EXHIBIT 10.1
STOCK OPTION AGREEMENT dated as of February 7, 2000 (this
"Agreement"), by and between XXXXX CORPORATION, a Delaware corporation
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("Issuer"), and LUCENT TECHNOLOGIES INC., a Delaware corporation ("Grantee").
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RECITALS
A. Grantee, Solara Acquisition Inc., a wholly owned subsidiary of
Grantee ("Acquisition"), and Issuer have entered into an Agreement and Plan of
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Merger dated as of the date hereof (the "Merger Agreement"; defined terms used
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but not defined herein have the respective meanings set forth in the Merger
Agreement), providing for, among other things, the merger of Acquisition with
and into Issuer, with Issuer as the surviving corporation in the Merger and
becoming a wholly owned subsidiary of Grantee; and
B. As a condition and inducement to Grantee's willingness to enter
into the Merger Agreement, Grantee has requested that Issuer agree, and Issuer
has agreed, to grant Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Issuer
and Grantee agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth
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herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
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purchase up to 2,550,041 (as adjusted as set forth herein) shares (the "Option
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Shares") of common stock, par value $.001 per share ("Issuer Common Stock"), of
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Issuer at a purchase price of $177.125 (as adjusted as set forth herein) per
Option Share (the "Purchase Price").
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2. Exercise of Option. (a) Grantee may exercise the Option, with
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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");
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provided, that (i) except as provided in the last sentence of this Section 2(a),
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the Option will terminate and be of no further force and effect upon the
earliest to occur of (A) the Effective Time and (B) 15 months after the first
occurrence of a Purchase Event, and (ii) any purchase of Option Shares upon
exercise of the Option will be subject to compliance with the HSR Act and the
obtaining or making of any consents, approvals, orders, notifications, filings
or authorizations, the failure of which to have obtained or made would have the
effect of making the issuance of Option Shares to Grantee illegal (the
"Regulatory Approvals"). Notwithstanding the termination of the Option, Grantee
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will be entitled to purchase the Option Shares if it has exercised the Option in
accordance with the terms hereof prior to the termination of the Option and the
termination of the Option will not affect any rights hereunder which by their
terms do not terminate or expire prior to or as of such termination.
(b) In the event that Grantee is entitled to and wishes to exercise
the Option, it will send to Issuer a written notice (an "Exercise Notice"; the
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date of such notice being herein
referred to as the "Notice Date") to that effect which Exercise Notice also
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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
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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
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Closing"). Any Option Closing will be at an agreed location and time in New
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York, New York on the applicable Option Closing Date or at such later date as
may be necessary so as to comply with the first sentence of Section 2(a).
(c) Notwithstanding anything to the contrary contained herein, any
exercise of the Option and purchase of Option Shares shall be subject to
compliance with applicable laws and regulations, which may prohibit the purchase
of all the Option Shares specified in the Exercise Notice without first
obtaining or making certain Regulatory Approvals. In such event, if the Option
is otherwise exercisable and Grantee wishes to exercise the Option, the Option
may be exercised in accordance with Section 2(b) and Grantee shall acquire the
maximum number of Option Shares specified in the Exercise Notice that Grantee is
then permitted to acquire under the applicable laws and regulations, and if
Grantee thereafter obtains the Regulatory Approvals to acquire the remaining
balance of the Option Shares specified in the Exercise Notice, then Grantee
shall be entitled to acquire such remaining balance. Issuer agrees to use its
reasonable best efforts (as defined in the Merger Agreement) to assist Grantee
in seeking the Regulatory Approvals.
In the event (i) Grantee receives official notice that a Regulatory
Approval required for the purchase of any Option Shares will not be issued or
granted or (ii) such Regulatory Approval has not been issued or granted within
six months of the date of the Exercise Notice, then with respect to the number
of Option Shares for which such Regulatory Approval will not be issued or
granted or has not been issued or granted, Grantee shall have the right to
exercise its Cash-Out Right pursuant to Section 6(c) with respect to such number
of Option Shares for which such Regulatory Approval will not be issued or
granted or has not been issued or granted.
3. Payment and Delivery of Certificates. (a) At any Option Closing,
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Grantee will pay to Issuer in immediately available funds by wire transfer to a
bank account designated in writing by Issuer an amount equal to the Purchase
Price multiplied by the number of Option Shares to be purchased at such Option
Closing plus the amount of any transfer, stamp or other similar taxes or charges
imposed in connection therewith.
