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EXHIBIT 99.2
EXECUTION COPY
STOCK OPTION AGREEMENT dated as of April 2, 1999 (the
"Agreement"), by and between MOSAIX, INC., a Washington corporation ("Issuer"),
and LUCENT TECHNOLOGIES INC., a Delaware corporation ("Grantee").
RECITALS
A. Grantee, Noah Acquisition Inc., a wholly owned
subsidiary of Grantee ("Acquisition"), and Issuer have entered into an Agreement
and Plan of Merger dated as of the date hereof (the "Merger Agreement"; defined
terms used but not defined herein have the meanings set forth in the Merger
Agreement), providing for, among other things, the merger of Acquisition with
and into Issuer, with Issuer as the surviving corporation in the Merger and
becoming a wholly owned subsidiary of Grantee; and
B. As a condition and inducement to Grantee's willingness
to enter into the Merger Agreement, Grantee has requested that Issuer agree, and
Issuer has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, Issuer and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase up to 2,092,757 (as adjusted as set forth herein) shares
(the "Option Shares") of common stock, par value $.01 per share ("Issuer Common
Stock"), of Issuer at a purchase price of $10.50 (as adjusted as set forth
herein) per Option Share (the "Purchase Price").
2. Exercise of Option. (a) Grantee may exercise the Option,
with respect to any or all of the Option Shares at any time or times, subject to
the provisions of Section 2(c), after the occurrence of any event as a result of
which the Grantee is unconditionally entitled to receive the Termination Fee
pursuant to Section 5.10(b) of the Merger Agreement (a "Purchase Event");
provided, that (i) except as provided in the last sentence of this Section 2(a),
the Option will terminate and be of no further force and effect upon the
Effective Time, and (ii) any purchase of Option Shares upon exercise of the
Option will be subject to compliance with the HSR Act and the obtaining or
making of any consents, approvals, orders, notifications, filings or
authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares to Grantee illegal (the
"Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee
will be entitled to purchase the Option Shares if it has
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exercised the Option in accordance with the terms hereof prior to the
termination of the Option and the termination of the Option will not affect any
rights hereunder which by their terms do not terminate or expire prior to or as
of such termination.
(b) In the event that Grantee is entitled to and wishes to
exercise the Option, it will send to Issuer a written notice (an "Exercise
Notice"; the date of which being herein referred to as the "Notice Date") to
that effect which Exercise Notice also specifies the number of Option Shares, if
any, Grantee wishes to purchase pursuant to this Section 2(b), the denominations
of the certificate or certificates evidencing the Option Shares which Grantee
wishes to purchase pursuant to this Section 2(b) and a date (an "Option Closing
Date"), subject to the following sentence, not earlier than seven business days
nor later than 20 business days from the Notice Date for the closing of such
purchase (an "Option Closing"). Any Option Closing will be at an agreed location
and time in New York, New York on the applicable Option Closing Date or at such
later date as may be necessary so as to comply with the first sentence of
Section 2(a).
(c) Notwithstanding anything to the contrary contained
herein, any exercise of the Option and purchase of Option Shares shall be
subject to compliance with applicable laws and regulations, which may prohibit
the purchase of all the Option Shares specified in the Exercise Notice without
first obtaining or making certain Regulatory Approvals. In such event, if the
Option is otherwise exercisable and Grantee wishes to exercise the Option, the
Option may be exercised in accordance with Section 2(b) and Grantee shall
acquire the maximum number of Option Shares specified in the Exercise Notice
that Grantee is then permitted to acquire under the applicable laws and
regulations, and if Grantee thereafter obtains the Regulatory Approvals to
acquire the remaining balance of the Option Shares specified in the Exercise
Notice, then Grantee shall be entitled to acquire such remaining balance. Issuer
agrees to use its reasonable best efforts to assist Grantee in seeking the
Regulatory Approvals.
In the event (i) Grantee receives official notice that a
Regulatory Approval required for the purchase of any Option Shares will not be
issued or granted or (ii) such Regulatory Approval has not been issued or
granted within six months of the date of the Exercise Notice, then with respect
to the number of Option Shares for which such Regulatory Approval will not be
issued or granted or has not been issued or granted, Grantee shall have the
right to send to Issuer an Exercise Notice with respect to such number of Option
Shares. If Grantee sends to Issuer such an Exercise Notice, then Issuer shall
pay to Grantee on the Option Closing Date, in exchange for the cancellation of
the Option with respect to such number of Option Shares as Grantee specifies in
the Exercise Notice, an amount in cash equal to such number of Option Shares
multiplied by the difference between (i) the average closing price, for the 10
trading days commencing on the 12th trading day immediately preceding the Option
Closing Date, per share of Issuer Common Stock as reported on The Nasdaq
National Market (or, if not listed on The Nasdaq National Market, as reported on
any other national securities exchange or national securities quotation system
on which the Issuer Common Stock is listed or quoted, as reported in The Wall
Street Journal (Northeast edition), or, if not reported thereby, any other
authoritative source) (the "Closing Price") and (ii) the Purchase Price.
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3. Payment and Delivery of Certificates. (a) At any Option
Closing, Grantee will pay to Issuer in immediately available funds by wire
transfer to a bank account designated in writing by Issuer an amount equal to
the Purchase Price multiplied by the number of Option Shares to be purchased at
such Option Closing plus the amount of any transfer, stamp or other similar
taxes or charges imposed in connection therewith.
(b) At any Option Closing, simultaneously with the delivery
of immediately available funds as provided in Section 3(a), Issuer will deliver
to Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall have issued any securities similar to rights under a
stockholder rights plan, then each Option Share issued pursuant to such exercise
will also represent such a corresponding right with terms substantially the same
as and at least as favorable to Grantee as are provided under any such
stockholder rights plan then in effect.
(c) Certificates for the Option Shares delivered at an
Option Closing will have typed or printed thereon a restrictive legend which
will read substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF APRIL 2, 1999, A
COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF MOSAIX, INC. AT ITS
PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee as follows:
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Authorized Stock. Issuer has taken all necessary corporate and
other action to authorize and reserve and, subject to the expiration or
termination of any required waiting period under the HSR Act, to permit
it to issue, and, at all times from the date hereof until the obligation
to deliver Option Shares upon the exercise of the Option terminates,
shall have reserved for issuance, upon exercise of the Option, shares of
Issuer Common Stock necessary for Grantee to exercise the Option, and
Issuer will take all necessary corporate action to authorize and reserve
for issuance all additional shares of Issuer Common Stock or other
securities which may be issued pursuant to Section 6 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due
exercise of the Option, including all additional shares of Issuer Common
Stock or other securities which may be issuable upon exercise of the
Option or any other securities which may be issued pursuant to Section
6, upon issuance pursuant hereto, will be duly and validly issued, fully
paid and nonassessable, and will be delivered free and clear of all
liens, claims, charges and encumbrances of any kind or nature
whatsoever, including without limitation any preemptive rights of any
stockholder of Issuer.
5. Representations and Warranties of Grantee. Grantee
hereby represents and warrants to Issuer that:
Purchase Not for Distribution. Any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be
transferred or otherwise disposed of except in a transaction registered,
or exempt from registration, under the Securities Act.
6. Adjustment upon Changes in Capitalization, Etc. (a) In
the event of any change in Issuer Common Stock by reason of a stock dividend,
split-up, merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price thereof, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee will receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable. Subject to Section 1, and
without limiting the parties' relative rights and obligations under the Merger
Agreement, if any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 6(a)), the number of shares of Issuer Common Stock
subject to the Option will be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) Without limiting the parties' relative rights and
obligations under the Merger Agreement, in the event that Issuer enters into an
agreement (i) to consolidate with or merge into any person, other than Grantee
or one of its subsidiaries, and Issuer will not be the
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continuing or surviving corporation in such consolidation or merger, (ii) to
permit any person, other than Grantee or one of its subsidiaries, to merge into
Issuer and Issuer will be the continuing or surviving corporation, but in
connection with such merger, the shares of Issuer Common Stock outstanding
immediately prior to the consummation of such merger will be changed into or
exchanged for stock or other securities of Issuer or any other person or cash or
any other property, or the shares of Issuer Common Stock outstanding immediately
prior to the consummation of such merger will, after such merger, represent less
than 50% of the outstanding voting securities of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any person,
other than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction will make proper provision so that the
Option will, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
with identical terms appropriately adjusted to acquire the number and class of
shares or other securities or property that Grantee would have received in
respect of Issuer Common Stock if the Option had been exercised immediately
prior to such consolidation, merger, sale, or transfer, or the record date
therefor, as applicable and make any other necessary adjustments.
(c) If a Purchase Event shall occur solely as a result of
the failure to obtain Company Shareholder Approval and on or prior to the date
of the Company Shareholder Meeting no Takeover Proposal shall have been made (a
"Call Event"), then the Issuer, upon notice to Grantee delivered within ten (10)
days after the occurrence of such Call Event (which notice shall be
irrevocable), may elect (a "Call Election") to purchase the Option for any
amount equal to $563,000 payable to Grantee in cash not later than twenty (20)
days after the date of such notice; provided, that if Issuer shall fail to
exercise its Call Election during such 10-day period, Grantee, upon notice to
Issuer delivered within thirty (30) days after such Call Event, may elect to
cause Issuer to purchase the Option for the amount and in the manner set forth
in this sentence.
(d) (i) Notwithstanding any other provision of this
Agreement, in no event shall Grantee's Total Profit (as hereinafter defined)
plus any Termination Fee paid to Grantee pursuant to Section 5.10(b) of the
Merger Agreement exceed in the aggregate $3,378,000 and, if the total amount
that otherwise would be received by Grantee would exceed such amount, Grantee,
at its election, shall either (a) reduce the number of shares of Issuer Common
Stock subject to the Option, (b) deliver to Issuer for cancellation shares of
Issuer Common Stock previously purchased by Grantee, (c) pay cash to Issuer or
(d) take any action representing any combination of the preceding clauses (a),
(b) and (c), so that Grantee's actually realized Total Profit, when aggregated
with such Termination Fee so paid to Grantee, shall not exceed $3,378,000 after
taking into account the foregoing actions.
(ii) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (A) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 6(c) and (B) the net cash amounts or the fair market value
of any property received by Grantee pursuant to the sale of Option Shares (or
other securities).
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7. Registration Rights. Issuer will, if requested by
Grantee at any time and from time to time within two years of the exercise of
the Option, as expeditiously as possible prepare and file up to three
registration statements under the Securities Act if such registration is
necessary in order to permit the sale or other disposition of any or all shares
of securities that have been acquired by or are issuable to Grantee upon
exercise of the Option in accordance with the intended method of sale or other
disposition stated by Grantee, including a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer will
use its best efforts to qualify such shares or other securities under any
applicable state securities laws. Grantee agrees to cause, and to cause any
underwriters of any sale or other disposition to cause, any sale or other
disposition pursuant to such registration statement to be effected on a widely
distributed basis so that upon consummation thereof no purchaser or transferee
will own beneficially more than 3.0% of the then-outstanding voting power of
Issuer. Issuer will use reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties which are required therefor, and to keep such registration statement
effective for such period not in excess of 120 calendar days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of Issuer hereunder to
file a registration statement and to maintain its effectiveness may be suspended
for up to 120 calendar days in the aggregate if the Board of Directors of Issuer
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require premature disclosure of material
nonpublic information that would materially and adversely affect Issuer or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of Issuer or any other material transaction involving Issuer. Any
registration statement prepared and filed under this Section 7, and any sale
covered thereby, will be at Issuer's expense except for underwriting discounts
or commissions, brokers' fees and the fees and disbursements of Grantee's
counsel related thereto. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. If, during the time periods referred to in the first sentence of this
Section 7, Issuer effects a registration under the Securities Act of Issuer
Common Stock for its own account or for any other stockholders of Issuer (other
than on Form S-4 or Form S-8, or any successor form), it will allow Grantee the
right to participate in such registration, and such participation will not
affect the obligation of Issuer to effect demand registration statements for
Grantee under this Section 7; provided that, if the managing underwriters of
such offering advise Issuer in writing that in their opinion the number of
shares of Issuer Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, Issuer will include the
shares requested to be included therein by Grantee pro rata with the shares
intended to be included therein by Issuer. In connection with any registration
pursuant to this Section 7, Issuer and Grantee will provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification, and contribution in connection with such
registration.
If a requested registration pursuant to this Section 7 involves
an underwritten offering, the underwriter or underwriters thereof shall be a
nationally recognized firm or firms
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selected by Issuer. Notwithstanding anything else contained in this Section 7,
each requested registration shall be for a number of shares of Issuer Common
Stock which represent at least one-fourth of the total of number of shares of
Issuer Common Stock purchased by Grantee hereunder.
8. Transfers. The Option Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 or (ii) to any purchaser or transferee who
would not, to the knowledge of Grantee after reasonable inquiry (which shall
include obtaining a representation from the purchaser or transferee),
immediately following such sale, assignment, transfer or disposal, beneficially
own more than 3.0% of the then-outstanding voting power of the Issuer; provided,
that Grantee shall be permitted to sell any Option Shares if such sale is made
pursuant to a tender or exchange offer that has been approved or recommended by
a majority of the members of the Board of Directors of Issuer (which majority
shall include a majority of directors who were directors as of the date hereof).
9. Listing. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then listed on The Nasdaq
National Market (or any other national securities exchange or national
securities quotation system), Issuer, upon the request of Grantee, will promptly
file an application to list the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on The Nasdaq National
Market (and any such other national securities exchange or national securities
quotation system) and will use reasonable efforts to obtain approval of such
listing as promptly as practicable.
10. Loss or Mutilation. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered will constitute an
additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed, or mutilated shall at any time be
enforceable by anyone.
11. Miscellaneous. (a) Expenses. Each of the parties hereto
will bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants, and
counsel.
(b) Amendment. This Agreement may not be amended, except by
an instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party
to waive any provision of this Agreement, or to extend the time for performance,
will be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this
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Agreement to assert any of its rights under this Agreement or otherwise will not
constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Merger Agreement (including the documents and instruments
attached thereto as exhibits or schedules or delivered in connection therewith)
and the Confidentiality Agreement (i) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement, and
(ii) are not intended to confer upon any person other than the parties any
rights or remedies.
(e) Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflict of
laws thereof.
(f) Notices. All notices, requests, claims, demands, and
other communications under this Agreement shall be sent in the manner and to the
addresses set forth in the Merger Agreement.
(g) Assignment. Neither this Agreement, the Option nor any
of the rights, interests, or obligations under this Agreement may be assigned or
delegated, in whole or in part, by operation of law or otherwise, by Issuer or
Grantee without the prior written consent of the other. Any assignment or
delegation in violation of the preceding sentence will be void. Subject to the
first and second sentences of this Section 11(g), this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
(h) Further Assurances. In the event of any exercise of the
Option by Grantee, Issuer and Grantee will execute and deliver all other
documents and instruments and take all other actions that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(i) Enforcement. The parties agree that irreparable damage
would occur and that the parties would not have any adequate remedy at law in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of New York or in New York state court, the foregoing being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of New York or any New
York state court in the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (iii) agrees that it will not bring any
action relating to
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this Agreement or any of the transactions contemplated by this Agreement in any
court other than a Federal court sitting in the State of New York or a New York
state court.
(j) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the day and year first written above.
MOSAIX, INC
By:
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Name:
Title:
LUCENT TECHNOLOGIES INC.
By:
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Name:
Title:
