargaining
or other labor union contract applicable to persons employed by Excel or
any of its subsidiaries and no collective bargaining agreement is being
negotiated by Excel or any of its subsidiaries. As of the date of this
Agreement, there is no labor dispute, strike or work stoppage against
Excel or any of its subsidiaries pending or, to the knowledge of Excel,
threatened which may interfere with the respective business activities of
Excel or any of its subsidiaries, except where such dispute, strike or
work stoppage individually or in the aggregate is not reasonably likely
to have a Material Adverse Effect on Excel. As of the date of this
Agreement, to the knowledge of Excel, none of Excel, any of its
subsidiaries or any of their respective representatives or employees has
committed any unfair labor practice in connection with the operation of
the respective business of Excel or any of its subsidiaries, and there is
no charge or complaint against Excel or any of its subsidiaries by the
National Labor Relations Board or any comparable governmental agency
pending or threatened in writing, in each case except where such actions,
charges or complaints, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect on Excel.
(v) No employee of Excel will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits
under any Excel Benefit Plan as a result of the transactions contemplated
by this Agreement or the Stockholders Agreement. No amount payable, or
economic benefit provided, by Excel or its subsidiaries (including any
acceleration of the time of payment or vesting of any benefit) could be
considered an "excess parachute payment" under Section 280G of the Code.
No person is entitled to receive any additional payment from Excel or its
subsidiaries or any other person (a "Parachute Gross-Up Payment") in the
event that the excise tax of Section 4999 of the Code is imposed on such
person. The Board of Directors of Excel or any of its subsidiaries has
not granted to any person any right to receive any Parachute Gross-Up
Payment.
(vi) Except as provided under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, no Excel Benefit Plan provides
post-retirement health insurance plans, the total cost of which is not
incurred by the former employee.
22
(l) Taxes. (i) Each of Excel and its subsidiaries has filed all
material tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely
filed, granted and have not expired, except to the extent that such
failures to file, to be complete or correct or to have extensions granted
that remain in effect individually or in the aggregate are not reasonably
likely to have a Material Adverse Effect on Excel. Excel and each of its
subsidiaries has paid (or Excel has paid on its behalf) all taxes shown
as due on such returns, and the most recent financial statements
contained in the Excel Filed SEC Documents reflect an adequate reserve
for all taxes payable by Excel and its subsidiaries for all taxable
periods and portions thereof accrued through the date of such financial
statements.
(ii) No deficiencies for any taxes have been proposed, asserted or
assessed against Excel or any of its subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the
aggregate are not reasonably likely to have a Material Adverse Effect on
Excel. The federal income tax returns of Excel and each of its
subsidiaries consolidated in such returns have closed by virtue of the
applicable statute of limitations.
(iii) Neither Excel nor any of its subsidiaries has taken any action
or knows of any fact, agreement, plan or other circumstance that is
reasonably likely to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
(iv) The Excel Benefit Plans and other Excel employee compensation
arrangements in effect as of the date of this Agreement have been
designed so that the disallowance of a material deduction under Section
162(m) of the Code for employee remuneration will not apply to any
amounts paid or payable by Excel or any of its subsidiaries under any
such plan or arrangement and, to the knowledge of Excel, no fact or
circumstance exists that is reasonably likely to cause such disallowance
to apply to any such amounts.
(v) Neither Excel nor any of its subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355
of the Code (x) in the two years prior to the date of this
23
Agreement or (y) in a distribution which could otherwise constitute part
of a "plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
(vi) As used in this Agreement, "taxes" shall include all (x)
federal, state, local or foreign income, property, sales, excise and
other taxes or similar governmental charges, including any interest,
penalties or additions with respect thereto, (y) liability for the
payment of any amounts of the type described in (x) as a result of being
a member of an affiliated, consolidated, combined or unitary group, and
(z) liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the payment of
any amounts of the type described in clause (x) or (y).
(m) Voting Requirements. The Excel Stockholders Approval is the only
vote or approval of the holders of any class or series of Excel's capital
stock necessary to approve and adopt this Agreement and approve the
Merger and the transactions contemplated hereby.
(n) Accounting Matters. Neither Excel nor any of its affiliates has
taken, failed to take or agreed to take any action that would prevent the
business combination to be effected by the Merger to be accounted for as
a pooling of interests.
(o) Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxx Xxxxxxx & Co. Incorporated, the fees and
expenses of which will be paid by Excel, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Excel. Excel has furnished to
Lucent true and complete copies of all agreements under which any such
fees or expenses are payable and all indemnification and other agreements
related to the engagement of the persons to whom such fees are payable.
(p) Takeover Statutes. No state takeover statute (including Chapters
110C, 110D and 110F of the MBCL) or similar statute or regulation applies
to this
24
Agreement, the Stockholders Agreement, the Merger or the other
transactions contemplated hereby or thereby.
(q) Opinion of Financial Advisor. Excel has received the written
opinion of Xxxxxx Xxxxxxx & Co. Incorporated, dated the date of this
Agreement, to the effect that, as of such date, the Exchange Ratio is
fair from a financial point of view to the stockholders of Excel (other
than Lucent and its affiliates), a signed copy of which opinion has been
or promptly will be delivered to Lucent.
(r) Intellectual Property; Year 2000. (i) Excel and its subsidiaries
own, or are validly licensed or otherwise have the right to use, all
patents, patent rights, trademarks, trade secrets, trade names, service
marks, copyrights and other proprietary intellectual property rights and
computer programs (the "Intellectual Property Rights") which are material
to the conduct of the business of Excel and its subsidiaries.
(ii) To the knowledge of Excel, neither Excel nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property Rights of any
other person, except for any such interference, infringement,
misappropriation or other conflict which, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
Excel. Neither Excel nor any of its subsidiaries has received any written
charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or other conflict (including
any claim that Excel or any such subsidiary must license or refrain from
using any Intellectual Property Rights of any other person) which has not
been settled or otherwise fully resolved. To Excel's knowledge, no other
person has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of Excel or any
of its subsidiaries, except for any such interference, infringement,
misappropriation or other conflict which, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect on
Excel.
(iii) As the business of Excel and its subsidiaries is presently
conducted and proposed to be conducted without giving effect to any
change with respect thereto that may be made by Lucent, to Excel's
knowledge, Lucent's use after the Closing of the
25
Intellectual Property Rights which are material to the conduct of the
business of Excel and its subsidiaries taken as a whole will not
interfere with, infringe upon, misappropriate or otherwise come into
conflict with the Intellectual Property Rights of any other person.
(iv) Each employee, agent, consultant or contractor who has
materially contributed to or participated in the creation or development
of any copyrightable, patentable or trade secret material on behalf of
Excel, any of its subsidiaries or any predecessor-in-interest thereto
either (x) is a party to a "work-for-hire" agreement under which Excel or
such subsidiary is deemed to be the original owner/author of all property
rights therein or (y) has executed an assignment or an agreement to
assign in favor of Excel, such subsidiary or such
predecessor-in-interest, as applicable, all right, title and interest in
such material.
(v) Neither Excel nor any of its subsidiaries is a party to any
agreement or other arrangement that is currently in effect and which
requires Excel or any of its subsidiaries to place into escrow any source
code, parts list, schematic, test procedure, technical information or
other data relating to products required to be supplied by Excel or any
of its subsidiaries pursuant to such agreement or arrangement.
