EXHIBIT (10)(i)1
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND AMONG
AT&T CORP.,
LUCENT TECHNOLOGIES INC.
AND
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
DATED AS OF
FEBRUARY 1, 1996
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.1. Action.............................................. 2
1.2. Affiliate........................................... 2
1.3. Agent............................................... 2
1.4. Agreement........................................... 2
1.5. American Ridge...................................... 2
1.6. Ancillary Agreements................................ 2
1.7. Applicable Deadline................................. 2
1.8. Arbitration Act..................................... 2
1.9. Arbitration Demand Date............................. 2
1.10. Arbitration Demand Notice........................... 2
1.11. Assets.............................................. 2
1.12. AT&T................................................ 4
1.13. AT&T Common Stock................................... 4
1.14. AT&T CP Rate........................................ 4
1.15. AT&T General Purchase Agreement..................... 4
1.16. AT&T Group.......................................... 4
1.17. AT&T Indemnitees.................................... 4
1.18. AT&T Laboratories................................... 4
1.19. AT&T Services Business.............................. 4
1.20. AT&T Services Group................................. 4
1.21. AT&T Ventures....................................... 4
1.22. ATTI................................................ 4
1.23. Brand License Agreement............................. 5
1.24. Change of Control................................... 5
1.25. Closing............................................. 5
1.26. Closing Date........................................ 5
1.27. Code................................................ 5
1.28. Commission.......................................... 5
1.29. Consents............................................ 5
1.30. Contingent Claim Committee, Contingent Gain and
Contingent Liabilities.............................. 5
1.31. CPR................................................. 5
1.32. Delayed Transfer Assets............................. 5
1.33. Delayed Transfer Liabilities........................ 5
1.34. Determination Request............................... 5
1.35. Distribution........................................ 6
1.36. Distribution Date................................... 6
1.37. Effective IPO Date.................................. 6
1.38. Effective Time...................................... 6
1.39. Employee Benefits Agreement......................... 6
1.40. Environmental Law................................... 6
1.41. Environmental Liabilities........................... 6
1.42. Escalation Notice................................... 6
1.43. Excess Portion...................................... 6
1.44. Exchange Act........................................ 6
1.45. Excluded Assets..................................... 6
1.46. Excluded Liabilities................................ 6
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1.47. Exclusive AT&T Contingent Gain, Exclusive AT&T Con-
tingent Liability, Exclusive Lucent Contingent Gain,
Exclusive Lucent Contingent Liability, Exclusive NCR
Contingent Gain, Exclusive NCR Contingent Liability
and Exclusive Contingent Liability.................. 7
1.48. Financing Facility.................................. 7
1.49. Governmental Approvals.............................. 7
1.50. Governmental Authority.............................. 7
1.51. Group............................................... 7
1.52. Identified ▇▇▇▇ Labs Services....................... 7
1.53. Indemnifying Party.................................. 7
1.54. Indemnitee.......................................... 7
1.55. Indemnity Payment................................... 7
1.56. Information......................................... 8
1.57. Insurance Policies.................................. 8
1.58. Insurance Proceeds.................................. 8
1.59. Interim Services and Systems Replication
Agreement........................................... 8
1.60. IPO................................................. 8
1.61. IPO Registration Statement.......................... 8
1.62. Liabilities......................................... 8
1.63. Lucent.............................................. 9
1.64. Lucent Assets....................................... 9
1.65. Lucent Balance Sheet................................ 9
1.66. Lucent ▇▇▇▇ Laboratories............................ 9
1.67. Lucent Business..................................... 10
1.68. Lucent Common Stock................................. 10
1.69. Lucent Contracts.................................... 10
1.70. Lucent Group........................................ 11
1.71. Lucent Indemnitees.................................. 11
1.72. Lucent Liabilities.................................. 11
1.73. Lucent OFL's........................................ 11
1.74. NCR................................................. 9
1.75. NCR Business........................................ 9
1.76. NCR Common Stock.................................... 9
1.77. NCR Covered Liabilities............................. 9
1.78. NCR Distribution.................................... 9
1.79. NCR Group........................................... 9
1.80. NCR Indemnitees..................................... 9
1.81. NCR Volume Purchase Agreement....................... 9
1.82. NYSE................................................ 11
1.83. Nassau Metals Liabilities........................... 11
1.84. Non-Lucent Assets................................... 11
1.85. Non-U.S. Plan....................................... 11
1.86. OFL's............................................... 11
1.87. Other Discontinued Operations....................... 12
1.88. Patent Assignments.................................. 12
1.89. Patent Defensive Protection Agreements.............. 12
1.90. Patent Joint Ownership Agreement.................... 12
1.91. Patent License Agreement............................ 12
1.92. Person.............................................. 12
1.93. Prime Rate.......................................... 12
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1.94. Prospectus.......................................... 12
1.95. RBOC................................................ 12
1.96. RBOC Agreements..................................... 13
1.97. RBOC Liability...................................... 13
1.98. RBOC Plan........................................... 13
1.99. Record Date......................................... 13
1.100. Related Exclusive Contingent Liabilities............ 13
1.101. Retained Receivables................................ 13
1.102. Ridge Lucent Policies............................... 13
1.103. Securities Act...................................... 13
1.104. Security Interest................................... 13
1.105. Separation.......................................... 14
1.106. Shared AT&T Percentage, Shared NCR Percentage,
Shared Lucent Percentage, Shared Percentage, Shared
Contingent Gain and Shared Contingent Liability..... 14
1.107. Submarine Systems................................... 14
1.108. Subsidiary.......................................... 14
1.109. Tax Sharing Agreement............................... 14
1.110. Taxes............................................... 14
1.111. Technology Access and Development Project
Agreement........................................... 14
1.112. Technology Assignment and Joint Ownership
Agreement........................................... 14
1.113. Technology License Agreement........................ 14
1.114. Telecommunications Service.......................... 14
1.115. Third Party Claim................................... 14
1.116. Trade Dress Assignment.............................. 14
1.117. Trademark and Service ▇▇▇▇ Assignment............... 15
1.118. Underwriters 15
1.119. Underwriting Agreement.............................. 15
1.120. Value............................................... 15
1.121. VTNS Agreement...................................... 15
1.122. Working Capital Facility............................ 15
ARTICLE II THE SEPARATION
2.1. Transfer of Assets and Assumption of Liabilities.... 15
2.2. Lucent Assets....................................... 16
2.3. Lucent Liabilities.................................. 17
2.4. Termination of Agreements........................... 18
2.5. Documents Relating to Transfer of Real Property
Interests and Tangible Property Located Thereon..... 19
2.6. Documents Relating to Other Transfers of Assets and
Assumption of Liabilities........................... 21
2.7. Other Ancillary Agreements.......................... 21
2.8. The Non-U.S. Plan................................... 22
2.9. AT&T Ventures; Lucent Foundation.................... 22
2.10. Disclaimer of Representations and Warranties........ 22
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2.11. Financing Arrangements.............................. 23
2.12. Governmental Approvals and Consents................. 23
2.13. Novation of Assumed Lucent Liabilities.............. 24
2.14. Novation of Assumed Liabilities other than Lucent
Liabilities......................................... 25
2.15. Third Party Patent License Agreements............... 25
2.16. Certain Termination Rights.......................... 27
ARTICLE III THE IPO AND ACTIONS PENDING THE IPO
3.1. Transactions Prior to the IPO....................... 29
3.2. Proceeds of the IPO................................. 29
3.3. Conditions Precedent to Consummation of the IPO..... 29
ARTICLE IV THE DISTRIBUTION
4.1. The Distribution.................................... 30
4.2. Actions Prior to the Distribution................... 31
4.3. Conditions to Distribution.......................... 31
4.4. Fractional Shares................................... 32
4.5. The Lucent Board of Directors....................... 32
ARTICLE V MUTUAL RELEASES; INDEMNIFICATION
5.1. Release of Pre-Closing Claims....................... 33
5.2. Indemnification by Lucent........................... 35
5.3. Indemnification by AT&T and by NCR.................. 35
5.4. Indemnification Obligations Net of Insurance
Proceeds and Other Amounts.......................... 36
5.5. Procedures for Indemnification of Third Party
Claims.............................................. 37
5.6. Additional Matters.................................. 38
5.7. Remedies Cumulative................................. 39
5.8. Survival of Indemnities............................. 39
5.9. RBOC Agreement Procedures........................... 39
5.10. Alleged Infringement or Misappropriation............ 40
ARTICLE VI CONTINGENT GAINS AND CONTINGENT LIABILITIES
6.1. Definitions Relating to Contingent Gains and
Contingent Liabilities.............................. 42
6.2. Contingent Gains.................................... 45
6.3. Exclusive Contingent Liabilities.................... 46
6.4. Shared Contingent Liabilities....................... 48
6.5. Payments............................................ 48
6.6. Procedures to Determine Status of Contingent
Liability or Contingent Gain........................ 48
6.7. Certain Case Allocation Matters..................... 49
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ARTICLE VII INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
7.1. Insurance Matters................................... 50
7.2. Collection of Accounts Receivable................... 51
7.3. Operating Financial Liabilities..................... 55
7.4. Certain Business Matters............................ 55
7.5. Late Payments....................................... 56
7.6. Transitional ▇▇▇▇ Labs Services..................... 56
ARTICLE VIII EXCHANGE OF INFORMATION; CONFIDENTIALITY
8.1. Agreement for Exchange of Information; Archives..... 56
8.2. Ownership of Information............................ 57
8.3. Compensation for Providing Information.............. 57
8.4. Record Retention.................................... 57
8.5. Limitation of Liability............................. 57
8.6. Other Agreements Providing for Exchange of
Information......................................... 57
8.7. Production of Witnesses; Records; Cooperation....... 57
8.8. Confidentiality..................................... 58
8.9. Protective Arrangements............................. 59
ARTICLE IX ARBITRATION; DISPUTE RESOLUTION
9.1. Agreement to Arbitrate.............................. 59
9.2. Escalation.......................................... 60
9.3. Demand for Arbitration.............................. 60
9.4. Arbitrators......................................... 61
9.5. Hearings............................................ 61
9.6. Discovery and Certain Other Matters................. 62
9.7. Certain Additional Matters.......................... 63
9.8. Limited Court Actions............................... 63
9.9. Continuity of Service and Performance............... 64
9.10. Law Governing Arbitration Procedures................ 64
ARTICLE X FURTHER ASSURANCES AND ADDITIONAL COVENANTS
10.1. Further Assurances.................................. 64
10.2. Qualification as Tax-Free Distribution.............. 66
ARTICLE XI TERMINATION
11.1. Termination by Mutual Consent....................... 66
11.2. Other Termination................................... 66
11.3. Effect of Termination............................... 66
ARTICLE XII MISCELLANEOUS
12.1. Counterparts; Entire Agreement; Corporate Power..... 66
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12.2. Governing Law....................................... 68
12.3. Assignability....................................... 68
12.4. Third Party Beneficiaries........................... 68
12.5. Notices............................................. 68
12.6. Severability........................................ 69
12.7. Force Majeure....................................... 69
12.8. Publicity........................................... 69
12.9. Expenses............................................ 69
12.10. Headings............................................ 69
12.11. Survival of Covenants............................... 69
12.12. Waivers of Default.................................. 69
12.13. Specific Performance................................ 70
12.14. Amendments.......................................... 70
12.15. Interpretation...................................... 70
Signatures...................................................... 71
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of February 1, 1996,
is by and among AT&T, Lucent and NCR. Capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in Article
I hereof.
WHEREAS, the Board of Directors of AT&T has determined that it is in the
best interests of AT&T and its shareholders to separate AT&T's existing
businesses into three independent businesses;
WHEREAS, in furtherance of the foregoing, it is appropriate and desirable
to transfer the Lucent Assets to Lucent and its Subsidiaries and to cause Lucent
and its Subsidiaries to assume the Lucent Liabilities, all as more fully
described in this Agreement and the Ancillary Agreements;
WHEREAS, the Board of Directors of AT&T has further determined that it is
appropriate and desirable, on the terms and conditions contemplated hereby, to
cause Lucent to offer and sell for its own account in the IPO a limited number
of shares of Lucent Common Stock, and subsequently for AT&T to distribute to
holders of shares of AT&T Common Stock the outstanding shares of Lucent Common
Stock owned directly or indirectly by AT&T;
WHEREAS, the Distribution is intended to qualify as a tax-free spin-off
under Section 355 of the Code;
WHEREAS, it is also expected that, following certain additional transfers
of Assets and assignments and assumptions of Liabilities, AT&T will distribute
to its shareholders all of the capital stock of NCR held directly or indirectly
by AT&T and that, in connection therewith, AT&T and NCR will enter into such
additional agreements as may be necessary to address matters not addressed by
this Agreement or the Ancillary Agreements; and
WHEREAS, it is appropriate and desirable to set forth the principal
corporate transactions required to effect the Separation, the IPO and the
Distribution and certain other agreements that will govern certain matters
relating to the Separation, the IPO and the Distribution and the relationship of
AT&T, Lucent, NCR and their respective Subsidiaries following the IPO and the
Distribution.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall have the
following meanings:
1.1. ACTION means any demand, action, suit, countersuit, arbitration,
inquiry, proceeding or investigation by or before any federal, state, local,
foreign or international Governmental Authority or any arbitration or mediation
tribunal.
1.2. AFFILIATE of any Person means a Person that controls, is controlled
by, or is under common control with such Person. As used herein, "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through
ownership of voting securities or other interests, by contract or otherwise.
1.3. AGENT means the distribution agent to be appointed by AT&T to
distribute to the shareholders of AT&T the shares of Lucent Common Stock held by
AT&T pursuant to the Distribution.
1.4. AGREEMENT means this Separation and Distribution Agreement, including
all of the Schedules hereto.
1.5. AMERICAN RIDGE means American Ridge Insurance Company, a Vermont
corporation.
1.6. ANCILLARY AGREEMENTS means the deeds, lease assignments and
assumptions, leases, subleases and sub-subleases, and the supplemental and other
agreements and instruments related thereto, substantially in the forms attached
as Schedule 2.5, the AT&T General Purchase Agreement and the supplemental and
other agreements related thereto, the Brand License Agreement, the Employee
Benefits Agreement, the Interim Services and Systems Replication Agreement, the
NCR Volume Purchase Agreement, the Patent Assignments, the Patent Defensive
Protection Agreements, the Patent Joint Ownership Agreement, the Patent License
Agreement, the Tax Sharing Agreement, the Technology Access and Development
Project Agreement, the Technology Assignment and Joint Ownership Agreements, the
Technology License Agreement, the Trade Dress Assignment, the Trademark and
Service ▇▇▇▇ Assignment, the VTNS Agreement, and the agreements and other
documents comprising the Non-U.S. Plan.
1.7. APPLICABLE DEADLINE has the meaning set forth in Section 9.3(b).
1.8. ARBITRATION ACT means the United States Arbitration Act, 9 U.S.C.
1-14, as the same may be amended from time to time.
1.9. ARBITRATION DEMAND DATE has the meaning set forth in Section 9.3(a).
1.10. ARBITRATION DEMAND NOTICE has the meaning set forth in Section
9.3(a).
1.11. ASSETS means assets, properties and rights (including goodwill),
wherever located (including in the possession of vendors or other third parties
or elsewhere), whether real, personal or mixed, tangible, intangible or
contingent, in each case whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person, including the following:
(a) all accounting and other books, records and files whether in paper,
microfilm, microfiche, computer tape or disc, magnetic tape or any other
form;
(b) all apparatus, computers and other electronic data processing
equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft, rolling stock, vessels,
motor vehicles and other transportation equipment, special and general
tools, test devices, prototypes and models and other tangible personal
property;
(c) all inventories of materials, parts, raw materials, supplies,
work-in-process and finished goods and products;
(d) all interests in real property of whatever nature, including
easements, whether as owner, mortgagee or holder of a Security
Interest in real property, lessor, sublessor, lessee, sublessee or
otherwise;
(e) all interests in any capital stock or other equity interests of any
Subsidiary or any other Person, all bonds, notes, debentures or other
securities issued by any Subsidiary or any other Person, all loans,
advances or other extensions of credit or capital contributions to any
Subsidiary or any other Person and all other investments in securities
of any Person;
(f) all license agreements, leases of personal property, open purchase
orders for raw materials, supplies, parts or services, unfilled orders
for the manufacture and sale of products and other contracts,
agreements or commitments;
(g) all deposits, letters of credit and performance and surety bonds;
(h) all written technical information, data, specifications, research and
development information, engineering drawings, operating and
maintenance manuals, and materials and analyses prepared by
consultants and other third parties;
(i) all domestic and foreign patents, copyrights, trade names, trademarks,
service marks and registrations and applications for any of the
foregoing, mask works, trade secrets, inventions, other proprietary
information and licenses from third Persons granting the right to use
any of the foregoing;
(j) all computer applications, programs and other software, including
operating software, network software, firmware, middleware, design
software, design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data, customer prospect lists,
supplier records, customer and supplier lists, customer and vender
data, correspondence and lists, product literature, artwork, design,
development and manufacturing files, vendor and customer drawings,
formulations and specifications, quality records and reports and other
books, records, studies, surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other accounts and notes
receivables;
(m) all rights under contracts or agreements, all claims or rights against
any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all claims, choses in action or
similar rights, whether accrued or contingent;
(n) all rights under insurance policies and all rights in the nature of
insurance, indemnification or contribution;
(o) all licenses (including radio and similar licenses), permits,
approvals and authorizations which have been issued by any
Governmental Authority;
(p) cash or cash equivalents, bank accounts, lock boxes and other deposit
arrangements; and
(q) interest rate, currency, commodity or other swap, collar, cap or other
hedging or similar agreements or arrangements.
1.12. AT&T means AT&T Corp., a New York corporation.
1.13. AT&T COMMON STOCK means the Common Stock, $1.00 par value per share,
of AT&T.
1.14. AT&T CP RATE during any month of determination shall be equal to the
weighted average rate on all AT&T commercial paper (across all maturities) for
such month.
1.15. AT&T GENERAL PURCHASE AGREEMENT means the General Purchase
Agreement,
dated as of the date hereof, by and between AT&T and Lucent.
1.16. AT&T GROUP means AT&T and each Person (other than any member of the
Lucent Group) that is an Affiliate of AT&T immediately after the Closing Date
(including any member of the NCR Group).
1.17. AT&T INDEMNITEES has the meaning set forth in section 5.2.
1.18. AT&T LABORATORIES means the Assets of AT&T's ▇▇▇▇ Laboratories
division described or listed on Schedule 1.18 and any other Assets of AT&T's
▇▇▇▇ Laboratories division that primarily relate to the AT&T Services Business
or the NCR Business.
1.19. AT&T SERVICES BUSINESS means: (a) the business and operations of the
telecommunications services divisions and Subsidiaries and the financial
services and leasing divisions and Subsidiaries of AT&T consisting principally
of the Communications Services Group, AT&T Wireless Services, Inc. and its
Subsidiaries, Universal Card Services, Inc. and its Subsidiaries, AT&T Capital
Corporation and its Subsidiaries, AT&T Solutions, AT&T Laboratories, Submarine
Systems and, subject to Section 2.9(a), AT&T Ventures; (b) except as otherwise
expressly provided herein, any terminated, divested or discontinued businesses
or operations that at the time of termination, divestiture or discontinuation
primarily related to the AT&T Services Business as then conducted; and (c) the
terminated, divested or discontinued businesses and operations listed or
described on Schedule 1.19.
1.20. AT&T Services Group means each member of the AT&T Group other than
any member of the NCR Group.
1.21. AT&T Ventures means AT&T Ventures, a limited partnership.
1.22. ATTI means AT&T International Inc., a Delaware corporation.
1.23. BRAND LICENSE AGREEMENT means the Brand License Agreement, dated as
of the date hereof, by and between AT&T and Lucent.
1.24. CHANGE OF CONTROL of any Person means any of the following: (a) the
consummation of a merger, consolidation, or similar business
combination involving such Person, or a sale or other disposition of
all or substantially all of the assets of such Person; (b) the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of 40% or more of either (i) the then
outstanding shares of common stock of such Person, or (ii) the
combined voting power of the then outstanding voting securities of
such Person entitled to vote generally in the election of directors;
or (c) individuals who, as of the Distribution Date, constitute the
Board of Directors of such Person (the "Incumbent Board") cease for
any reason to constitute at least a majority of such Board; provided,
however, that any individual becoming a director subsequent to the
Distribution Date (other than any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of any Person other than the Board) whose election or
nomination for election by the stockholders of such Person was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board.
1.25. CLOSING means the receipt by Lucent of the net proceeds of the IPO in
accordance with the terms of the Underwriting Agreement.
1.26. CLOSING DATE means the first time at which any shares of Lucent
Common Stock are sold to the Underwriters pursuant to the IPO in accordance with
the terms of the Underwriting Agreement.
1.27. CODE means the Internal Revenue Code of 1986, as amended.
1.28. COMMISSION means the Securities and Exchange Commission.
1.29. CONSENTS means any consents, waivers or approvals from, or
notification requirements to, any third parties.
1.30. CONTINGENT CLAIM COMMITTEE, CONTINGENT GAIN AND CONTINGENT
LIABILITIES have the respective meanings set forth in Section 6.1.
1.31. CPR means the Center for Public Resources.
1.32. DELAYED TRANSFER ASSETS means any Lucent Assets that are expressly
provided in this Agreement or any Ancillary Agreement to be transferred after
the date of this Agreement.
1.33. DELAYED TRANSFER LIABILITIES means any Lucent Liabilities that are
expressly provided in this Agreement or any Ancillary Agreement to be assumed
after the date of this Agreement.
1.34. DETERMINATION REQUEST means a written request made to the Contingent
Claim Committee, pursuant to Section 5.5(b), for a determination as to whether a
Third Party Claim specified in such request constitutes a Shared Contingent
Liability.
1.35. DISTRIBUTION means the distribution by AT&T on a pro rata basis to
holders of AT&T Common Stock of all of the outstanding shares of Lucent Common
Stock owned by AT&T on the Distribution Date as set forth in Article IV.
1.36. DISTRIBUTION DATE means the date determined pursuant to Section 4.1
on which the Distribution occurs.
1.37. EFFECTIVE IPO DATE means the date on which the IPO Registration
Statement is declared effective by the Commission.
1.38. EFFECTIVE TIME means 5:00 p.m., Eastern Standard Time or Eastern
Daylight Time (whichever shall be then in effect), on the Distribution Date.
1.39. EMPLOYEE BENEFITS AGREEMENT means the Employee Benefits Agreement,
dated as of the date hereof, by and between AT&T and Lucent.
1.40. ENVIRONMENTAL LAW means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
1.41. ENVIRONMENTAL LIABILITIES means all Liabilities relating to, arising
out of or resulting from any Environmental Law or contract or agreement relating
to environmental, health or safety matters (including all removal, remediation
or cleanup costs, investigatory costs, governmental response costs, natural
resources damages, property damages, personal injury damages, costs of
compliance with any settlement, judgment or other determination of Liability and
indemnity, contribution or similar obligations) and all costs and expenses
(including allocated costs of in-house counsel and other personnel), interest,
fines, penalties or other monetary sanctions in connection therewith.
1.42. ESCALATION NOTICE has the meaning set forth in Section 9.2.
1.43. EXCESS PORTION has the meaning specified in Section 6.1.
1.44. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
1.45. EXCLUDED ASSETS has the meaning set forth in Section 2.2(b).
1.46. EXCLUDED LIABILITIES has the meaning set forth in Section 2.3(b).
1.47. EXCLUSIVE AT&T CONTINGENT GAIN, EXCLUSIVE AT&T CONTINGENT
LIABILITY,
EXCLUSIVE LUCENT CONTINGENT GAIN, EXCLUSIVE LUCENT CONTINGENT
LIABILITY,
EXCLUSIVE NCR CONTINGENT GAIN, EXCLUSIVE NCR CONTINGENT LIABILITY
AND EXCLUSIVE
CONTINGENT LIABILITY have the respective meanings set forth in Section 6.1.
1.48. FINANCING FACILITY means the commercial paper facility and related
credit agreement to be entered into prior to the Closing Date by and among AT&T,
Lucent, and an agent or co-agents selected by AT&T and Lucent, pursuant to
which, prior to the Closing Date, AT&T will issue commercial paper or otherwise
borrow an amount determined by AT&T and, as of the Closing Date, Lucent will
become the sole obligor and AT&T will have no further liability or obligation
thereunder.
1.49. GOVERNMENTAL APPROVALS means any notices, reports or other filings to
be made, or any consents, registrations, approvals, permits or authorizations to
be obtained from, any Governmental Authority.
1.50. GOVERNMENTAL AUTHORITY shall mean any federal, state, local, foreign
or international court, government, department, commission, board, bureau,
agency, official or other regulatory, administrative or governmental authority.
1.51. GROUP means any of the AT&T Services Group, the Lucent Group or the
NCR Group, as the context requires.
