EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of August 17, 1999
By and Among
LUCENT TECHNOLOGIES INC.,
DALLAS MERGER INC.
And
EXCEL SWITCHING CORPORATION
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TABLE OF CONTENTS
PAGE
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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
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
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
(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
Annex I Index of Defined Terms
Exhibit A Form of Affiliate Letter
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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;
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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 & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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 the relevant provisions of the MBCL
and shall make all other filings or recordings required under the MBCL. The
Merger shall become effective at
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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.
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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 Chapter 156B of the MBCL (the
"Dissenting Shares") shall not be converted into the right
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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 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
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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 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
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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 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.
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(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 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,
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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.
(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
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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 (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
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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, 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
12
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 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
13
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 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,
14
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
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 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
15
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 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
16
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 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
17
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 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
18
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 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
19
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.
(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.
20
(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
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
21
Benefit Plan provides post-retirement health insurance plans, the
total cost of which is not incurred by the former employee.
(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 36B(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
22
qualifying for tax-free treatment under Section 355 of the Code (x) in
the two years prior to the date of this Agreement or (y) in a
distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e)
of the Code) in conjunction with the Merger.
(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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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 Agreement, the Stockholders Agreement, the
Merger or the other transactions contemplated hereby or thereby.
23
(q) OPINION OF FINANCIAL ADVISOR. Excel has received the
written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & 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 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.
24
(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 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
25
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.
(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
26
"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 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
27
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 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
28
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, (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
29
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
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
30
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.
(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.
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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 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
32
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 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;
33
(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;
(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;
34
(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, (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
35
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, 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
36
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 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
37
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 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
38
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 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
39
third parties, (iv) the defending of any lawsuits or other legal proceedings,
whether judicial 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.
40
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
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
41
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 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.
42
(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, 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
43
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 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
44
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 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.
45
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 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.
46
(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 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP stating
in substance that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
47
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 & ▇▇▇▇▇, counsel to Lucent, 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.
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 ▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 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.
48
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 of Section 4.02(a) or (b) by
Excel would satisfy clauses (A) and (B) above); or
49
(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 under this Agreement or
otherwise shall not constitute a waiver of such rights.
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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.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: Separately supplied
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President-Law
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: Separately supplied
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III; and
(b) if to Excel, to
Excel Switching Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: Separately supplied
Attention: General Counsel
51
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: Separately supplied
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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;
52
(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 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
53
(H) any refusal by any of Excel's suppliers to
continue to do business with Excel;
(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.
54
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.
55
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 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.
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/▇▇▇▇▇ ▇'▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇▇▇
Title: Vice President
Switching & Access
Solutions
56
DALLAS MERGER INC.,
by
/s/▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
by
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
EXCEL SWITCHING CORPORATION,
by
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
by
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Chief
Financial Officer and
Treasurer
1
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
2
TERM PAGE
Intellectual Property
Rights....................................... 24
knowledge...................................... 53
Liens.......................................... 11
Lucent......................................... 1
Lucent Authorized Preferred
Stock........................................ 28
Lucent Common Stock............................ 4
Lucent Disclosure Schedule..................... 27
Lucent Filed SEC Documents..................... 27
Lucent Junior Preferred
Stock........................................ 27
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
3
opinion of counsel to Lucent or as described in a "no-action" or interpretive
letter from the Staff of the SEC specifically 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
4
effect that such legends are no longer required for purposes of the Securities
Act.
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.]