(vi) Excel has substantially completed all necessary steps with the
intent of ensuring that its products (including prior and current
products and technology and products and technology currently under
development) will, when used in accordance with associated documentation
on a specified platform or platforms, be capable upon installation of (i)
operating in the same manner on dates in both the Twentieth and
Twenty-First centuries and (ii) accurately processing, providing and
receiving date data from, into, and between the Twentieth and
Twenty-First centuries, including the years 1999 and 2000 and making
leap-year calculations, provided that all other non-Excel products (e.g.,
hardware, software and firmware) used by Excel in or in combination with
Excel products properly exchange data with Excel products. In addition,
Excel has taken the necessary steps to ensure that operations and all
material systems utilized to support such operations will not be
materially adversely impacted by the year 2000 date change or any other
date change. Excel further
26
represents and warrants: (i) the accuracy of year 2000 product
information provided on its external website; and (ii) that based on all
currently available information, Excel believes it has sufficient
resources to complete all necessary customer year 2000 upgrades.
(s) Certain Contracts. Section 3.01(s) of the Excel Disclosure
Schedule sets forth a true and complete list as of the date hereof of
each material contract for the purchase or sale of goods or services to
which Excel or any of its subsidiaries is a party. Neither Excel nor any
of its subsidiaries is a party to or bound by any non-competition
agreement or any other similar agreement or obligation which purports to
limit in any material respect the manner in which, or the localities in
which, the business of Excel and its subsidiaries is conducted.
(t) Title to Properties. (i) Section 3.01(t) of the Excel Disclosure
Schedule sets forth a true and complete list of all real property and
leasehold property owned or leased by Excel or any of its subsidiaries.
Each of Excel and its subsidiaries has good and valid title to, or valid
leasehold interests in or valid rights to, all its material properties
and assets except for such as are no longer used or useful in the conduct
of its businesses or as have been disposed of in the ordinary course of
business and except for defects in title, easements, restrictive
covenants and similar encumbrances that individually or in the aggregate
do not materially interfere with its ability to conduct its business as
currently conducted. All such material assets and properties, other than
assets and properties in which Excel or any of its subsidiaries has a
leasehold interest, are free and clear of all Liens except for Liens that
individually or in the aggregate do not materially interfere with the
ability of Excel and its subsidiaries to conduct their respective
businesses as currently conducted.
(ii) Each of Excel and its subsidiaries has complied in all material
respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and
effect. Each of Excel and its subsidiaries enjoys peaceful and
undisturbed possession under all such leases, except for failures to do
so that individually or in the aggregate is not reasonably likely to have
a Material Adverse Effect on Excel.
27
(u) Business Relationships. To Excel's knowledge, as of the date
hereof, neither Excel nor any of its subsidiaries has been informed or is
otherwise aware of any development or state of facts which is reasonably
likely to have a material adverse effect on the business relationship of
Excel or any of its subsidiaries with any VAR (Value Added Reseller) or
ISV (Independent Software Vendor) other than as may directly arise as a
result of this Agreement or the transactions contemplated hereby or the
announcement thereof.
SECTION 3.02. Representations and Warranties of Lucent and Sub.
Except as disclosed in the Lucent SEC Documents filed and publicly available
prior to the date of this Agreement (the "Lucent Filed SEC Documents") or as
set forth on the Disclosure Schedule delivered by Lucent to Excel prior to the
execution of this Agreement (the "Lucent Disclosure Schedule") and making
reference to the particular subsection of this Agreement to which exception is
being taken, Lucent and Sub represent and warrant to Excel as follows:
(a) Organization, Standing and Corporate Power. Each of Lucent and
Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of Lucent and Sub is duly qualified
or licensed to do business and is in good standing (with respect to
jurisdictions which recognize such concept) in each jurisdiction in which
the nature of its business or the ownership, leasing or operation of its
assets makes such qualification or licensing necessary, except for those
jurisdictions where the failure to be so qualified or licensed or to be
in good standing individually or in the aggregate is not reasonably
likely to have a Material Adverse Effect on Lucent. Lucent has made
available to Excel prior to the execution of this Agreement complete and
correct copies of its certificate of incorporation and by-laws and the
certificate of incorporation and by-laws of Sub, in each case as amended
to the date of this Agreement.
(b) Capital Structure. The authorized capital stock of Lucent
consists of 6 billion shares of Lucent Common Stock and 250 million
shares of preferred stock, par value $1.00 per share, of Lucent ("Lucent
Authorized Preferred Stock"), of which 15 million shares have been
designated Series A Junior
28
Participating Preferred Stock (the "Lucent Junior Preferred Stock"). As
of June 30, 1999, (i) approximately 3 billion shares of Lucent Common
Stock were issued and outstanding, (ii) no shares of Lucent Junior
Preferred Stock were issued and outstanding and (iii) other than the
Lucent Junior Preferred Stock, no other shares of Lucent Authorized
Preferred Stock have been designated or issued. As of the date of this
Agreement, no bonds, debentures, notes or other indebtedness of Lucent
having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders
of Lucent may vote are issued or outstanding. All outstanding shares of
capital stock of Lucent are, and all shares which may be issued will be,
when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Lucent has made
available to Excel a complete and correct copy of the Rights Agreement
dated as of April 4, 1996, as amended (the "Lucent Rights Agreement")
between Lucent and The Bank of New York, as Rights Agent, relating to
rights ("Lucent Rights") to purchase Lucent Junior Preferred Stock.
(c) Authority; Noncontravention. Each of Lucent and Sub has all
requisite corporate power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Lucent and Sub and the
consummation by Lucent and Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Lucent and Sub, as applicable. This Agreement has been duly executed
and delivered by Lucent and Sub and, assuming the due authorization,
execution and delivery by each of the other parties hereto, constitutes a
legal, valid and binding obligation of each of Lucent and Sub,
enforceable against each of them in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of
the Merger and the other transactions contemplated hereby and compliance
with the provisions of this Agreement will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation or
acceleration of any obligation or to the loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets
of Lucent or Sub under, (i) the certificate of incorporation or by-laws
of Lucent or the articles of organization or by-laws of Sub, (ii) any
loan or
29
credit agreement, note, bond, mortgage, indenture, lease or other
contract, agreement, obligation, commitment, arrangement, understanding,
instrument, permit, concession, franchise, license or similar
authorization applicable to Lucent or Sub or their respective properties
or assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, (A) any judgment, order or decree
or (B) any statute, law, ordinance, rule or regulation, in each case
applicable to Lucent or Sub or their respective properties or assets,
other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate are not reasonably likely to (x) have a Material Adverse Effect
on Lucent, (y) materially impair the ability of Lucent or Sub to perform
its obligations under this Agreement or (z) prevent or materially delay
the consummation of the transactions contemplated hereby. No consent,
approval, order or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Lucent or Sub in connection with the
execution and delivery of this Agreement by Lucent and Sub or the
consummation by Lucent and Sub of the transactions contemplated hereby,
except for (1) the filing of a premerger notification and report form by
Lucent under the HSR Act and any applicable filings and approvals under
similar foreign antitrust or competition laws and regulations; (2) the
filing with the SEC of (A) the Form S-4 and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be
required in connection with this Agreement, the Stockholders Agreement
and the transactions contemplated by this Agreement and the Stockholders
Agreement; (3) the filing of the Articles of Merger (and any other merger
documents required by the MBCL) with the Secretary of State of the
Commonwealth of Massachusetts and appropriate documents with the relevant
authorities of other states in which Lucent is qualified to do business
and such filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (4) such filings
with and approvals of the NYSE to permit the shares of Lucent Common
Stock that are to be issued in the Merger to be listed on the NYSE; and
(5) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be
obtained or made individually or in the aggregate is not reasonably
likely to (x) have a Material Adverse Effect on Lucent,
30
(y) materially impair the ability of Lucent or Sub to perform its
obligations under this Agreement or (z) prevent or materially delay the
consummation of the transactions contemplated hereby.