1.52. IDENTIFIED ▇▇▇▇ LABS SERVICES means:
(a) environmental, health and safety services provided by Lucent ▇▇▇▇
Laboratories, including (i) compatibility, product compliance,
telephone network interconnect, product design and mandatory standards
consultation services, (ii) wireless safety, radiation protection and
product safety services, (iii) groundwater remediation services, (iv)
environmental and energy management, and (v) industrial hygiene,
safety and toxicology;
(b) technical support services provided by Lucent ▇▇▇▇ Laboratories,
including (i) technical cataloging and processing services and (ii)
product design shop services;
(c) additional research and similar services provided by Lucent ▇▇▇▇
Laboratories;
(d) information systems reengineering center services, including systems
design and programming support for human resource, billing,
procurement and facilities systems; and
(e) services provided by Lucent ▇▇▇▇ Laboratories relating to projects
initiated prior to the date hereof but not completed prior to the
Closing Date.
1.53. INDEMNIFYING PARTY has the meaning set forth in Section 5.4(a).
1.54. INDEMNITEE has the meaning set forth in Section 5.4(a).
1.55. INDEMNITY PAYMENT has the meaning set forth in Section 5.4(a).
1.56. INFORMATION means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
1.57. INSURANCE POLICIES means the insurance policies written by insurance
carriers unaffiliated with AT&T pursuant to which Lucent or one or more of its
Subsidiaries (or their respective officers or directors) will be insured parties
after the Closing Date.
1.58. INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set off) from American Ridge or any of
its Subsidiaries or from any third party in the nature of insurance,
contribution or indemnification in respect of any Liability (other
than pursuant to or in connection with any RBOC Agreement);
in any such case net of any applicable premium adjustments (including
reserves and retrospectively rated premium adjustments) and net of any costs or
expenses (including allocated costs of in-house counsel and other personnel)
incurred in the collection thereof.
1.59. INTERIM SERVICES AND SYSTEMS REPLICATION AGREEMENT means the
Interim
Services and Systems Replication Agreement, dated as of the date hereof, by and
among AT&T, Lucent and NCR.
1.60. IPO means the initial public offering by Lucent of shares of Lucent
Common Stock pursuant to the IPO Registration Statement.
1.61. IPO REGISTRATION STATEMENT means the registration statement on Form
S-1 to be filed under the Securities Act, pursuant to which the Lucent Common
Stock to be issued in the IPO will be registered, together with all amendments
thereto.
1.62. LIABILITIES means any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exonerations, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, guarantees,
make whole agreements and similar obligations, and other liabilities, including
all contractual obligations, whether absolute or contingent, matured or
unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,
whenever arising,
and including those arising under any law, rule, regulation, Action, threatened
or contemplated Action (including the costs and expenses of demands,
assessments, judgments, settlements and compromises relating thereto and
attorneys' fees and any and all costs and expenses (including allocated costs of
in-house counsel and other personnel), whatsoever reasonably incurred in
investigating, preparing or defending against any such Actions or threatened or
contemplated Actions), order or consent decree of any Governmental Authority or
any award of any arbitrator or mediator of any kind, and those arising under any
contract, commitment or undertaking, including those arising under this
Agreement or any Ancillary Agreement, in each case, whether or not recorded or
reflected or required to be recorded or reflected on the books and records or
financial statements of any Person.
1.63. LUCENT means Lucent Technologies Inc., a Delaware corporation.
1.64. LUCENT ASSETS has the meaning set forth in Section 2.2(a).
1.65. LUCENT BALANCE SHEET means the audited consolidated balance sheet of
Lucent, including the notes thereto, as of December 31, 1995.
1.66. LUCENT ▇▇▇▇ LABORATORIES means the Assets of AT&T's ▇▇▇▇ Laboratories
division as of the date hereof other than the Assets of AT&T Laboratories.
1.67. LUCENT BUSINESS means: (a) the business and operations of the
telecommunications equipment divisions and Subsidiaries of AT&T consisting
principally of the Network Systems Group, the Global Business Communications
Systems Group, the Consumer Products Group, the Microelectronics Group, AT&T
Paradyne and Lucent ▇▇▇▇ Laboratories; and (b) except as otherwise expressly
provided herein, any terminated, divested or discontinued businesses or
operations that at the time of termination, divestiture or discontinuation
primarily related to the Lucent Business as then conducted.
1.68. LUCENT COMMON STOCK means the Common Stock, $.01 par value per share,
of Lucent.
1.69. LUCENT CONTRACTS means the following contracts and agreements to
which AT&T or any of its Affiliates is a party or by which it or any of its
Affiliates or any of their respective Assets is bound, whether or not in
writing, except for any such contract or agreement that is contemplated to be
retained by AT&T or any member of the AT&T Group pursuant to any provision of
this Agreement or any Ancillary Agreement:
(a) any supply or vendor contracts or agreements listed or described on
Schedule 1.69(a);
(b) any contract or agreement entered into in the name of, or expressly on
behalf of, any division, business unit or member of the Lucent Group
(other than ATTI or any Person controlled by ATTI);
(c) any contract or agreement that relates primarily to the Lucent
Business;
(d) federal, state and local government and other contracts and agreements
that are listed or described on Schedule 1.69(d) and any other
government contracts or agreements entered into after the date hereof
and prior to the Closing Date that relate primarily to the Lucent
Business;
(e) any contract or agreement to which ATTI or any Person controlled by
ATTI is a party (or by which any of the Assets of ATTI or any such
Person is bound), other than (i) any such contract or agreement to
which AT&T World Services, Inc. is a party that primarily relates to
AT&T's EasyLink Services business, AT&T's International Correspondence
Assistance Program, or to AT&T's Federal Systems, including the
contracts and agreements listed or described on Schedule 1.69(e)(i),
(ii) any joint venture or other contract or agreement listed or
described on Schedule 1.69(e)(ii), and (iii) any such contract or
agreement that relates primarily to the AT&T Services Business or the
NCR Business;
(f) any contract or agreement representing capital or operating equipment
lease obligations reflected on the Lucent Balance Sheet, including
obligations as lessee under those contracts or agreements listed on
Schedule 1.69(f) (as such Schedule may be supplemented by mutual
agreement of the parties after the date hereof and prior to the
Closing Date to assign capital and operating equipment lease
obligations executed and delivered after the date of the Lucent
Balance Sheet);
(g) any contract or agreement that is otherwise expressly contemplated
pursuant to this Agreement or any of the Ancillary Agreements to be
assigned to Lucent or any member of the Lucent Group;
(h) (i) any guarantee, indemnity, representation, warranty or other
Liability of any member of the Lucent Group or the AT&T Group in
respect of any other Lucent Contract, any Lucent Liability or the
Lucent Business (including guarantees of financing incurred by
customers or other third parties in connection with purchases of
products or services from the Lucent Business), and (ii) the
contracts, agreements and other documents listed or described on
Schedule 1.69(h));
(i) the arrangements between AT&T and NEC Corp. with respect to the joint
venture known as AT&T Japan Semiconductor Marketing, Ltd.; and
(j) any Lucent OFL.
No RBOC Agreement shall be deemed to be an Lucent Contract, except to the
extent expressly set forth herein.
1.70. LUCENT GROUP means Lucent, each Subsidiary of Lucent and each other
Person that is either controlled directly or indirectly by Lucent immediately
after the Closing Date or that is contemplated to be controlled by Lucent
pursuant to the Non-U.S. Plan (other than any Person that is contemplated not to
be controlled by Lucent pursuant to the Non-U.S. Plan).
1.71. LUCENT INDEMNITEES has the meaning set forth in Section 5.3(a).
1.72. LUCENT LIABILITIES has the meaning set forth in Section 2.3(a).
1.73. LUCENT OFL'S has the meaning set forth in Section 7.3(a).
1.74. NCR means ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (formerly named AT&T Global Information
Solutions Company), a Maryland corporation.
1.75. NCR BUSINESS means: (a) the computer products, computer systems, data
processing and information solutions business and operations as conducted by NCR
and its Subsidiaries; (b) except as otherwise expressly provided herein, any
terminated, divested or discontinued businesses or operations (i) that at the
time of termination, divestiture or discontinuation primarily related to the NCR
Business as then conducted, or (ii) that were conducted by NCR, or any Person
that at any time was an Affiliate of NCR, prior to the acquisition of NCR by
AT&T; and (c) the terminated, divested or discontinued businesses and operations
listed or described on Schedule 1.75.
1.76. NCR COMMON STOCK means the Common Stock, par value $5.00 per share,
of NCR.
1.77. NCR COVERED LIABILITIES has the meaning set forth in Section 5.3(b).
1.78. NCR DISTRIBUTION means the distribution by AT&T on a pro rata basis
to holders of AT&T Common Stock of all of the outstanding shares of NCR owned
directly or indirectly by AT&T.
1.79. NCR GROUP means NCR, each Subsidiary of NCR and each other Person
that is either controlled directly or indirectly by NCR immediately after the
Closing or that is contemplated to be controlled by NCR pursuant to the Non-U.S.
Plan.
1.80. NCR INDEMNITEES has the meaning set forth in Section 5.2.
1.81. NCR VOLUME PURCHASE AGREEMENT means the Volume Purchase Agreement,
dated as of the date hereof, by and between NCR and Lucent.
1.82. NYSE means The New York Stock Exchange, Inc.
1.83. NASSAU METALS LIABILITIES means all Environmental Liabilities
primarily relating to, arising out of or resulting from the operations of AT&T
Nassau Metals Corporation, as conducted at any time prior to, on or after the
Closing Date.
1.84. NON-LUCENT ASSETS means any Assets of AT&T or any of its Affiliates
(including any member of the NCR Group) other than Lucent Assets.
1.85. NON-U.S. PLAN means the Non-U.S. Plan, comprised of the series of
transactions, agreements and other arrangements, pursuant to which the non-U.S.
Assets and Liabilities of AT&T and its Affiliates have been or will be assigned
among the parties hereto, which are set forth or described in Schedule 1.85 (as
such Schedule may be supplemented by mutual consent of the parties prior to the
Closing Date).
1.86. OFL'S mean all liabilities, obligations, contingencies and
instruments and other Liabilities of any member of the AT&T Group of a financial
nature with third parties existing on the date hereof or entered into or
established between the date hereof and the Closing Date, including any of the
following:
(a) foreign exchange contracts;
(b) letters of credit;
(c) guarantees of third party loans to customers;
(d) surety bonds (excluding surety for workers' compensation
self-insurance);
(E) interest support agreements on third party loans to customers;
(f) performance bonds or guarantees issued by third parties;
(g) swaps or other derivatives contracts; and
(h) recourse arrangements on the sale of receivables or notes.
1.87. OTHER DISCONTINUED OPERATIONS means (a) the business and operations
as conducted by any RBOC prior to its divestiture from AT&T, (b) Cincinnati ▇▇▇▇
Concession Service and (c) any other terminated, divested or discontinued
businesses and operations of AT&T, Lucent or NCR or of any former or current
Affiliate of AT&T, Lucent or NCR (whether such business or operations were
terminated, divested or discontinued prior to, at the time or after such Person
was, became or ceased to be an Affiliate of AT&T, Lucent or NCR) that are either
(i) not listed or described in, or on the Schedules to, the definitions of AT&T
Services Business, Lucent Business or NCR Business or on Schedule 2.3(a)(v) or
(ii) listed or described on Schedule 1.87.
1.88. PATENT ASSIGNMENTS means the six Patent Assignments, substantially in
the forms attached hereto as Schedule 1.88, to be executed and delivered by AT&T
to Lucent, NCR to AT&T, AT&T to NCR, Lucent to NCR, and Lucent to AT&T, on or
prior to the Closing Date.
1.89. PATENT DEFENSIVE PROTECTION AGREEMENTS means the two Defensive
Protection Agreements, substantially in the forms attached hereto as Schedule
1.89, to be executed and delivered between AT&T and Lucent, and between Lucent
and NCR, respectively, on or prior to the Closing Date.
1.90. PATENT JOINT OWNERSHIP AGREEMENT means the Patent Joint Ownership
Agreement, substantially in the form attached hereto as Schedule 1.90, to be
executed and delivered between AT&T and Lucent on or prior to the Closing Date.
1.91. PATENT LICENSE AGREEMENT means the Patent License Agreement,
substantially in the form attached hereto as Schedule 1.91, to be executed and
delivered by AT&T, Lucent and NCR on or prior to the Closing Date.
1.92. PERSON means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity and any Governmental Authority.
1.93. PRIME RATE means the rate which Chemical Bank (or any successor
thereto or other major money center commercial bank agreed to by the parties
hereto) announces from time to time as its prime lending rate, as in effect from
time to time.
1.94. PROSPECTUS means each preliminary, final or supplemental prospectus
forming a part of the IPO Registration Statement.
1.95. RBOC means each of Ameritech Corporation, ▇▇▇▇ Atlantic Corporation,
BellSouth Corporation, NYNEX Corporation, Pacific Telesis Group, SBC
Communications Inc., and U S West, Inc., and each of their respective
Affiliates, and the respective successors and assigns of any of the foregoing.
1.96. RBOC AGREEMENTS means the Agreement Concerning Contingent
Liabilities, Tax Matters and Termination of Certain Agreements among AT&T, and
the ▇▇▇▇ System Operating Companies Regional Holding Companies and affiliates,
and the Agreement Regarding Sharing of Environmental Liabilities.
1.97. RBOC LIABILITY means any Liability of any member of any Group
relating to, arising out of or resulting from any RBOC Agreement.
1.98. RBOC PLAN means the Plan of Reorganization filed on December 16,
1982, in the United States District Court for the District of Columbia in United
States v. Western Electric Co., Inc., Civil Action No. 82-0192, as modified by
the Court's orders and as thereafter amended, modified or supplemented.
1.99. RECORD DATE means the close of business on the date to be determined
by the AT&T Board of Directors as the record date for determining shareholders
of AT&T entitled to receive shares of Lucent Common Stock in the Distribution.
1.100. RELATED EXCLUSIVE CONTINGENT LIABILITIES has the meaning set forth
in Section 6.1.
1.101. RETAINED RECEIVABLES means any and all accounts receivable and other
rights to payment for goods or services sold, leased or otherwise provided in
the conduct of the Lucent Business that as of the date hereof are payable by a
third Person to AT&T, whether past due, due or to become due on or prior to June
30, 1996, including any interest, sales or use taxes, finance charges, late or
returned check charges and other obligations of the account debtor with respect
thereto, and any proceeds of any of the foregoing, that are (a) reflected in the
CBS System for accounts receivable arising in the Global Business Communications
Systems Group, (b) reflected in the CARMS system for accounts receivable arising
in the Network Systems Group or the Microelectronics Group, or (c) accounts
receivables arising in the Consumer Products Group if the account debtor is one
of the 20 largest third-party domestic customers of the Consumer Products Group
as of the date hereof; provided, however, that any accounts receivable arising
in the Network Systems Group or the Microelectronics Group shall not be Retained
Receivables if such accounts receivable were more than 90 days past due as of
the date hereof.
1.102. RIDGE LUCENT POLICIES means any insurance policies written by
American Ridge or any other captive insurance company of AT&T covering the
Lucent Business or any member of the Lucent Group.
1.103. SECURITIES ACT means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
1.104. SECURITY INTEREST means any mortgage, security interest, pledge,
lien, charge, claim, option, right to acquire, voting or other restriction,
right-of-way, covenant, condition, easement, encroachment, restriction on
transfer, or other encumbrance of any nature whatsoever.
1.105. SEPARATION means the transfer of the Lucent Assets to Lucent and its
Subsidiaries and the assumption by Lucent and its Subsidiaries of the Lucent
Liabilities, all as more fully described in this Agreement and the Ancillary
Agreements.
1.106. SHARED AT&T PERCENTAGE, SHARED NCR PERCENTAGE, SHARED
LUCENT
PERCENTAGE, SHARED PERCENTAGE, SHARED CONTINGENT GAIN AND SHARED
CONTINGENT
LIABILITY have the respective meanings set forth in Section 6.1.
1.107. SUBMARINE SYSTEMS means the Assets, businesses and operations of
AT&T's Submarine Systems, Inc., and the additional Assets listed or described in
Section 2.2(b)(vi).
1.108. SUBSIDIARY OF ANY PERSON means any corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however that no Person that is not directly or indirectly wholly owned by any
other Person shall be a Subsidiary of such other Person unless such other Person
controls, or has the right, power or ability to control, that Person.
1.109. TAX SHARING AGREEMENT means the Tax Sharing Agreement, dated as of
the date hereof, by and among AT&T, Lucent and NCR.
1.110. TAXES has the meaning set forth in the Tax Sharing Agreement.
1.111. TECHNOLOGY ACCESS AND DEVELOPMENT PROJECT AGREEMENT means
the
Technology Access and Development Project Agreement, dated as of the date
hereof, by and between NCR and Lucent.
1.112. TECHNOLOGY ASSIGNMENT AND JOINT OWNERSHIP AGREEMENTS means
the two
Technology Assignment and Joint Ownership Agreements, substantially in the form
attached hereto as Schedule 1.112, by and between AT&T and Lucent, and by and
among AT&T, Lucent and NCR, respectively, to be executed and delivered on or
prior to the Closing Date.
1.113. TECHNOLOGY LICENSE AGREEMENT means the Technology License
Agreement,
substantially in the form attached hereto as Schedule 1.113, by and among AT&T,
Lucent and NCR to be executed and delivered on or prior to the Closing Date.
1.114. TELECOMMUNICATIONS SERVICE means any service providing the
transmission of voice, data, image or other messages, by radio or by aid of
wire, cable or other like connection now known or later developed between the
points of origin and reception of such transmission or by means of any
combination of the foregoing, including telecommunications services commonly
characterized as local, toll (whether intraLATA or interLATA), long distance and
cellular (whether mobile or fixed).
1.115. THIRD PARTY CLAIM has the meaning set forth in Section 5.5(a).
1.116. TRADE DRESS ASSIGNMENT means the Trade Dress Assignment, dated as of
the date hereof, by AT&T to Lucent.
1.117. TRADEMARK AND SERVICE ▇▇▇▇ ASSIGNMENT means the Trademark and
Service ▇▇▇▇ Assignment, dated as of the date hereof, by AT&T to Lucent.
1.118. UNDERWRITERS means the managing underwriters for the IPO.
1.119. UNDERWRITING AGREEMENT means the underwriting agreement to be
entered into among Lucent and the Underwriters with respect to the IPO.
1.120. VALUE has the meaning set forth in Section 6.1.
1.121. VTNS AGREEMENT means the Virtual Telecommunications Network Service
Agreement, between AT&T and Lucent, dated as of the date hereof.
1.122. WORKING CAPITAL FACILITY means the Working Capital Agreement to be
entered into by Lucent, as borrower, and Chemical Bank, as Agent, and the
Lending Banks named therein, to fund the working capital requirements of Lucent
following the date hereof.
ARTICLE II
THE SEPARATION
2.1. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. (a) Each of AT&T
and
NCR hereby assigns, transfers, conveys and delivers to Lucent, and agrees to
cause its applicable Subsidiaries to assign, transfer, convey and deliver to
Lucent, and Lucent hereby accepts from each of AT&T and NCR and their respective
Subsidiaries, all of AT&T's and NCR's and their applicable Subsidiaries'
respective right, title and interest in all Lucent Assets, other than the
Delayed Transfer Assets.
(b) Lucent hereby assumes and agrees faithfully to perform and fulfill all
the Lucent Liabilities, other than the Delayed Transfer Liabilities,
in accordance with their respective terms. Lucent shall be responsible
for all Lucent Liabilities, regardless of when or where such
Liabilities arose or arise, or whether the facts on which they are
based occurred prior to or subsequent to the date hereof, regardless
of where or against whom such Liabilities are asserted or determined
(including any Lucent Liabilities arising out of claims made by
AT&T's, Lucent's or NCR's respective directors, officers, employees,
agents, Subsidiaries or Affiliates against any member of the AT&T
Group or the Lucent Group) or whether asserted or determined prior to
the date hereof, and regardless of whether arising from or alleged to
arise from negligence, recklessness, violation of law, fraud or
misrepresentation by any member of the AT&T Group or the Lucent Group
or any of their respective directors, officers, employees, agents,
Subsidiaries or Affiliates.
(c) Each of the parties hereto agrees that the Delayed Transfer Assets
will be assigned, transferred, conveyed and delivered, and the Delayed
Transfer Liabilities will be assumed, in accordance with the terms of
the agreements that provide for such assignment, transfer, conveyance
and delivery, or such assumption, after the date of this Agreement or
as otherwise set forth on Schedule 2.1(c). Following such assignment,
transfer, conveyance and delivery of any Delayed Transfer Asset, or
the assumption of any Delayed Transfer Liability, the applicable
Delayed Transfer Asset or Delayed Transfer Liability shall be treated
for all purposes of this Agreement and the Ancillary Agreements as an
Lucent Asset or an Lucent Liability, as the case may be.
(d) In the event that at any time or from time to time (whether prior to
or after the Distribution Date), any party hereto (or any member of
such party's respective Group), shall receive or otherwise possess any
Asset that is allocated to any other Person pursuant to this Agreement
or any Ancillary Agreement, such party shall promptly transfer, or
cause to be transferred, such Asset to the Person so entitled thereto.
Prior to any such transfer, the Person receiving or possessing such
Asset shall hold such Asset in trust for any such other Person.
2.2. LUCENT ASSETS. (a) For purposes of this Agreement, "Lucent Assets"
shall mean (without duplication):
(i) any and all Assets that are expressly contemplated by this Agreement
or any Ancillary Agreement (or Schedule 2.2(a)(i) or any other
Schedule hereto or thereto) as Assets to be transferred to Lucent or
any other member of the Lucent Group;
(ii) all issued and outstanding capital stock of ATTI and any and all
Assets owned by ATTI or its Subsidiaries as of the date of the
transfer of such capital stock to Lucent pursuant to Section 2.8(b),
except for the Assets contemplated to be sold or otherwise
transferred to any member of the AT&T Group pursuant to the Non-U.S.
Plan;
(iii) any Exclusive Lucent Contingent Gain and any Shared Lucent Percentage
of any Shared Contingent Gain;
(iv) (A) any amounts actually paid to AT&T after the Closing Date pursuant
to any RBOC Agreement in respect of any Lucent Liability or any
Nassau Metals Liability, (B) any rights of any member of the Lucent
Group under any RBOC Agreement in respect of any Lucent Liability or
any Nassau Metals Liability, and (C) subject to Section 7.1, any
rights of any member of the Lucent Group under any of the Insurance
Policies, including any rights thereunder arising after the
Distribution Date in respect of any Insurance Policies that are
occurrence policies;
(v) (A) any Assets that Section 2.5(b) contemplates will be transferred
to, or be retained by, any member of the Lucent Group, (B) any Lucent
Contracts and (C) all issued and outstanding capital stock of AT&T
Nassau Metals Corporation and the other Subsidiaries of AT&T listed
on Schedule 2.2(a)(v);
(vi) any Assets reflected in the Lucent Balance Sheet as Assets of Lucent
and its Subsidiaries, subject to any dispositions of such Assets
subsequent to the date of the Lucent Balance Sheet; and
(vii) except as contemplated by Section 2.5(b), any and all Assets owned or
held immediately prior to the Closing Date by AT&T or any of its
Subsidiaries that are used primarily in the Lucent Business. The
intention of this clause (vii) is only to rectify any inadvertent
omission of transfer or conveyance of any Assets that, had the
parties given specific consideration to such Asset as of the date
hereof, would have otherwise been classified as an Lucent Asset. No
Asset shall be deemed to be an Lucent Asset solely as a result of
this clause (vii) if such Asset is within the category or type of
Asset expressly covered by the subject matter of an Ancillary
Agreement. In addition, no Asset shall be deemed an Lucent Asset
solely as a result of this clause (vii) unless a claim with respect
thereto is made by Lucent on or prior to the first anniversary of
the Distribution Date.
Notwithstanding the foregoing, the Lucent Assets shall not in any event include
the Excluded Assets referred to in Section 2.2(b) below.
(b) For the purposes of this Agreement, "Excluded Assets" shall mean:
(i) the Assets listed or described on Schedule 2.2(b)(i);
(ii) the Retained Receivables;
(iii) any and all Assets that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Assets to be retained by AT&T or any other member of
the AT&T Group (including the NCR Group);
(iv) any contract or agreement described in clause (e)(i) through
(e)(iii) of the definition of Lucent Contract;
(v) except to the extent expressly set forth in Section 2.2(a)(iii)
or (iv), respectively, (A) any Contingent Gains and (B) any
rights in respect of, or proceeds received pursuant to, any RBOC
Agreement; and
(vi) all Assets (including land, buildings, manufacturing equipment
and inventory) of the undersea repeaters factory of Lucent's
Microelectronic Group located in Clark, New Jersey.