(b) At any Option Closing, simultaneously with the delivery of
immediately available funds as provided in Section 3(a), Issuer will deliver to
Grantee a certificate or certificates representing the Option Shares to be
purchased at such Option Closing, which Option Shares will be free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever. If at the
time of issuance of Option Shares pursuant to an exercise of the Option
hereunder, Issuer shall have issued any securities similar to rights under a
stockholder rights plan, then each Option Share issued pursuant to such exercise
will also represent such a
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corresponding right with terms substantially the same as and at least as
favorable to Grantee as are provided under any such stockholder rights plan then
in effect.
(c) Certificates for the Option Shares delivered at an Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 7, 2000, A COPY
OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF XXXXX CORPORATION
AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
4. Representations and Warranties of Issuer. Issuer hereby
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represents and warrants to Grantee as follows:
Authorized Stock. Issuer has taken all necessary corporate
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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
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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
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represents and warrants to Issuer that:
Purchase Not for Distribution. Any Option Shares or other securities
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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
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of any change in Issuer Common Stock by reason of a stock dividend, split-up,
merger, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of shares or securities subject to the Option,
and the Purchase Price thereof, will be adjusted appropriately, and proper
provision will be made in the agreements governing such transaction, so that
Grantee will receive upon exercise of the Option the number and class of shares
or other securities or property that Grantee would have received in respect of
Issuer Common Stock if the Option had been exercised immediately prior to such
event or the record date therefor, as applicable. Subject to Section 1, and
without limiting the parties' relative rights and obligations under the Merger
Agreement, if any additional shares of Issuer Common Stock are issued after the
date of this Agreement (other than pursuant to an event described in the first
sentence of this Section 6(a)), the number of shares of Issuer Common Stock
subject to the Option will be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
(b) Without limiting the parties' relative rights and obligations
under the Merger Agreement, in the event that Issuer enters into an agreement
(i) to consolidate with or merge into any person, other than Grantee or one of
its subsidiaries, and Issuer will not be the continuing or surviving corporation
in such consolidation or merger, (ii) to permit any person, other than Grantee
or one of its subsidiaries, to merge into Issuer and Issuer will be the
continuing or surviving corporation, but in connection with such merger, the
shares of Issuer Common Stock outstanding immediately prior to the consummation
of such merger will be changed into or exchanged for stock or other securities
of Issuer or any other person or cash or any other property, or the shares of
Issuer Common Stock outstanding immediately prior to the consummation of such
merger will, after such merger, represent less than 50% of the outstanding
voting securities of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than Grantee or one
of its subsidiaries, then, and in each such case, the agreement governing such
transaction will make proper provision so that the Option will, upon the
consummation of any such transaction and upon the terms and conditions set forth
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herein, be converted into, or exchanged for, an option with identical terms
appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments.
(c) If at any time during the period commencing on a Purchase Event
and ending on the termination of the Option in accordance with Section 2,
Grantee sends to Issuer an Exercise Notice indicating Grantee's election to
exercise its right (the "Cash-Out Right") pursuant to this Section 6(c), then
Issuer shall pay to Grantee on the Option Closing Date, in exchange for the
cancellation of the Option with respect to such number of Option Shares as
Grantee specifies in the Exercise Notice, an amount in cash equal to such number
of Option Shares multiplied by the difference between (i) the average closing
price, for the 10 trading days commencing on the 12th trading day immediately
preceding the Option Closing Date, per share of Issuer Common Stock as reported
on The Nasdaq National Market (or, if not listed on The Nasdaq National Market,
as reported on any other national securities exchange or national securities
quotation system on which the Issuer Common Stock is listed or quoted, as
reported in The Wall Street Journal (Northeast edition), or, if not reported
thereby, any other authoritative source) (the "Closing Price") and (ii) the
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Purchase Price. Notwithstanding the termination of the Option, Grantee will be
entitled to exercise its rights under this Section 6(c) if it has exercised such
rights in accordance with the terms hereof prior to the termination of the
Option.
(d) (i) Notwithstanding any other provision of this Agreement, in no
event shall Grantee's Total Profit (as hereinafter defined) plus any Termination
Fee paid to Grantee pursuant to Section 5.10(b) of the Merger Agreement exceed
in the aggregate $105 million and, if the total amount that otherwise would be
received by Grantee would exceed such amount, Grantee, at its election, shall
either (a) reduce the number of shares of Issuer Common Stock subject to the
Option, (b) deliver to Issuer for cancellation shares of Issuer Common Stock
previously purchased by Grantee, (c) pay cash to Issuer or (d) take any action
representing any combination of the preceding clauses (a), (b) and (c), so that
Grantee's actually realized Total Profit, when aggregated with such Termination
Fee so paid to Grantee, shall not exceed $105 million after taking into account
the foregoing actions.