(d) SEC Documents; Undisclosed Liabilities. Lucent has filed all
required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since October 1, 1997 (collectively, the "Lucent SEC Documents").
As of their respective dates, the Lucent SEC Documents complied in all
material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such Lucent SEC Documents, and
none of the Lucent SEC Documents when filed contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent that information contained in any Lucent
SEC Document has been revised or superseded by a later filed Lucent SEC
Document, none of the Lucent SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
The financial statements of Lucent included in the Lucent SEC Documents
comply as to form, as of their respective dates of filing with the SEC,
in all material respects with the Accounting Rules, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto)
and fairly present in all material respects the consolidated financial
position of Lucent and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements,
to normal recurring year-end audit adjustments and the absence of
footnotes, if applicable). Except (i) as set forth in the Lucent Filed
SEC Documents or (ii) for liabilities incurred in connection with this
Agreement or the transactions contemplated hereby, neither Lucent nor any
of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or
31
otherwise) that individually or in the aggregate, are reasonably likely
to have a Material Adverse Effect on Lucent.
(e) Information Supplied. None of the information supplied or to be
supplied by Lucent specifically for inclusion or incorporation by
reference in (i) the Form S-4 will, at the time the Form S-4 becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
(ii) the Excel Proxy Statement will, at the date it is first mailed to
Excel's stockholders or at the time of the Excel Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
are made, not misleading. The Form S-4 will comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. No representation or warranty is made by
Lucent with respect to statements made or incorporated by reference
therein based on information supplied by Excel specifically for inclusion
or incorporation by reference in the Form S-4.
(f) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the Stockholders Agreement
or the transactions contemplated hereby or thereby, and except as
disclosed in the Lucent Filed SEC Documents, since March 31, 1999, Lucent
and its subsidiaries have conducted their business only in the ordinary
course, and there has not been any Material Adverse Change in Lucent.
(g) Voting Requirements. No vote of the holders of shares of Lucent
Common Stock or any other class or series of capital stock of Lucent is
necessary to approve and adopt this Agreement and the Stockholders
Agreement and the transactions contemplated hereby and thereby.
(h) Tax Matters. Neither Lucent nor any of its subsidiaries has
taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
32
(i) Accounting Matters. Neither Lucent nor any of its affiliates has
taken, failed to take or agreed to take any action that would prevent the
business combination to be effected by the Merger to be accounted for as
a pooling of interests.
(j) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as
contemplated hereby.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01. Conduct of Business. (a) Conduct of Business by Excel.
Except as set forth in Section 4.01(a) of the Excel Disclosure Schedule, as
otherwise expressly contemplated by this Agreement or as consented to in
writing by Lucent, during the period from the date of this Agreement to the
Effective Time, Excel shall, and shall cause its subsidiaries to, carry on
their respective businesses in the ordinary course consistent with past
practice and in compliance in all material respects with all applicable laws
and regulations and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, use
reasonable efforts to keep available the services of their current officers
and other key employees and preserve their relationships with those persons
having business dealings with them to the end that their goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Without limiting the
generality of the foregoing (but subject to the above exceptions), during the
period from the date of this Agreement to the Effective Time, Excel shall not,
and shall not permit any of its subsidiaries to:
(i) other than dividends and distributions (including liquidating
distributions) by a direct or indirect wholly owned subsidiary of Excel
to its parent, (x) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock, property or otherwise)
in respect of, any of its capital stock, (y) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (z) purchase, redeem or otherwise acquire, directly or
indirectly, any shares of capital stock of Excel or any
33
of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise encumber or subject
to any Lien any shares of its capital stock, any other voting securities
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities,
other than (x) the issuance of Excel Stock Options granted consistent
with past practice to new employees of Excel representing in the
aggregate not more than 250,000 shares of Excel Common Stock or (y) the
issuance of Excel Common Stock upon the exercise of Excel Stock Options
outstanding as of the date hereof in accordance with their present terms
or upon the exercise of the Excel Stock Options referred to in clause (x)
in accordance with their terms;
(iii) amend Excel's Restated Articles of Organization, by-laws or
other comparable organizational documents;
(iv) acquire or agree to acquire by merging or consolidating with,
or by purchasing assets of, or by any other manner, any business or any
person, other than purchases of raw materials or supplies in the ordinary
course of business consistent with past practice;
(v) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its
properties or assets (including securitizations), other than sales or
licenses of finished goods in the ordinary course of business consistent
with past practice;
(vi) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Excel or any
of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for short-term
borrowings incurred in the ordinary course of business (or to refund
existing or maturing indebtedness) consistent with past practice and
except for intercompany indebtedness between Excel and any of
34
its subsidiaries or between such subsidiaries, or (y) make any loans,
advances or capital contributions to, or investments in, any other
person, other than loans to employees for travel and related purposes in
the ordinary course of business consistent with past practice and
policies;
(vii) make or agree to make any new capital expenditure or
expenditures, other than capital expenditures not exceeding the
respective aggregate amounts in each of the fiscal years ended 1999 and
2000 as set forth in Excel's capital expenditure budget for each of the
fiscal years ended 1999 and 2000;
(viii) make any tax election that, individually or in the aggregate,
is reasonably likely to adversely affect in any material respect the tax
liability or tax attributes of Excel or any of its subsidiaries;
(ix) (x) pay, discharge, settle or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), or litigation (whether or not commenced prior to the date of
this Agreement), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent consolidated financial statements (or the
notes thereto) of Excel included in the Excel Filed SEC Documents or
incurred since the date of such financial statements, or (y) waive the
benefits of, agree to modify in any manner, terminate, release any person
from or fail to enforce any confidentiality, standstill or similar
agreement to which Excel or any of its subsidiaries is a party or of
which Excel or any of its subsidiaries is a beneficiary;
(x) except as required by law or contemplated hereby and except for
labor agreements negotiated in the ordinary course, enter into, adopt or
amend in any material respect or terminate any Excel Benefit Plan or any
other agreement, plan or policy involving Excel or its subsidiaries, and
one or more of its directors, officers or employees, or change any
actuarial or 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;
35
(xi) except for normal increases in the ordinary course of business
consistent with past practice or as contemplated hereby or by the terms
of any employment agreement the existence of which does not constitute a
violation of this Agreement, increase the compensation of any director,
officer or other employee or pay any benefit or amount not required by a
plan or arrangement as in effect on the date of this Agreement to any
such person;
(xii) transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Intellectual Property Rights of
Excel and its subsidiaries other than in the ordinary course of business
consistent with past practices or on a non-exclusive basis not materially
different from past practices;
(xiii) enter into or amend (A) any OEM agreement other than in the
ordinary course of business consistent with past practice, or (B) any
agreement pursuant to which any person is granted exclusive marketing,
manufacturing or other rights with respect to any Excel product, process
or technology;
(xiv) call or hold any meeting of stockholders of Excel other than
in connection with the election of members of the Board of Directors of
Excel or other routine matters in the ordinary course of business
consistent with past practice;
(xv) take any action that would, or that is reasonably likely to,
result in (x) any of the representations and warranties made by Excel in
this Agreement that are qualified as to materiality becoming untrue, (y)
any of such representations and warranties that are not so qualified
becoming untrue in any material respect or (z) any condition to the
Merger set forth in Article VI not being satisfied; or
(xvi) authorize, or commit, resolve or agree to take, any of the
foregoing actions.