2.3. LUCENT LIABILITIES. (a) For the purposes of this Agreement, "Lucent
Liabilities" shall mean (without duplication):
(i) any and all Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be assumed by Lucent or any member of
the Lucent Group, and all agreements, obligations and
Liabilities of any member of the Lucent Group under this
Agreement or any of the Ancillary Agreements;
(ii) all Liabilities (other than Taxes based on, or measured by
reference to, net income), including any employee-related
Liabilities and Environmental Liabilities, primarily relating
to, arising out of or resulting from:
(A) the operation of the Lucent Business, as conducted at any time prior
to, on or after the Closing Date (including any Liability relating to, arising
out of or resulting from any act or failure to act by any director, officer,
employee, agent or representative (whether or not such act or failure to act is
or was within such Person's authority));
(B) the operation of any business conducted by any member of the Lucent
Group at any time after the Closing Date (including any Liability relating to,
arising out of or resulting from any act or failure to act by any director,
officer, employee, agent or representative (whether or not such act or failure
to act is or was within such Person's authority)); or
(C) any Lucent Assets (including any Lucent Contracts and any real property
and leasehold interests);
in any such case whether arising before, on or after the Closing Date;
(iii) subject to the terms of Article VI, all Exclusive Lucent Contingent
Liabilities and the Shared Lucent Percentage of any Shared Contingent
Liabilities;
(iv) all Liabilities relating to, arising out of or resulting from the
Working Capital Facility and, as of the Closing Date, the Financing
Facility;
(v) all Liabilities relating to, arising out of or resulting from any of
the terminated, divested or discontinued businesses and operations
listed or described on Schedule 2.3(a)(v);
(vi) all Liabilities of ATTI or its Subsidiaries, as of the date of the
transfer of the capital stock of ATTI to Lucent pursuant to Section
2.8(b), except for the Liabilities contemplated to be assumed by any
member of the AT&T Group pursuant to the Non-U.S. Plan, and all
Liabilities of any other member of the Lucent Group; and
(vii) all Liabilities reflected as liabilities or obligations of Lucent in
the Lucent Balance Sheet, subject to any discharge of such
Liabilities subsequent to the date of the Lucent Balance Sheet.
Notwithstanding the foregoing, the Lucent Liabilities shall not include the
Excluded Liabilities referred to in Section 2.3(b) below. Subject to Articles V
and VI hereof, the Lucent Liabilities shall not include any Nassau Metals
Liabilities.
(b) For the purposes of this Agreement, "Excluded Liabilities" shall mean:
(i) any and all Liabilities that are expressly contemplated by this
Agreement or any Ancillary Agreement (or the Schedules hereto or
thereto) as Liabilities to be retained or assumed by AT&T or any
other member of the AT&T Group (including the NCR Group), and all
agreements and obligations of any member of the AT&T Group under
this Agreement or any of the Ancillary Agreements;
(ii) subject to the terms of Article VI, all Exclusive AT&T Services
Contingent Liabilities and Exclusive NCR Contingent Liabilities
and the Shared AT&T Percentage and the Shared NCR Percentage of
any Shared Contingent Liabilities; and
(iii) except as set forth in any Ancillary Agreement, all Environmental
Liabilities accrued as of the date hereof solely relating to,
arising out of or resulting from the existence of any leasehold
interest that is an Lucent Asset if the applicable lessor,
sublessor or sub-sublessor under the applicable lease, sublease or
sub-sublease is a member of the AT&T Services Group or the NCR
Group.
2.4. TERMINATION OF AGREEMENTS. (a) Except as set forth in Section 2.4(b),
in furtherance of the releases and other provisions of Section 5.1 hereof,
Lucent and each member of the Lucent Group, on the one hand, and each of AT&T,
NCR and
the respective members of the AT&T Services Group and the NCR Group, on the
other hand, hereby terminate, any and all agreements, arrangements, commitments
or understandings, whether or not in writing, between or among Lucent and/or any
member of the Lucent Group, on the one hand, and AT&T or NCR and/or any member
of the AT&T Services Group or the NCR Group, on the other hand, effective as of
the Closing Date; provided, however, to the extent any such agreement,
arrangement, commitment or understanding is inconsistent with any Ancillary
Agreement, such termination shall be effective as of the date of effectiveness
of the applicable Ancillary Agreement. No such terminated agreement,
arrangement, commitment or understanding (including any provision thereof which
purports to survive termination) shall be of any further force or effect after
the Closing Date (or, to the extent contemplated by the proviso to the
immediately preceding sentence, after the effective date of the applicable
Ancillary Agreement). Each party shall, at the reasonable request of any other
party, take, or cause to be taken, such other actions as may be necessary to
effect the foregoing.
(b) The provisions of Section 2.4(a) shall not apply to any of the
following agreements, arrangements, commitments or understandings (or
to any of the provisions thereof): (i) this Agreement and the
Ancillary Agreements (and each other agreement or instrument expressly
contemplated by this Agreement or any Ancillary Agreement to be
entered into by any of the parties hereto or any of the members of
their respective Groups); (ii) any agreements, arrangements,
commitments or understandings listed or described on Schedule
2.4(b)(ii), including the representations, warranties and product
support agreements, arrangements, commitments or understandings to be
set forth on such Schedule relating to products, services or materials
previously furnished by the Lucent Business to the AT&T Services
Business; (iii) any agreements, arrangements, commitments or
understandings to which any Person other than the parties hereto and
their respective Affiliates is a party (it being understood that to
the extent that the rights and obligations of the parties and the
members of their respective Groups under any such agreements,
arrangements, commitments or understandings constitute Lucent Assets
or Lucent Liabilities, they shall be assigned pursuant to Section
2.1); (iv) any intercompany accounts payable or accounts receivable
accrued as of the Closing Date that are reflected in the books and
records of the parties or otherwise documented in writing in
accordance with past practices; (v) any agreements, arrangements,
commitments or understandings to which AT&T Capital Corporation or any
other non-wholly owned Subsidiary of AT&T, Lucent or NCR, as the case
may be, is a party (it being understood that directors' qualifying
shares or similar interests will be disregarded for purposes of
determining whether a Subsidiary is wholly owned); (vi) any written
Tax sharing or Tax allocation agreements to which any member of any
Group is a party; and (vii) any other agreements, arrangements,
commitments or understandings that this Agreement or any Ancillary
Agreement expressly contemplates will survive the Closing Date.
2.5. DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY INTERESTS
AND TANGIBLE
PROPERTY LOCATED THEREON. (a) In furtherance of the assignment, transfer and
conveyance of Lucent Assets and the assumption of Lucent Liabilities set forth
in Section 2.1(a) and (b), simultaneously with the execution and delivery hereof
or as promptly as practicable thereafter, each of AT&T, Lucent and NCR, or their
applicable Subsidiaries, is executing and delivering or will execute and deliver
deeds, lease assignments and assumptions, leases, subleases and sub-subleases
substantially in the forms attached as Schedule 2.5 (which in certain cases
includes different forms for real property and leasehold interests located
outside of the United States), with such changes as may be necessary to conform
to any laws, regulations or usage applicable in the jurisdiction in which the
relevant real property is located. Set forth in, or referenced by, such Schedule
is, among
other things, a summary of each property or interest therein to be conveyed,
assigned, leased, subleased or sub-subleased, the applicable entities relevant
to each property and their capacities with respect to each property (e.g., as
transferor, transferee, assignor, assignee, lessor, lessee, sublessor,
sublessee, sub-sublessor or sub-sublessee), and any terms applicable to each
property that are not specified in the forms of deed, lease assignment and
assumption, lease, sublease or sub-sublease (e.g., rent and term).
(b) Except as otherwise expressly provided in this Agreement or any
Ancillary Agreement, all tenant improvements, fixtures, furniture,
office equipment, servers, private branch exchanges, artwork and other
tangible property (other than equipment subject to capital or
operating equipment leases, which will be transferred or retained
based on whether the associated capital or operating equipment lease
is or is not an Lucent Contract) located as of the date hereof on any
real property that is covered by any Ancillary Agreement referred to
in Section 2.5(a), including the Schedules thereto, shall, except to
the extent expressly set forth on a Schedule referred to in Section
2.5(a), be transferred or retained as follows:
(i) DEEDS AND ASSIGNMENTS. In the case of any real property or
leasehold interests covered by an Ancillary Agreement set forth on
Schedule 2.5 that is a deed or lease assignment and assumption,
all such tangible property will be transferred to the transferee
or assignee of the applicable real property or leasehold interest;
(ii) SHARED FACILITIES WITHOUT THIRD PARTY LEASES. In the case of any
real property or leasehold interests covered by an Ancillary
Agreement set forth on Schedule 2.5 that is a lease, all such
tangible property will be retained by the lessor under the
applicable lease, except that any such tangible property (other
than tenant improvements, fixtures, furniture and artwork) used
exclusively by the lessee shall be transferred to, or retained by,
the lessee.
(iii) SHARED DOMESTIC FACILITIES WITH THIRD PARTY LEASES. In the case of
any real property or leasehold interests located in the United
States covered by an Ancillary Agreement set forth on Schedule 2.5
that is a sublease or sub-sublease, all such tangible property
will be retained by the sublessor or sub-sublessor, respectively,
under the applicable sublease or sub-sublease, except that any
such tangible property (other than tenant improvements, fixtures
and artwork), including furniture used exclusively by the
sublessee or sub-sublessee, respectively, shall be transferred to,
or retained by, such sublessee or sub-sublessee.
(iv) SHARED NON-U.S. FACILITIES WITH THIRD PARTY LEASES. In the case of
any real property or leasehold interests located outside of the
United States covered by an Ancillary Agreement set forth on
Schedule 2.5 that is a sublease or sub-sublease, all such tangible
property will be retained by the sublessor or subsublessor,
respectively, under the applicable sublease or sub-sublease,
except that any such tangible property (other than tenant
improvements, fixtures, furniture and artwork) used exclusively by
the sublessee or sub-sublessee, respectively, shall be transferred
to, or retained by, such sublessee or sub-sublessee.
In the case of this Section 2.5(b), all determinations as to exclusive use by
any member of a Group shall be made without regard to infrequent and immaterial
use by the members of any other Group, if the transfer of such Asset to, or the
retention of such Asset by, such first Group would not interfere in any material
respect with either the business or operations of any such other Group.
Notwithstanding the foregoing provisions of this Section 2.5(b),
any artwork located as of the date hereof in the private office of any senior
manager or officer of any Group may, at the election of such senior manager or
officer, be retained by, or transferred to, the Group by which such executive is
employed as of the Closing Date.
(c) In the case of any real property or leasehold interest that is covered
by Section 2.5(b)(i) and any of Section 2.5(b)(ii), (iii) or (iv), all
such tangible property shall first be allocated pursuant to the
provisions of Section 2.5(b)(i) and thereafter pursuant to whichever
of such other clauses is applicable.
2.6. DOCUMENTS RELATING TO OTHER TRANSFERS OF ASSETS AND
ASSUMPTION OF
LIABILITIES. In furtherance of the assignment, transfer and conveyance of Lucent
Assets and the assumption of Lucent Liabilities set forth in Section 2.1(a) and
(b), simultaneously with the execution and delivery hereof or as promptly as
practicable thereafter, (i) each of AT&T and NCR shall execute and deliver, and
each shall cause its respective Subsidiaries to execute and deliver, such bills
of sale, stock powers, certificates of title, assignments of contracts and other
instruments of transfer, conveyance and assignment as and to the extent
necessary to evidence the transfer, conveyance and assignment of all of AT&T's,
NCR's and their respective Subsidiaries' right, title and interest in and to the
Lucent Assets to Lucent and (ii) Lucent shall execute and deliver, to AT&T, NCR
and their respective Subsidiaries such bills of sale, stock powers, certificates
of title, assumptions of contracts and other instruments of assumption as and to
the extent necessary to evidence the valid and effective assumption of the
Lucent Liabilities by Lucent.
2.7. OTHER ANCILLARY AGREEMENTS. (a) Effective as of the date hereof,
except as provided in Section 2.7(b) or Section 2.8, each of AT&T, Lucent and
NCR will execute and deliver all Ancillary Agreements to which it is a party.
(b) After the date hereof and on or prior to the Closing Date, the parties
shall execute and deliver each of the following Ancillary Agreements
to which it is a party:
(i) the Patent Assignments;
(ii) the Patent License Agreement;
(iii) the Patent Joint Ownership Agreement;
(iv) the Patent Defensive Protection Agreements;
(v) The Technology Assignment and Joint Ownership Agreements; and
(vi) the Technology License Agreement.
The parties acknowledge that the forms of the foregoing agreements attached
hereto as Schedules reflect the allocation of patents and other intellectual
property pursuant to a process conducted prior to the date hereof, and that such
agreements will be further supplemented prior to their execution to reflect a
continuation of such process for new patent applications and other intellectual
property that were not considered in the allocation process conducted prior to
the date hereof. In addition, the parties will determine no later than February
15, 1996 the appropriate amount and terms of the payments to be made pursuant to
the Patent Defensive Protection Agreements.
2.8. THE NON-U.S. PLAN. (a) Each of AT&T, Lucent and NCR shall take, and
shall cause each member of its respective Group to take, such action as
reasonably necessary to consummate the transactions contemplated by the Non-U.S.
Plan (whether prior to or after the Closing Date).
(b) After the date hereof and on or prior to the Closing Date, AT&T shall
transfer all of its right, title and interest in and to all of the
issued and outstanding capital stock in each of ATTI and NCS Ventures,
Inc., a Delaware corporation, to Lucent by means of a contribution of
such capital stock by AT&T to Lucent. The parties hereto shall
execute, or cause to be executed, such transfer instruments as they
mutually deem appropriate to effectuate and evidence such transfer.
2.9. AT&T VENTURES; LUCENT FOUNDATION. (a) On or prior to the Closing Date,
AT&T shall transfer to Lucent 35% of AT&T's interest as a limited partner in
AT&T Ventures and Lucent shall assume all Liabilities of a limited partner of
AT&T Ventures relating to such interest. AT&T and Lucent shall use reasonable
best efforts to cooperate so that Lucent will be admitted to AT&T Ventures as a
limited partner in respect of such interest. Without duplication of any such
Liability assumed in its capacity as a limited partner, Lucent shall indemnify,
defend and hold harmless each AT&T Indemnitee and each NCR Indemnitee from and
against 35% of any and all Liabilities of the AT&T Indemnitees or the NCR
Indemnitees, respectively, relating to, arising out of or resulting from AT&T
Ventures, including in respect of any capital calls or commitments and in
connection with the operation or management thereof.
(b) (i) Following the date hereof, Lucent will incorporate a private
foundation to be qualified under Section 501(c)(3) of the Code. The
AT&T Foundation will make an $18 million grant to the new foundation
formed by Lucent, as soon as is reasonably practicable following such
new foundation's request, subject to the satisfaction by such new
foundation of the following requirements: the election or appointment
of a governing board of directors or trustees, the adoption of
by-laws, the hiring of a professional staff, the formulation of a
mission statement, and commencement of the development of programs and
priorities for funding grants. The determination as to whether such
requirements have been satisfied shall be made by the trustees of the
AT&T Foundation in their sole discretion and shall be binding on all
parties. Such $18 million grant shall be payable, at the AT&T
Foundation's election, in cash or in appreciated property (or any
combination thereof). All determinations with respect to the fair
market value of any appreciated property will be made by the trustees
of the AT&T Foundation in their sole discretion and shall be binding
on all parties.
(ii) The AT&T Foundation has approved a 1996 grant budget that
includes grants totalling $13 million relating to Lucent initiatives.
The staffs of the AT&T Foundation and the new foundation to be formed
by Lucent pursuant to subparagraph (i) above will work together to
administer the grants relating to these Lucent initiatives. In the
event such $13 million has not been fully disbursed prior to the
Distribution Date, the AT&T Foundation will transfer to the new
foundation formed by Lucent an amount equal to the portion of such $13
million that has not been disbursed, and such foundation will assume
the obligation to make grants equal to such remaining amount. The AT&T
Foundation will also allocate up to $1 million of its 1996
administrative budget for administrative costs related to Lucent
programs.
2.10. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. (a) Each of AT&T
(on
behalf of itself and each member of the AT&T Services Group), Lucent (on behalf
of
itself and each member of the Lucent Group) and NCR (on behalf of itself and
each member of the NCR Group) understands and agrees that, except as expressly
set forth herein (including in Section 7.2(g)) or in any Ancillary Agreement, no
party to this Agreement, any Ancillary Agreement or any other agreement or
document contemplated by this Agreement, any Ancillary Agreement or otherwise,
is representing or warranting in any way as to the Assets, businesses or
Liabilities transferred or assumed as contemplated hereby or thereby, as to any
consents or approvals required in connection therewith, as to the value or
freedom from any Security Interests of, or any other matter concerning, any
Assets of such party, or as to the absence of any defenses or right of setoff or
freedom from counterclaim with respect to any claim or other Asset, including
any accounts receivable, of any party, or as to the legal sufficiency of any
assignment, document or instrument delivered hereunder to convey title to any
Asset or thing of value upon the execution, delivery and filing hereof or
thereof. Except as may expressly be set forth herein or in any Ancillary
Agreement, all such Assets are being transferred on an "as is," "where is" basis
(and, in the case of any real property, by means of a quitclaim or similar form
deed or conveyance) and the respective transferees shall bear the economic and
legal risks that any conveyance shall prove to be insufficient to vest in the
transferee good and marketable title, free and clear of any Security Interest.
2.11. FINANCING ARRANGEMENTS. (a) Prior to the Closing Date, AT&T and
Lucent shall enter into the Financing Facility. AT&T and Lucent agree to take
all such reasonable action as may be necessary to permit AT&T to borrow such
amount as it shall determine under the Financing Facility prior to the Closing
Date and to assure the assignment to and the assumption by Lucent of all
obligations thereunder and the full release and discharge of each of AT&T and
any other member of the AT&T Group of all of its obligations thereunder as of
the Closing Date in accordance with the terms of the Financing Facility. AT&T
and Lucent shall participate in the preparation of all materials and
presentations as may be reasonably necessary to secure funding pursuant to the
Financing Facility, including rating agency presentations necessary to obtain
the requisite ratings needed to secure the financing under the Financing
Facility and such assignment, assumption, release and discharge. As of the time
of such assignment, assumption, release and discharge, Lucent shall pay (or
reimburse AT&T for) all expenses associated with the Financing Facility.
(b) Simultaneously with or following the execution and delivery of this
Agreement, Lucent intends to enter into the Working Capital Facility.
Lucent agrees to cause all obligations of AT&T or any other member of
the AT&T Group, if any, under the Working Capital Facility to be
terminated at the Closing Date. Lucent shall pay all expenses
associated with the Working Capital Facility.
2.12. GOVERNMENTAL APPROVALS AND CONSENTS. (a) To the extent that the
Separation requires any Governmental Approvals or Consents, the parties will use
their reasonable best efforts to obtain any such Governmental Approvals and
Consents.
(b) If and to the extent that the valid, complete and perfected transfer
or assignment (or novation of any federal government contract) to the
Lucent Group of any Lucent Assets (or from the Lucent Group of any
Non-Lucent Assets) would be a violation of applicable laws or require
any Consent or Governmental Approval in connection with the
Separation, the IPO or the Distribution, then, unless AT&T shall
otherwise determine, the transfer or assignment to or from the Lucent
Group, as the case may be, of such Lucent Assets or Non-Lucent Assets,
respectively, shall be automatically deemed deferred and any such
purported transfer or assignment shall be null and void until
such time as all legal impediments are removed and/or such Consents or
Governmental Approvals have been obtained. Notwithstanding the
foregoing, such Asset shall be deemed an Lucent Asset for purposes of
determining whether any Liability is an Lucent Liability.
(c) If the transfer or assignment of any Assets intended to be transferred
or assigned hereunder, including pursuant to the Non-U.S. Plan, is not
consummated prior to or at the Closing Date, whether as a result of
the provisions of Section 2.12(b) or for any other reason, then the
Person retaining such Asset shall thereafter hold such Asset for the
use and benefit, insofar as reasonably possible, of the Person
entitled thereto (at the expense of the Person entitled thereto). In
addition, the Person retaining such Asset shall take such other
actions as may be reasonably requested by the Person to whom such
Asset is to be transferred in order to place such Person, insofar as
reasonably possible, in the same position as if such Asset had been
transferred as contemplated hereby and so that all the benefits and
burdens relating to such Lucent Assets (or such Non-Lucent Assets, as
the case may be), including possession, use, risk of loss, potential
for gain, and dominion, control and command over such Assets, are to
inure from and after the Closing Date to the Lucent Group (or the AT&T
Group, as the case may be).
(d) If and when the Consents and/or Governmental Approvals, the absence of
which caused the deferral of transfer of any Asset pursuant to Section
2.12(b), are obtained, the transfer of the applicable Asset shall be
effected in accordance with the terms of this Agreement and/or the
applicable Ancillary Agreement.
(e) The Person retaining an Asset due to the deferral of the transfer of
such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the
Person entitled to the Asset, other than reasonable out-of-pocket
expenses, attorneys' fees and recording or similar fees, all of which
shall be promptly reimbursed by the Person entitled to such Asset.
2.13. NOVATION OF ASSUMED LUCENT LIABILITIES. (a) Each of AT&T, Lucent and
NCR, at the request of any of the others, shall use their reasonable best
efforts to obtain, or to cause to be obtained, any consent, substitution,
approval or amendment required to novate (including with respect to any federal
government contract) or assign all obligations under agreements, leases,
licenses and other obligations or Liabilities (including Lucent OFL's) of any
nature whatsoever that constitute Lucent Liabilities or Nassau Metals
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than any member of the Lucent Group, so that, in any
such case, Lucent and its Subsidiaries will be solely responsible for such
Liabilities; provided, however, that none of AT&T, Lucent or NCR shall be
obligated to pay any consideration therefor to any third party from whom such
consents, approvals, substitutions and amendments are requested.
(b) If AT&T, Lucent or NCR is unable to obtain, or to cause to be
obtained, any such required consent, approval, release, substitution
or amendment, the applicable member of the AT&T Services Group or the
NCR Group, as the case may be, shall continue to be bound by such
agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof (except to the extent expressly
set forth in Section 7.3 in the case of Lucent OFL's), Lucent shall,
as agent or subcontractor for AT&T, NCR or such other Person, as the
case may be, pay, perform and discharge fully all the obligations or
other Liabilities of AT&T, NCR or such other Person, as the case may
be, thereunder from and after the date hereof. Lucent shall indemnify
each AT&T Indemnitee and each NCR Indemnitee, and hold each of them
harmless against any Liabilities
arising in connection therewith. Except as expressly set forth in
Section 7.3 in the case of Lucent OFL's, each of AT&T and NCR, as the
case may be, shall, without further consideration, pay and remit, or
cause to be paid or remitted, to Lucent promptly all money, rights and
other consideration received by it or any member of its respective
Group in respect of such performance (unless any such consideration is
an Excluded Asset). If and when any such consent, approval, release,
substitution or amendment shall be obtained or such agreement, lease,
license or other rights or obligations shall otherwise become
assignable or able to be novated, each of AT&T and NCR, as the case
may be, shall thereafter assign, or cause to be assigned, all its
rights, obligations and other Liabilities thereunder or any rights or
obligations of any member of its respective Group to Lucent without
payment of further consideration and Lucent shall, without the payment
of any further consideration, assume such rights and obligations.
2.14. NOVATION OF ASSUMED LIABILITIES OTHER THAN LUCENT LIABILITIES.
(a) Each of AT&T, Lucent and NCR, at the request of any of the others,
shall use their reasonable best efforts to obtain, or to cause to be
obtained, any consent, substitution, approval or amendment required to
novate or assign all obligations under agreements, leases, licenses
and other obligations or Liabilities of any nature whatsoever that do
not constitute Lucent Liabilities or Nassau Metals Liabilities, or to
obtain in writing the unconditional release of all parties to such
arrangements other than any member of the AT&T Group, so that, in any
such case, the members of the AT&T Group will be solely responsible
for such Liabilities; provided, however, that none of AT&T, Lucent or
NCR shall be obligated to pay any consideration therefor to any third
party from whom such consents, approvals, substitutions and amendments
are requested.
(b) If AT&T, Lucent or NCR is unable to obtain, or to cause to be
obtained, any such required consent, approval, release, substitution
or amendment, the applicable member of the Lucent Group shall continue
to be bound by such agreements, leases, licenses and other obligations
and, unless not permitted by law or the terms thereof, AT&T shall
cause a member of the AT&T Group, as agent or subcontractor for such
member of the Lucent Group, to pay, perform and discharge fully all
the obligations or other Liabilities of such member of the Lucent
Group thereunder from and after the date hereof. AT&T shall indemnify
each Lucent Indemnitee and hold each of them harmless against any
Liabilities arising in connection therewith. Lucent shall cause each
member of the Lucent Group without further consideration, to pay and
remit, or cause to be paid or remitted, to AT&T or to another member
of the AT&T Group specified by AT&T promptly all money, rights and
other consideration received by it or any member of the Lucent Group
in respect of such performance. If and when any such consent,
approval, release, substitution or amendment shall be obtained or such
agreement, lease, license or other rights or obligations shall
otherwise become assignable or able to be novated, Lucent shall
promptly assign, or cause to be assigned, all its rights, obligations
and other Liabilities thereunder or any rights or obligations of any
member of the Lucent Group to AT&T or to another member of the AT&T
Group specified by AT&T without payment of further consideration and
AT&T, without the payment of any further consideration shall, or shall
cause such other member of the AT&T Group to, assume such rights and
obligations.
2.15. THIRD PARTY PATENT LICENSE AGREEMENTS. (a) Except as otherwise set
forth in this Section 2.15, effective as of the date of execution of the Patent
Assignments and other agreements set forth in Section 2.7(b), AT&T hereby: (i)
grants to each of Lucent and NCR the right to share with AT&T the license rights
granted by any third party to AT&T pursuant to any patent license agreement
between AT&T and such third party existing as of the date hereof and (ii) grants
to Lucent the right to receive any net royalty
payments from third parties pursuant to the patent license agreements referred
to in clause (i) above. Except as otherwise set forth in this Section 2.15, AT&T
will retain all rights in and to the patent license agreements referred to in
this Section 2.15.