(ii) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Option Shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below) which,
together with any Termination Fee theretofore paid to Grantee, would exceed $105
million; provided, that nothing in this sentence shall restrict any exercise of
the Option permitted hereby on any subsequent date.
(iii) As used herein, the term "Total Profit" shall mean the aggregate
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amount (before taxes) of the following: (A) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to the exercise of the Cash-Out Right under Section 6(c) and (B) the net cash
amounts or the fair market value of any property received by Grantee pursuant to
the sale of Option Shares (or other securities).
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(iv) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of such proposal
assuming for such purpose that the Option was exercised on such date for such
number of Option Shares and assuming that such Option Shares, together with all
other Option Shares held by Grantee and its affiliates as of such date, were
sold for cash at the closing market price on The Nasdaq National Market (or, if
shares of Issuer Common Stock are not then listed or traded on The Nasdaq
National Market, on any other national securities exchange or national quotation
system on which shares of Issuer Common Stock are so listed or traded) for
shares of Issuer Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
7. Registration Rights. Issuer will, if requested by Grantee at any
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time and from time to time within two years of the exercise of the Option, as
expeditiously as reasonably possible prepare and file up to three registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all shares of securities that
have been acquired by or are issuable to Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee, including a "shelf" registration statement under Rule 415 under the
Securities Act or any successor provision, and Issuer will use its best efforts
to qualify such shares or other securities under any applicable state securities
laws. Grantee agrees to cause, and to cause any underwriters of any sale or
other disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee will own beneficially more than
3.0% of the then-outstanding voting power of Issuer. Issuer will use reasonable
efforts to cause each such registration statement to become effective, to obtain
all consents or waivers of other parties which are required therefor, and to
keep such registration statement effective for such period not in excess of 120
calendar days from the day such registration statement first becomes effective
as may be reasonably necessary to effect such sale or other disposition. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for up to 120 calendar days in the aggregate
if the Board of Directors of Issuer shall have determined that the filing of
such registration statement or the maintenance of its effectiveness would
require premature disclosure of material nonpublic information that would
materially and adversely affect Issuer or otherwise interfere with or adversely
affect any pending or proposed offering of securities of Issuer or any other
material transaction involving Issuer. Any registration statement prepared and
filed under this Section 7, and any sale covered thereby, will be at Issuer's
expense except for underwriting discounts or commissions, brokers' fees and the
fees and disbursements of Grantee's counsel related thereto. Grantee will
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. If, during the time periods
referred to in the first sentence of this Section 7, Issuer effects a
registration under the Securities Act of Issuer Common Stock for its own account
or for any other stockholders of Issuer (other than on Form S-4 or Form S-8, or
any successor form), it will allow Grantee the right to participate in such
registration, and such participation will not affect the obligation of Issuer to
effect demand registration statements for Grantee under this Section 7; provided
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that, if the managing underwriters of such offering advise Issuer in writing
that in their opinion the number of shares of Issuer Common Stock requested to
be included in such registration exceeds
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the number which can be sold in such offering, Issuer will include the shares
requested to be included therein by Grantee pro rata with the shares intended to
be included therein by Issuer. In connection with any registration pursuant to
this Section 7, Issuer and Grantee will provide each other and any underwriter
of the offering with customary representations, warranties, covenants,
indemnification, and contribution in connection with such registration.
If a requested registration pursuant to this Section 7 involves an
underwritten offering, the underwriter or underwriters thereof shall be a
nationally recognized firm or firms selected by Issuer. Notwithstanding anything
else contained in this Section 7, each requested registration shall be for a
number of shares of Issuer Common Stock which represent at least one-fourth of
the total of number of shares of Issuer Common Stock purchased by Grantee
hereunder.
8. Transfers. The Option Shares may not be sold, assigned,
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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,
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that Grantee shall be 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
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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
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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
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and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants, and counsel.
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(b) Amendment. This Agreement may not be amended, except by an
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instrument in writing signed on behalf of each of the parties.
(c) Extension; Waiver. Any agreement on the part of a party to waive
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any provision of this Agreement, or to extend the time for performance, will be
valid only if set forth in an instrument in writing signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise will not constitute a waiver of such rights.
(d) Entire Agreement; No Third-Party Beneficiaries. This Agreement,
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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
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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
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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
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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
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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
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occur and that the parties would not have any adequate remedy at law in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of New York or in New York state court, the foregoing being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (i) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of New York or any New
York
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state court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (iii) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a Federal court sitting in the State of
New York or a New York state court.
(j) Severability. If any term or other provision of this Agreement is
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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.
XXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: President, Chief Executive Officer
and Chairman of the Board
LUCENT TECHNOLOGIES INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Executive VP and CEO, Microelectronics
and Communications Technologies
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