(b) Advice of Changes. Excel and Lucent shall promptly advise the
other party orally and in writing to the extent it has knowledge of (i) any
representation or warranty made by it (and, in the case of Lucent, made by
Sub) contained in this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation or warranty
that is not so qualified becoming untrue or inaccurate in any material
respect,
36
(ii) the failure by it (and, in the case of Lucent, by Sub) to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement and (iii) any change or
event having, or which is reasonably likely to have, a Material Adverse Effect
on such party or on the truth of their respective representations and
warranties or the ability of the conditions set forth in Article VI to be
satisfied; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties (or
remedies with respect thereto) or the conditions to the obligations of the
parties under this Agreement.
SECTION 4.02. No Solicitation. (a) Excel shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take
any other action to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Takeover
Proposal or (ii) participate in any discussions or negotiations regarding any
Takeover Proposal. For purposes of this Agreement, "Takeover Proposal" means
any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 10% or more of the assets of Excel and its
subsidiaries, taken as a whole, or 10% or more of any class or series of
equity securities of Excel or any of its subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 10% or more of any class or series of equity securities of Excel or any
of its subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Excel or any of its subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Neither the Board of Directors of Excel nor any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Lucent, the approval or, subject to its or their obligations
under applicable law as referred to in Section 4.02(d), recommendation by such
Board of Directors or such committee of the Merger or this Agreement, (ii)
approve or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) approve or recommend, or propose to approve or recommend, or
execute or enter into, any letter of intent,
37
agreement in principle, merger agreement, acquisition agreement, option
agreement or other similar agreement or propose or agree to do any of the
foregoing related to any Takeover Proposal.
(c) In addition to the obligations of Excel set forth in paragraphs
(a) and (b) of this Section 4.02, Excel shall immediately (and no later than
48 hours) advise Lucent orally and in writing of any request for information
or of any inquiry with respect to a Takeover Proposal or of any Takeover
Proposal, the material terms and conditions of such request, inquiry or
Takeover Proposal and the identity of the person making such request, inquiry
or Takeover Proposal. Excel will promptly keep Lucent informed of the status
and details (including amendments or changes or proposed amendments or
changes) of any such request, inquiry or Takeover Proposal.
(d) Nothing contained in this Agreement shall prohibit Excel from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Excel's stockholders (including the withdrawal or modification of the
recommendation of the Board of Directors of Excel of the Merger or this
Agreement and the disclosure of the terms of a Takeover Proposal) if, in the
good faith judgment of the Board of Directors of Excel, after consultation
with outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law; provided, however, that neither Excel nor
its Board of Directors nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, its approval of this Agreement or the Merger
or the submission of this Agreement to the stockholders of Excel for a vote
thereon pursuant to Section 78 of the MBCL or (ii) approve or recommend, or
propose to approve or recommend, a Takeover Proposal.
ARTICLE V
Additional Agreements
SECTION 5.01. Preparation of the Form S-4 and the Excel Proxy
Statement; Excel Stockholders Meeting. (a) As soon as practicable following
the date of this Agreement, Lucent and Excel shall prepare and Excel shall
file with the SEC the Excel Proxy Statement and Lucent and Excel shall prepare
and Lucent shall file with the SEC the Form S-4, in which the Excel Proxy
Statement will be included as a prospectus. Each of Excel and Lucent shall use
all
38
reasonable efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Excel will use
all reasonable efforts to cause the Excel Proxy Statement to be mailed to
Excel's stockholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act. Lucent shall also take any action (other
than qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the
issuance of Lucent Common Stock in the Merger and Excel shall furnish all
information concerning Excel and the holders of capital stock of Excel as may
be reasonably requested in connection with any such action and the
preparation, filing and distribution of the Excel Proxy Statement. No filing
of, or amendment or supplement to, or correspondence to the SEC or its staff
with respect to, the Form S-4 will be made by Lucent, or the Excel Proxy
Statement will be made by Excel, without providing the other party a
reasonable opportunity to review and comment thereon. Lucent will advise
Excel, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Lucent
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. Excel will advise Lucent, promptly after it receives notice
thereof, of any request by the SEC for the amendment of the Excel Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time any
information relating to Excel or Lucent, or any of their respective
affiliates, directors or officers, should be discovered by Excel or Lucent
which should be set forth in an amendment or supplement to any of the Form S-4
or the Excel Proxy Statement, so that any of such documents would not include
any misstatement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers such
information shall promptly notify the other parties hereto and an appropriate
amendment or supplement describing such information shall be promptly filed
with the SEC and, to the extent required by law, disseminated to the
stockholders of Excel.
(b) Excel shall, as soon as practicable following the date of this
Agreement, establish a record date (which will be as soon as practicable
following the date of this
39
Agreement) for, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Excel Stockholders Meeting") solely for the purpose of
obtaining the Excel Stockholders Approval. Excel shall, through its Board of
Directors, recommend to its stockholders the approval and adoption of this
Agreement, the Merger and the other transactions contemplated hereby. Without
limiting the generality of the foregoing, Excel agrees that its obligations
pursuant to the first sentence of this Section 5.01(b) shall not be affected
by the commencement, public proposal, public disclosure or communication to
Excel of any Takeover Proposal.
SECTION 5.02. Letters of Excel's Accountants. (a) Excel shall use
all reasonable efforts to cause to be delivered to Lucent two letters from
Excel's independent public accountants, one dated a date within two business
days before the date on which the Form S-4 shall become effective and one
dated a date within two business days before the Closing Date, each addressed
to Lucent, in form and substance reasonably satisfactory to Lucent and
customary in scope and substance for comfort letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(b) Excel shall provide all reasonable cooperation to each of its
independent public accountants and Lucent's independent public accountants to
enable them to issue the letters referred to in Section 6.01(f) and shall use
reasonable efforts to cause them to do so.
SECTION 5.03. Letters of Lucent's Accountants. (a) Lucent shall use
all reasonable efforts to cause to be delivered to Excel two letters from
Lucent's independent public accountants, one dated a date within two business
days before the date on which the Form S-4 shall become effective and one
dated a date within two business days before the Closing Date, each addressed
to Excel, in form and substance reasonably satisfactory to Excel and customary
in scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form
S-4.
(b) Lucent shall provide all reasonable cooperation to each of its
independent public accountants and Excel's independent public accountants to
enable them to issue the letters referred to in Section 6.01(f) and shall use
reasonable efforts to cause them to do so.
SECTION 5.04. Access to Information; Confidentiality. Upon
reasonable notice and subject to the
40
Non-Disclosure Agreement dated December 4, 1998, between Lucent and Excel (the
"Confidentiality Agreement"), Excel shall, and shall cause each of its
subsidiaries to, afford to Lucent and its officers, employees, accountants,
counsel, financial advisors and other representatives, reasonable access
during normal business hours during the period prior to the Effective Time to
all its properties, books, contracts, commitments, personnel and records and,
during such period, Excel shall, and shall cause each of its subsidiaries to,
furnish promptly to Lucent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Lucent may reasonably
request (including Excel's outside accountants work papers). Excel shall not
be required to provide access to or disclose information where such access or
disclosure would contravene any law, rule, regulation, order or decree. No
review pursuant to this Section 5.04 shall have an effect for the purpose of
determining the accuracy of any representation or warranty given by either
party hereto to the other party hereto. Lucent will hold, and will cause its
officers, employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreement.
SECTION 5.05. Commercially Reasonable Efforts. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
hereto agrees to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties hereto in doing, all things necessary, proper
or advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement and the Stockholders Agreement, including using commercially
reasonable efforts to accomplish the following: (i) the taking of all
commercially reasonable acts necessary to cause the conditions to Closing to
be satisfied as promptly as practicable, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from Governmental
Entities and the making of all necessary registrations and filings (including
filings with Governmental Entities, if any) and the taking of all steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iv) the defending of any
lawsuits or other legal proceedings, whether judicial
41
or administrative, challenging this Agreement or the Stockholders Agreement or
the consummation of the transactions contemplated by, and to fully carry out
the purposes of, this Agreement and the Stockholders Agreement, including
seeking to have any stay or temporary restraining order entered by any court
or other Governmental Entity vacated or reversed, and (v) the execution and
delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement and the Stockholders Agreement.