(b) The grants set forth in the first sentence of Section 2.15(a) shall
not apply to (i) the patent license agreements set forth in Schedule
2.15(b) or (ii) any other patent license agreement with respect to
which there otherwise exists, on or prior to the date of execution of
the Patent Assignments, written provision for the allocation or
sharing of rights under such patent license agreement between or among
any two or all three of AT&T, Lucent and NCR.
(c) Except as set forth in Section 2.15(d), in the event that any grant of
rights set forth in Section 2.15(a) would violate or is found to
violate the terms of, or result in the loss of rights or imposition of
penalty under, any patent license agreement covered thereby, or would
not be effective subsequent to the Distribution Date, such grant of
rights with respect to such patent license agreement shall be deemed
null and void and, in lieu thereof, (i) effective as of the
Distribution Date, AT&T hereby transfers any such patent license
agreement to Lucent without retaining any rights therein (and AT&T
waives any such right it could otherwise retain) and (ii) Lucent shall
use all reasonable efforts to arrange for the grant by the applicable
third party of comparable rights (other than any right to receive
royalty payments) to each of AT&T and NCR, provided that none of
Lucent, AT&T or NCR shall be obligated to pay any consideration
therefor.
(d) In the event that any transfer set forth in Section 2.15(c) would
violate or is found to violate the terms of, or result in the loss of
rights or imposition of penalty under, any patent license agreement
covered thereby, or would not be effective subsequent to the
Distribution Date, such transfer shall be deemed null and void and, in
lieu thereof, (i) AT&T hereby retains all rights under any such patent
license agreement, (ii) AT&T will pay over to Lucent any royalty
payments it may receive from any third party pursuant to any such
patent license agreement and (iii) AT&T shall use all reasonable
efforts to arrange for the grant by the applicable third party of
comparable rights (other than any right to royalty payments) to each
of Lucent and NCR, provided that none of Lucent, AT&T or NCR shall be
obligated to pay any consideration therefor.
(e) In the event that license rights under any patent license agreement
intended to be granted or transferred to Lucent under this Section
2.15 are not effectively granted or transferred (including in the
event such grant or transfer is not effective after the Distribution
Date and/or the parties are unable to arrange for the grant by the
applicable third party of comparable license rights to Lucent), then,
at the written request of Lucent: (i) AT&T will exercise any have-made
rights it may have under the applicable third-party license agreement
to have Lucent make, and will purchase from Lucent, such products or
other materials as Lucent may direct using the applicable third-party
patents as to which AT&T has such have-made rights (at the price and
on the terms to be paid and agreed to by the Person or Persons to whom
AT&T may be directed to sell such products or other materials pursuant
to the following clause (ii)); and (ii) following any such purchase,
AT&T will sell such products or other materials to such Person or
Persons, on such terms, as may be directed by Lucent (except that AT&T
will not be required to make any representations, warranties or
commitments in respect thereof other than to provide to such Person or
Persons the representations, warranties and commitments of Lucent in
respect thereof, for which only Lucent, and not AT&T, will be
responsible). In connection with the foregoing, Lucent will cause the
Person or Persons to which such products or other materials are sold
to acknowledge in writing that only Lucent and the members of the
Lucent Group, and not AT&T or any member of the AT&T Group, will be
responsible to such Person or Persons in respect of such products or
other materials. Nothing in this Section (e) shall be construed to
require AT&T or any member of the AT&T Group to violate any applicable
laws, rules or regulations of any Governmental Authority.
(f) In the event AT&T makes any purchases and sales as directed by Lucent
under the foregoing paragraph (e), then: (i) Lucent will promptly
reimburse AT&T for all costs and expenses (including allocated costs
of in-house counsel and other personnel) that AT&T or any member of
the AT&T Group may incur in connection with such actions, plus a fee
of two percent (2%); and (ii) Lucent will indemnify and hold harmless
AT&T and each AT&T Indemnitee for all Liabilities that may arise as a
result of such actions (including any claims by the purchaser of such
products or materials, any loss incurred on the sale of such products
or materials by AT&T to the Person or Persons directed by Lucent, or
arising out of the failure of such Person or Persons to purchase such
products or materials on the terms directed by Lucent, and any claims
alleging any infringement of any patent, copyright, trademark or
misappropriation of a trade secret, any product liability claims, and
any other claims, in connection with such products or materials).
(g) Each of AT&T, Lucent and NCR agrees that it will fulfill any
obligations it may have to any third party pursuant to the patent
license agreements to which the provisions of this Section 2.15 apply.
2.16. CERTAIN TERMINATION RIGHTS. (a) Notwithstanding anything in this
Agreement or any Ancillary Agreement to the contrary, the rights granted to
Lucent and the members of the Lucent Group shall be subject to the provisions of
this Section 2.16.
(b) Except as otherwise expressly provided in this Section 2.16, in the
event that, at any time prior to the fifth anniversary of this
Agreement, Lucent or any member of the Lucent Group offers, furnishes
or provides, either directly or indirectly (whether through any
reseller or joint venture or otherwise), any Telecommunications
Services of the type offered by the AT&T Services Business as of the
Closing Date, then:
(i) pursuant to Section 2.5 and Article IX of the Brand License
Agreement, AT&T may, in its sole discretion, terminate all or any
portion of the rights granted to Lucent and the members of the
Lucent Group pursuant to the Brand License Agreement;
(ii) AT&T may, in its sole discretion, terminate all or any remaining
portion of the purchase commitments made by AT&T and the members
of the AT&T Group in the AT&T General Purchase Agreement;
(iii) AT&T may, in its sole discretion, exercise either the Full Grant
rights or the Partial Grant rights described in subparagraphs
8.4(b) and 8.4(c), respectively, of the Supplemental General
Purchase Agreement, dated as of the date hereof, between AT&T and
Lucent;
(iv) AT&T may, in its sole discretion, terminate all or any portion of
the rights to patents and technology of AT&T or any member of the
AT&T Group granted to Lucent and the members of the Lucent Group
pursuant to the Patent License Agreement and the Technology
License Agreement; and
(v) at AT&T's direction, which may be given in its sole discretion,
Lucent and the members of the Lucent Group will reconvey to AT&T
or any member of the AT&T Group all of their right, title and
interest in any and all patents and technology in which Lucent or
any member of the Lucent Group was granted an undivided one-half
interest pursuant to the Patent Assignments or the Technology
Assignment and Joint Ownership Agreement.
(c) Lucent and the members of the Lucent Group shall not be deemed to
offer, furnish or provide, either directly or indirectly, any
Telecommunications Services (and Section 2.16(b) will not apply)
solely by virtue of either of the following:
(i) a passive investment by Lucent or any of the members of the Lucent
Group of, in the aggregate, (A) less than 5% of the ownership
interest in any Person that offers, furnishes or provides
Telecommunications Services in the United States or (B) not more
than 15% of the ownership interest in any Person that offers,
furnishes or provides Telecommunications Services solely outside
of the United States (it being understood that Telecommunications
Services operating outside the United States will be considered
solely outside the United States notwithstanding the ability of
such Telecommunications Services to receive transmissions from or
send transmissions to the United States, so long as such
Telecommunications Services may not be used to send and receive
transmissions solely within the United States); or
(ii) an investment by Lucent or any of the members of the Lucent Group
of, in the aggregate, not more than 40% of the ownership interest
in any Person outside the United States formed for the purpose of
building a network or similar system for the provision of
Telecommunications Services solely outside of the United States,
which network or system is built by Lucent or any members of the
Lucent Group; so long as Lucent and the members of the Lucent
Group divest such interest to, in the aggregate, not more than 15%
of the ownership interest in such Person within one year of
commencement of the provision of any Telecommunications Services
over such network or system, or such longer period as may be
necessary to permit such reduction in interest and to which AT&T
shall consent, which consent will not be unreasonably withheld; or
(iii) the offer, furnishing or provision by Lucent and the members of
the Lucent Group, either directly or indirectly, of
Telecommunications Services from which the aggregate revenues in
any fiscal year do not exceed one percent of the aggregate
revenues of Lucent and the members of the Lucent Group for such
fiscal year, provided that, in determining whether such one
percent threshold has been met, any resale of Telecommunications
Services provided by AT&T or any member of the AT&T Group to
Lucent or any member of the Lucent Group pursuant to the VTNS
Agreement or any tariff or contract shall not be considered as
Telecommunications Services offered, furnished or provided by
Lucent and the members of the Lucent Group.
ARTICLE III
THE IPO AND ACTIONS PENDING THE IPO
3.1. TRANSACTIONS PRIOR TO THE IPO. (a) Subject to the conditions specified
in Section 3.6, AT&T and Lucent shall use their reasonable best efforts to
consummate the IPO. Such actions shall include, but not necessarily be limited
to, those specified in this Section 3.1.
(b) Lucent shall file the IPO Registration Statement, and such amendments
or supplements thereto, as may be necessary in order to cause the same
to become and remain effective as required by law or by the
Underwriters, including, but not limited to, filing such amendments to
the IPO Registration Statement as may be required by the Underwriting
Agreement, the Commission or federal, state or foreign securities
laws. AT&T and Lucent shall also cooperate in preparing, filing with
the Commission and causing to become effective a registration
statement registering the Lucent Common Stock under the Exchange Act,
and any registration statements or amendments thereof which are
required to reflect the establishment of, or amendments to, any
employee benefit and other plans necessary or appropriate in
connection with the IPO, the Separation, the Distribution or the other
transactions contemplated by this Agreement and the Ancillary
Agreements.
(c) Lucent shall enter into the Underwriting Agreement, in form and
substance reasonably satisfactory to Lucent and shall comply with its
obligations thereunder.
(d) AT&T and Lucent shall consult with each other and the Underwriters
regarding the timing, pricing and other material matters with respect
to the IPO.
(e) Lucent shall use its reasonable best efforts to take all such action
as may be necessary or appropriate under state securities and blue sky
laws of the United States (and any comparable laws under any foreign
jurisdictions) in connection with the IPO.
(f) Lucent shall prepare, file and use reasonable best efforts to seek to
make effective, an application for listing of the Lucent Common Stock
issued in the IPO on the NYSE, subject to official notice of issuance.
(g) Lucent shall participate in the preparation of materials and
presentations as the Underwriters shall deem necessary or desirable.
(h) Lucent shall pay all third party costs, fees and expenses relating to
the IPO, all of the reimbursable expenses of the Underwriters pursuant
to the Underwriting Agreement, all of the costs of producing,
printing, mailing and otherwise distributing the Prospectus, as well
as the Underwriters' discount as provided in the Underwriting
Agreement.
3.2. PROCEEDS OF THE IPO. The IPO will be a primary offering of Lucent
Common Stock and the net proceeds of the IPO will be retained by Lucent.
3.3. CONDITIONS PRECEDENT TO CONSUMMATION OF THE IPO. As soon as
practicable after the date of this Agreement, the parties hereto shall use their
reasonable best efforts to satisfy the following conditions to the consummation
of the IPO. The obligations
of the parties to consummate the IPO shall be conditioned on the satisfaction,
or waiver by AT&T, of the following conditions:
(a) The IPO Registration Statement shall have been filed and declared
effective by the Commission, and there shall be no stop-order in
effect with respect thereto.
(b) The Financing Facility shall have been executed and delivered,
pursuant to which AT&T shall have borrowed an amount of funds
determined by AT&T, and AT&T shall be satisfied in its sole discretion
that as of the Closing Date it will have no further liability or
obligation whatsoever under either the Working Capital Facility or the
Financing Facility.
(c) The actions and filings with regard to state securities and blue sky
laws of the United States (and any comparable laws under any foreign
jurisdictions) described in Section 3.1 shall have been taken and,
where applicable, have become effective or been accepted.
(d) The Lucent Common Stock to be issued in the IPO shall have been
accepted for listing on the NYSE, on official notice of issuance.
(e) Lucent shall have entered into the Underwriting Agreement and all
conditions to the obligations of Lucent and the Underwriters shall
have been satisfied or waived.
(f) AT&T shall be satisfied in its sole discretion that it will own at
least 80.1% of the outstanding Lucent Common Stock following the IPO
on a fully diluted basis, after giving effect to the issuance of any
shares of restricted stock or employee stock options to any employees
of Lucent, and all other conditions to permit the Distribution to
qualify as a tax-free distribution to AT&T, Lucent and AT&T's
shareholders shall, to the extent applicable as of the time of the
IPO, be satisfied and there shall be no event or condition that is
likely to cause any of such conditions not to be satisfied as of the
time of the Distribution or thereafter.
(g) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Separation or the IPO or any of the
other transactions contemplated by this Agreement or any Ancillary
Agreement shall be in effect.
(h) Such other actions as the parties hereto may, based upon the advice of
counsel, reasonably request to be taken prior to the Separation and
the IPO in order to assure the successful completion of the Separation
and the IPO and the other transactions contemplated by this Agreement
shall have been taken.
(i) This Agreement shall not have been terminated.
ARTICLE IV
THE DISTRIBUTION
4.1. THE DISTRIBUTION. (a) Subject to Section 4.3 hereof, on or prior to
the Distribution Date, AT&T will deliver to the Agent for the benefit of holders
of record of
AT&T Common Stock on the Record Date, a single stock certificate, endorsed by
AT&T in blank, representing all of the outstanding shares of Lucent Common Stock
then owned by AT&T or any member of the AT&T Group, and shall cause the transfer
agent for the shares of AT&T Common Stock to instruct the Agent to distribute on
the Distribution Date the appropriate number of such shares of Lucent Common
Stock to each such holder or designated transferee or transferees of such
holder.
(b) Subject to Section 4.4, each holder of AT&T Common Stock on the Record
Date (or such holder's designated transferee or transferees) will be
entitled to receive in the Distribution a number of shares of Lucent
Common Stock equal to the number of shares of AT&T Common Stock held
by such holder on the Record Date multiplied by a fraction the
numerator of which is the number of shares of Lucent Common Stock
beneficially owned by AT&T or any other member of the AT&T Group on
the Record Date and the denominator of which is the number of shares
of AT&T Common Stock outstanding on the Record Date.
(c) Lucent and AT&T, as the case may be, will provide to the Agent all
share certificates and any information required in order to complete
the Distribution on the basis specified above.
4.2. ACTIONS PRIOR TO THE DISTRIBUTION. (a) AT&T and Lucent shall prepare
and mail, prior to the Distribution Date, to the holders of AT&T Common Stock,
such information concerning Lucent, its business, operations and management, the
Distribution and such other matters as AT&T shall reasonably determine and as
may be required by law. AT&T and Lucent will prepare, and Lucent will, to the
extent required under applicable law, file with the Commission any such
documentation and any requisite no action letters which AT&T determines are
necessary or desirable to effectuate the Distribution and AT&T and Lucent shall
each use its reasonable best efforts to obtain all necessary approvals from the
Commission with respect thereto as soon as practicable.
(b) AT&T and Lucent shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of the United States
(and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.
(c) AT&T and Lucent shall take all reasonable steps necessary and
appropriate to cause the conditions set forth in Section 4.3 (subject
to Sections 4.3(d)) to be satisfied and to effect the Distribution on
the Distribution Date.
(d) Lucent shall prepare and file, and shall use its reasonable best
efforts to have approved, an application for the listing of the Lucent
Common Stock to be distributed in the Distribution on the NYSE,
subject to official notice of distribution.
4.3. CONDITIONS TO DISTRIBUTION. The AT&T Board currently intends to effect
the Distribution by December 31, 1996. Subject to any restrictions contained in
the Underwriting Agreement, the AT&T Board shall have the sole discretion to
determine the date of consummation of the Distribution at any time after the
Closing Date and on or prior to December 31, 1996. AT&T shall be obligated to
consummate the Distribution no later than December 31, 1996, subject to the
satisfaction, or waiver by the AT&T Board in its sole discretion, of the
conditions set forth below. In the event that any such condition shall not have
been satisfied or waived on or before December 31, 1996, AT&T shall consummate
the Distribution as promptly as practicable following the satisfaction or waiver
of all such conditions.
(a) a private letter ruling from the Internal Revenue Service shall have
been obtained, and shall continue in effect, to the effect that, among
other things, the Distribution will qualify as a tax-free distribution
for federal income tax purposes under Section 355 of the Code and the
transfer to Lucent of the Lucent Assets and the assumption by Lucent
of the Lucent Liabilities in connection with the Separation will not
result in the recognition of any gain or loss to AT&T, Lucent or
AT&T's or Lucent's shareholders for federal income tax purposes, and
such ruling shall be in form and substance satisfactory to AT&T in its
sole discretion;
(b) any material Governmental Approvals and Consents necessary to
consummate the Distribution shall have been obtained and be in full
force and effect;
(c) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Distribution shall be in effect and
no other event outside the control of AT&T shall have occurred or
failed to occur that prevents the consummation of the Distribution;
and
(d) no other events or developments shall have occurred subsequent to the
Closing Date that, in the judgment of the Board of Directors of AT&T,
would result in the Distribution having a material adverse effect on
AT&T or on the shareholders of AT&T.
The foregoing conditions are for the sole benefit of AT&T and shall not
give rise to or create any duty on the part of AT&T or the AT&T Board of
Directors to waive or not waive any such condition.
4.4. FRACTIONAL SHARES. As soon as practicable after the Distribution Date,
AT&T shall direct the Agent to determine the number of whole shares and
fractional shares of Lucent Common Stock allocable to each holder of record or
beneficial owner of AT&T Common Stock as of the Record Date, to aggregate all
such fractional shares and sell the whole shares obtained thereby at the
direction of AT&T either to AT&T, in open market transactions or otherwise, in
each case at then prevailing trading prices, and to cause to be distributed to
each such holder or for the benefit of each such beneficial owner to which a
fractional share shall be allocable such holder's or owner's ratable share of
the proceeds of such sale, after making appropriate deductions of the amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale. AT&T and the Agent shall use their reasonable best efforts to
aggregate the shares of AT&T Common Stock that may be held by any beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.
4.5. THE LUCENT BOARD OF DIRECTORS. AT&T and Lucent shall each take all
actions which may be required to elect or otherwise appoint as directors of
Lucent, on or prior to the Distribution Date, persons to be designated by a
nominating committee of Lucent's Board of Directors (which nominating committee
shall be comprised of individuals who are at such time neither officers nor
directors of AT&T) as additional or substitute members of the Board of Directors
of Lucent on the Distribution Date.
ARTICLE V
INDEMNIFICATION
5.1. RELEASE OF PRE-CLOSING CLAIMS. (a) Except as provided in Section
5.1(c), effective as of the Closing Date, Lucent does hereby, for itself and
each other member of the Lucent Group, their respective Affiliates (other than
any member of the AT&T Group), successors and assigns, and all Persons who at
any time prior to the Closing Date have been shareholders, directors, officers,
agents or employees of any member of the Lucent Group (in each case, in their
respective capacities as such), remise, release and forever discharge each of
AT&T and NCR, the respective members of the AT&T Services Group and the NCR
Group, their respective Affiliates (other than any member of the Lucent Group),
successors and assigns, and all Persons who at any time prior to the Closing
Date have been shareholders, directors, officers, agents or employees of any
member of the AT&T Services Group or the NCR Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to have occurred or to have failed to occur or any conditions existing
or alleged to have existed on or before the Closing Date, including in
connection with the transactions and all other activities to implement any of
the Separation, the IPO and the Distribution.
(b) Except as provided in Section 5.1(c), effective as of the Closing
Date, each of AT&T and NCR does hereby, for itself and each other
member of the AT&T Services Group and the NCR Group, their respective
Affiliates (other than any member of the Lucent Group), successors and
assigns, and all Persons who at any time prior to the Closing Date
have been shareholders, directors, officers, agents or employees of
any member of the AT&T Services Group or the NCR Group (in each case,
in their respective capacities as such), remise, release and forever
discharge Lucent, the respective members of the Lucent Group, their
respective Affiliates (other than any member of the AT&T Group),
successors and assigns, and all Persons who at any time prior to the
Closing Date have been shareholders, directors, officers, agents or
employees of any member of the Lucent Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities
whatsoever, whether at law or in equity (including any right of
contribution), whether arising under any contract or agreement, by
operation of law or otherwise, existing or arising from any acts or
events occurring or failing to occur or alleged to have occurred or to
have failed to occur or any conditions existing or alleged to have
existed on or before the Closing Date, including in connection with
the transactions and all other activities to implement any of the
Separation, the IPO and the Distribution.
(c) Nothing contained in Section 5.1(a) or (b) shall impair any right of
any Person to enforce this Agreement, any Ancillary Agreement or any
agreements, arrangements, commitments or understandings that are
specified in Section 2.4(b) or the applicable Schedules thereto not to
terminate as of the Closing Date, in each case in accordance with its
terms. Nothing contained in Section 5.1(a) or (b) shall release any
Person from:
(i) any Liability provided in or resulting from any agreement among
any members of the AT&T Services Group, the Lucent Group or the
NCR Group that is specified in Section 2.4(b) or the applicable
Schedules thereto as not to terminate as of the Closing Date, or
any other Liability specified in such Section 2.4(b) as not to
terminate as of the Closing Date;
(ii) any Liability, contingent or otherwise, assumed, transferred,
assigned or allocated to the Group of which such Person is a
member in accordance with, or any other Liability of any member of
any Group under, this Agreement or any Ancillary Agreement;
(iii) any Liability for the sale, lease, construction or receipt of
goods, property or services purchased, obtained or used in the
ordinary course of business by a member of one Group from a member
of any other Group prior to the Closing Date;
(iv) any Liability for unpaid amounts for products or services or
refunds owing on products or services due on a value-received
basis for work done by a member of one Group at the request or on
behalf of a member of another Group;
(v) any Liability that the parties may have with respect to
indemnification or contribution pursuant to this Agreement for
claims brought against the parties by third Persons, which
Liability shall be governed by the provisions of this Article V
and Article VI and, if applicable, the appropriate provisions of
the Ancillary Agreements; or
(vi) any Liability the release of which would result in the release of
any Person other than a Person released pursuant to this Section
5.1; provided that the parties agree not to bring suit or permit
any of their Subsidiaries to bring suit against any Person with
respect to any Liability to the extent that such Person would be
released with respect to such Liability by this Section 5.1 but
for the provisions of this clause (vi).
(d) Lucent shall not make, and shall not permit any member of the Lucent
Group to make, any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any
indemnification, against AT&T, NCR or any member of the AT&T Services
Group or NCR Group, or any other Person released pursuant to Section
5.1(a), with respect to any Liabilities released pursuant to Section
5.1(a). AT&T shall not, and shall not permit any member of the AT&T
Services Group, to make any claim or demand, or commence any Action
asserting any claim or demand, including any claim of contribution or
any indemnification, against Lucent or any member of the Lucent Group,
or any other Person released pursuant to Section 5.1(b), with respect
to any Liabilities released pursuant to Section 5.1(b). NCR shall not,
and shall not permit any member of the NCR Group, to make any claim or
demand, or commence any Action asserting any claim or demand,
including any claim of contribution or any indemnification, against
Lucent or any member of the Lucent Group, or any other Person released
pursuant to Section 5.1(b), with respect to any Liabilities released
pursuant to Section 5.1(b).
(e) It is the intent of each of AT&T, Lucent and NCR by virtue of the
provisions of this Section 5.1 to provide for a full and complete
release and discharge of all Liabilities existing or arising from all
acts and events occurring or failing to occur or alleged to have
occurred or to have failed to occur and all conditions existing or
alleged to have existed on or before the Closing Date, between or
among Lucent or any member of the Lucent Group, on the one hand, and
AT&T, NCR or any member of the AT&T Services Group or the NCR Group,
on the other hand (including any contractual agreements or
arrangements existing or alleged to exist between or among any such
members on or before the Closing Date), except as expressly set forth
in Section 5.1(c). At any time, at
the request of any other party, each party shall cause each member of
its respective Group to execute and deliver releases reflecting the
provisions hereof.
5.2. INDEMNIFICATION BY LUCENT. Except as provided in Section 5.4, Lucent
shall indemnify, defend and hold harmless AT&T, each member of the AT&T Services
Group and each of their respective directors, officers and employees, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "AT&T Indemnitees"), and NCR, each member of the NCR Group
and each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "NCR Indemnitees"), from and against any and all Liabilities of the AT&T
Indemnitees and the NCR Indemnitees, respectively, relating to, arising out of
or resulting from any of the following items (without duplication):
(a) the failure of Lucent or any other member of the Lucent Group or any
other Person to pay, perform or otherwise promptly discharge any
Lucent Liabilities, any Nassau Metals Liabilities or Lucent Contract
in accordance with their respective terms, whether prior to or after
the Closing Date or the date hereof;
(b) the Lucent Business, any Lucent Liability, any Lucent Contract or any
Nassau Metals Liabilities;
(c) any breach by Lucent or any member of the Lucent Group of this
Agreement or any of the Ancillary Agreements; and
(d) any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, with respect to all information contained in any IPO
Registration Statement or Prospectus.
5.3. INDEMNIFICATION BY AT&T AND BY NCR. (a) AT&T shall indemnify, defend
and hold harmless Lucent, each member of the Lucent Group and each of their
respective directors, officers and employees, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Lucent
Indemnitees"), from and against any and all Liabilities of the Lucent
Indemnitees relating to, arising out of or resulting from any of the following
items (without duplication):
(i) the failure of AT&T or any other member of the AT&T Group or any
other Person to pay, perform or otherwise promptly discharge any
Liabilities of the AT&T Group other than the Lucent Liabilities,
the Nassau Metals Liabilities and the NCR Covered Liabilities,
whether prior to or after the Closing Date or the date hereof;
(ii) the AT&T Services Business or any Liability of the AT&T Group
other than the Lucent Liabilities, the Nassau Metals Liabilities
and the NCR Covered Liabilities; and
(iii) any breach by AT&T or any member of the AT&T Services Group of
this Agreement or any of the Ancillary Agreements.
(b) NCR shall indemnify, defend and hold harmless each Lucent Indemnitee
from and against any and all Liabilities of the Lucent Indemnitees
relating to, arising out of or resulting from any of the following
items (without duplication): (i) the failure of
NCR or any member of the NCR Group or any other Person to pay, perform
or otherwise promptly discharge any Exclusive NCR Contingent Liability
or any Shared NCR Percentage of any Shared Contingent Liability,
whether prior to or after the Closing Date or the date hereof; and
(ii) any breach by NCR or any member of the NCR Group of this
Agreement or any of the Ancillary Agreements, or any other agreement
that is not contemplated to be terminated as of the Closing Date
pursuant to Section 2.4(b) (collectively, the "NCR Covered
Liabilities").
(c) NCR shall indemnify, defend and hold harmless each AT&T Indemnitee
from and against any and all Liabilities of the AT&T Indemnitees
relating to, arising out of or resulting from any NCR Covered
Liability.
5.4. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND
OTHER
AMOUNTS. (a) The parties intend that any Liability subject to indemnification or
reimbursement pursuant to this Article V or Article VI will be net of Insurance
Proceeds and any amounts recovered pursuant to an RBOC Agreement that actually
reduce the amount of the Liability. Accordingly, the amount which any party (an
"Indemnifying Party") is required to pay to any Person entitled to
indemnification hereunder (an "Indemnitee") will be reduced by any Insurance
Proceeds theretofore actually recovered by or on behalf of the Indemnitee in
reduction of the related Liability and by any amount actually theretofore
recovered pursuant to an RBOC Agreement. If an Indemnitee receives a payment (an
"Indemnity Payment") required by this Agreement from an Indemnifying Party in
respect of any Liability and subsequently receives Insurance Proceeds, or
recovers any amount pursuant to an RBOC Agreement, then the Indemnitee will pay
to the Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds and/or RBOC Agreement recovery had been received,
realized or recovered before the Indemnity Payment was made.
(b) In the case of any Shared Contingent Liability, any Insurance
Proceeds, or recoveries pursuant to any RBOC Agreement actually
received, realized or recovered by any party in respect of the Shared
Contingent Liability will be shared among the parties in such manner
as may be necessary so that the obligations of the parties for such
Shared Contingent Liability, net of such Insurance Proceeds or
recovery pursuant to an RBOC Agreement, will remain in proportion to
their respective Shared Percentages, regardless of which party or
parties may actually receive, realize or recover such Insurance
Proceeds or amount pursuant to an RBOC Agreement.
(c) An insurer who would otherwise be obligated to pay any claim shall not
be relieved of the responsibility with respect thereto or, solely by
virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed
that no insurer or any other third party shall be entitled to a
"windfall" (i.e., a benefit they would not be entitled to receive in
the absence of the indemnification provisions) by virtue of the
indemnification provisions hereof. Nothing contained in this Agreement
or any Ancillary Agreement shall obligate any member of any Group to
seek to collect or recover any Insurance Proceeds.
5.5. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. (a) If an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including any Governmental Authority) who is not a member of the AT&T Services
Group, the Lucent Group or the NCR Group of any claim or of the commencement by
any such Person of any Action (collectively, a "Third Party Claim") with respect
to which an Indemnifying
Party may be obligated to provide indemnification to such Indemnitee pursuant to
Section 5.2 or 5.3, or any other Section of this Agreement or any Ancillary
Agreement, such Indemnitee shall give such Indemnifying Party and, if AT&T is
not the Indemnifying Party, AT&T written notice thereof within 20 days after
becoming aware of such Third Party Claim. Any such notice shall describe the
Third Party Claim in reasonable detail. If any Person shall receive notice or
otherwise learn of the assertion of a Third Party Claim which may reasonably be
determined to be a Shared Contingent Liability, such Person (if other than AT&T)
shall give AT&T and any other party to this Agreement written notice thereof
within 20 days after becoming aware of such Third Party Claim. Any such notice
shall describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnitee or other Person to give notice as
provided in this Section 5.5(a) shall not relieve the related Indemnifying Party
of its obligations under this Article V, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
(b) If the Indemnitee, the party receiving any notice pursuant to Section
5.5(a) or any other party to this Agreement believes that the Third
Party Claim is or may be a Shared Contingent Liability, such
Indemnitee or other party may make a Determination Request at any time
following any notice given by the Indemnitee to an Indemnifying Party
or given by any other Person to AT&T pursuant to Section 5.5(a). AT&T
may make such a Determination Request at any time. Unless all parties
have acknowledged that the applicable Third Party Claim is not a
Shared Contingent Liability or unless a determination to such effect
has been made in accordance with Section 6.6, AT&T shall be entitled
(but not obligated) to assume the defense of such Third Party Claim as
if it were the Indemnifying Party hereunder. In any such event, AT&T
shall be entitled to reimbursement of all the costs and expenses
(including allocated costs of in-house counsel and other personnel) of
such defense once a final determination or acknowledgment is made as
to the status of the Third Party Claim from the applicable party or
parties that would have been required to pay such amounts if the
status of the Third Party Claim had been determined immediately;
provided that, if such Third Party Claim is determined to be a Shared
Contingent Liability, such costs and expenses shall be shared as
provided in Section 5.5(c).
(c) AT&T shall assume the defense of, and may seek to settle or
compromise, any Third Party Claim that is a Shared Contingent
Liability, and the costs and expenses (including allocated costs of
in-house counsel and other personnel) thereof shall be included in the
calculation of the amount of the applicable Shared Contingent
Liability in determining the reimbursement obligations of the other
parties with respect thereto pursuant to Section 6.4. Any Indemnitee
in respect of a Shared Contingent Liability shall have the right to
employ separate counsel and to participate in (but not control) the
defense, compromise, or settlement thereof, but all fees and expenses
of such counsel shall be the expense of such Indemnitee.
(d) Other than in the case of a Shared Contingent Liability, an
Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle
or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30
days after the receipt of notice from an Indemnitee in accordance with
Section 5.5(a) (or sooner, if the nature of such Third Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee of its
election whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any
reservations or exceptions. After notice from an Indemnifying Party to
an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ
separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but the fees and expenses of such
counsel shall be the expense of such Indemnitee except as set forth in
the next sentence. In the event that (i) the Third Party Claim is not
a Shared Contingent Liability and (ii) the Indemnifying Party has
elected to assume the defense of the Third Party Claim but has
specified, and continues to assert, any reservations or exceptions in
such notice, then, in any such case, the reasonable fees and expenses
of one separate counsel for all Indemnitees shall be borne by the
Indemnifying Party.
(e) Other than in the case of a Shared Contingent Liability, if an
Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as
provided in Section 5.5(d), such Indemnitee may defend such Third
Party Claim at the cost and expense (including allocated costs of
in-house counsel and other personnel) of the Indemnifying Party.
(f) Unless the Indemnifying Party has failed to assume the defense of the
Third Party Claim in accordance with the terms of this Agreement, no
Indemnitee may settle or compromise any Third Party Claim that is not
a Shared Contingent Liability without the consent of the Indemnifying
Party. No Indemnitee may settle or compromise any Third Party Claim
that is a Shared Contingent Liability without the consent of AT&T.
(g) In the case of a Third Party Claim that is not a Shared Contingent
Liability, no Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without
the consent of the Indemnitee if the effect thereof is to permit any
injunction, declaratory judgment, other order or other nonmonetary
relief to be entered, directly or indirectly, against any Indemnitee.
In the case of a Third Party Claim that is a Shared Contingent
Liability, AT&T shall not consent to entry of any judgment or enter
into any settlement of the Third Party Claim without the consent of
the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be
entered, directly or indirectly, against any Indemnitee.
(h) The provisions of Section 5.5 and Section 5.6 shall not apply to Taxes
(which are covered by the Tax Sharing Agreement).
5.6. ADDITIONAL MATTERS. (a) Any claim on account of a Liability which does
not result from a Third Party Claim shall be asserted by written notice given by
the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall
have a period of 30 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such 30-day
period, such Indemnifying Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party does not respond
within such 30-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party as contemplated by this Agreement and the Ancillary Agreements.
(b) In the event of payment by or on behalf of any Indemnifying Party to
any Indemnitee in connection with any Third Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the place
of such Indemnitee as to any events or circumstances in respect of
which such Indemnitee may have any right, defense or claim relating to
such Third Party Claim against any claimant or plaintiff asserting
such Third Party Claim or against any other person. Such Indemnitee
shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house
counsel and other personnel) of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim; provided, however,
that AT&T shall be entitled to control the prosecution of any such
right, defense or claim in respect of any Shared Contingent Liability.
(c) In the event of an Action in which the Indemnifying Party is not a
named defendant, if the Indemnifying Party shall so request, the
parties shall endeavor to substitute the Indemnifying Party for the
named defendant or, in the case of a Shared Contingent Liability, add
the Indemnifying Party as a named defendant if at all practicable. If
such substitution or addition cannot be achieved for any reason or is
not requested, the named defendant shall allow the Indemnifying Party
to manage the Action as set forth in this Section and, subject to
Section 6.4 with respect to Shared Contingent Liabilities, the
Indemnifying Party shall fully indemnify the named defendant against
all costs of defending the Action (including court costs, sanctions
imposed by a court, attorneys' fees, experts' fees and all other
external expenses, and the allocated costs of in-house counsel and
other personnel), the costs of any judgment or settlement, and the
cost of any interest or penalties relating to any judgment or
settlement.
5.7. REMEDIES CUMULATIVE. The remedies provided in this Article V shall be
cumulative and, subject to the provisions of Article IX, shall not preclude
assertion by any Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnifying Party.
5.8. SURVIVAL OF INDEMNITIES. The rights and obligations of each of AT&T,
Lucent and NCR and their respective Indemnitees under this Article V shall
survive the sale or other transfer by any party of any Assets or businesses or
the assignment by it of any Liabilities.
5.9. RBOC AGREEMENT PROCEDURES. (a) With respect to the RBOC Agreements,
and except as otherwise provided in this Section 5.9 or as otherwise agreed by
the parties hereto, AT&T shall be the party to provide and receive notices and
all other information to and from the RBOCs, and otherwise to deal with the
RBOCs, in respect of all matters arising under the RBOC Agreements or the RBOC
Plan. Without limiting the foregoing, AT&T shall continue as the representative
of all Groups to the contingent liability oversight committee, except as and to
the extent AT&T and the other parties to the RBOC Agreements may otherwise
agree.
(b) After the date hereof, AT&T and Lucent will cooperate with each other
to take reasonable steps to transfer to Lucent the responsibilities
for providing and receiving notices and other information to and from,
and for otherwise dealing with, the RBOCs in respect of Lucent
Liabilities and any Nassau Metals Liabilities that may be subject to
sharing with the RBOCs under any RBOC Agreements (other than Shared
Contingent Liabilities, which will be controlled by AT&T in accordance
with the provisions of Section 5.5(c)), including the right to receive
directly from the RBOCs any sharing payments that may be due from the
RBOCs under any RBOC Agreements in respect of Lucent Liabilities or
Nassau Metals Liabilities. Unless and until such responsibilities are
transferred to Lucent in accordance with the foregoing, the provisions
of the following paragraphs (c), (d) and (e) will apply.
(c) In the event that Lucent determines that any Lucent Liability or any
Nassau Metals Liability (other than a Shared Contingent Liability) is
or may be subject to sharing with the RBOCs pursuant to any RBOC
Agreement, and Lucent so requests, AT&T will promptly submit any
notice, claim or other information or material with respect
thereto as may be required by such RBOC Agreement and provided by
Lucent to AT&T in accordance with the notice provisions of Section
12.5 hereof. Upon receipt of any amounts from any RBOCs with respect
to their sharing obligation under an RBOC Agreement relating to an
Lucent Liability or any Nassau Metals Liability (other than a Shared
Contingent Liability), AT&T will promptly remit such amounts to
Lucent. AT&T will also forward to Lucent, in accordance with the
notice provisions of Section 12.5 hereof, any notices, information or
other materials that it may receive from the RBOCs pursuant to such
RBOC Agreement in respect of any Lucent Liability or any Nassau Metals
Liability. Notwithstanding the foregoing, in no event shall AT&T have
any liability for its failure or delay in submitting or forwarding any
such notice, claim, information or other material except to the extent
Lucent is prejudiced thereby. AT&T shall have no obligation to send,
deliver or make any such notice or claim, or take any other action
under any RBOC Agreement in respect of any Lucent Liability or any
Nassau Metals Liability, unless Lucent shall request that AT&T do so,
and provide AT&T with any necessary notice, claim or other information
or material, as set forth above.
(d) In the event any member of the Lucent Group desires to commence an
arbitration or other proceeding to recover any amounts that may be due
under any RBOC Agreement in respect of an Lucent Liability or any
Nassau Metals Liability (other than a Shared Contingent Liability),
AT&T will take such action as such member of the Lucent Group may
reasonably request to commence such arbitration or other proceeding in
accordance with such RBOC Agreement, including consenting to be the
named party in such arbitration or other proceeding, but such
arbitration or other proceeding will be managed and controlled by such
member of the Lucent Group and such member of the Lucent Group will be
responsible for the prosecution of such arbitration or other
proceeding and all decisions made with respect thereto.
(e) Lucent will, upon receipt of any invoice therefor, promptly reimburse
AT&T for all costs or expenses (including allocated costs of in-house
counsel and other personnel) incurred in taking any actions pursuant
to the foregoing paragraphs (c) and (d), and will defend, indemnify
and hold harmless AT&T and each other AT&T Indemnitee with respect to
all matters taken at the direction of or on behalf of any member of
the Lucent Group in connection with any RBOC Agreement.
(f) Each party hereto further agrees that it will from time to time
promptly provide AT&T with all such information, notices and other
materials (and shall make available the former, current and future
directors, officers, employees, other personnel and agents of the
members of its respective Group as witnesses and any books, records or
other documents within its control or which it otherwise has the
ability to make available) as AT&T may determine to be necessary or
advisable to permit AT&T to pursue any rights or potential rights
under each such RBOC Agreement, to perform the obligations of any
member of the AT&T Group under each such RBOC Agreement in accordance
with the respective terms thereof and to defend itself, its Affiliates
and any other Person for which AT&T may have any indirect liability
(through an indemnification obligation or otherwise) from any claims
or potential claims thereunder.
5.10. ALLEGED INFRINGEMENT OR MISAPPROPRIATION. (a) The provisions of this
Section 5.10 shall apply notwithstanding any other provisions of this Agreement
or any Ancillary Agreement. In the event of any claim, action, proceeding or
suit by a third party against any member of the AT&T Group alleging an
infringement of any patent, copyright, trademark or misappropriation of a trade
secret with respect to any product, software or
other material provided by or ordered from the Lucent Business prior to the
Closing Date (other than any such product, software or other material provided
under and ordered pursuant to the AT&T General Purchase Agreement, or any
supplemental or related agreement thereto, with respect to which an infringement
or misappropriation indemnity is provided under such agreement) for use by the
AT&T Services Business or the NCR Business (whether used alone or in combination
with any product, software or other material provided by the Lucent Business or
by a third party), Lucent, at its expense, shall defend and hold harmless each
such member of the AT&T Group with respect to such claim, action, proceeding or
suit, subject to the conditions and exceptions stated in paragraphs (b), (c) and
(d) below. Lucent shall reimburse each such member of the AT&T Group for all
costs, expenses or attorneys' fees (including allocated costs of in-house
counsel and other personnel) incurred at Lucent's written request or
authorization, and shall indemnify each such member of the AT&T Group against
any liability assessed against it by final judgment, on account of such
infringement or misappropriation arising out of such use.
(b) If the use by any member of the AT&T Group of any such product,
software or other material referred to in Section 5.10(a) is enjoined
or in the opinion of such member of the AT&T Group is likely to be
enjoined, Lucent shall, at its expense and at the sole option of such
member of the AT&T Group, (i) replace the enjoined product, software
or materials with a substitute free of any infringement; (ii) modify
the enjoined product, software or materials so that they will be free
of the infringement; or (iii) procure for such member of the AT&T
Group a license or other right to use the enjoined product, software
or materials. In the alternative, such member of the AT&T Group, may
at its option, procure a license with a reasonable royalty rate
payable to the third party alleging infringement, and Lucent shall
reimburse, indemnify and hold harmless such member of the AT&T Group
for all liability for payment of such reasonable royalty.
(c) AT&T or another member of the AT&T Group shall give Lucent prompt
written notice of all such claims, actions, proceedings or suits
alleging infringement or misappropriation and Lucent shall have full
and complete authority to assume the sole defense thereof, including
appeals, and to settle the same; provided, however, that this does not
limit any rights of any member of the AT&T Group concerning
injunctions addressed in Section 5.10(b). The members of the AT&T
Group shall, upon Lucent's request and at Lucent's expense, furnish
all information and assistance available to such members of the AT&T
Group and cooperate in every reasonable way to facilitate the defense
and/or settlement of any such claim, action, proceeding or suit.
(d) The foregoing indemnity will not apply to any alleged infringement or
misappropriation if and to the extent such alleged infringement or
misappropriation arises from (i) the use by any member of the AT&T
Group of any product, software or other material provided by the
Lucent Business, in combination with any product, software or other
material provided after the Closing Date by a third party (other than
any third-party product, software, other material or components
furnished to such member of the AT&T Group by any member of the Lucent
Group), or (ii) any changes made by any member of the AT&T Group after
the Closing Date in any combination of any product, software or other
material provided by the Lucent Business, with any product, software
or other material provided by a third party (other than any
third-party product, software, other material or components furnished
by the Lucent Group), except for the addition of any product, software
or other material provided by any member of the Lucent Group after the
Closing Date to any such combination in place as of the Closing Date.
ARTICLE VI
CONTINGENT GAINS AND CONTINGENT LIABILITIES
6.1. DEFINITIONS RELATING TO CONTINGENT GAINS AND CONTINGENT
LIABILITIES.
For the purpose of this Agreement the following terms shall have the following
meanings:
(a) CONTINGENT CLAIM COMMITTEE means a committee composed of one
representative designated from time to time by each of AT&T, NCR and
Lucent that shall be established in accordance with Section 6.6.
(b) CONTINGENT GAIN means any claim or other right of AT&T, Lucent, NCR or
any their respective Affiliates, whenever arising, against any Person
other than AT&T, Lucent, NCR or any of their respective Affiliates, if
and to the extent that (i) such claim or right has accrued as of the
Closing Date (based on then existing law) and (ii) the existence or
scope of the obligation of such other Person as of the Closing Date
was not acknowledged, fixed or determined in any material respect, due
to a dispute or other uncertainty as of the Closing Date or as a
result of the failure of such claim or other right to have been
discovered or asserted as of the Closing Date. A claim or right
meeting the foregoing definition shall be considered a Contingent Gain
regardless of whether there was any Action pending, threatened or
contemplated as of the Closing Date with respect thereto. For purposes
of the foregoing, a claim or right shall be deemed to have accrued as
of the Closing Date if all the elements of the claim necessary for its
assertion shall have occurred on or prior to the Closing Date, such
that the claim or right, were it asserted in an Action on or prior to
the Closing Date, would not be dismissed by a court on ripeness or
similar grounds. Notwithstanding the foregoing, none of (i) any
payment to any member of any Group pursuant to or in respect of any of
the RBOC Agreements, (ii) any Insurance Proceeds, (iii) any Excluded
Assets, (iv) any reversal of any litigation or other reserve, or (v)
any matters relating to Taxes (which are governed by the Tax Sharing
Agreement) shall deemed to be a Contingent Gain.
(c) CONTINGENT LIABILITY means any Liability, other than Liabilities for
Taxes (which are governed by the Tax Sharing Agreement), of AT&T,
Lucent, NCR or any of their respective Affiliates, whenever arising,
to any Person other than AT&T, Lucent, NCR or any of their respective
Affiliates, if and to the extent that (i) such Liability has accrued
as of the Closing Date (based on then existing law) and (ii) the
existence or scope of the obligation of AT&T, Lucent, NCR or any of
their respective Affiliates as of the Closing Date with respect to
such Liability was not acknowledged, fixed or determined in any
material respect, due to a dispute or other uncertainty as of the
Closing Date or as a result of the failure of such Liability to have
been discovered or asserted as of the Closing Date (it being
understood that the existence of a litigation or other reserve with
respect to any Liability shall not be sufficient for such Liability to
be considered acknowledged, fixed or determined). In the case of any
Liability a portion of which had accrued as of the Closing Date and a
portion of which accrues after the Closing Date, only that portion
that had accrued as of the Closing Date shall be considered a
Contingent Liability. For purposes of the foregoing, a Liability shall
be deemed to have accrued as of the Closing Date if all the elements
necessary for the assertion of a claim with respect to such Liability
shall have occurred on or prior to the Closing Date, such that the
claim, were it asserted in an Action on or prior to the Closing Date,
would not be dismissed by a court on ripeness or similar grounds. For
purposes of clarification of the foregoing, the parties agree that no
Liability relating to, arising out of or resulting from any obligation
of any Person to perform the executory portion of any contract or
agreement existing as of the Closing Date, or to satisfy
any obligation accrued under any Plan (as defined in the Employee
Benefits Agreement) as of the Closing Date, shall deemed to be a
Contingent Liability.
(d) EXCESS PORTION means that portion, if any, of the aggregate Value of
all amounts actually paid by AT&T, Lucent or NCR (in each case,
together with any members of its respective Group), in respect of any
single Exclusive Contingent Liability of such Group or any Related
Exclusive Contingent Liabilities of such Group that is in excess of
$100 million.
(e) EXCLUSIVE AT&T CONTINGENT GAIN means any Contingent Gain if such
Contingent Gain primarily relates to any AT&T Services Business,
including the matters listed or described on Schedule 6.1(e) hereto,
or if such Contingent Gain is expressly assigned to AT&T pursuant to
this Agreement or any Ancillary Agreement.
(f) EXCLUSIVE LUCENT CONTINGENT GAIN means any Contingent Gain if such
Contingent Gain primarily relates to any Lucent Business, including
the matters listed or described on Schedule 6.1(f) hereto, or if such
Contingent Gain is expressly assigned to Lucent pursuant to this
Agreement or any Ancillary Agreement.
(g) EXCLUSIVE NCR CONTINGENT GAIN means any Contingent Gain if such
Contingent Gain primarily relates to any NCR Business, including the
matters listed or described on Schedule 6.1(g) hereto, or if such
Contingent Gain is expressly assigned to NCR pursuant to this
Agreement or any Ancillary Agreement.
(h) EXCLUSIVE AT&T CONTINGENT LIABILITY means any Contingent Liability
(other than an RBOC Liability) if such Contingent Liability primarily
relates to any AT&T Services Business, including the matters listed or
described on Schedule 6.1(e) hereto (as supplemented pursuant to
Section 6.6(d)), or if such Contingent Liability is expressly assigned
to AT&T pursuant to this Agreement or any Ancillary Agreement.
(i) EXCLUSIVE CONTINGENT LIABILITY means any Exclusive AT&T Contingent
Liability, Exclusive NCR Contingent Liability or Exclusive Lucent
Contingent Liability.
(j) EXCLUSIVE LUCENT CONTINGENT LIABILITY means any Contingent Liability
(other than an RBOC Liability) if (i) such Contingent Liability
primarily relates to any Lucent Business or to the matters listed or
described on Schedule 2.3(a)(v), including the matters listed or
described on Schedule 6.1(f) (as supplemented pursuant to Section
6.6(d)) hereto, (ii) such Contingent Liability relates to, arises out
of or results from any Nassau Metals Liability, or (iii) such
Contingent Liability is expressly assigned to Lucent pursuant to this
Agreement or any Ancillary Agreement.
(k) EXCLUSIVE NCR CONTINGENT LIABILITY means any Contingent Liability
(other than an RBOC Liability) if such Contingent Liability primarily
relates to any NCR Business, including the matters listed or described
on Schedule 6.1(g) (as supplemented pursuant to Section 6.6(d))
hereto, or if such Contingent Liability is expressly assigned to NCR
pursuant to this Agreement or any Ancillary Agreement.
(l) RELATED EXCLUSIVE CONTINGENT LIABILITIES of any Group means:
(i) in the case of any Exclusive Contingent Liabilities of such Group
other than Environmental Liabilities, any set or group of
Exclusive Contingent Liabilities of such Group (but not including
any Exclusive Contingent Liabilities of any other Group) arising
from:
(A) any single Action (including any group of Actions that are consolidated
as a single Action and any Action or Actions certified as a class action);
(B) any Action that is brought or threatened to be brought as a class
action and that is settled; or
(C) any group of Actions (other than workers' compensation Actions by or on
behalf of former or current employees of any member of such Group) asserting
claims in respect of repetitive stress injuries (RSIs) that arise or are alleged
to arise from the manufacture or sale of equipment, such as computer keyboards,
to third parties; and
(ii) in the case of any Exclusive Contingent Liabilities of such Group
that are Environmental Liabilities:
(A) any and all Environmental Liabilities of such Group associated with a
single site; and
(B) any and all Environmental Liabilities of such Group arising from
separate sites but listed on the National Priorities List as a single site.