(b) In connection with and without limiting the foregoing, Excel and
its Board of Directors and Lucent and its Board of Directors shall (i) take
all action necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to the Merger, this Agreement,
the Stockholders Agreement or any of the other transactions contemplated by
this Agreement or the Stockholders Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Merger,
this Agreement, the Stockholders Agreement or any other transaction
contemplated by this Agreement or the Stockholders Agreement, take all action
necessary to ensure that the Merger and the other transactions contemplated by
this Agreement and the Stockholders Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and the
Stockholders Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by this
Agreement and the Stockholders Agreement.
SECTION 5.06. Stock Options. (a) As soon as practicable following
the date of this Agreement, the Board of Directors of Excel (or, if
appropriate, any committee thereof administering the Excel Stock Plans) shall
adopt such resolutions or take such other actions as may be required to effect
the following:
(i) adjust the terms of all outstanding Excel Stock Options granted
under the Excel Stock Plans, whether vested or unvested, as necessary to
provide that, at the Effective Time, each Excel Stock Option outstanding
immediately prior to the Effective Time shall be amended and converted
into an option to acquire, on the same terms and conditions as were
applicable under such Excel Stock Option the number of shares of Lucent
Common Stock (rounded down to the nearest whole share) equal to (A) the
number of shares of Excel Common Stock subject to such Excel Stock Option
immediately prior to the Effective Time
42
multiplied by (B) the Exchange Ratio, at an exercise price per share of
Lucent Common Stock (rounded to the nearest one-hundredth of a cent)
equal to (x) the exercise price per share of such Excel Common Stock
immediately prior to the Effective Time divided by (y) the Exchange Ratio
(each, as so adjusted, an "Adjusted Option"); and
(ii) make such other changes to the Excel Stock Plans as Excel and
Lucent may agree are appropriate to give effect to the Merger.
(b) As soon as practicable after the Effective Time, Lucent shall
deliver to the holders of Excel Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Excel Stock Plans and
the agreements evidencing the grants of such Excel Stock Options and that such
Excel Stock Options and agreements shall be assumed by Lucent and shall
continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 5.06 after giving effect to the Merger).
(c) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by following procedures to be
communicated by Lucent with the notice contemplated by Section 5.06(b),
together with the consideration therefor and the federal withholding tax
information, if any, required in accordance with the related Excel Stock Plan.
(d) Except as otherwise contemplated by this Section 5.06 and except
to the extent required under the respective terms of the Excel Stock Options,
all restrictions or limitations on transfer and vesting with respect to Excel
Stock Options awarded under the Excel Stock Plans or any other plan, program
or arrangement of Excel or any of its subsidiaries, to the extent that such
restrictions or limitations shall not have already lapsed, shall remain in
full force and effect with respect to such options after giving effect to the
Merger and the assumption by Lucent as set forth above. It is the intention of
the parties hereto that the options so assumed by Lucent qualify, to the
maximum extent permissible following the Effective Time, as incentive stock
options as defined in Section 422 of the Code to the extent that such options
qualified as incentive stock options prior to the Effective Time.
(e) Within 30 days after the Closing, Lucent shall prepare and file
with the SEC a registration statement on Form S-8 (or another appropriate
form) registering a
43
number of shares of Lucent Common Stock equal to the number of shares subject
to the Adjusted Options. Excel shall cooperate with, and assist Lucent in the
preparation of, such registration statement.
(f) Excel shall take, or cause to be taken, all action necessary to
amend Excel's 1997 Employee Stock Purchase Plan to terminate such Plan and all
future offering periods thereunder, in each case, effective as of the date
that is two business days prior to the Closing Date.
SECTION 5.07. Employee Matters. (a) Lucent shall cause the Surviving
Corporation to make an offer of employment to each employee of Excel who on
the Closing Date is employed by Excel or who was employed by Excel but is on
authorized leave of absence. The foregoing undertaking shall not apply to any
inactive or former employee including any person on short-term or long-term
disability or who has terminated his or her employment, retired or died on or
before the Closing Date; provided that each employee of Excel on short-term
disability leave on the Closing Date shall be offered employment by the
Surviving Corporation upon such employee being able to return to active
service.
(b) As soon as practicable after the Closing Date (the "Benefits
Date"), Lucent shall provide, or cause to be provided, employee benefit plans,
programs and arrangements to employees of Excel that are the same as those
made generally available to non-represented employees of Lucent who are hired
by Lucent after December 31, 1998. From the Effective Time to the Benefits
Date (which the parties acknowledge may occur on different dates with respect
to different plans, programs or arrangements of Lucent), Lucent shall provide,
or cause to be provided, the employee benefit plans, programs and arrangements
of Excel provided to employees of Excel as of the date hereof.
(c) With respect to each benefit plan, program practice, policy or
arrangement maintained by Lucent (the "Lucent Plans") in which employees of
Excel subsequently participate, (i) service with Excel and its subsidiaries
prior to the Effective Time shall be credited against all service and waiting
period requirements under the Lucent Plans (provided that such recognition
shall not be for the purpose of determining (x) retirement benefits under
Lucent's defined benefit pension plans (unless otherwise required by law) or
(y) any Lucent subsidy under Lucent's retiree health plans), (ii) the Lucent
Plans shall not provide any pre-existing condition exclusions and (iii) the
deductibles, copayments and out-of-pocket maximums in effect under the Lucent
Plans shall be reduced by any deductibles,
44
copayments and out-of-pocket maximums paid by such individuals under the Excel
Benefit Plans for the plan year in which the Effective Time occurs.
SECTION 5.08. Indemnification, Exculpation and Insurance. (a) Lucent
agrees that all rights to indemnification and exculpation (including the
advancement of expenses) from liabilities for acts or omissions occurring at
or prior to the Effective Time (including with respect to the transaction
contemplated by this Agreement) now existing in favor of the current or former
directors or officers of Excel and its subsidiaries as provided in their
respective articles of organization or by-laws (or comparable organizational
documents) and any indemnification agreements of Excel (as each is in effect
on the date hereof), the existence of which does not constitute a breach of
this Agreement, shall be assumed by the Surviving Corporation in the Merger,
without further action, as of the Effective Time and shall survive the Merger
and shall continue in full force and effect in accordance with their terms,
and Lucent shall cause the Surviving Corporation to honor all such rights.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, or otherwise dissolves the
Surviving Corporation, then, and in each such case, Lucent shall cause proper
provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 5.08.
(c) Lucent shall, at its option, for a period of not less than six
years after the Effective Time, either (i) maintain Excel's current directors'
and officers' liability insurance covering acts or omissions occurring prior
to the Effective Time ("D&O Insurance") with respect to those persons who are
currently covered by Excel's directors' and officers' liability insurance
policy on terms with respect to such coverage and amount no less favorable
than those of such policy in effect on the date hereof; or (ii) cause to be
provided coverage no less favorable to such directors or officers, as the case
may be, than the D&O Insurance, in each case so long as the annual premium
therefor would not be in excess of 200% of the last annual premium paid for
the D&O Insurance prior to the date of this Agreement (such 200% amount the
"Maximum Premium"). If the existing or substituted directors' and officers'
liability insurance expires, is terminated or canceled during such
45
six-year period, Lucent will obtain as much D&O Insurance as can be obtained
for the remainder of such period for an annualized premium not in excess of
the Maximum Premium. Excel represents that the Maximum Premium is $450,000.