Exclusive Contingent Liabilities of such Group that are Environmental
Liabilities of such Group arising from sites listed separately on the National
Priorities List shall not be deemed to be Related Exclusive Contingent
Liabilities. Whether sites not listed on the National Priorities List shall be
deemed to be a "single site" for purposes of clause (B) of this definition shall
be determined by applying the definition of "on-site" contained in 40 C.F.R.
300.5 (as in effect an as of the date of this Agreement) which provides that
"On-site means the areal extent of contamination and all suitable areas in very
close proximity to the contamination necessary for implementation of the
response action." Site identifications by a state or local Governmental
Authority similar in import to those authorized by the definition of "on-site"
in 40 C.F.R. Section 300.5 (as in effect as of the date of this Agreement) shall
similarly be determinative of whether sites not listed on the National
Priorities List shall be deemed to be a "single site" for purposes of this
definition.
(m) SHARED AT&T PERCENTAGE means 75%.
(n) SHARED CONTINGENT GAIN means any Contingent Gain that is not an
Exclusive AT&T Contingent Gain, an Exclusive Lucent Contingent Gain or
an Exclusive NCR Contingent Gain, including any Contingent Gain
relating to, arising out of or resulting from the matters set forth on
Schedule 6.1(n).
(o) SHARED CONTINGENT LIABILITY means, without duplication:
(i) any Contingent Liability that is not an Exclusive AT&T Contingent
Liability, an Exclusive Lucent Contingent Liability or an
Exclusive NCR Contingent Liability;
(ii) any RBOC Liability;
(iii) any Liability (other than Taxes) relating to, arising out of or
resulting from any Other Discontinued Operation; and
(iv) any Liability (other than Taxes) relating to, arising out of or
resulting from the matters set forth on Schedule 6.1(n).
(p) SHARED NCR PERCENTAGE means 3%.
(q) SHARED LUCENT PERCENTAGE means 22%.
(r) SHARED PERCENTAGE means the Shared AT&T Percentage, the Shared NCR
Percentage or the Shared Lucent Percentage, as the case may be.
(s) VALUE means the aggregate amount of all cash payments, the fair market
value of all non-cash payments and the incremental cost of providing
any goods or services made or provided in respect of any Exclusive
Contingent Liability or Related Exclusive Contingent Liabilities,
whether in satisfaction of any judgment, in settlement of any Action
or threatened Action or otherwise (including all costs and expenses
(including allocated costs of in-house counsel and other personnel),
of defending or investigating any Action or threatened Action), net
of: (i) any Insurance Proceeds received or realized in respect of the
applicable Exclusive Contingent Liability or Related Exclusive
Contingent Liabilities (applied in reduction of the applicable
Liability in the manner contemplated by Section 5.4), (ii) any Tax
benefits associated with such payments or the provision of such goods
or services (based on assumed effective Tax rate equal to the
effective Tax rate of the applicable party for the fiscal year
immediately preceding the year in which such payments are made or
goods or services provided (it being understood that the effective Tax
rate for any party whose earnings for such immediately preceding
fiscal year are consolidated for federal income tax purposes with
another corporation shall be the effective Tax rate of the corporation
filing such federal income tax return for such immediately preceding
fiscal year)), (iii) any amounts received pursuant to any RBOC
Agreement in respect of the Exclusive Contingent Liability or Related
Exclusive Contingent Liabilities, (iv) any other amounts recovered
(including by way of set off) from a third party in connection with
any such Action or threatened Action and (v) the amount of any
reserve, account payable or similar accrual in respect of the
Exclusive Contingent Liability or Related Exclusive Contingent
Liabilities, net of any offsetting receivables in respect of such
Exclusive Contingent Liability or Related Exclusive Contingent
Liabilities, in each case as reflected on the Lucent Balance Sheet or
the audited consolidated balance sheet of AT&T, including the notes
thereto, as of December 31, 1995 (and without giving effect to any
subsequent adjustment of any such reserve, account payable, accrual or
offsetting receivable).
6.2. CONTINGENT GAINS. (a) Each of AT&T, Lucent and NCR shall have sole and
exclusive right to any benefit received with respect to any Exclusive AT&T
Contingent Gain, Exclusive Lucent Contingent Gain or Exclusive NCR Contingent
Gain, respectively. Each of AT&T, Lucent and NCR shall have sole and exclusive
authority to commence, prosecute, settle, manage, control, conduct, waive,
forego, release, discharge,
forgive and otherwise determine all matters whatsoever with respect to any
Exclusive AT&T Contingent Gain, Exclusive Lucent Contingent Gain or Exclusive
NCR Contingent Gain, respectively.
(b) Any benefit that may be received from any Shared Contingent Gain shall
be shared among AT&T, Lucent and NCR in proportion to the Shared AT&T
Percentage, the Shared Lucent Percentage and the Shared NCR
Percentage, respectively, and shall be paid in accordance with Section
6.5. Notwithstanding the foregoing, AT&T shall have sole and exclusive
authority to commence, prosecute, settle, manage, control, conduct,
waive, forgo, release, discharge, forgive and otherwise determine all
matters whatsoever with respect to any Shared Contingent Gain. Neither
Lucent nor NCR shall take, or permit any member of their respective
Groups to take, any action (including commencing any claim) that would
interfere with such rights and powers of AT&T. AT&T shall use its
reasonable efforts to notify each of Lucent and NCR in the event that
it commences an Action with respect to a Shared Contingent Gain;
provided that the failure to provide such notice shall not give rise
to any rights on the part of Lucent or NCR against AT&T or affect any
other provision of this Section 6.2. Each of Lucent and NCR
acknowledges that AT&T may elect not to pursue any Shared Contingent
Gain for any reason whatsoever (including a different assessment of
the merits of any Action, claim or right than Lucent or NCR or any
business reasons that are in the best interests of AT&T or a member of
the AT&T Services Group, without regard to the best interests of any
member of the Lucent Group or the NCR Group) and that no member of the
AT&T Group shall have any liability to any Person (including any
member of the Lucent Group or the NCR Group) as a result of any such
determination.
(c) In the event of any dispute as to whether any claim or right is a
Contingent Gain or whether any Contingent Gain is a Shared Contingent
Gain, an Exclusive AT&T Contingent Gain, an Exclusive Lucent
Contingent Gain or an Exclusive NCR Contingent Gain, AT&T may, but
shall not be obligated to, commence prosecution or other assertion of
such claim or right pending resolution of such dispute. In the event
that AT&T commences any such prosecution or assertion and, upon
resolution of the dispute, a party other than AT&T is determined
hereunder to have the exclusive right to such claim or right, AT&T
shall, promptly upon the request of such other party, discontinue the
prosecution or assertion of such right or claim and transfer the
control thereof to the party so determined to have the right thereto.
In such event, the party having the right to such claim or right will
reimburse AT&T for all costs and expenses (including allocated costs
of in-house counsel and other personnel), reasonably incurred prior to
resolution of such dispute in the prosecution or assertion of such
claim or right.
6.3. EXCLUSIVE CONTINGENT LIABILITIES. (a) Except as otherwise provided in
this Section 6.3, each Exclusive Contingent Liability or Related Exclusive
Contingent Liability shall constitute a Liability for which indemnification is
provided by AT&T, Lucent or NCR, as the case may be, pursuant to Article V
hereof and shall be subject to the procedures set forth in Article V with
respect thereto.
(b) Notwithstanding anything to the contrary in this Agreement, except as
set forth in paragraph (f) of this Section 6.3, if the aggregate Value
of all amounts paid by AT&T, Lucent or NCR (in each case, together
with any members of its respective Group) in respect of any single
Exclusive Contingent Liability of such Group or any Related Exclusive
Contingent Liabilities of such Group is in excess of $100 million,
each of AT&T, Lucent or NCR, as the case may be, shall be entitled to
reimbursement from
each of the others for a share of the Excess Portion in accordance
with the following percentages:
(i) in the case of Exclusive AT&T Contingent Liabilities, AT&T shall
bear 75 percent of such Excess Portion, Lucent shall bear 22
percent of such Excess Portion, and NCR shall bear 3 percent of
such Excess Portion;
(ii) in the case of Exclusive NCR Contingent Liabilities, NCR shall
bear 50 percent of such Excess Portion, AT&T shall bear 37 percent
of such Excess Portion and Lucent shall bear 13 percent of such
Excess Portion; and
(iii) in the case of Exclusive Lucent Contingent Liabilities, Lucent
shall bear 50 percent of such Excess Portion, AT&T shall bear 47
percent of such Excess Portion and NCR shall bear 3 percent of
such Excess Portion.
(c) In the event that after any payment is made by any party to any other
party in accordance with the allocation set forth in Section 6.3(b),
any party or any member of such party's Group receives any Insurance
Proceeds, obtains any recovery pursuant to an RBOC Agreement or
obtains any other amounts that, in any such case, would reduce the
Value of all amounts paid by such party and the members of its Group
in respect of the applicable Exclusive Contingent Liability or
Liabilities, such party will promptly notify each other party of the
receipt of such Insurance Proceeds or recovery of such amount pursuant
to an RBOC Agreement or otherwise and will promptly reimburse each
other party for the amount of any payment that such first party would
not have been entitled to receive if it had received such Insurance
Proceeds or obtained such recovery pursuant to an RBOC Agreement or
otherwise on or prior to the date it received a payment pursuant to
this Section. Each such repayment will be accompanied by interest
accruing from the date of receipt of the original payment pursuant to
this Section to the date of such repayment at a rate equal to the
Prime Rate plus 2% per annum.
(d) Each party agrees to use its reasonable best efforts to advise each
other party if it becomes aware of one or more Exclusive Contingent
Liabilities that may result in a Value of $100 million or more;
provided, however, that no failure to give any such notice shall
relieve any other party of any obligation pursuant to this Agreement.
In the event of any such notice, or if any other party otherwise
determines that any such risk may exist, the other parties will be
entitled at their own expense to monitor any such Action. In any such
event, the parties will enter into a mutually acceptable joint defense
agreement so as to maintain to the extent reasonably practicable the
attorney-client privilege with respect thereto.
(e) It shall not be a defense to any obligation by any party to pay any
amount in respect of any Excess Portion that such party was not
consulted in the defense thereof, that such party's views or opinions
as to the conduct of such defense were not accepted or adopted, that
such party does not approve of the quality or manner of the defense
thereof or that such Excess Portion was incurred by reason of a
settlement rather than by a judgment or other determination of
liability (even if, subject to Section 5.5(g), such settlement was
effected without the consent or over the objection of such party).
(f) Neither AT&T nor Lucent (nor any member of their respective Groups)
will be entitled to reimbursement pursuant to this Section 6.3 for a
share of the Excess Portion in respect of any Exclusive Contingent
Liability or Related Exclusive Contingent Liabilities that would be
subject to sharing with the RBOCs pursuant to any
RBOC Agreement, unless the applicable party shall have pursued in good
faith any recovery to which it or any member of its Group may be
entitled under such RBOC Agreement in respect of such Exclusive
Contingent Liability or Related Exclusive Contingent Liabilities.
6.4. SHARED CONTINGENT LIABILITIES. (a) As set forth in Section 5.5(c),
AT&T shall assume the defense of, and may seek to settle or compromise, any
Third Party Claim that is a Shared Contingent Liability, and the costs and
expenses (including allocated costs of in-house counsel and other personnel)
thereof shall be included in the calculation of the amount of the applicable
Shared Contingent Liability in determining the reimbursement obligations of the
other parties with respect thereto pursuant to this Section 6.4.
(b) Each of AT&T, Lucent and NCR shall be responsible for its Shared
Percentage of any Shared Contingent Liability. It shall not be a
defense to any obligation by any party to pay any amount in respect of
any Shared Contingent Liability that such party was not consulted in
the defense thereof, that such party's views or opinions as to the
conduct of such defense were not accepted or adopted, that such party
does not approve of the quality or manner of the defense thereof or
that such Shared Contingent Liability was incurred by reason of a
settlement rather than by a judgment or other determination of
liability (even if, subject to Section 5.5(g), such settlement was
effected without the consent or over the objection of such party).
6.5. PAYMENTS. (a) Any amount owed in respect of any Shared Contingent
Liabilities (including reimbursement for the cost or expense (including
allocated costs of inhouse counsel and other personnel) of defense of (i) any
Third Party Claim that is a Shared Contingent Liability), (ii) any Excess
Portion of any Exclusive Contingent Liabilities or of any Related Exclusive
Contingent Liabilities or (iii) any Shared Contingent Gains pursuant to this
Article VI shall be remitted promptly after the party entitled to such amount
provides an invoice (including reasonable supporting information with respect
thereto) to the party owing such amount.
(b) In the case of any Shared Contingent Liability, AT&T shall be entitled
to reimbursement from Lucent and NCR in advance of a final
determination of any Action for amounts paid in respect of costs and
expenses (including allocated costs of in-house counsel and other
personnel) related thereto, from time to time as such costs and
expenses are incurred. In the case of any Shared Contingent Gain, AT&T
shall be entitled to retain from the amount of the Shared Contingent
Gain otherwise payable to Lucent and NCR, Lucent's and NCR's
respective Shared Percentage of the costs and expenses (including
allocated costs of in-house counsel and other personnel) paid or
incurred by or on behalf of any member of the AT&T Services Group in
connection with such Shared Contingent Gain.
(c) Any amounts billed and properly payable in accordance with this
Article VI that are not paid within 30 days of such ▇▇▇▇ shall bear
interest at the Prime Rate plus 2% per annum.
6.6. PROCEDURES TO DETERMINE STATUS OF CONTINGENT LIABILITY OR
CONTINGENT
GAIN. (a) As of the Closing Date, and with respect to Actions not set forth on
Schedules 6.1(e), 6.1(f), 6.1(g) or 6.1(n), AT&T, Lucent and NCR will form the
Contingent Claim Committee for the purpose of resolving any disagreement among
the parties as to whether:
(i) any claim or right is a Contingent Gain;
(ii) any Contingent Gain is a Shared Contingent Gain, an Exclusive AT&T
Contingent Gain, an Exclusive Lucent Contingent Gain or an
Exclusive NCR Contingent Gain;
(iii) any Liability is a Contingent Liability;
(iv) any Contingent Liability is a Shared Contingent Liability, an
Exclusive AT&T Contingent Liability, an Exclusive Lucent
Contingent Liability or an Exclusive NCR Contingent Liability; or
(v) any Exclusive Contingent Liabilities constitute Related Exclusive
Contingent Liabilities.
(b) Any of the parties may refer any potential Contingent Gains or
Contingent Liabilities to the Contingent Claim Committee for
resolution of a disagreement described in Section 6.6(a) and the
Contingent Claim Committee's determination (which shall be made within
30 days of such referral), if unanimous, shall be binding on all of
the parties and their respective successors and assigns. In the event
that the Contingent Claim Committee cannot reach a unanimous
determination as to the nature or status of any such Contingent
Liabilities or Contingent Gains within 30 days after such referral,
the issue will be submitted for arbitration pursuant to the procedures
set forth in Article IX of this Agreement, subject to Section 9.8. The
outcome of the arbitration pursuant to Article IX (subject to Section
9.8) shall be final and binding on all parties and their respective
successors and assigns.
(c) In resolving, with respect to any matter not set forth in Schedules
6.1(e), 6.1(f), 6.1(g) and 6.1(n), whether (i) any Contingent Gain is
a Shared Contingent Gain, an Exclusive AT&T Contingent Gain, an
Exclusive Lucent Contingent Gain or an Exclusive NCR Contingent Gain
or (ii) any Contingent Liability is a Shared Contingent Liability, an
Exclusive AT&T Contingent Liability, an Exclusive Lucent Contingent
Liability or an Exclusive NCR Contingent Liability, the categorization
of Contingent Claims and Contingent Liabilities existing as of the
Closing Date, as reflected in Schedules 6.1(e), 6.1(f), 6.1(g) and
6.1(n), shall be considered and used as a precedential guide.
(d) At any time or from time to time prior to the Closing Date, the
Solicitor General of AT&T, following consultation with representatives
of each of Lucent and NCR, may amend or supplement any of Schedules
6.1(e), 6.1(f), 6.1(g) and 6.1(n). Without limiting the foregoing,
prior to the Closing Date, the parties will continue to review
Schedule 6.1(n) to determine whether any matter set forth therein will
be reassigned as an Exclusive Contingent Liability.
6.7. CERTAIN CASE ALLOCATION MATTERS. Lucent and NCR acknowledge that Third
Party Claims may be asserted in respect of alleged repetitive stress injuries in
a single Action (including a group of consolidated Actions) that involve both
computer keyboards or related equipment manufactured in the conduct of the NCR
Business (which would constitute an Exclusive NCR Contingent Liability) and
computer keyboards or related equipment manufactured in the conduct of the
discontinued computer operations of AT&T and its Affiliates, other than any
member of the NCR Group (which would constitute an Exclusive Lucent Contingent
Liability). Lucent and NCR agree to use their reasonable best efforts to share
responsibility (including for all costs and expenses (including allocated costs
of in-house counsel and other personnel)) for any such Third Party Claims or
Actions, notwithstanding any allocation of such Actions set forth in
Schedules 6.1(e), 6.1(f), 6.1(g) and 6.1(n), so that, to the maximum extent
reasonably practicable, the parties will have the same rights and obligations as
would have been applicable if such matters had been commenced as separate
Actions. Third Party Claims with respect to computer keyboards or related
equipment manufactured in the conduct of the NCR Business shall not be deemed to
be Related Exclusive Contingent Liabilities with Third Party Claims with respect
to any computer keyboards or related equipment manufactured in the conduct of
the discontinued computer operations of AT&T and its Affiliates (other than any
member of the NCR Group).
ARTICLE VII
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
7.1. INSURANCE MATTERS. (a) Lucent agrees that it will pay to AT&T $1
million per month (prorated on a daily basis for any partial month) in respect
of the period from the date hereof until the Distribution Date, such amount to
be payable in arrears by the 10th day of the next succeeding month, in respect
of Insurance Policies under which Lucent will continue to have coverage
following the date hereof. AT&T and Lucent agree to cooperate in good faith to
provide for an orderly transition of insurance coverage from the date hereof
through the Distribution Date and for the treatment of any Insurance Policies
that will remain in effect following the Closing Date on a mutually agreeable
basis. In no event shall AT&T, any other member of the AT&T Group or any AT&T
Indemnitee or NCR Indemnitee have liability or obligation whatsoever to any
member of the Lucent Group in the event that any Insurance Policy or other
contract or policy of insurance shall be terminated or otherwise cease to be in
effect for any reason, shall be unavailable or inadequate to cover any Liability
of any member of the Lucent Group for any reason whatsoever or shall not be
renewed or extended beyond the current expiration date.
(b) As promptly as practicable, each party shall use its reasonable best
efforts to consummate the transactions set forth on Schedule 7.1(b)
with respect to American Ridge and its Subsidiaries.
(c) (i) Except in the case of the Ridge Lucent Policies and except as
otherwise provided in any Ancillary Agreement, the parties intend by
this Agreement that Lucent and each other member of the Lucent Group
be successors-in-interest to all rights that any member of the Lucent
Group may have as of the Closing Date as a subsidiary, affiliate,
division or department of AT&T prior to the Closing Date under any
policy of insurance issued to AT&T by any insurance carrier
unaffiliated with AT&T or under any agreements related to such
policies executed and delivered prior to the Closing Date, including
any rights such member of the Lucent Group may have, as an insured or
additional named insured, subsidiary, affiliate, division or
department, to avail itself of any such policy of insurance or any
such agreements related to such policies as in effect prior to the
Closing Date. At the request of Lucent, AT&T shall take all reasonable
steps, including the execution and delivery of any instruments, to
effect the foregoing; provided however that AT&T shall not be required
to pay any amounts, waive any rights or incur any Liabilities in
connection therewith.
(ii) Except in the case of the Ridge Lucent Policies and except as
otherwise contemplated by any Ancillary Agreement, after the
Closing Date, none of AT&T or Lucent or any member of their
respective Groups shall, without the consent of the other, provide
any such insurance carrier with a release, or amend, modify or
waive any rights under any such policy or agreement, if such
release, amendment, modification or
waiver would adversely affect any rights or potential rights of
any member of the other Group thereunder; provided however that
the foregoing shall not (A) preclude any member of any Group from
presenting any claim or from exhausting any policy limit, (B)
require any member of any Group to pay any premium or other amount
or to incur any Liability, or (C) require any member of any Group
to renew, extend or continue any policy in force. Each of Lucent
and AT&T will share such information as is reasonably necessary in
order to permit the other to manage and conduct its insurance
matters in an orderly fashion.
(d) This Agreement shall not be considered as an attempted assignment of
any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the AT&T Group
in respect of any Insurance Policy or any other contract or policy of
insurance.
(e) Lucent does hereby, for itself and each other member of the Lucent
Group, their respective Affiliates (other than any member of the AT&T
Group), successors and assigns, and all Persons who at any time have
been shareholders, directors, officers, agents or employees of any
member of the Lucent Group (in each case, in their respective
capacities as such), agree that all Ridge Lucent Policies will
automatically be terminated in all respects as of the Distribution
Date (without any further action by any Person) and, as of such date,
remise, release and forever discharge each AT&T Indemnitee and each
NCR Indemnitee with respect thereto. Lucent agrees to indemnify,
defend and hold harmless each member of the AT&T Group and each AT&T
Indemnitee and NCR Indemnitee if any Person shall claim that it is
entitled to any payment from any of the foregoing in respect of any
Ridge Lucent Policy. At the request of AT&T, Lucent will take, or
cause to be taken, all action necessary to terminate any Ridge Lucent
Policies and all Liabilities of any member of the AT&T Group
thereunder, effective as of the Distribution Date.
(f) Lucent does hereby, for itself and each other member of the Lucent
Group, agree that no member of the AT&T Group or any AT&T Indemnitee
or NCR Indemnitee shall have any Liability whatsoever as a result of
the insurance policies and practices of AT&T and its Affiliates as in
effect at any time prior to the Closing Date, including as a result of
the level or scope of any such insurance, the creditworthiness of any
insurance carrier, the terms and conditions of any policy, the
adequacy or timeliness of any notice to any insurance carrier with
respect to any claim or potential claim or otherwise.
(g) Nothing in this Agreement shall be deemed to restrict any member of
the Lucent Group from acquiring at its own expense any other insurance
policy in respect of any Liabilities or covering any period.
7.2. COLLECTION OF ACCOUNTS RECEIVABLE. (a) Lucent acknowledges on behalf
of itself and each other member of the Lucent Group that it is aware that the
Retained Receivables are Excluded Assets and that certain Persons that are
account debtors with respect to accounts receivables included in the Lucent
Assets (or that in the future may otherwise become payable to a member of the
Lucent Group) are also account debtors with respect to the Retained Receivables.
Lucent agrees that from and after the date hereof and prior to December 31,
1997, unless otherwise specifically directed by AT&T, Lucent, as agent for AT&T,
will take all commercially reasonable steps consistent with the Lucent
Business's current practices to service and collect the Retained Receivables.
AT&T and S&T will cooperate to establish as promptly as practicable mutually
acceptable operational procedures. In addition, Lucent will use all reasonable
best efforts to satisfy any conditions to the payment of any Retained
Receivables and to fulfill all obligations to
the applicable account debtors related to such Retained Receivables; provided,
however that if, in order to collect any Retained Receivables, Lucent is
required to engage a collection agency or to institute legal proceedings or any
other Action it shall be entitled to be reimbursed for its reasonable
out-of-pocket costs and expenses incurred in connection therewith. After
December 31, 1997, the parties will negotiate in good faith with respect to the
final disposition of any then outstanding Retained Receivables.
(b) Any payment made by an account debtor to Lucent or any member of the
Lucent Group with respect to an account receivable shall be applied to
the Retained Receivables (and paid over to AT&T in accordance with
this Section 7.2) before they are applied to any other account
receivable whenever arising for such account debtor (regardless of the
respective dates of such accounts receivable or of any specific
notation to the contrary by the applicable account debtor), unless the
applicable account debtor specifies that such payment shall be applied
to another account payable of such account debtor that (i) arose from
an order placed after the date of this Agreement and (ii) is both due
and paid prior to the first due date of any Retained Receivable or any
other account receivable of such account debtor.
(c) Each of AT&T and Lucent shall deliver to the other such schedules and
other information with respect to the Retained Receivables and the
accounts receivables included in the Lucent Assets as each shall
reasonably request from time to time in order to permit such parties
to reconcile their respective records and to monitor the collection of
all accounts receivable (whether Lucent Assets or Retained
Receivables). Each of Lucent and AT&T shall afford the other
reasonable access to its books and records relating to any accounts
receivable. Without limiting the foregoing, Lucent shall at all
times maintain the ability to provide to AT&T promptly upon request
a true and complete schedule of all Retained Receivables due and
owing as of the end of the prior month.
(d) By the 15th day of each month (or if such day is not a business day,
by the next business day), Lucent hereby irrevocably agrees to pay
over, or cause to be paid over, in immediately available funds to
AT&T, at no cost or charge to AT&T or any of its Affiliates (other
than any member of the Lucent Group), any and all amounts which were
received (or deemed received in accordance with Section 7.2(b)) during
the immediately preceding month by any member of the Lucent Group in
respect of the Retained Receivables. Any such amounts not paid over to
AT&T by the date specified in the first sentence of this Section
7.2(d) shall bear interest at the Prime Rate plus 2% per annum.
(e) Nothing in this Agreement or any Ancillary Agreement shall be
construed to grant to any member of the Lucent Group any right, title
or interest in any Retained Receivable and no member of the Lucent
Group shall have any right or power to, and no member of the Lucent
Group shall, grant or suffer to exist any right of set off, lien or
any other Security Interest in any Retained Receivables or proceeds
thereof. Lucent will not, and it will not permit any member of the
Lucent Group to, extend or otherwise change the amount or other terms
of payment of any Retained Receivable, unless Lucent shall have paid
to AT&T an amount equal to the full amount of such Retained
Receivable. Lucent hereby irrevocably and unconditionally agrees that
it shall not assert (and it shall not permit any member of the Lucent
Group to assert) any offsets, claims, counterclaims or defenses in
respect of the Retained Receivables or its obligations to pay over any
such Retained Receivables to AT&T hereunder (whether existing on the
date hereof or arising hereafter and whether or not relating to the
transactions contemplated by this Agreement, any Ancillary Agreement
or otherwise).
(f) AT&T shall retain the right to collect or seek to collect in such
manner as it may in its sole discretion determine all or any portion
of the Retained Receivables.
(g) Lucent hereby represents and warrants to AT&T that each Retained
Receivable constitutes a legal, valid and binding obligation of the
applicable account debtor enforceable against such account debtor in
accordance with its respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally,
and is not subject to any Security Interest or any other lien, claim,
defense or right of set-off.
(h) On or prior to February 15, 1996, Lucent shall deliver to AT&T a true
and correct list of each of the Retained Receivables in such form as
AT&T shall reasonably request. Such list shall specify the face amount
of each Retained Receivable and a summary of the total Retained
Receivables, including the allocations thereof among the Lucent
business units, the applicable credit loss reserve thereon and such
other information as AT&T shall reasonably request.
7.3. OPERATING FINANCIAL LIABILITIES. (a) As between Lucent and AT&T,
Lucent hereby irrevocably assumes and agrees to pay, perform, satisfy and
discharge all liabilities, obligations, contingencies and other Liabilities
under, or otherwise relating to, arising out of or resulting from, all Lucent
OFL's. For purposes of this Agreement, the term "Lucent OFL" means the OFL's
listed or described on Schedule 7.3(a) and any other OFL's that are primarily
related to, arise out of or result from any Lucent Asset, Lucent Liability
(including any Lucent Contract) or Lucent Business or that were otherwise
entered into in connection with the conduct of the Lucent Business. The parties
hereto acknowledge that there may be OFL's that are Lucent OFL's that are not
set forth or described on such Schedule 7.3(a), either because such OFL's are
entered into after the date hereof or because such OFL's were inadvertently
excluded from such Schedule. As a result, the parties agree to cooperate in good
faith to supplement Schedule 7.3(a) as any additional Lucent OFL's are
identified. In the event that any OFL is so added to such Schedule 7.3(a), AT&T
will retroactively ▇▇▇▇ Lucent in accordance with this Section 7.3 for any
amount payable by any member of the AT&T Group on or after the date hereof, and
AT&T will retroactively credit Lucent in accordance with this Section 7.3 for
any amount paid to any member of the AT&T Group on or after the date hereof,
together in each case with interest thereon from the date of payment by or to
any such member of the AT&T Group, as the case may be, to the date of settlement
of such ▇▇▇▇ or credit, at the AT&T CP Rate that would have been applicable if
such Lucent OFL had originally been included on Schedule 7.3(a), subject to
increase pursuant to Section 7.3(c)(ii).
(b) (i) AT&T may, from time to time, set forth on Schedule 7.3(a) whether
any Lucent OFL's are to be paid, performed, satisfied and discharged
directly by Lucent. AT&T may at any time or from time to time on at
least 30 days' written notice to Lucent, modify such Schedule 7.3(a)
to change whether any Lucent OFL shall thereafter be paid, performed,
satisfied and discharged directly by Lucent or by AT&T. AT&T shall, in
the absence of any default by Lucent under this Section 7.3, pay, or
cause to be paid, all other Lucent OFL's, and Lucent agrees to
reimburse AT&T for such payments in accordance with the terms of this
Section 7.3. If Lucent is in default of any of its obligations under
this Section 7.3, AT&T shall no longer be required to pay, or cause to
be paid, any Lucent OFL's and Lucent shall be required directly to
pay, perform, satisfy and discharge such Lucent OFL's.
(ii) In the event that payments are made by a third party under any
Lucent OFL, if Lucent is not in default of any of its obligations
under this Section 7.3, (A) if any such payment is made to any
member of the Lucent Group, such member of the Lucent Group will
be entitled to retain any such payments received by it, and (B) if
any such payment is made to any member of the AT&T Group, such
member of the AT&T Group shall, at AT&T's election, either remit
any such amounts it receives to Lucent or net such amounts against
payments AT&T is then required to make under any other Lucent OFL
or against payments then owed (whether or not then due) to AT&T by
Lucent hereunder.
(iii) In the event that payments are made by a third party under any
Lucent OFL, if Lucent is in default of any of its obligations
under this Section 7.3, (A) if any such payment is made to any
member of the Lucent Group, Lucent shall promptly remit any such
payments to AT&T, and (B) if any such payment is made to any
member of the AT&T Group, AT&T shall be entitled (but not
required) to apply any such payments to satisfy, any such breach
by Lucent, either, at AT&T's option, by netting amounts then owed
(whether or not then due) to AT&T by Lucent hereunder or by paying
over such monies in order to satisfy any obligation in respect of
any Lucent OFL.
(iv) In the event that payment or receipt of commodities or other
property is called for under any Lucent OFL, the parties will
mutually agree upon reasonable then current market-based
valuations to convert such payment or receipt into dollars, unless
Lucent determines to make delivery or take receipt under the
Lucent OFL in commodities or property.
(c) (i) AT&T shall issue a statement to Lucent for the payments due from
or payable to Lucent pursuant to this Section 7.3 in respect of any
month by the tenth business day of the following month. Each such
statement shall set forth the AT&T CP Rate for the immediately
preceding month. Interest will accrue and be payable by Lucent on all
amounts due pursuant to this Section 7.3 in respect of Lucent OFL's at
the AT&T CP Rate in effect for the month immediately preceding the
month in which the statement is issued from the date of payment of any
such amount by any member of the AT&T Group under any Lucent OFL to
the date of payment therefor to AT&T by Lucent. In the event payments
are due by AT&T to Lucent under this Section 7.3, AT&T will pay
interest at the AT&T CP Rate in effect for the month immediately
preceding the month in which the statement is issued from the date of
receipt by AT&T under an Lucent OFL to the date of payment by AT&T.
All payments under this Section 7.3 shall be in same day funds.
(ii) Lucent agrees to pay AT&T any amounts due (including in respect of
interest) within 10 days of receipt of each statement. AT&T will
remit to Lucent any payments (including in respect of interest)
received by any member of the AT&T Group under any Lucent OFL (to
the extent not netted in accordance with Section 7.3(b)) within 10
days of the date of statement. Any amounts not paid when due shall
bear interest at the Prime Rate plus 2% per annum in lieu of the
AT&T CP Rate.
(d) (i) Lucent may prepay (or effect the early termination) of any Lucent
OFL's provided that no additional Liability is thereby created for any
member of the AT&T Group other than any Liabilities that are fully
discharged and satisfied by Lucent simultaneously with such prepayment
or early termination.
(ii) Without AT&T's written consent, Lucent will not enter into or
permit any amendment, modification or waiver of any provision of
any Lucent OFL; provided that AT&T agrees that it will consent to
any such amendments, modifications or waivers that do not create
additional obligations or Liabilities for any member of the AT&T
Group or otherwise adversely affect any member of the AT&T Group.
(iii) Each party will give prompt notice to the other party of any
default by it or, if it becomes aware thereof, by any third party
under any Lucent OFL.
(iv) In the event that Lucent makes any payment in respect of an Lucent
OFL, Lucent will be subrogated to all rights of AT&T or any member
of the AT&T Group with respect to such Lucent OFL, including with
respect to collateral, to the extent of such payment.
7.4. CERTAIN BUSINESS MATTERS. (a) No member of any Group shall have any
duty to refrain from (i) engaging in the same or similar activities or lines of
business as any member of any other Group, (ii) doing business with any
potential or actual supplier or customer of any member of any other Group, or
(iii) engaging in, or refraining from, any other activities whatsoever relating
to any of the potential or actual suppliers or customers of any member of any
other Group.
(b) Each of AT&T, Lucent and NCR is aware that from time to time certain
business opportunities may arise which more than one Group may be
financially able to undertake, and which are, from their nature, in
the line of more than one Group's business and are of practical
advantage to more than one Group. In connection therewith, the parties
agree that if prior to (but not following) the Distribution Date, any
of AT&T, Lucent or NCR acquires knowledge of an opportunity that meets
the foregoing standard with respect to more than one Group, none of
AT&T, Lucent or NCR shall have any duty to communicate or offer such
opportunity to any of the others and may pursue or acquire such
opportunity for itself, or direct such opportunity to any other
Person, unless (i) such opportunity relates primarily to the AT&T
Services Business, the Lucent Business or the NCR Business, in which
case the party that acquires knowledge of such opportunity shall use
its reasonable best efforts to communicate and offer such opportunity
to AT&T, Lucent or NCR, respectively, or (ii) such opportunity relates
both to the AT&T Services Business and the Lucent Business but not
primarily to either one, in which case such party shall use its
reasonable best efforts to communicate and offer such opportunity to
Lucent. Notwithstanding the foregoing, no party shall be required to
so communicate or offer any such opportunity if it would result in the
breach of any contract or agreement or violate any applicable law,
rule or regulation of any Governmental Authority, no party shall have
any obligation to finance (or provide any other assistance whatsoever)
to any other party in connection with any such opportunity. In the
event the foregoing clause (i) or (ii) is applicable, no party, other
than the party to whom the opportunity must be offered in accordance
with such clauses, shall pursue or acquire such opportunity for
itself, or direct such opportunity to any other Person, unless the
party to whom the opportunity is required to be offered does not
within a reasonable period of time begin to pursue, or does not
thereafter continue to pursue, such opportunity diligently and in good
faith.
7.5. LATE PAYMENTS. Except as expressly provided to the contrary in this
Agreement or in any Ancillary Agreement, any amount not paid when due pursuant
to this Agreement or any Ancillary Agreement (and any amounts billed or
otherwise invoiced or demanded and properly payable that are not paid within 30
days of such ▇▇▇▇, invoice or other demand) shall accrue interest at a rate per
annum equal to the Prime Rate plus 2%.
7.6. TRANSITIONAL ▇▇▇▇ LABS SERVICES. Prior to, on, and after the Closing
Date, AT&T and each member of the AT&T Group, shall have the right, to obtain
from Lucent or any member of the Lucent Group, the Identified ▇▇▇▇ Labs
services, and such other services that are provided by Lucent ▇▇▇▇ Laboratories
that AT&T may from time to time reasonably determine are necessary to assure a
smooth and orderly transition of the businesses, in each case on a commercially
reasonable basis. Each of the parties shall use their reasonable best efforts
to identify and document any such additional services on or prior to the
Closing Date; provided, however, that whether or not identified prior to the
Closing Date, prior to, on, and after the Closing Date, each member of the AT&T
Group shall continue to have the right to obtain such services, on commercially
reasonable terms, as contemplated by this Section 7.6.
ARTICLE VIII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
8.1. AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES. (a) Each of
AT&T,
Lucent and NCR, on behalf of its respective Group, agrees to provide, or cause
to be provided, to each other Group, at any time before or after the
Distribution Date, as soon as reasonably practicable after written request
therefor, any Information in the possession or under the control of such
respective Group which the requesting party reasonably needs (i) to comply with
reporting, disclosure, filing or other requirements imposed on the requesting
party (including under applicable securities or tax laws) by a Governmental
Authority having jurisdiction over the requesting party, (ii) for use in any
other judicial, regulatory, administrative, tax or other proceeding or in order
to satisfy audit, accounting, claims, regulatory, litigation, tax or other
similar requirements, or (iii) to comply with its obligations under this
Agreement, any Ancillary Agreement or any Lucent OFL; provided, however, that in
the event that any party determines that any such provision of Information could
be commercially detrimental, violate any law or agreement, or waive any
attorneyclient privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(b) After the Closing Date, Lucent shall have access during regular
business hours (as in effect from time to time) to the documents and
objects of historic significance that relate to the Lucent Business
that are located in the AT&T Archives located at ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇. Lucent may obtain copies (but not originals) of
documents for bona fide business purposes and may obtain objects for
exhibition purposes for commercially reasonable periods of time if
required for bona fide business purposes, provided that Lucent shall
cause any such objects to be returned promptly in the same condition
in which they were delivered to Lucent and Lucent shall comply with
any rules, procedures or other requirements, and shall be subject to
any restrictions (including prohibitions on removal of specified
objects), that are then applicable to AT&T. Lucent shall pay $125 per
hour for archives research services (subject to increase from time to
time to reflect rates then in effect for AT&T generally). Nothing
herein shall be deemed to restrict the access of any member of the
AT&T Group or the NCR Group to any such documents or objects or to
impose any liability on any member of the AT&T Group if any such
documents or objects are not maintained or preserved by AT&T.
(c) After the date hereof, (i) Lucent shall maintain in effect at its own
cost and expense adequate systems and controls to the extent necessary
to enable the members of the AT&T Group to satisfy their respective
reporting, accounting, audit and other obligations, and (ii) Lucent
shall provide, or cause to be provided, to AT&T in such form as
AT&T shall request, at no charge to AT&T, all financial and other data
and information as AT&T determines necessary or advisable in order to
prepare AT&T financial statements and reports or filings with any
Governmental Authority.
8.2. OWNERSHIP OF INFORMATION. Any Information owned by one Group that is
provided to a requesting party pursuant to Section 8.1 shall be deemed to remain
the property of the providing party. Unless specifically set forth herein,
nothing contained in this Agreement shall be construed as granting or conferring
rights of license or otherwise in any such Information.
8.3. COMPENSATION FOR PROVIDING INFORMATION. The party requesting such
Information agrees to reimburse the other party for the reasonable costs, if
any, of creating, gathering and copying such Information, to the extent that
such costs are incurred for the benefit of the requesting party. Except as may
be otherwise specifically provided elsewhere in this Agreement or in any other
agreement between the parties, such costs shall be computed in accordance with
the providing party's standard methodology and procedures.
8.4. RECORD RETENTION. To facilitate the possible exchange of Information
pursuant to this Article VIII and other provisions of this Agreement after the
Distribution Date, the parties agree to use their reasonable best efforts to
retain all Information in their respective possession or control on the
Distribution Date in accordance with the policies of AT&T as in effect on the
Closing Date. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes or to Environmental
Liabilities, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof).
8.5. LIMITATION OF LIABILITY. No party shall have any liability to any
other party in the event that any Information exchanged or provided pursuant to
this Agreement which is an estimate or forecast, or which is based on an
estimate or forecast, is found to be inaccurate, in the absence of willful
misconduct by the party providing such Information. No party shall have any
liability to any other party if any Information is destroyed after reasonable
best efforts by such party to comply with the provisions of Section 8.4.
8.6. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION. The
rights and
obligations granted under this Article VIII are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in any Ancillary Agreement.
8.7. PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a) After the Closing
Date, except in the case of an adversarial Action by one party against another
party (which shall be governed by such discovery rules as may be applicable
under Article IX or otherwise), each party hereto shall use its reasonable best
efforts to make available to each other party, upon written request, the former,
current and future directors, officers, employees, other personnel and agents of
the members of its respective Group as witnesses and any books, records or other
documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any Action in
which the requesting party may from time to time be involved, regardless of
whether such Action is a matter with respect to which indemnification may be
sought hereunder. The requesting party shall bear all costs and expenses
(including allocated costs of in-house counsel and other personnel) in
connection therewith.
(b) If an Indemnifying Party or AT&T chooses to defend or to seek to
compromise or settle any Third Party Claim, or if any party chooses to
prosecute or otherwise evaluate or to pursue any Contingent Gain or
any recovery in respect of any RBOC Agreement, the other parties shall
make available to such Indemnifying Party, AT&T or such other party,
as the case may be, upon written request, the former, current and
future directors, officers, employees, other personnel and agents of
the members of its respective Group as witnesses and any books,
records or other documents within its control or which it otherwise
has the ability to make available, to the extent that any such person
(giving consideration to business demands of such directors, officers,
employees, other personnel and agents) or books, records or other
documents may reasonably be required in connection with such defense,
settlement or compromise, or such prosecution, evaluation or pursuit,
as the case may be, and shall otherwise cooperate in such defense,
settlement or compromise, or such prosecution, evaluation or pursuit,
as the case may be.
(c) Without limiting the foregoing, the parties shall cooperate and
consult to the extent reasonably necessary with respect to any
Actions, Contingent Liabilities and Contingent Gains.
(d) Without limiting any provision of this Section, each of the parties
agrees to cooperate, and to cause each member of its respective Group
to cooperate, with each other in the defense of any infringement or
similar claim with respect any intellectual property and shall not
claim to acknowledge, or permit any member of its respective Group to
claim to acknowledge, the validity or infringing use of any
intellectual property of a third Person in a manner that would hamper
or undermine the defense of such infringement or similar claim.
(e) The obligation of the parties to provide witnesses pursuant to this
Section 8.7 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as
witnesses inventors and other officers without regard to whether the
witness or the employer of the witness could assert a possible
business conflict (subject to the exception set forth in the first
sentence of Section 8.7(a)).
(f) In connection with any matter contemplated by this Section 8.7, the
parties will enter into a mutually acceptable joint defense agreement
so as to maintain to the extent practicable any applicable
attorney-client privilege or work product immunity of any member of
any Group.
8.8. CONFIDENTIALITY. (a) Subject to Section 8.9, each of AT&T, Lucent and
NCR, on behalf of itself and each member of its respective Group, agrees to
hold, and to cause its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives to hold, in strict
confidence, with at least the same degree of care that applies to AT&T's
confidential and proprietary information pursuant to policies in effect as of
the Closing Date, all Information concerning each such other Group that is
either in its possession (including Information in its possession prior to any
of the date hereof, the Closing Date or the Distribution Date) or furnished by
any such other Group or its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives at any time pursuant
to this Agreement, any Ancillary Agreement or
otherwise, and shall not use any such Information other than for such purposes
as shall be expressly permitted hereunder or thereunder, except, in each case,
to the extent that such Information has been (i) in the public domain through no
fault of such party or any member of such Group or any of their respective
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives, (ii) later lawfully acquired from other sources by such
party (or any member of such party's Group) which sources are not themselves
bound by a confidentiality obligation), or (iii) independently generated without
reference to any proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or permit to be released
or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other
advisors and representatives who need to know such Information (who
shall be advised of their obligations hereunder with respect to such
Information), except in compliance with Section 8.9. Without limiting
the foregoing, when any Information is no longer needed for the
purposes contemplated by this Agreement or any Ancillary Agreement,
each party will promptly after request of the other party either
return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries
based thereon) or certify to the other party that it has destroyed
such Information (and such copies thereof and such notes, extracts or
summaries based thereon).
8.9. PROTECTIVE ARRANGEMENTS. In the event that any party or any member of
its Group either determines on the advice of its counsel that it is required to
disclose any Information pursuant to applicable law or receives any demand under
lawful process or from any Governmental Authority to disclose or provide
Information of any other party (or any member of any other party's Group) that
is subject to the confidentiality provisions hereof, such party shall notify the
other party prior to disclosing or providing such Information and shall
cooperate at the expense of the requesting party in seeking any reasonable
protective arrangements requested by such other party. Subject to the foregoing,
the Person that received such request may thereafter disclose or provide
Information to the extent required by such law (as so advised by counsel) or by
lawful process or such Governmental Authority.
ARTICLE IX
ARBITRATION; DISPUTE RESOLUTION
9.1. AGREEMENT TO ARBITRATE. Except as otherwise specifically provided in
any Ancillary Agreement, the procedures for discussion, negotiation and
arbitration set forth in this Article IX shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with this
Agreement or any Ancillary Agreement, or the transactions contemplated hereby or
thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the date hereof), or the
commercial or economic relationship of the parties relating hereto or thereto,
between or among any member of the AT&T Services Group, the Lucent Group and the
NCR Group. Each party agrees on behalf of itself and each member of its
respective Group that the procedures set forth in this Article IX shall be the
sole and exclusive remedy in connection with any dispute, controversy or claim
relating to any of the foregoing matters and irrevocably waives any right to
commence any Action in or before any Governmental Authority, except as expressly
provided in Sections 9.7(b) and 9.8 and except to the extent provided under the
Arbitration Act in the case of judicial review of arbitration results or awards.
Each party on behalf of
itself and each member of its respective Group irrevocably waives any right to
any trial by jury with respect to any claim, controversy or dispute set forth in
the first sentence of this Section 9.1.
9.2. ESCALATION. (a) It is the intent of the parties to use their
respective reasonable best efforts to resolve expeditiously any dispute,
controversy or claim between or among them with respect to the matters covered
hereby that may arise from time to time on a mutually acceptable negotiated
basis. In furtherance of the foregoing, any party involved in a dispute,
controversy or claim may deliver a notice (an "Escalation Notice") demanding an
in person meeting involving representatives of the parties at a senior level of
management of the parties (or if the parties agree, of the appropriate strategic
business unit or division within such entity). A copy of any such Escalation
Notice shall be given to the General Counsel, or like officer or official, of
each party involved in the dispute, controversy or claim (which copy shall state
that it is an Escalation Notice pursuant to this Agreement). Any agenda,
location or procedures for such discussions or negotiations between the parties
may be established by the parties from time to time; provided, however, that the
parties shall use their reasonable best efforts to meet within 30 days of the
Escalation Notice.
(b) The parties may, by mutual consent, retain a mediator to aid the
parties in their discussions and negotiations by informally providing
advice to the parties. Any opinion expressed by the mediator shall be
strictly advisory and shall not be binding on the parties, nor shall
any opinion expressed by the mediator be admissible in any arbitration
proceedings. The mediator may be chosen from a list of mediators
previously selected by the parties or by other agreement of the
parties. Costs of the mediation shall be borne equally by the parties
involved in the matter, except that each party shall be responsible
for its own expenses. Mediation is not a prerequisite to a demand for
arbitration under Section 9.3.
9.3. DEMAND FOR ARBITRATION. (a) At any time after the first to occur of
(i) the date of the meeting actually held pursuant to the applicable Escalation
Notice or (ii) 45 days after the delivery of an Escalation Notice (as
applicable, the "Arbitration Demand Date"), any party involved in the dispute,
controversy or claim (regardless of whether such party delivered the Escalation
Notice) may, unless the Applicable Deadline has occurred, make a written demand
(the "Arbitration Demand Notice") that the dispute be resolved by binding
arbitration, which Arbitration Demand Notice shall be given to the parties to
the dispute, controversy or claim in the manner set forth in Section 12.5. In
the event that any party shall deliver an Arbitration Demand Notice to another
party, such other party may itself deliver an Arbitration Demand Notice to such
first party with respect to any related dispute, controversy or claim with
respect to which the Applicable Deadline has not passed without the requirement
of delivering an Escalation Notice. No party may assert that the failure to
resolve any matter during any discussions or negotiations, the course of conduct
during the discussions or negotiations or the failure to agree on a mutually
acceptable time, agenda, location or procedures for the meeting, in each case,
as contemplated by Section 9.2, is a prerequisite to a demand for arbitration
under Section 9.3.
(b) Except as may be expressly provided in any Ancillary Agreement, any
Arbitration Demand Notice may be given until one year and 45 days
after the later of the occurrence of the act or event giving rise to
the underlying claim or the date on which such act or event was, or
should have been, in the exercise of reasonable due diligence,
discovered by the party asserting the claim (as applicable and as it
may in a particular case be
specifically extended by the parties in writing, the "Applicable
Deadline"). Any discussions, negotiations or mediations between the
parties pursuant to this Agreement or otherwise will not toll the
Applicable Deadline unless expressly agreed in writing by the parties.
Each of the parties agrees on behalf of itself and each member of its
Group that if an Arbitration Demand Notice with respect to a dispute,
controversy or claim is not given prior to the expiration of the
Applicable Deadline, as between or among the parties and the members
of their Groups, such dispute, controversy or claim will be barred.
Subject to Sections 9.7(d) and 9.8, upon delivery of an Arbitration
Demand Notice pursuant to Section 9.3(a) prior to the Applicable
Deadline, the dispute, controversy or claim shall be decided by a sole
arbitrator in accordance with the rules set forth in this Article IX.
9.4. ARBITRATORS. (a) Within 15 days after a valid Arbitration Demand
Notice is given, the parties involved in the dispute, controversy or claim
referenced therein shall attempt to select a sole arbitrator satisfactory to all
such parties.