(d) The provisions of this Section 5.08 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (ii) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 5.09. Fees and Expenses. All fees and expenses incurred in
connection with the Merger, this Agreement, the Stockholders Agreement and the
transactions contemplated by this Agreement and the Stockholders Agreement
shall be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated, except that each of Lucent and Excel shall bear and pay
one-half of (a) the costs and expenses incurred in connection with the filing,
printing and mailing of the Form S-4 and the Excel Proxy Statement (including
SEC filing fees) and (b) the filing fees for the premerger notification and
report forms under the HSR Act.
SECTION 5.10. Public Announcements. Lucent (on behalf of itself and
Sub) and Excel will consult with each other before issuing, and provide each
other the opportunity to review, comment upon and concur with, any press
release or other public statements with respect to the transactions
contemplated by this Agreement, including the Merger and the Stockholders
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as either party may determine is
required by applicable law, the SEC, court process or by obligations pursuant
to any listing agreement with any national securities exchange or national
trading system. The parties hereto agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement and the
Stockholders Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 5.11. Affiliates. Excel shall deliver to Lucent at least 30
days prior to the Closing Date a letter identifying all persons who are, at
the time this Agreement is submitted for adoption by the stockholders of
Excel, "affiliates" of Excel for purposes of Rule 145 under the Securities Act
or for purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and applicable
SEC rules
46
and regulations. Excel shall use reasonable efforts to cause each such person
to deliver to Lucent at least 30 days prior to the Closing Date, a written
agreement substantially in the form attached as Exhibit A hereto. Lucent shall
use reasonable efforts to cause all persons who are "affiliates" of Lucent for
purposes of qualifying the Merger for pooling of interests accounting
treatment under Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations to deliver to Excel at least 30 days prior to the
Closing Date, a written agreement complying with the fourth paragraph of
Exhibit A hereto.
SECTION 5.12. NYSE Listing. Lucent shall use reasonable efforts to
cause the Lucent Common Stock issuable in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, as promptly as
practicable after the date hereof, and in any event prior to the Closing Date.
SECTION 5.13. Litigation. Excel shall give Lucent the opportunity to
participate in the defense of any litigation against Excel and/or its
directors relating to the transactions contemplated by this Agreement.
SECTION 5.14. Tax Treatment. Each of Lucent and Excel shall use
reasonable efforts to cause the Merger to qualify as a reorganization under
the provisions of Section 368 of the Code and to obtain the opinions of
counsel referred to in Sections 6.02(c) and 6.03(c), including the execution
of the letters of representation referred to therein.
SECTION 5.15. Pooling of Interests. Each of Excel and Lucent shall
use reasonable efforts to cause the transactions contemplated by this
Agreement, including the Merger, and the Stockholders Agreement to be
accounted for as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable SEC rules and regulations, and each of Excel
and Lucent agrees that it shall take no action that would cause such
accounting treatment not to be obtained.
SECTION 5.16. Stockholder Agreement Legend. Excel will inscribe upon
any certificate representing Subject Shares (as defined in the Stockholders
Agreement) tendered by a Stockholder (as defined in the Stockholders
Agreement) in connection with any proposed transfer of any Subject Shares by
such Stockholder in accordance with the terms of the Stockholders Agreement
the following legend: "THE SHARES OF COMMON STOCK, PAR VALUE $0.01, PER SHARE,
OF EXCEL SWITCHING CORPORATION, REPRESENTED BY THIS CERTIFICATE
47
ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF AUGUST 17, 1999, AND ARE
SUBJECT TO THE TERMS THEREOF. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT THE
PRINCIPAL EXECUTIVE OFFICES OF EXCEL SWITCHING CORPORATION."; and Excel will
return such certificate containing such inscription to such Stockholder within
three business days following Excel's receipt thereof.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party hereto to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Excel Stockholders Approval. The Excel Stockholders Approval
shall have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) No Litigation. No judgment, order, decree, statute, law,
ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition (collectively,
"Restraints") shall be in effect, and there shall not be pending or
threatened any suit, action or proceeding by any Governmental Entity, (i)
preventing the consummation of the Merger or (ii) which otherwise is
reasonably likely to have a Material Adverse Effect on Excel or Lucent,
as applicable; provided, however, that each of the parties hereto shall
have used its reasonable efforts to prevent the entry of any such
Restraints and to appeal as promptly as possible any such Restraints that
may be entered.
(d) Form S-4. The Form S-4 shall have become effective under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
(e) NYSE Listing. The shares of Lucent Common Stock issuable to
Excel's stockholders as contemplated
48
by this Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(f) Pooling Letters. Each of Lucent and Excel shall have received a
letter, dated as of the Closing Date, addressed to Lucent and Excel, from
PricewaterhouseCoopers LLP in form and substance satisfactory to Lucent,
stating in substance that PricewaterhouseCoopers LLP concurs with the
conclusion of Lucent's management that no condition exists that would
preclude accounting of the Merger as a pooling of interests under Opinion
16 of the Accounting Principles Board and applicable SEC rules and
regulations. Each of Lucent and Excel shall have received a letter, dated
as of the Closing Date, addressed to Lucent and Excel, from Xxxxxx
Xxxxxxxx LLP stating in substance that Xxxxxx Xxxxxxxx LLP concurs with
the conclusion of Excel's management that no condition exists that would
preclude accounting of the Merger as a pooling of interests transaction
under Opinion 16 of the Accounting Principles Board and applicable SEC
rules and regulations.
SECTION 6.02. Conditions to Obligations of Lucent and Sub. The
obligation of Lucent and Sub to effect the Merger is further subject to
satisfaction or waiver of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Excel set forth herein that are qualified as to materiality
shall be true and correct, and those that are not so qualified shall be
true and correct in all material respects, in each case as of the date
hereof and as of the Effective Time, with the same effect as if made at
and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such date). Lucent shall have received a
certificate signed on behalf of Excel by the chief executive officer of
Excel to such effect.
(b) Performance of Obligations of Excel. Excel shall have performed
in all material respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date. Lucent shall have
received a certificate signed on behalf of Excel by the chief executive
officer of Excel to such effect.
(c) Tax Opinions. Lucent shall have received from Cravath, Swaine &
Xxxxx, counsel to Lucent, on the
49
date on which the Form S-4 is declared effective by the SEC and on the
Closing Date, an opinion, in each case dated as of such respective date
and stating that the Merger will qualify for U.S. federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code. The issuance of such opinion shall be conditioned upon the receipt
by such tax counsel of customary representation letters from each of
Lucent and Excel, in each case, in form and substance reasonably
satisfactory to such tax counsel.
SECTION 6.03. Conditions to Obligations of Excel. The obligation of
Excel to effect the Merger is further subject to satisfaction or waiver of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of Lucent and Sub set forth herein that are qualified as to
materiality shall be true and correct, and those that are not so
qualified shall be true and correct in all material respects, in each
case as of the date hereof and as of the Effective Time, with the same
effect as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date). Excel shall
have received a certificate signed on behalf of Lucent by an authorized
signatory of Lucent to such effect.
(b) Performance of Obligations of Lucent and Sub. Lucent and Sub
shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing
Date. Excel shall have received a certificate signed on behalf of Lucent
by an authorized signatory of Lucent to such effect
(c) Tax Opinions. Excel shall have received from Xxxxx, Xxxxxxx &
Xxxxxxxxx, LLP, counsel to Excel, on the date on which the Form S-4 is
declared effective by the SEC and on the Closing Date, an opinion, in
each case dated as of such respective date and stating that the Merger
will qualify for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. The issuance of such
opinion shall be conditioned upon the receipt by such tax counsel of
customary representation letters from each of Lucent and Excel, in each
case, in form and substance reasonably satisfactory to such tax counsel.
50
SECTION 6.04. Frustration of Closing Conditions. None of Lucent, Sub
or Excel may rely on the failure of any condition set forth in Section 6.01,
6.02 or 6.03, as the case may be, to be satisfied if such failure was caused
by such party's failure to use reasonable efforts to consummate the Merger and
the other transactions contemplated by this Agreement and the Stockholders
Agreement, as required by and subject to Section 5.05.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Excel
Stockholders Approval:
(a) by mutual written consent of Lucent and Excel;
(b) by either Lucent or Excel:
(i) if the Merger shall not have been consummated by March 31,
2000; provided, however, that the right to terminate this Agreement
pursuant to this Section 7.01(b)(i) shall not be available to any
party whose failure to perform any of its obligations under this
Agreement results in the failure of the Merger to be consummated by
such time; or
(ii) if any Restraint having any of the effects set forth in
Section 6.01(c) shall be in effect and shall have become final and
nonappealable; provided that the party seeking to terminate this
Agreement pursuant to this Section 7.01(b)(ii) shall have used
reasonable efforts to prevent the entry of and to remove such
Restraint;
(c) by Lucent, if Excel shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.02(a) or (b), and (B) is incapable of being or has not been
cured by Excel within 30 calendar days after the giving of written notice
to Excel of such breach or failure to perform (it being understood and
agreed that any breach
51
of Section 4.02(a) or (b) by Excel would satisfy
clauses (A) and (B) above); or
(d) by Excel, if Lucent shall have breached or failed to perform in
any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to
perform (A) would give rise to the failure of a condition set forth in
Section 6.03(a) or (b), and (B) is incapable of being or has not been
cured by Lucent within 30 calendar days after the giving of written
notice to Lucent of such breach or failure to perform.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either Excel or Lucent as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Lucent, Sub or Excel, other than the
provisions of Section 3.01(o), the last sentence of Section 5.04, Section
5.09, this Section 7.02 and Article VIII, which provisions survive such
termination, and except to the extent that such termination results from the
wilful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after the Excel Stockholders Approval;
provided, however, that after any such approval, there shall not be made any
amendment that by law requires further approval by the stockholders of Excel
or the approval of the stockholders of Lucent without the further approval of
such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
SECTION 7.04. Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.03, waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
52
under this Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE VIII
General Provisions
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Lucent or Sub, to
Lucent Technologies Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Telecopy No.: Separately supplied
Attention: Xxxxxx X. Xxxxxx
Vice President-Law
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: Separately supplied
Attention: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx, III; and
53
(b) if to Excel, to
Excel Switching Corporation
000 Xxxxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telecopy No.: Separately supplied
Attention: General Counsel
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Telecopy No.: Separately supplied
Attention: Xxxx X. Xxxxxxx
Xxxxxx X. Xxxxx, Xx.
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise;
(b) "business day" means any day other than Saturday, Sunday or any
other day on which banks are legally permitted to be closed in New York;
(c) "knowledge" of any person that is not an individual means, with
respect to any specific matter, the knowledge of such person's executive
officers and other officers having primary responsibility for such
matter;
(d) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with Excel or Lucent, any change, effect, event,
occurrence, condition, development or state of facts that is materially
adverse to the long-term business prospects, business, assets, results of
operations or financial condition of Excel and its subsidiaries, taken as
a
54
whole, or Lucent and its subsidiaries, taken as a whole; provided,
however, that no change, effect, event, occurrence, condition,
development or state of facts shall be deemed, individually or in the
aggregate, to constitute a Material Adverse Change or Material Adverse
Effect to the extent:
(i) relating to or resulting from the telephony and
telecommunications markets generally, the U.S. economy as a whole or the
international economy as a whole or any political, economic or social
instability in any such market or economy;
(ii) relating to or resulting from U.S. or international securities
markets in general; or
(iii) solely with respect to Excel and its subsidiaries, arising as
a result of this Agreement or the transactions contemplated hereby or the
announcement thereof, including one or more of the following:
(A) the market price of Excel Common Stock;
(B) the bookings, revenues, gross margins or earnings of Excel;
(C) any delay of, reduction in or cancelation or change in the
term or timing of product orders or project implementations by
customers of Excel;
(D) any attrition of Excel employees;
(E) any termination or modification of any existing contract
(or any negotiations with respect thereto) between Excel and any of
its customers;
(F) any litigation brought or threatened against Excel, any
principal stockholder thereof or any member of its Board of
Directors after the date hereof;
(G) any material litigation existing on the date hereof
involving Excel's Intellectual Property Rights or any change in
strategy, position or status of any such pending litigation; or
(H) any refusal by any of Excel's suppliers to continue to do
business with Excel;
55
(e) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(f) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
All terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
56
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except
for the provisions of Article II, Section 5.06 and Section 5.08, are not
intended to confer upon any person other than the parties any rights or
remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflict of laws thereof, except that the consummation of the Merger shall
be governed by, and construed in accordance with, the MBCL.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other parties. Any assignment
in violation of the preceding sentence shall be void. Subject to the preceding
two sentences, this Agreement will be binding upon, inure to the benefit of,
and be enforceable by, the parties and their respective successors and
assigns.
SECTION 8.09. Enforcement. Each of the parties hereto agrees that
irreparable damage would occur and that the parties would not have any
adequate remedy at law in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
federal court located in the State of Delaware or in Delaware state court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any federal court located in the State
of Delaware or any Delaware state court in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (c) agrees that
it will not bring any action relating to this Agreement or any
57
of the transactions contemplated by this Agreement in any court other than a
federal court sitting in the State of Delaware or a Delaware state court.
58
SECTION 8.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.
IN WITNESS WHEREOF, Lucent, Sub and Excel have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
LUCENT TECHNOLOGIES INC.,
by
/s/Xxxxx X'Xxxxxx
-------------------------------
Name: Xxxxx X'Xxxxxx
Title: Vice President
Switching & Access
Solutions
DALLAS MERGER INC.,
by
/s/Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
by
/s/Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Assistant Treasurer
EXCEL SWITCHING CORPORATION,
by
/s/Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
by
/s/Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President, Chief
Financial Officer and
Treasurer
ANNEX I
TO THE MERGER AGREEMENT
Index of Defined Terms
Term Page
Accounting Rules......................................................15
Adjusted Option.......................................................42
affiliate.............................................................53
Agreement............................................................. 1
Articles of Merger.....................................................2
business day..........................................................53
Benefits Date.........................................................43
Certificates.......................................................... 6
Closing............................................................... 2
Closing Date.......................................................... 2
Code................................................................. 1
Common Shares Trust................................................... 8
Confidentiality Agreement.............................................40
control...............................................................53
Dissenting Shares......................................................5
D&O Insurance.........................................................44
Effective Time........................................................ 3
Environmental Law.....................................................19
ERISA.................................................................19
Excel................................................................. 1
Excel Authorized Preferred
Stock...............................................................12
Excel Benefit Plans...................................................19
Excel Common Stock.................................................... 1
Excel Disclosure Schedule............................................ 11
Excel Filed SEC Documents.............................................11
Excel Permits.........................................................18
Excel Proxy Statement.................................................14
Excel SEC Documents...................................................15
Excel Stock Options...................................................12
Excel Stock Plans.....................................................12
Excel Stockholders Approval........................................... 2
Excel Stockholders Meeting............................................39
Excess Shares......................................................... 8
Exchange Act..........................................................14
Exchange Agent........................................................ 5
Exchange Fund......................................................... 6
Exchange Ratio........................................................ 4
Form S-4..............................................................16
GAAP..................................................................15
Governmental Entity...................................................14
Hazardous Materials...................................................19
HSR Act...............................................................14
Term Page
Intellectual Property
Rights..............................................................24
knowledge.............................................................53
Liens.................................................................11
Lucent................................................................ 1
Lucent Authorized Preferred
Stock...............................................................27
Lucent Common Stock................................................... 4
Lucent Disclosure Schedule............................................27
Lucent Filed SEC Documents............................................27
Lucent Junior Preferred
Stock...............................................................28
Lucent Plans..........................................................43
Lucent Rights.........................................................28
Lucent Rights Agreement...............................................28
Lucent SEC Documents..................................................30
Material Adverse Change...............................................53
Material Adverse Effect...............................................53
Maximum Premium.......................................................44
MBCL.................................................................. 2
Merger................................................................ 1
Merger Consideration.................................................. 4
NYSE.................................................................. 8
Parachute Gross-Up Payment............................................21
person................................................................55
Principal Stockholders.................................................1
Release...............................................................19
Restraints............................................................47
SEC...................................................................14
Securities Act........................................................15
Stockholders Agreement................................................ 1
Sub................................................................... 1
subsidiary............................................................55
Surviving Corporation................................................. 2
Takeover Proposal.....................................................36
taxes.................................................................23
EXHIBIT A
TO THE MERGER AGREEMENT
Form of Affiliate Letter
Dear Sirs:
The undersigned, a holder of shares of common stock,
par value $.01 per share ("Excel Common Stock"), of Excel
Switching Corporation, a Massachusetts corporation
("Excel"), is entitled to receive in connection with the
merger (the "Merger") of a subsidiary of Lucent Technologies
Inc., a Delaware corporation ("Lucent"), with and into
Excel, securities of Lucent, as the parent of the surviving
corporation in the Merger (the "Parent Securities"). The
undersigned acknowledges that the undersigned may be deemed
an "affiliate" of Excel within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act of 1933,
as amended (the "Securities Act"), by the Securities and
Exchange Commission (the "SEC") and may be deemed an
"affiliate" of Excel for purposes of qualifying the Merger
for pooling of interests accounting treatment under
Opinion 16 of the Accounting Principles Board and applicable
SEC rules and regulations, although nothing contained herein
should be construed as an admission of either such fact.
If in fact the undersigned were an affiliate under the
Securities Act, the undersigned's ability to sell, assign or
transfer the Parent Securities received by the undersigned
in exchange for any shares of Excel Common Stock in
connection with the Merger may be restricted unless such
transaction is registered under the Securities Act or an
exemption from such registration is available. The
undersigned understands that such exemptions are limited and
the undersigned has obtained or will obtain advice of
counsel as to the nature and conditions of such exemptions,
including information with respect to the applicability to
the sale of such securities of Rules 144 and 145(d)
promulgated under the Securities Act. The undersigned
understands that Lucent will not be required to maintain the
effectiveness of any registration statement under the
Securities Act for the purposes of resale of Parent
Securities by the undersigned.
The undersigned hereby represents to and covenants with
Lucent that the undersigned will not sell, assign or
transfer any of the Parent Securities received by the
undersigned in exchange for shares of Excel Common Stock in
connection with the Merger except (i) pursuant to an
effective registration statement under the Securities Act,
(ii) in conformity with the volume and other limitations of
Rule 145 or (iii) in a transaction which, in the opinion of
counsel to Lucent or as described in a "no-action" or
interpretive letter from the Staff of the SEC specifically
2
issued with respect to a transaction to be engaged in by the
undersigned, is not required to be registered under the
Securities Act.
The undersigned hereby further represents to and
covenants with Lucent that the undersigned has not, within
the preceding 30 days, sold, transferred or otherwise
disposed of any shares of Excel Common Stock held by the
undersigned and that the undersigned will not sell, transfer
or otherwise dispose of any Parent Securities received by
the undersigned in connection with the Merger until after
such time as results covering at least 30 days of post-
Merger combined operations of Excel and Lucent have been
published by Lucent, in the form of a quarterly earnings
report, an effective registration statement filed with the
SEC, a report to the SEC on Form 10-K, 10-Q or 8-K, or any
other public filing or announcement which includes such
combined results of operations, except as would not
otherwise reasonably be expected to adversely affect the
qualification of the Merger as a pooling-of-interests.
In the event of a sale or other disposition by the
undersigned of Parent Securities pursuant to Rule 145, the
undersigned will supply Lucent with evidence of compliance
with such Rule, in the form of a letter in the form of
Annex I hereto and the opinion of counsel or no-action
letter referred to above. The undersigned understands that
Lucent may instruct its transfer agent to withhold the
transfer of any Parent Securities disposed of by the
undersigned, but that (provided such transfer is not
prohibited by any other provision of this letter agreement)
upon receipt of such evidence of compliance, Lucent shall
cause the transfer agent to effectuate the transfer of the
Parent Securities sold as indicated in such letter.
Lucent covenants that it will take all such actions as
may be reasonably available to it to permit the sale or
other disposition of Parent Securities by the undersigned
under Rule 145 in accordance with the terms thereof.
The undersigned acknowledges and agrees that the
legends set forth below will be placed on certificates
representing Parent Securities received by the undersigned
in connection with the Merger or held by a transferee
thereof, which legends will be removed by delivery of
substitute certificates upon receipt of an opinion in form
and substance reasonably satisfactory to Lucent from
independent counsel reasonably satisfactory to Lucent to the
effect that such legends are no longer required for purposes
of the Securities Act.
3
There will be placed on the certificates for Parent
Securities issued to the undersigned, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued
pursuant to a business combination which is being
accounted for as a pooling of interests, in a transaction
to which Rule 145 promulgated under the Securities Act of
1933 applies. The shares have not been acquired by the
holder with a view to, or for resale in connection with,
any distribution thereof within the meaning of the
Securities Act of 1933. The shares may not be sold,
pledged or otherwise transferred (i) until such time as
Lucent Technologies Inc. shall have published financial
results covering at least 30 days of combined operations
after the Effective Time and (ii) except in accordance
with an exemption from the registration requirements of
the Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned
has carefully read this letter and understands the
requirements hereof and the limitations imposed upon the
distribution, sale, transfer or other disposition of Parent
Securities and (ii) the receipt by Lucent of this letter is
an inducement to Lucent's obligations to consummate the
Merger.
Very truly yours,
Dated:
ANNEX I
TO EXHIBIT A
[Name] [Date]
On , the undersigned sold the
securities of Lucent Technologies Inc., a Delaware
corporation ("Lucent"), described below in the space
provided for that purpose (the "Securities"). The
Securities were received by the undersigned in connection
with the merger of a subsidiary of Lucent with and into
Excel Switching Corporation, a Massachusetts corporation.
Based upon the most recent report or statement filed by
Lucent with the Securities and Exchange Commission, the
Securities sold by the undersigned were within the
prescribed limitations set forth in paragraph (e) of
Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Securities Act").
The undersigned hereby represents that the Securities
were sold in "brokers' transactions" within the meaning of
Section 4(4) of the Securities Act or in transactions
directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as
amended. The undersigned further represents that the
undersigned has not solicited or arranged for the
solicitation of orders to buy the Securities, and that the
undersigned has not made any payment in connection with the
offer or sale of the Securities to any person other than to
the broker who executed the order in respect of such sale.
Very truly yours,
[Space to be provided for description of the Securities.]