(b) In the event that such parties are not able jointly to select a sole
arbitrator within such 15-day period, such parties shall each appoint
an arbitrator within 30 days after delivery of the Arbitration Demand
Notice. If one party appoints an arbitrator within such time period
and the other party or parties fail to appoint an arbitrator within
such time period, the arbitrator appointed by the one party shall be
the sole arbitrator of the matter.
(c) In the event that a sole arbitrator is not selected pursuant to
paragraph (a) or (b) above and, instead, two or three arbitrators are
selected pursuant to paragraph (b) above, the two or three arbitrators
will, within 30 days after the appointment of the later of them to be
appointed, select an additional arbitrator who shall act as the sole
arbitrator of the dispute. After selection of such sole arbitrator,
the initial arbitrators shall have no further role with respect to the
dispute. In the event that the arbitrators so appointed do not, within
30 days after the appointment of the later of them to be appointed,
agree on the selection of the sole arbitrator, any party involved in
such dispute may apply to CPR, New York, New York to select the sole
arbitrator, which selection shall be made by such organization within
30 days after such application. Any arbitrator selected pursuant to
this paragraph (c) shall be disinterested with respect to any of the
parties and the matter and shall be reasonably competent in the
applicable subject matter.
(d) The sole arbitrator selected pursuant to paragraph (a), (b) or (c)
above will set a time for the hearing of the matter which will
commence no later than 90 days after the date of appointment of the
sole arbitrator pursuant to paragraph (a), (b) or (c) above and which
hearing will be no longer than 30 days (unless in the judgment of the
arbitrator the matter is unusually complex and sophisticated and
thereby requires a longer time, in which event such hearing shall be
no longer than 90 days). The final decision of such arbitrator will be
rendered in writing to the parties not later than 60 days after the
last hearing date, unless otherwise agreed by the parties in writing.
(e) The place of any arbitration hereunder will be New York, New York,
unless otherwise agreed by the parties.
9.5. HEARINGS. Within the time period specified in Section 9.4(d), the
matter shall be presented to the arbitrator at a hearing by means of written
submissions of memoranda and verified witness statements, filed simultaneously,
and responses, if necessary in the judgment of the arbitrator or both the
parties. If the arbitrator deems it to be essential to a fair resolution of the
dispute, live cross-examination or direct examination may be permitted, but is
not generally contemplated to be necessary. The arbitrator shall actively
manage the arbitration with a view to achieving a just, speedy and
cost-effective resolution of the dispute, claim or controversy. The arbitrator
may, in his or her discretion, set time and other limits on the presentation of
each party's case, its memoranda or other submissions, and refuse to receive any
proffered evidence, which the arbitrator, in his or her discretion, finds to be
cumulative, unnecessary, irrelevant or of low probative nature. Except as
otherwise set forth herein, any arbitration hereunder will be conducted in
accordance with the CPR Rules for Non-Administered Arbitration of Business
Disputes then prevailing (except that the arbitration will not be conducted
under the auspices of the CPR and the fee schedule of the CPR will not apply).
Except as expressly set forth in Section 9.8(b), the decision of the arbitrator
will be final and binding on the parties, and judgment thereon may be had and
will be enforceable in any court having jurisdiction over the parties.
Arbitration awards will bear interest at an annual rate of the Prime Rate plus
2% per annum. To the extent that the provisions of this Agreement and the
prevailing rules of the CPR conflict, the provisions of this Agreement shall
govern.
9.6. DISCOVERY AND CERTAIN OTHER MATTERS. (a) Any party involved in the
applicable dispute may request limited document production from the other party
or parties of specific and expressly relevant documents, with the reasonable
expenses of the producing party incurred in such production paid by the
requesting party. Any such discovery (which rights to documents shall be
substantially less than document discovery rights prevailing under the Federal
Rules of Civil Procedure) shall be conducted expeditiously and shall not cause
the hearing provided for in Section 9.5 to be adjourned except upon consent of
all parties involved in the applicable dispute or upon an extraordinary showing
of cause demonstrating that such adjournment is necessary to permit discovery
essential to a party to the proceeding. Depositions, interrogatories or other
forms of discovery (other than the document production set forth above) shall
not occur except by consent of the parties involved in the applicable dispute.
Disputes concerning the scope of document production and enforcement of the
document production requests will be determined by written agreement of the
parties involved in the applicable dispute or, failing such agreement, will be
referred to the arbitrator for resolution. All discovery requests will be
subject to the proprietary rights and rights of privilege of the parties, and
the arbitrator will adopt procedures to protect such rights and to maintain the
confidential treatment of the arbitration proceedings (except as may be required
by law). Subject to the foregoing, the arbitrator shall have the power to issue
subpoenas to compel the production of documents relevant to the dispute,
controversy or claim.
(b) The arbitrator shall have full power and authority to determine issues
of arbitrability but shall otherwise be limited to interpreting or
construing the applicable provisions of this Agreement or any
Ancillary Agreement, and will have no authority or power to limit,
expand, alter, amend, modify, revoke or suspend any condition or
provision of this Agreement or any Ancillary Agreement; it being
understood, however, that the arbitrator will have full authority to
implement the provisions of this Agreement or any Ancillary Agreement,
and to fashion appropriate remedies for breaches of this Agreement
(including interim or permanent injunctive relief); provided that the
arbitrator shall not have (i) any authority in excess of the authority
a court having jurisdiction over the parties and the controversy or
dispute would have absent these arbitration provisions or (ii) any
right or power to award punitive or treble damages. It is the
intention of the parties that in rendering a decision the arbitrator
give effect to the applicable provisions of this Agreement and the
Ancillary Agreements and follow applicable law (it being understood
and agreed that this sentence shall not give rise to a right of
judicial review of the arbitrator's award).
(c) If a party fails or refuses to appear at and participate in an
arbitration hearing after due notice, the arbitrator may hear and
determine the controversy upon evidence produced by the appearing
party.
(d) Arbitration costs will be borne equally by each party involved in the
matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of
witnesses selected by such party.
9.7. CERTAIN ADDITIONAL MATTERS. (a) Any arbitration award shall be a bare
award limited to a holding for or against a party and shall be without findings
as to facts, issues or conclusions of law (including with respect to any matters
relating to the validity or infringement of patents or patent applications) and
shall be without a statement of the reasoning on which the award rests, but must
be in adequate form so that a judgment of a court may be entered thereupon.
Judgment upon any arbitration award hereunder may be entered in any court having
jurisdiction thereof.
(b) Prior to the time at which an arbitrator is appointed pursuant to
Section 9.4, any party may seek one or more temporary restraining
orders in a court of competent jurisdiction if necessary in order to
preserve and protect the status quo. Neither the request for, or grant
or denial of, any such temporary restraining order shall be deemed a
waiver of the obligation to arbitrate as set forth herein and the
arbitrator may dissolve, continue or modify any such order. Any such
temporary restraining order shall remain in effect until the first to
occur of the expiration of the order in accordance with its terms or
the dissolution thereof by the arbitrator.
(c) Except as required by law, the parties shall hold, and shall cause
their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of
mediation or arbitration in confidence in accordance with the
provisions of Article VIII and except as may be required in order to
enforce any award. Each of the parties shall request that any mediator
or arbitrator comply with such confidentiality requirement.
(d) In the event that at any time the sole arbitrator shall fail to serve
as an arbitrator for any reason, the parties shall select a new
arbitrator who shall be disinterested as to the parties and the matter
in accordance with the procedures set forth herein for the selection
of the initial arbitrator. The extent, if any, to which testimony
previously given shall be repeated or as to which the replacement
arbitrator elects to rely on the stenographic record (if there is one)
of such testimony shall be determined by the replacement arbitrator.
9.8. LIMITED COURT ACTIONS. (a) Notwithstanding anything herein to the
contrary, in the event that any party reasonably determines the amount in
controversy in any dispute, controversy or claim (or any series of related
disputes, controversies or claims) under this Agreement or any Ancillary
Agreement is, or is reasonably likely to be, in excess of $100 million and if
such party desires to commence an Action in lieu of complying with the
arbitration provisions of this Article, such party shall so state in its
Arbitration Demand Notice. If the other parties to the arbitration do not agree
that the amount in controversy in such dispute, controversy or claim (or such
series of related disputes, controversies or claims) is, or is reasonably likely
to be, in excess of $100 million, the arbitrator selected pursuant to Section
9.4 hereof shall decide whether the amount in controversy in such dispute,
controversy or claim (or such series of related disputes, controversies or
claims) is, or is reasonably likely to be, in excess of $100 million. The
arbitrator shall set a date that is no later than ten days after the date of his
or
her appointment for submissions by the parties with respect to such issue. There
shall not be any discovery in connection with such issue. The arbitrator shall
render his or her decision on such issue within five days of such date so set by
the arbitrator. In the event that the arbitrator determines that the amount in
controversy in such dispute, controversy or claim (or such series of related
disputes, controversies or claims) is or is reasonably likely to be in excess of
$100 million, the provisions of Sections 9.4(d) and (e), 9.5, 9.6, 9.7 and 9.10
hereof shall not apply and on or before (but, except as expressly set forth in
Section 9.8(b), not after) the tenth business day after the date of such
decision, any party to the arbitration may elect, in lieu of arbitration, to
commence an Action with respect to such dispute, controversy or claim (or such
series of related disputes, controversies or claims) in any court of competent
jurisdiction. If the arbitrator does not so determine, the provisions of this
Article (including with respect to time periods) shall apply as if no
determinations were sought or made pursuant to this Section 9.8(a).
(b) In the event that an arbitration award in excess of $100 million is
issued in any arbitration proceeding commenced hereunder, any party
may, within 60 days after the date of such award, submit the dispute,
controversy or claim (or series of related disputes, controversies or
claims) giving rise thereto to a court of competent jurisdiction,
regardless of whether such party or any other party sought to commence
an Action in lieu of proceeding with arbitration in accordance with
Section 9.8(a). In such event, the applicable court may elect to rely
on the record developed in the arbitration or, if it determines that
it would be advisable in connection with the matter, allow the parties
to seek additional discovery or to present additional evidence. Each
party shall be entitled to present arguments to the court with respect
to whether any such additional discovery or evidence shall be
permitted and with respect to all other matters relating to the
applicable dispute, controversy or claim (or series of related
disputes, controversies or claims).
9.9. CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise agreed in
writing, the parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article IX with respect
to all matters not subject to such dispute, controversy or claim.
9.10. LAW GOVERNING ARBITRATION PROCEDURES. The interpretation of the
provisions of this Article IX, only insofar as they relate to the agreement to
arbitrate and any procedures pursuant thereto, shall be governed by the
Arbitration Act and other applicable federal law. In all other respects, the
interpretation of this Agreement shall be governed as set forth in Section 12.2.
ARTICLE X
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
10.1. FURTHER ASSURANCES. (a) In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
its reasonable best efforts, prior to, on and after the Closing Date, to take,
or cause to be taken, all actions, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws, regulations and
agreements to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the Closing
Date, each party hereto shall cooperate with the other parties, and
without any further consideration, but at the expense of the
requesting party, to execute and deliver, or use its reasonable best
efforts to cause to be executed and delivered, all instruments,
including instruments of conveyance, assignment and transfer, and to
make all filings with, and to obtain all consents, approvals or
authorizations of, any Governmental Authority or any other Person
under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all
such other actions as such party may reasonably be requested to take
by any other party hereto from time to time, consistent with the terms
of this Agreement and the Ancillary Agreements, in order to effectuate
the provisions and purposes of this Agreement and the Ancillary
Agreements and the transfers of the Lucent Assets and the assignment
and assumption of the Lucent Liabilities and the other transactions
contemplated hereby and thereby. Without limiting the foregoing, each
party will, at the reasonable request, cost and expense of any other
party, take such other actions as may be reasonably necessary to vest
in such other party good and marketable title, free and clear of any
Security Interest, if and to the extent it is practicable to do so.
(c) On or prior to the Closing Date, AT&T, Lucent and NCR in their
respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are
reasonably necessary or desirable to be taken by AT&T, Lucent, NCR or
any other Subsidiary of AT&T, as the case may be, to effectuate the
transactions contemplated by this Agreement. On or prior to the
Closing Date, AT&T and Lucent shall take all actions as may be
necessary to approve the stock-based employee benefit plans of Lucent
in order to satisfy the requirement of Rule 16b-3 under the Exchange
Act and Section 162(m) of the Code.
(d) The parties hereto agree to take any reasonable actions necessary in
order for the Distribution to qualify as a tax-free distribution
pursuant to Section 355 of the Code.
(e) AT&T, Lucent and NCR, and each of the members of their respective
Groups, waive (and agree not to assert against any of the others) any
claim or demand that any of them may have against any of the others
for any Liabilities or other claims relating to or arising out of: (i)
the failure of Lucent or any member of the Lucent Group, on the one
hand, or of AT&T, NCR or any member of the AT&T Services Group or the
NCR Group, on the other hand, to provide any notification or
disclosure required under any state Environmental Law in connection
with the Separation or the other transactions contemplated by this
Agreement, including the transfer by any member of any Group to any
member of any other Group of ownership or operational control of any
Assets not previously owned or operated by such transferee; or (ii)
any inadequate, incorrect or incomplete notification or disclosure
under any such state Environmental Law by the applicable transferor.
To the extent any Liability to any Governmental Authority or any third
Person arises out of any action or inaction described in clause (i) or
(ii) above, the transferee of the applicable Asset hereby assumes and
agrees to pay any such Liability.
(f) Prior to the Closing Date, if one or more of the parties identifies
any commercial or other service that is needed to assure a smooth and
orderly transition of the businesses in connection with the
consummation of the transactions contemplated hereby, and that is not
otherwise governed by the provisions of this Agreement or any
Ancillary Agreement, the parties will cooperate in determining whether
there is a mutually acceptable arm's-length basis on which one or more
of the other parties will provide such service.
10.2. QUALIFICATION AS TAX-FREE DISTRIBUTION. After the Closing Date, none
of AT&T, Lucent or NCR shall take, or permit any member of its respective Group
to take, any action which could reasonably be expected to prevent the
Distribution from qualifying as a tax-free distribution within the meaning of
Section 355 of the Code or any other transaction contemplated by this Agreement
or any Ancillary Agreement which is intended by the parties to be tax-free from
failing so to qualify. Without limiting the foregoing, after the Closing Date
and on or prior to the Distribution Date, Lucent shall not issue or grant, and
shall not permit any member of the Lucent Group to issue or grant, directly or
indirectly, any shares of Lucent Common Stock or any rights, warrants, options
or other securities to purchase or acquire (whether upon conversion, exchange or
otherwise) any shares of Lucent Common Stock (whether or not then exercisable,
convertible or exchangeable).
ARTICLE XI
TERMINATION
11.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Distribution Date by the mutual consent of AT&T, Lucent
and NCR.
11.2. OTHER TERMINATION. This Agreement may be terminated by AT&T at any
time prior to the Closing Date. The obligations of the parties under Article IV
(including the obligation to pursue or effect the Distribution) may be
terminated by AT&T if the Distribution Date shall not have occurred on or prior
to December 31, 1997.
11.3. EFFECT OF TERMINATION. (a) In the event of any termination of this
Agreement prior to the Closing Date, no party to this Agreement (or any of its
directors or officers) shall have any Liability or further obligation to any
other party.
(b) In the event of any termination of this Agreement on or after the
Closing Date, only the provisions of Article IV will terminate and the
other provisions of this Agreement and each Ancillary Agreement shall
remain in full force and effect.
ARTICLE XII
MISCELLANEOUS
12.1. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE POWER. (a) This
Agreement
and each Ancillary 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 party.
(b) This Agreement, and the Ancillary Agreements and the Exhibits,
Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter
hereof, supersede all previous agreements, negotiations, discussions,
writings, understandings, commitments and conversations with respect
to such subject matter and there are no agreements or understandings
between the parties other than those set forth or referred to herein
or therein.
(c) AT&T represents on behalf of itself and each other member of the AT&T
Services Group, Lucent represents on behalf of itself and each other
member of the Lucent Group and NCR represents on behalf of itself and
each other member of the NCR Group as follows:
(i) each such Person has the requisite corporate or other power and
authority and has taken all corporate or other action necessary in
order to execute, deliver and perform each of this Agreement and
each other Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby; and
(ii) this Agreement and each Ancillary Agreement to which it is a party
has been duly executed and delivered by it and constitutes a valid
and binding agreement of it enforceable in accordance with the
terms thereof.
(d) Each party hereto acknowledges that it and each other party hereto is
executing certain of the Ancillary Agreements by facsimile, stamp or
mechanical signature. Each party hereto expressly adopts and confirms
each such facsimile, stamp or mechanical signature made in its
respective name as if it were a manual signature, agrees that it will
not assert that any such signature is not adequate to bind such party
to the same extent as if it were signed manually and agrees that at
the reasonable request of any other party hereto at any time it will
as promptly as reasonably practicable cause each such Ancillary
Agreement to be manually executed (any such execution to be as of the
date of the initial date thereof).
(e) Notwithstanding any provision of this Agreement or any Ancillary
Agreement, neither AT&T, Lucent nor NCR shall be required to take or
omit to take any act that would violate its fiduciary duties to any
minority stockholders of AT&T Capital Corporation or any other
non-wholly owned Subsidiary of AT&T, Lucent or NCR, as the case may be
(it being understood that directors' qualifying shares or similar
interests will be disregarded for purposes of determining whether a
Subsidiary is wholly owned).
12.2. GOVERNING LAW. Except as set forth in Section 9.10, this Agreement
and, unless expressly provided therein, each Ancillary Agreement, shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York (other than as to its laws of arbitration which shall be
governed under the Arbitration Act or other applicable federal law pursuant to
Section 9.10), irrespective of the choice of laws principles of the State of New
York, as to all matters, including matters of validity, construction, effect,
enforceability, performance and remedies.
12.3. ASSIGNABILITY. (a) Except as set forth in any Ancillary Agreement,
this Agreement and each Ancillary Agreement shall be binding upon and inure to
the benefit of the parties hereto and thereto, respectively, and their
respective successors and assigns; provided, however, that no party hereto or
thereto may assign its respective rights or delegate its respective obligations
under this Agreement or any Ancillary Agreement without the express prior
written consent of the other parties hereto or thereto.
(b) Lucent agrees and acknowledges on behalf of itself and each other
member of the Lucent Group that (i) AT&T and NCR may enter into a
separation and distribution agreement and other agreements and
instruments in connection with the NCR Distribution or otherwise
providing for certain arrangements between AT&T and NCR and that no
consent of any member of the Lucent Group will be required in
connection therewith, (ii) certain transfers of Assets and Liabilities
may occur after the date hereof between
members of the AT&T Services Group and the NCR Group and that no
consent of any member of the Lucent Group will be required in
connection therewith, (iii) AT&T shall have no obligation to proceed
with the NCR Distribution, and (iv) except as set forth below, all of
the rights and obligations of the NCR Group shall continue regardless
of whether NCR is an Affiliate of AT&T. Lucent agrees that if any
technical or other nonmaterial amendments to this Agreement or any
Ancillary Agreement are advisable in connection with the NCR
Distribution or the separation of the NCR Business from the AT&T
Services Business, Lucent will reasonably cooperate with AT&T and NCR
in connection therewith for no additional consideration. Without
limiting the foregoing, effective immediately on notice to Lucent,
without any further action required by any member of the Lucent Group,
AT&T may assume any Asset or Liability of any member of the NCR Group
hereunder or under any Ancillary Agreement (and any rights of any
member of the NCR Group in connection therewith) and all members of
the NCR Group shall thereupon automatically be released therefrom.
12.4. THIRD PARTY BENEFICIARIES. Except for the indemnification rights
under this Agreement of any AT&T Indemnitee, Lucent Indemnitee or NCR Indemnitee
in their respective capacities as such, (a) the provisions of this Agreement and
each Ancillary Agreement are solely for the benefit of the parties and are not
intended to confer upon any Person except the parties any rights or remedies
hereunder, and (b) there are no third party beneficiaries of this Agreement or
any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement
shall provide any third person with any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference to
this Agreement or any Ancillary Agreement. No party hereto shall have any right,
remedy or claim with respect to any provision of this Agreement or any Ancillary
Agreement to the extent such provision relates solely to the other two parties
hereto or the members of such other two parties' respective Groups.
12.5. NOTICES. All notices or other communications under this Agreement or
any Ancillary Agreement shall be in writing and shall be deemed to be duly given
when (a) delivered in person or (b) deposited in the United States mail or
private express mail, postage prepaid, addressed as follows:
If to AT&T, to: AT&T Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President-Law and
Corporate Secretary
If to Lucent, to: Lucent Technologies Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
If to NCR, to: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
with a copy to: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTN: GENERAL COUNSEL
Any party may, by notice to the other party, change the address to which
such notices are to be given.
12.6. SEVERABILITY. If any provision of this Agreement or any Ancillary
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof or thereof, or the application of such provision to
Persons or circumstances or in jurisdictions other than those as to which it has
been held invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby or thereby,
as the case may be, is not affected in any manner adverse to any party. Upon
such determination, the parties shall negotiate in good faith in an effort to
agree upon such a suitable and equitable provision to effect the original intent
of the parties.
12.7. FORCE MAJEURE. No party shall be deemed in default of this Agreement
or any Ancillary Agreement to the extent that any delay or failure in the
performance of its obligations under this Agreement or any Ancillary Agreement
results from any cause beyond its reasonable control and without its fault or
negligence, such as acts of God, acts of civil or military authority, embargoes,
epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods,
unusually severe weather conditions, labor problems or unavailability of parts,
or, in the case of computer systems, any failure in electrical or air
conditioning equipment. In the event of any such excused delay, the time for
performance shall be extended for a period equal to the time lost by reason of
the delay.
12.8. PUBLICITY. Prior to the Distribution, each of Lucent, NCR and AT&T
shall consult with each other prior to issuing any press releases or otherwise
making public statements with respect to the IPO, the Distribution or any of the
other transactions contemplated hereby and prior to making any filings with any
Governmental Authority with respect thereto.
12.9. EXPENSES. Except as expressly set forth in this Agreement (including
Section 3.1(h) hereof) or in any Ancillary Agreement, whether or not the IPO or
the Distribution is consummated, all third party fees, costs and expenses paid
or incurred in connection with the Distribution will be paid by AT&T.
12.10. HEADINGS. The article, section and paragraph headings contained in
this Agreement and in the Ancillary Agreements are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement
or any Ancillary Agreement.
12.11. SURVIVAL OF COVENANTS. Except as expressly set forth in any
Ancillary Agreement, the covenants, representations and warranties contained in
this Agreement and each Ancillary Agreement, and liability for the breach of any
obligations contained herein, shall survive each of the Separation, the IPO and
the Distribution and shall remain in full force and effect regardless of whether
AT&T shall consummate, delay, modify or abandon the NCR Distribution.
12.12. WAIVERS OF DEFAULT. Waiver by any party of any default by the other
party of any provision of this Agreement or any Ancillary Agreement shall not be
deemed a waiver by the waiving party of any subsequent or other default, nor
shall it prejudice the rights of the other party.
12.13. SPECIFIC PERFORMANCE. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement or any Ancillary Agreement, the party or parties who are or are to be
thereby aggrieved shall have the right to specific performance and injunctive or
other equitable relief of its rights under this Agreement or such Ancillary
Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The parties agree
that the remedies at law for any breach or threatened breach, including monetary
damages, are inadequate compensation for any loss and that any defense in any
action for specific performance that a remedy at law would be adequate is
waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
12.14. AMENDMENTS. (a) No provisions of this Agreement or any Ancillary
Agreement shall be deemed waived, amended, supplemented or modified by any
party, unless such waiver, amendment, supplement or modification is in writing
and signed by the authorized representative of the party against whom it is
sought to enforce such waiver, amendment, supplement or modification. Without
limiting the foregoing, the parties agree that any waiver, amendment, supplement
or modification of this Agreement or any Ancillary Agreement that solely relates
to and affects only two of the three parties hereto shall not require the
consent of the third party hereto.
(b) Without limiting the foregoing, the parties anticipate that, prior to
the Closing Date, some or all of the Schedules to this Agreement may
be amended or supplemented and, in such event, such amended or
supplemented Schedules shall be attached hereto in lieu of the
original Schedules.
12.15. INTERPRETATION. Words in the singular shall be held to include the
plural and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement (or the applicable Ancillary Agreement) as a whole
(including all of the Schedules, Exhibits and Appendices hereto and thereto) and
not to any particular provision of this Agreement (or such Ancillary Agreement).
Article, Section, Exhibit, Schedule and Appendix references are to the Articles,
Sections, Exhibits, Schedules and Appendices to this Agreement (or the
applicable Ancillary Agreement) unless otherwise specified. The word "including"
and words of similar import when used in this Agreement (or the applicable
Ancillary Agreement) shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified. The word "or" shall
not be exclusive. For all purposes of this Agreement, "allocated costs of
in-house counsel and other personnel" shall be determined in accordance with the
principles set forth in Schedule 12.15.
IN WITNESS WHEREOF, the parties have caused this Separation and
Distribution Agreement to be executed by their duly authorized representatives.
AT&T CORP.
By: /s/
--------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC.
By: /s/
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Name:
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
By: /s/
--------------------------
Name:
Title: