Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
April 2, 2006
by and among
LUCENT TECHNOLOGIES INC.
ALCATEL
and
AURA MERGER SUB, INC.
TABLE OF CONTENTS
--------------
PAGE
ARTICLE I THE MERGER
Section 1.01 The Merger...........................................1
Section 1.02 Conversion of Shares.................................2
Section 1.03 Surrender and Payment................................3
Section 1.04 Stock Options and Other Stock-Based Awards...........5
Section 1.05 Adjustments..........................................7
Section 1.06 Fractional Shares....................................7
Section 1.07 Withholding Rights...................................8
Section 1.08 Lost Certificates....................................8
Section 1.09 Shares Held by Lucent Affiliates.....................8
ARTICLE II CERTAIN GOVERNANCE MATTERS
Section 2.01 Corporate Name and Executive Offices.................9
Section 2.02 Alcatel Board of Directors and Management............9
Section 2.03 Articles of Association and By-laws of Alcatel.......9
Section 2.04 Board Rules of Alcatel..............................10
Section 2.05 Certificate of Incorporation of the Surviving
Corporation........................................10
Section 2.06 By-laws of the Surviving Corporation................10
Section 2.07 Directors and Officers of the Surviving
Corporation........................................10
Section 2.08 Governance of ▇▇▇▇ Laboratories and Certain
Government Contracts...............................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF LUCENT
Section 3.01 Corporate Existence and Power.......................10
Section 3.02 Corporate Authorization.............................11
Section 3.03 Governmental Authorization..........................12
Section 3.04 Non-Contravention...................................12
Section 3.05 Capitalization of Lucent............................13
Section 3.06 Subsidiaries........................................13
i
Section 3.07 SEC Filings.........................................15
Section 3.08 Financial Statements................................16
Section 3.09 Disclosure Documents................................16
Section 3.10 Absence of Certain Changes..........................17
Section 3.11 No Undisclosed Material Liabilities.................17
Section 3.12 Investigation; Litigation...........................17
Section 3.13 Taxes...............................................17
Section 3.14 Employee Benefit Plan; Employment and
Labor Matters......................................19
Section 3.15 Compliance with Laws................................20
Section 3.16 Environmental Matters...............................21
Section 3.17 Intellectual Property...............................22
Section 3.18 Vendor Financing....................................24
Section 3.19 Takeover Statutes...................................24
Section 3.20 Finders' or Advisors' Fees..........................24
Section 3.21 Opinions of Financial Advisors......................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ALCATEL
Section 4.01 Corporate Organization..............................25
Section 4.02 Corporate Authorization.............................25
Section 4.03 Governmental Authorization..........................26
Section 4.04 Non-Contravention...................................26
Section 4.05 Capitalization of Alcatel...........................27
Section 4.06 Subsidiaries........................................27
Section 4.07 SEC Filings.........................................28
Section 4.08 Financial Statements................................29
Section 4.09 Disclosure Documents................................29
Section 4.10 Absence of Certain Changes..........................30
Section 4.11 No Undisclosed Material Liabilities.................31
Section 4.12 Investigation; Litigation...........................31
Section 4.13 Taxes...............................................31
Section 4.14 Employee Benefit Plans; Employment and Labor
Matters............................................32
Section 4.15 Compliance with Laws................................33
Section 4.16 Environmental Matters...............................34
ii
Section 4.17 Intellectual Property...............................35
Section 4.18 Vendor Financing....................................36
Section 4.19 Finders' or Advisors' Fees..........................36
Section 4.20 Opinion of Financial Advisor........................36
Section 4.21 Takeover Statutes...................................36
ARTICLE V COVENANTS OF LUCENT
Section 5.01 Conduct of Lucent...................................36
Section 5.02 Lucent Stockholder Meeting; Proxy Material..........39
Section 5.03 Other Offers........................................40
Section 5.04 Shareholder Rights Plan.............................41
ARTICLE VI COVENANTS OF ALCATEL
Section 6.01 Conduct of Alcatel..................................41
Section 6.02 Obligations of Merger Subsidiary....................44
Section 6.03 Director and Officer Liability......................44
Section 6.04 Alcatel Shareholder Meeting; Form F-4...............45
Section 6.05 Stock Exchange Listing..............................46
Section 6.06 Employee Benefits...................................46
Section 6.07 Other Offers........................................47
Section 6.08 Business in Sanctioned Countries....................49
ARTICLE VII COVENANTS OF ALCATEL AND LUCENT
Section 7.01 Reasonable Best Efforts.............................49
Section 7.02 Preparation of Proxy Statement/Prospectus;
Form F-4, Form F-6.................................51
Section 7.03 Access to Information; Compliance Program;
Transition Committee...............................52
Section 7.04 Tax Treatment.......................................53
Section 7.05 Public Announcements................................54
Section 7.06 Further Assurances..................................54
Section 7.07 Notices of Certain Events...........................54
Section 7.08 Payment of Dividends................................55
iii
ARTICLE VIII CONDITIONS TO THE MERGER
Section 8.01 Conditions to the Obligations of Each Party.........55
Section 8.02 Conditions to the Obligations of Alcatel
and Merger Subsidiary..............................57
Section 8.03 Conditions to the Obligations of Lucent.............57
ARTICLE IX TERMINATION
Section 9.01 Termination.........................................58
Section 9.02 Effect of Termination...............................60
ARTICLE X MISCELLANEOUS
Section 10.01 Notices............................................60
Section 10.02 Non-Survival of Representations and Warranties.....61
Section 10.03 Amendments; No Waivers.............................61
Section 10.04 Expenses...........................................61
Section 10.05 Successors and Assigns.............................64
Section 10.06 Governing Law......................................64
Section 10.07 Jurisdiction.......................................64
Section 10.08 Waiver of Jury Trial...............................65
Section 10.09 Counterparts; Effectiveness........................65
Section 10.10 Entire Agreement; No Third Party Beneficiaries.....65
Section 10.11 Interpretation.....................................65
Section 10.12 Severability.......................................66
iv
INDEX
PAGE PAGE
1933 ACT..............................7 EFFECTIVE TIME.....................2
ADS...................................3 END DATE..........................58
AFFECTED EMPLOYEES...................46 ENVIRONMENTAL CLAIM...............22
AGREEMENT.............................1 ENVIRONMENTAL LAWS................22
ALCATEL...............................1 ERISA.............................19
ALCATEL ACQUISITION PROPOSAL.........48 EXCESS SHARES......................7
ALCATEL BALANCE SHEET................29 EXCHANGE ACT......................12
ALCATEL BALANCE SHEET DATE...........29 EXCHANGE AGENT.....................3
ALCATEL CEO...........................9 EXCHANGE RATIO.....................2
ALCATEL CHANGE IN RECOMMENDATION.....45 EXON-▇▇▇▇▇▇ ACT...................12
ALCATEL CIRCULAR.....................29 FILED ALCATEL SEC DOCUMENTS.......24
ALCATEL DISCLOSURE LETTER............26 FILED LUCENT SEC DOCUMENTS........10
ALCATEL EMPLOYEE PLAN................32 FORM F-4..........................29
ALCATEL INITIAL FEE..................63 FORM F-6..........................29
ALCATEL NECESSARY CORPORATE DOCUMENTS HAZARDOUS MATERIALS...............22
.................................45 HSR ACT...........................12
ALCATEL ORDINARY SHARE................3 IFRS..............................29
ALCATEL SEC DOCUMENTS................28 INDEMNITEES.......................44
ALCATEL SECURITIES...................27 INTELLECTUAL PROPERTY.............22
ALCATEL SHAREHOLDER APPROVAL.........25 LIEN..............................12
ALCATEL SHAREHOLDER MEETING..........45 LUCENT.............................1
ALCATEL STOCK OPTION PLANS...........27 LUCENT ACQUISITION PROPOSAL.......40
ALCATEL SUBSIDIARY SECURITIES........28 LUCENT BALANCE SHEET..............16
ALCATEL SUPERIOR PROPOSAL............48 LUCENT BALANCE SHEET DATE.........16
ALCATEL TERMINATION FEE..............63 LUCENT CEO.........................9
ALCATEL VENDOR FINANCING.............35 LUCENT CHANGE IN RECOMMENDATION...39
AMF..................................12 LUCENT CONVERTIBLE DEBT............7
APPROPRIATE ASSETS...................10 LUCENT DISCLOSURE LETTER...........6
BOOK-ENTRY SHARES.....................4 LUCENT EMPLOYEE PLAN..............19
CERTIFICATES..........................3 LUCENT INITIAL FEE................62
CFIUS................................55 LUCENT PROXY STATEMENT............16
CLEANUP..............................21 LUCENT SEC DOCUMENTS..............15
CLOSING...............................2 LUCENT SECURITIES.................13
CLOSING DATE..........................2 LUCENT STOCK OPTION................5
CODE..................................1 LUCENT STOCK OPTION PLANS..........5
COMMON SHARES TRUST...................8 LUCENT STOCK-BASED ACCOUNT.........6
CONFIDENTIALITY AGREEMENT............52 LUCENT STOCKHOLDER APPROVAL.......11
DELAWARE LAW..........................1 LUCENT STOCKHOLDER MEETING........38
DEPOSITORY............................3 LUCENT SUBSIDIARY SECURITIES......14
DETRIMENT............................56 LUCENT SUPERIOR PROPOSAL..........40
EC MERGER REGULATION.................12 LUCENT TERMINATION FEE............62
v
PAGE PAGE
LUCENT VENDOR FINANCING..............24 RELEASE..........................22
LUCENT WARRANTS.......................6 RULE 145..........................8
MAJOR PENSION PLANS..................57 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT...............15
MATERIAL ADVERSE EFFECT..............11 SEC...............................7
MERGER................................1 SHARES............................2
MERGER CONSIDERATION..................3 SUBSIDIARY........................3
MERGER SUBSIDIARY.....................1 SURVIVING CORPORATION.............1
MULTIEMPLOYER PLANS..................19 TAX RETURNS......................19
NEW ALCATEL BY-LAWS...................9 TAXES............................18
NYSE..................................7 TRADE SECRETS....................23
PERSON................................3 TRANSITION COMMITTEE.............52
PLAN ASSET MEASUREMENT DATE..........57 US GAAP..........................15
PLAN ASSETS..........................57 WARRANT AGREEMENT.................6
QUALIFYING AMENDMENT.................51
EXHIBITS
Exhibit A - Amended and Restated Articles of Association and By-laws of
Alcatel (STATUTS)
Exhibit B - Amended and Restated Board Rules of Alcatel (REGLEMENTS INTERIEURS)
Exhibit C - Certificate of Incorporation and Bylaws of Surviving Company
Exhibit D - Form of Affiliate Letter
vii
7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of April 2,
2006, by and among Lucent Technologies, Inc., a Delaware corporation ("LUCENT"),
Alcatel, a societe anonyme organized under the laws of the Republic of France
("ALCATEL"), and Aura Merger Sub, Inc., a Delaware corporation and a direct
wholly owned subsidiary of Alcatel ("MERGER SUBSIDIARY").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Merger Subsidiary and
Lucent have approved this Agreement, and deem it advisable and in the best
interests of their respective stockholders to consummate the merger of Merger
Subsidiary with and into Lucent on the terms and conditions set forth herein,
and the Board of Directors of Lucent has determined to recommend the Merger to
the stockholders of Lucent;
WHEREAS, the Board of Directors of Alcatel has approved this Agreement,
and deems it in the best interest of Alcatel to consummate the merger of Merger
Subsidiary with and into Lucent on the terms and conditions set forth herein and
has determined to recommend the Merger to the shareholders of Alcatel; and
WHEREAS, for United States federal income tax purposes, it is intended
that the Merger qualify (i) as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and the
rules and regulations promulgated thereunder and (ii) for an exception to the
general rule of Section 367(a)(1) of the Code, and that this Agreement be, and
is hereby adopted as, a plan of reorganization for purposes of Section 368 of
the Code.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. (a) At the Effective Time (as defined in
Section 1.01(b)), upon the terms and subject to the conditions set forth in this
Agreement, Merger Subsidiary shall be merged (the "MERGER") with and into Lucent
in accordance with the General Corporation Law of the State of Delaware
("DELAWARE LAW"), whereupon the separate existence of Merger Subsidiary shall
cease, and Lucent shall be the surviving corporation in the Merger (the
"SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, Lucent and Merger
Subsidiary will file a certificate of merger with the Secretary of State of the
State of Delaware and make all other
filings or recordings required by Delaware Law in connection with the Merger.
The Merger shall become effective at such time as the certificate of merger is
duly filed with the Secretary of State of the State of Delaware or at such later
time as is specified in the certificate of merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, obligations and duties of Lucent and Merger
Subsidiary, all as provided under Section 259 of Delaware Law.
(d) The closing of the Merger (the "CLOSING") shall take place at
the offices of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, as soon as practicable, but in any event within three business
days after the day on which the last to be fulfilled or waived of the conditions
set forth in Article VIII (other than those conditions that by their nature are
to be fulfilled by actions taken at the Closing, but subject to the fulfillment
or waiver of such conditions) shall be fulfilled or waived in accordance with
this Agreement or at such other place and time or on such other date as Lucent
and Alcatel may agree in writing (the "CLOSING DATE").
Section 1.02 Conversion of Shares. (a) At the Effective Time, by virtue
of the Merger and without any action on the part of any party hereto or of any
holder of capital stock thereof:
(i) each share of Common Stock, par value $0.01 per share, of
Lucent (the "SHARES") held by Lucent as treasury stock or held by Alcatel
or Merger Subsidiary immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(ii) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation; and
(iii) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 1.02(a)(i), be
converted into the right to receive 0.1952 (the "EXCHANGE RATIO") of an ADS
(as defined below).
(b) All ADSs issued as provided in this Section 1.02 shall be of
the same class and shall have the same terms as the currently outstanding ADSs.
The Alcatel Ordinary Shares underlying the ADSs that are issued in connection
with the Merger shall be of the same class and shall have the same terms as the
currently outstanding Alcatel Ordinary Shares with all rights attached or
accrued to them to any distribution occurring after the Closing Date (including
without limitation, interim dividends or distributions out of retained earnings
or issuance or merger premium). Alcatel or Lucent shall, following the Closing,
except as provided in Section 1.03(c), pay all stamp duties, if any, imposed in
connection with the issuance or
2
creation of the ADSs (and the underlying Alcatel Ordinary Shares) in connection
with the Merger.
(c) From and after the Effective Time, each holder of a certificate
representing any Shares shall cease to have any rights with respect thereto,
except, in the case of holders of Shares converted in accordance with Section
1.02(a)(iii), the right to receive the Merger Consideration (as defined below)
and any dividends payable pursuant to Section 1.03(f), in each case without
interest thereon. From and after the Effective Time, all certificates
representing the common stock of Merger Subsidiary shall be deemed for all
purposes to represent the number of shares of common stock of the Surviving
Corporation into which they were converted in accordance with Section
1.02(a)(ii).
(d) The ADSs to be received as consideration pursuant to the Merger
by each holder of Shares (together with cash in lieu of fractional ADSs as
specified below) is referred to herein as the "MERGER CONSIDERATION."
(e) In accordance with Section 262 of Delaware Law, no appraisal
rights shall be available to the holders of Shares in connection with the
Merger.
(f) For purposes of this Agreement:
"ADS" means an American Depository Share of Alcatel representing one (1)
Alcatel Ordinary Share.
"ALCATEL ORDINARY SHARE" means an ordinary share, nominal value (euro)
2.00 per share, of Alcatel.
"SUBSIDIARY" when used with respect to any Person means any other
Person, whether incorporated or unincorporated, of which (i) more than fifty
percent of the capital securities or other ownership interests or (ii)
securities or other interests having by their terms ordinary voting power to
elect more than fifty percent of the board of directors (or comparable governing
body or person), is directly owned or controlled by such first Person or by any
one or more of its Subsidiaries.
"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
Section 1.03 Surrender and Payment. (a) Prior to the Effective Time,
Alcatel shall appoint The Bank of New York or an agent mutually agreed by
Alcatel and Lucent (the "EXCHANGE AGENT"), pursuant to an agreement in form and
substance reasonably acceptable to Alcatel and Lucent for the purpose of
exchanging certificates representing Shares (the "CERTIFICATES") for the Merger
Consideration and any dividends payable pursuant to Section 1.03(f). At the
Effective Time, Alcatel shall: (i) deposit, or cause to be deposited, with
Societe Generale, as custodian and agent of The Bank of New York, as depositary
for the ADSs, or any successor depositary thereto (the "DEPOSITORY"), a number
of Alcatel Ordinary Shares equal to the aggregate number of ADSs to be issued as
Merger Consideration; and (ii) deposit, or cause to be deposited, with the
Exchange Agent the receipts representing such aggregate number of ADSs,
3
in each of cases (i) and (ii), for the benefit of the holders of Shares which
are converted into the right to receive ADSs pursuant to Section 1.02(a)(iii) of
this Agreement. To the extent required, Alcatel shall cause the Exchange Agent
to requisition from the Depository, from time to time, such number of ADSs as
are issuable in respect of Shares to be properly delivered to the Exchange
Agent. Promptly after the Effective Time, Alcatel will send, or will cause the
Exchange Agent to send, to each holder of record at the Effective Time of Shares
a letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) in such form as
Lucent and Alcatel may reasonably agree, for use in effecting delivery of Shares
to the Exchange Agent. Following the Effective Time, Alcatel agrees to make
available to the Exchange Agent, from time to time as needed, cash in U.S.
dollars sufficient to pay any dividends and other distributions pursuant to
Section 1.03(f). At and after the Effective Time, Alcatel will take all actions
necessary to cause the delivery of Alcatel Ordinary Shares or ADSs, as
applicable upon the exercise or conversion at or after the Effective Time of any
option referred to in Section 1.04, any Lucent Warrant, any Lucent Stock-Based
Account or Lucent Convertible Debt.
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Exchange Agent of a
Certificate representing Shares (or effective affidavits of loss in lieu thereof
in accordance with the procedures set forth in Section 1.08) or non-certificated
Shares represented by book-entry ("BOOK-ENTRY SHARES"), together with a properly
completed letter of transmittal, will be entitled to receive the Merger
Consideration in respect of such Shares (including cash payable in lieu of
fractional shares pursuant to Section 1.06), and any dividends payable pursuant
to Section 1.03(f). Until a Certificate is so surrendered, such Certificate
shall, after the Effective Time, only represent the right to receive such Merger
Consideration and any dividends payable pursuant to Section 1.03(f) (in each
case without interest thereon).
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the Person in whose name the Certificate is registered, it
shall be a condition to such payment that the Certificate so surrendered shall
be properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the Exchange Agent any transfer or
other taxes required as a result of such payment to a Person other than the
registered holder of such Certificate or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, Certificates
or Book-Entry Shares are presented to Alcatel or the Surviving Corporation, they
shall be canceled and exchanged for the Merger Consideration, and any dividends
payable pursuant to Section 1.03(f), in accordance with the provisions of this
Article I. In no event shall any interest be payable with respect to the Merger
Consideration or any such dividends.
(e) Any portion of the Merger Consideration, or dividends payable
pursuant to Section 1.03(f), made available to the Exchange Agent pursuant to
Section 1.03(a) that remains unclaimed by the holders of Shares twelve (12)
months after the Effective Time shall be returned to Alcatel, upon demand, and
any such holder who has not exchanged his
4
Shares for Merger Consideration in accordance with this Section prior to that
time shall thereafter look only to Alcatel for payment of the Merger
Consideration in respect of his Shares. Notwithstanding the foregoing, Alcatel
shall not be liable to any holder of Shares for any amount paid to a public
official pursuant to applicable abandoned property, escheat or similar laws. Any
amounts remaining unclaimed by holders of Shares three years after the Effective
Time (or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become the property of any governmental entity) shall,
to the extent permitted by applicable law, become the property of Alcatel free
and clear of any Liens (as defined in Section 3.04), claims or interest of any
Person previously entitled thereto.
(f) No dividends or other distributions with respect to ADSs (or
the underlying Alcatel Ordinary Shares) issued in the Merger shall be paid to
the holder of any unsurrendered Certificates or Book-Entry Shares until such
Certificates or Book-Entry Shares are surrendered as provided in this Section
1.03. Subject to applicable law, following such surrender, there shall be paid,
without interest, to the record holder of the ADSs issued in exchange for such
Certificates or Book-Entry Shares (i) at the time of such surrender, all
dividends and other distributions payable in respect of such ADSs with a record
date after the Effective Time and a payment date on or prior to the date of such
surrender and which were not previously paid, and (ii) at the appropriate
payment date, the dividends or other distributions payable with respect to such
ADSs with a record date after the Effective Time but with a payment date
subsequent to such surrender. For purposes of dividends or other distributions
in respect of ADSs, all ADSs to be issued pursuant to the Merger (excluding ADSs
(and underlying Alcatel Ordinary Shares) issuable upon exercise of options which
are issued pursuant to Section 1.04 unless such options are actually exercised
prior to the Effective Time, or upon exercise of Lucent Warrants, Lucent
Stock-Based Awards or Lucent Convertible Debt) shall be entitled to dividends
pursuant to the immediately preceding sentence as if such ADSs were issued and
outstanding as of the Effective Time.
Section 1.04 Stock Options and Other Stock-Based Awards. (a) Except
as otherwise mutually agreed by Alcatel and Lucent, at the Effective Time, each
outstanding option to purchase Shares (a "LUCENT STOCK OPTION") granted under
Lucent's compensation or benefit plans or agreements pursuant to which Shares
may be issued (collectively, the "LUCENT STOCK OPTION PLANS") (excluding any
option granted under the Lucent 2001 Employee Stock Purchase Plan (the "ESPP")),
whether vested or not vested, shall be converted into a right to acquire, on the
same terms and conditions as were applicable under such Lucent Stock Option
prior to the Effective Time, the number (rounded down to the nearest whole
number) of Alcatel Ordinary Shares determined by multiplying (x) the number of
Shares subject to such Lucent Stock Option immediately prior to the Effective
Time by (y) the Exchange Ratio, at an exercise price per Alcatel Ordinary Shares
expressed in Euros equal to the product of (A) the quotient of (x) the U.S.
dollar exercise price per Share otherwise purchasable pursuant to such Lucent
Stock Option, divided by (y) the Exchange Ratio, multiplied by (B) the Euro
Exchange Rate, rounding the resulting exercise price up to the nearest euro
cent. The "EURO EXCHANGE RATE" shall equal the Noon Buying Rate for euros as
announced by the Federal Reserve Bank of New York for the Closing Date, which
for the avoidance of doubt shall be computed as euros per one U.S. dollar. In
addition, prior to the Effective Time (but effective as of the Effective Time),
Lucent will make any amendments to the terms of Lucent Stock Option Plans that
are necessary to give effect to the transactions contemplated by this Section.
Lucent has identified in Section 1.04(a) of the
5
separate disclosure letter delivered by Lucent to Alcatel dated as of the date
of this Agreement (the "LUCENT DISCLOSURE LETTER") each of the Lucent Stock
Option Plans. Lucent has not taken, and shall not take, any action causing any
option holder to have the right to receive a "change in control cash-out"
described in Section 11(b) of the Lucent 2003 Long Term Incentive Program,
Section 10(b) of the Lucent 2000 Stock Option Plan or any similar provision of
any other Lucent Stock Option Plan. The rights to exercise for Alcatel Ordinary
Shares into which the Lucent Stock Options will be converted will have exercise
features (including without limitation net cashless exercise features)
comparable to those provided generally to holders of Alcatel stock options
employed in the same jurisdiction.
(b) At the Effective Time, each award ("LUCENT STOCK-BASED
ACCOUNT") that has been established under any employee incentive or benefit
plan, program or arrangement or under any non-employee director plan maintained
by Lucent on or prior to the date of this Agreement which provides for
equity-based awards shall be amended or converted into an award with respect to
Alcatel Ordinary Shares for individuals domiciled outside the United States and
denominated in ADSs with respect to individuals domiciled in the United States,
with the number of ADSs or Alcatel Ordinary Shares in each case determined by
multiplying (x) the number of Shares subject to such Lucent Stock-Based Account
immediately prior to the Effective Time by (y) the Exchange Ratio. The other
terms and conditions of Lucent Stock-Based Accounts, and the plans or agreements
under which they were established, shall continue to apply in accordance with
their terms and conditions. Lucent represents that all employee incentive or
benefit plans, programs or arrangements and non-employee director plans under
which any Lucent Stock-Based Accounts have been established are disclosed in
Section 1.04(c) of the Lucent Disclosure Letter.
(c) Pursuant to Section 11(c)(2) of the ESPP, Lucent shall make
reasonable efforts to provide that no later than the earlier of (x) the Closing
Date and (y) the final date of the first six-month ESPP cycle to commence
following the date hereof (such earlier date, the "ESPP TERMINATION DATE"), all
then-outstanding Options (as defined in the ESPP) shall be exercised, and that
no Options shall be granted on or following the ESPP Termination Date.
(d) Alcatel shall take all corporate action necessary to, and
shall, make available for issuance or delivery such number of Alcatel Ordinary
Shares and ADSs that may be issued or delivered on and after the Effective Time
(i) pursuant to the terms set forth in this Section 1.04, (ii) in respect of the
warrants of Lucent ("LUCENT WARRANTS") outstanding as of immediately prior to
the Effective Time issued pursuant to the warrant agreement, dated as of
December 10, 2004 (the "WARRANT AGREEMENT"), between Lucent and The Bank of New
York, as warrant agent, (iii) in respect of the debentures, notes and securities
outstanding as of immediately prior to the Effective Time issued pursuant to (1)
the Indenture, dated as of March 19, 2002, by and between Lucent and The Bank of
New York, as trustee, for the 7.75% Convertible Subordinated Debentures of
Lucent, due 2017, (2) the Indenture, dated as of June 4, 2003, by and between
Lucent and The Bank of New York, as trustee, as supplemented by the First
Supplemental Denture, dated as of June 4, 2003, by and between Lucent and The
Bank of New York, as trustee, for the 2 3/4% Series A Convertible Senior
Debentures due 2023 and for the 2 3/4% Series B Convertible Senior Debentures of
Lucent due 2025 and (3) the Indenture, dated as of November 24, 2003, by and
between Lucent and The Bank of New York, as Trustee, for
6
the 8.00% Convertible Subordinated Debentures of Lucent Due 2031 (collectively,
the "LUCENT CONVERTIBLE DEBT").
(e) At the Effective Time, Alcatel shall file with the Securities
and Exchange Commission (the "SEC") a registration statement on an appropriate
form or a post-effective amendment to a previously filed registration statement
under the Securities Act of 1933, as amended (the "1933 ACT"), with respect to
the ADSs (and, if required, the underlying Alcatel Ordinary Shares), subject to
options and other equity-based awards issued pursuant to this Section 1.04, and
subject to Lucent Warrants, Lucent Stock-Based Accounts and Lucent Convertible
Debt, and for purposes of satisfying 401(k) plan obligations, and shall use its
reasonable best efforts to maintain the current status of the prospectus
contained therein, as well as comply with any applicable state securities or
"blue sky" laws, for so long as such options or other equity-based awards,
Lucent Warrants, Lucent Stock-Based Accounts or Lucent Convertible Debt remain
outstanding.
(f) The parties will make good faith efforts to make any equitable
adjustments necessary to ensure that the conversions of Lucent Stock Options and
Lucent Stock-Based Accounts contemplated by this Section 1.04 comply with
Section 409A of the Code.
Section 1.05 Adjustments. If at any time during the period between
the date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Alcatel or Lucent shall occur by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Merger Consideration shall be appropriately adjusted to provide
the holders of Shares the same economic effect as contemplated by this
Agreement. Nothing in this Section 1.05 shall be construed to permit Alcatel to
take any action that is otherwise prohibited or restricted by any other
provision of this Agreement. Prior to the Effective Time, Alcatel shall not take
any action, including amending the deposit agreement between Alcatel and
Depositary that would cause each ADS to represent more or less than one Alcatel
Ordinary Share.
Section 1.06 Fractional Shares. (a) No fractional ADSs shall be
issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fractional ADS will be entitled to receive, from the Exchange
Agent in accordance with the provisions of this Section 1.06, a cash payment in
lieu of such fractional ADS representing such holder's proportionate interest,
if any, in the proceeds from the sale by the Exchange Agent in one or more
transactions of the number of ADSs delivered to the Exchange Agent by Alcatel
pursuant to Section 1.03(a) over the aggregate number of whole ADSs to be
distributed to the holders of Certificates pursuant to Section 1.03(b) (such
excess being herein called the "EXCESS SHARES"). The parties acknowledge that
payment of cash consideration in lieu of issuing fractional ADSs was not
separately bargained for consideration but merely represents a mechanical
rounding off for purposes of simplifying the corporate and accounting problems
that would otherwise be caused by the issuance of fractional ADSs. As soon as
practicable after the Effective Time, the Exchange Agent, as agent for the
holders of the Certificates and Book-Entry Shares shall sell the Excess Shares
at then-prevailing prices on the New York Stock Exchange (the "NYSE") in the
manner provided in the following paragraph.
7
(b) The sale of the Excess Shares by the Exchange Agent, as agent
for the holders that would otherwise receive fractional ADSs, shall be executed
on the NYSE through one or more member organizations of the NYSE and shall be
executed in round lots to the extent practicable. The compensation payable to
the Exchange Agent and the expenses incurred by the Exchange Agent, in each
case, in connection with such sale or sales of the Excess Shares, and all
related commissions, transfer taxes and other out-of-pocket transaction costs,
will be paid by the Surviving Corporation out of its own funds and will not be
paid directly or indirectly by Alcatel. Until the proceeds of such sale or sales
have been distributed to the holders of Shares, the Exchange Agent shall hold
such proceeds in trust for the holders of Shares (the "COMMON SHARES TRUST").
The Exchange Agent shall determine the portion of the Common Shares Trust to
which each holder of Shares shall be entitled, if any, by multiplying the amount
of the aggregate proceeds comprising the Common Shares Trust by a fraction, the
numerator of which is the amount of the fractional ADS interest to which such
holder of Shares would otherwise be entitled and the denominator of which is the
aggregate amount of fractional ADS interests to which all holders of Shares
would otherwise be entitled.
(c) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Shares in lieu of any fractional ADSs,
the Exchange Agent shall make available such amounts to such holders of Shares
(without interest thereon).
Section 1.07 Withholding Rights. Each of the Surviving Corporation
and Alcatel shall be entitled to deduct and withhold from the consideration
otherwise payable to any Person pursuant to this Article I such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any provision of federal, state, local or foreign tax law. To the extent that
amounts are so withheld by the Surviving Corporation or Alcatel, as the case may
be, such withheld amounts shall be treated for all purposes under this Agreement
and otherwise as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by the Surviving Corporation or
Alcatel, as the case may be.
Section 1.08 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration to be paid in respect of the Shares
represented by such Certificate as contemplated by this Article.
Section 1.09 Shares Held by Lucent Affiliates. Anything to the
contrary herein notwithstanding, any ADSs and, upon exchange therefor, the
underlying Alcatel Ordinary Shares (and, in either case, any receipts,
certificates or evidences of Book-Entry Shares therefor) issued to "affiliates"
(as such term is used in Rule 145 promulgated under the 1933 Act ("RULE 145"))
of Lucent pursuant to Section 1.03, shall be subject to the restrictions
described in Rule 145.
8
ARTICLE II
CERTAIN GOVERNANCE MATTERS
Section 2.01 Corporate Name and Executive Offices. (a) Promptly
following the Effective Time, Alcatel's name shall be changed to a name mutually
agreed by the parties prior to the Effective Time, which name shall not be
solely "Alcatel" or "Lucent." In connection with the name change, Alcatel and
Lucent shall mutually agree on a stock trading symbol prior to the Effective
Time.
(b) As of and after the Merger, (i) the executive offices of
Alcatel shall be located in Paris, France, and (ii) the offices of the business
of Lucent currently known as "▇▇▇▇ Laboratories" (which shall be the Global
Research and Development headquarters of Alcatel) and the U.S. operating
headquarters of Alcatel shall be located in the State of New Jersey, USA.
Section 2.02 Alcatel Board of Directors and Management. (a) At the
meeting of Alcatel's shareholders to obtain the Alcatel Shareholder Approval (as
defined in Section 4.02(a)), Alcatel's Board of Directors shall nominate
fourteen (14) individuals for election to the Board of Directors of Alcatel
effective as of, and conditioned upon, the occurrence of the Effective Time.
Such nominees (the "BOARD DESIGNEES") shall be comprised of: (i) five persons
designated by Alcatel from Alcatel's current Board of Directors, (ii) five
persons designated by Lucent from Lucent's current Board of Directors, (iii) the
Chief Executive Officer of Alcatel as of the date of this Agreement (the
"ALCATEL CEO") and the Chief Executive Officer of Lucent as of the date of this
Agreement (the "LUCENT CEO"), and (iv) two persons who qualify as independent
directors of Alcatel's Board of Directors mutually agreed upon by Alcatel and
Lucent, consistent with Schedule 2.02(a) of the Lucent Disclosure Letter. Each
nominee elected to the Board of Directors in such meeting of Alcatel's
shareholders shall be elected for a term of four years.
(b) Alcatel's Board of Directors shall cause the Lucent CEO to be
appointed as Chief Executive Officer of Alcatel, and cause the Alcatel CEO to be
appointed as the non-executive Chairman of the Board of Directors of Alcatel, in
each case, effective as of the Effective Time. In the event that the Lucent CEO
is unwilling or unable to serve as the Chief Executive Officer of Alcatel as of
the Effective Time, the Board of Directors of Alcatel (constituted pursuant to
Section 2.02(a)) shall appoint a Chief Executive Officer of Alcatel in
accordance with the articles of association and by-laws (STATUTS) of Alcatel as
in effect as of the Effective Time. In the event that the Alcatel CEO is
unwilling or unable to serve as the non-executive Chairman of the Board of
Directors of Alcatel as of the Effective Time, the Board of Directors of Alcatel
(constituted pursuant to Section 2.02(a)) shall appoint a non-executive Chairman
of the Board of Directors of Alcatel in accordance with the articles of
association and by-laws (STATUTS) of Alcatel as in effect as of the Effective
Time.
Section 2.03 Articles of Association and By-laws of Alcatel. The
articles of association and by-laws of Alcatel (STATUTS) in effect immediately
prior to the Effective Time shall be amended so that as of the Effective Time,
the articles of association and by-laws of Alcatel (STATUTS) shall read in their
entirety as set forth in Exhibit A hereto (the "NEW ALCATEL BY-LAWS").
9
Section 2.04 Board Rules of Alcatel. The Board Rules (REGLEMENTS
INTERIEURS) of Alcatel in effect immediately prior to the Effective Time shall
be amended and restated in their entirety to read as set forth in Exhibit B
hereto, effective as of the Effective Time.
Section 2.05 Certificate of Incorporation of the Surviving
Corporation. Subject to Section 6.03, the certificate of incorporation of Lucent
in effect immediately prior to the Effective Time, as amended and restated in
its entirety to read as set forth in Exhibit C hereto, shall be the certificate
of incorporation of the Surviving Corporation until amended in accordance with
applicable law.
Section 2.06 By-laws of the Surviving Corporation. Subject to Section
6.03, the by-laws of Merger Subsidiary in effect immediately prior to the
Effective Time, as set forth in Exhibit C hereto, shall be the by-laws of the
Surviving Corporation until amended in accordance with applicable law.
Section 2.07 Directors and Officers of the Surviving Corporation.
From and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, the directors and
officers of the Surviving Corporation shall be mutually selected by Alcatel and
Lucent.
Section 2.08 Governance of ▇▇▇▇ Laboratories and Certain Government
Contracts. Alcatel, Lucent, the entity holding certain appropriate assets
(including certain government contracts consistent with Section 2.08 of the
Lucent Disclosure Letter), (the "APPROPRIATE ASSETS") and any intermediate
entities shall enter into the appropriate form of agreement, effective as of the
Effective Time and mutually acceptable to the parties acting in accordance with
Section 7.01, with respect to the Appropriate Assets, pursuant to which the sole
equityholder of the entity holding the Appropriate Assets shall provide three
special directors (which special directors shall be citizens and residents of
the United States eligible to obtain personnel security clearance from the U.S.
Department of Defense) with certain governance rights over the entity holding
the Appropriate Assets to ensure the independence of such entity from its parent
entities and to protect the confidentiality of classified information.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LUCENT
Except as set forth in any Lucent SEC Document (as defined in Section
3.07(a)), filed and publicly available prior to the date of this Agreement (the
"FILED LUCENT SEC DOCUMENTS"), excluding any disclosure in such Filed Lucent SEC
Document set forth in any risk factor section and in any section relating to
forward-looking statements, and except as set forth in the Lucent Disclosure
Letter (subject to Section 10.11(b)), Lucent represents and warrants to Alcatel
that:
Section 3.01.Corporate Existence and Power. Lucent is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. Lucent has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted, except for those the absence of which would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
10
below) on Lucent. Lucent is duly qualified to do business and is in good
standing in each jurisdiction (to the extent such concepts exist in such
jurisdictions) where the character of the property owned, operated or leased by
it or the nature of its activities makes such qualification necessary, except
for those jurisdictions where the failure to be so qualified or be in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Lucent. For purposes of this Agreement, a "MATERIAL ADVERSE EFFECT"
with respect to any Person means any events, facts, changes or circumstances
which are, have resulted in, or would reasonably be expected to result in, a
material adverse effect on the financial condition, business, or annual results
of operations of such Person and its Subsidiaries, taken as a whole, except to
the extent arising or resulting from, or caused by any of the following, in
which case, they shall be excluded from consideration: (i) any changes or
developments in United States, European or global economic, regulatory or
political conditions in general (including the outbreak or escalation of
hostilities or acts of war or terrorism), or generally affecting the financial
or securities markets in the United States, Europe or elsewhere in the world,
(ii) any changes or developments involving the communications systems, software
and products industries in general and not materially disproportionately
affecting such Person (and its Subsidiaries) relative to other participants in
such industries generally, (iii) any changes in applicable law, US GAAP (as
herein defined), IFRS (as herein defined) or other accounting standards, (iv)
any changes or developments directly resulting from the execution, delivery,
existence of, or compliance with, this Agreement or announcement of the
transactions contemplated hereby (provided that the exception in this clause
(iv) shall not apply to the representations and warranties contained in Section
3.04 or 4.04 to the extent that the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby would result in a
breach or inaccuracy of the representations and warranties set forth in Section
3.04 or 4.04). Lucent has heretofore made available to Alcatel true and complete
copies of Lucent's certificate of incorporation and by-laws as currently in
effect.
Section 3.02 Corporate Authorization. (a) The execution, delivery and
performance by Lucent of this Agreement and the consummation by Lucent of the
transactions contemplated hereby are within Lucent's corporate powers and,
except for the Lucent Stockholder Approval (as defined below), have been duly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by Lucent and, assuming that this Agreement
constitutes the valid and binding agreement of each of Alcatel and Merger
Subsidiary, constitutes a valid and binding agreement of Lucent enforceable
against Lucent in accordance with its terms.
(b) Lucent's Board of Directors, at a meeting duly called and held,
has (i) determined that this Agreement and the transactions contemplated hereby
(including the Merger) are advisable and in the best interests of Lucent's
stockholders, (ii) duly and validly approved and adopted this Agreement and the
transactions contemplated hereby (including the Merger) and (iii) resolved
(subject to Section 5.02) to recommend to its stockholders the adoption of this
Agreement.
(c) The affirmative vote of the holders of a majority of the Shares
outstanding on the record date (the "LUCENT STOCKHOLDER APPROVAL") set for the
Lucent Stockholder Meeting (as defined in Section 5.02) to adopt this Agreement
is the only vote of the
11
holders of any class or series of Lucent's capital stock necessary under
applicable law to approve and adopt this Agreement, the Merger and the other
transactions contemplated hereby.
Section 3.03 Governmental Authorization. The execution, delivery and
performance by Lucent of this Agreement and the consummation of the transactions
contemplated hereby (including the Merger) by Lucent require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
other than (a) the filing of a certificate of merger in accordance with Delaware
Law, (b) compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), (c) compliance
with any applicable requirements of Council Regulation (EC) No. 139/2004 of the
Council of the European Union (the "EC MERGER REGULATION"), (d) compliance with
any applicable requirements of any other foreign antitrust laws or regulations,
(e) compliance with any applicable requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder (the
"EXCHANGE ACT"), (f) compliance with any applicable requirements of the 1933
Act, (g) compliance with French securities regulatory requirements, including of
the Autorite des Marches Financiers (the "AMF"), (h) compliance with any
applicable requirements of the Exon-▇▇▇▇▇▇ Amendment to the Defense Protection
Act of 1998 (the "EXON-▇▇▇▇▇▇ ACT") and (i) other actions or filings which if
not taken or made would not, individually or in the aggregate, have a Material
Adverse Effect on Lucent.
Section 3.04 Non-Contravention. Except as set forth on Section 3.04
of the Lucent Disclosure Letter, the execution, delivery and performance by
Lucent of this Agreement and the consummation by Lucent of the transactions
contemplated hereby do not and will not (a) assuming receipt of the Lucent
Stockholder Approval, contravene or conflict with the certificate of
incorporation or by-laws or equivalent organizational documents of Lucent or any
of its Subsidiaries, (b) assuming compliance with the matters referred to in
Section 3.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Lucent or any of its Subsidiaries, (c) constitute a
violation of or default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Lucent or any of its
Subsidiaries or to a loss of any benefit to which Lucent or any of its
Subsidiaries is entitled under any provision of any agreement, contract or other
instrument binding upon Lucent or any of its Subsidiaries or any license,
franchise, permit or other similar authorization held by Lucent or any of its
Subsidiaries, or (d) result in the creation or imposition of any Lien on any
asset of Lucent or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or violations, defaults,
rights of termination, cancellation or acceleration, or losses or Liens referred
to in clause (c) or (d) that would not, individually or in the aggregate, have a
Material Adverse Effect on Lucent. For purposes of this Agreement, the term
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset other than
any such mortgage, lien, pledge, charge, security interest or encumbrance, (i)
for Taxes (as defined in Section 3.13) not yet due or being contested in good
faith (and for which adequate accruals or reserves have been established on the
Alcatel Balance Sheet (as defined in Section 4.08) or Lucent Balance Sheet (as
defined in Section 3.08), as the case may be) or (ii) which is a carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like lien
arising in the ordinary course of business. Except as disclosed in Section 3.04
of the Lucent Disclosure Letter, neither Lucent nor any Subsidiary of Lucent is
a party to any
12
agreement that expressly limits the ability of Lucent or any Subsidiary of
Lucent, or would limit Alcatel or any Subsidiary of Alcatel after the Effective
Time, to compete in or conduct any line of business or compete with any Person
or in any geographic area or during any period of time, in each case, if such
limitation is or is reasonably likely to be material to Lucent and its
Subsidiaries, taken as a whole, or, following the Effective Time, to Alcatel and
its Subsidiaries, taken as a whole.
Section 3.05 Capitalization of Lucent. The authorized capital stock
of Lucent consists of 10,000,000,000 Shares and 250,000,000 shares of preferred
stock, par value $1.00 per share (of which 25,000,000 shares are designated as
Series A Junior Participating Preferred Stock). As of the close of business on
February 28, 2006, (i) there were 4,470,843,920 Shares issued and outstanding,
and (ii) there were no shares of preferred stock of Lucent issued and
outstanding. As of the close of business on February 28, 2006, (i) there were
375,904,163 Shares issuable assuming that all options outstanding as of such
date issued under the Lucent Stock Option Plans were exercisable as of such date
(of which options to purchase an aggregate of 282,901,542 Shares were
exercisable as of such date), (ii) there were Lucent Stock-Based Accounts with
respect to (a) 25,172,796 full stock units for employees and (b) 236,232
non-employee director Shares (including deferred Share grants to non-employee
directors); (iii) there were 816,454,426 Shares issuable assuming the conversion
of all of the outstanding Lucent Convertible Debt as of such date and (iv) there
were 199,372,885 Shares issuable assuming that all of the Lucent Warrants
outstanding as of such date were converted into Shares as of such date. All
outstanding Shares have been duly authorized and validly issued and are fully
paid and nonassessable. Except as set forth in this Section 3.05 and except for
changes since the close of business on February 28, 2006 resulting from the
exercise of employee stock options outstanding on such date or options or other
stock-based awards granted as permitted by Section 5.01, there are outstanding
(a) no shares of capital stock or other voting securities of Lucent, (b) no
securities of Lucent convertible into or exchangeable for shares of capital
stock or voting securities of Lucent, and (c) no options, warrants or other
rights to acquire from Lucent, and no preemptive or similar rights, subscription
or other rights, convertible securities, agreements, arrangements or commitments
of any character, relating to the capital stock of Lucent, obligating Lucent to
issue, transfer or sell, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Lucent or obligating Lucent to grant, extend or enter into any such option,
warrant, subscription or other right, convertible security, agreement,
arrangement or commitment (the items in clauses (a), (b) and (c) being referred
to in this Agreement collectively as the "LUCENT SECURITIES"). There are no
outstanding obligations of Lucent or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Lucent Securities.
Section 3.06 Subsidiaries. (a) Each Subsidiary of Lucent is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (to the extent such concepts exist in such
jurisdictions), has all powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, consents and approvals the
absence of which would not, individually or in the aggregate, have a Material
Adverse Effect on Lucent. Each Subsidiary of Lucent is duly qualified to do
business and is in good standing in each jurisdiction (to the extent such
concepts exist in such jurisdictions) where the character of the property owned,
operated or leased by it or the nature of its activities makes such
qualification
13
necessary, except for those jurisdictions where failure to be so qualified or in
good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Lucent.
(b) Except for Liens in respect of the Collateral Agreements as
provided therein and except as set forth on Section 3.06(b) of the Lucent
Disclosure Letter, all of the outstanding capital stock of, or other ownership
interests in, each Subsidiary of Lucent are owned by Lucent, directly or
indirectly, free and clear of any material Lien and free of any other material
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership interests). Except
as set forth on Section 3.06(b) of the Lucent Disclosure Letter, there are no
outstanding (i) securities convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary of Lucent or (ii) options, warrants, preemptive or similar rights,
subscriptions or other rights, convertible securities, agreements, arrangements
or commitments of any character, relating to the capital stock of any Subsidiary
of Lucent, obligating Lucent or any of its Subsidiaries to issue, transfer or
sell, any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary of Lucent or obligating
Lucent or any Subsidiary of Lucent to grant, extend or enter into any such
option, warrant, subscription or other right, convertible security, agreement,
arrangement or commitment (the items in clauses (i) and (ii) of this sentence
being referred to in this Agreement collectively as the "LUCENT SUBSIDIARY
SECURITIES"). Except as set forth on Section 3.06(b) of the Lucent Disclosure
Letter, there are no outstanding obligations of Lucent or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Lucent
Subsidiary Securities. No non-wholly owned Subsidiary of Lucent owns any Shares.
For purposes of this Agreement, the term "COLLATERAL AGREEMENTS" means
(i) the Amended and Restated Letter of Credit Issuance and Reimbursement
Agreement among Lucent Technologies Inc. and several banks and other parties
thereto and JPMorgan Chase Bank, N.A., as administrative agent, dated as of
October 1, 2004, as amended; (ii) the Amended and Restated External Sharing Debt
Agreement among Lucent Technologies Inc., several banks and other parties
thereto and JPMorgan Chase Bank, N.A., as administrative agent, dated as of
October 1, 2004, as amended; (iii) the First Amendment, dated as of April 8,
2005, to the (a) the Amended and Re-stated Letter of Credit Issuance and
Reimbursement Agreement, dated as of October 1, 2004, among Lucent Technologies
Inc., the several banks and other financial institutions or entities from time
to time parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
and (b) the Amended and Restated External Sharing Debt Agreement, dated as of
October 1, 2004, among Lucent Technologies Inc., the several banks and other
financial institutions or entities from time to time parties thereto and
JPMorgan Chase Bank, N.A., as Administrative Agent; (iv) the Amended and
Restated Guarantee and Collateral Agreement made by Lucent Technologies Inc. and
certain of its subsidiaries in favor of JPMorgan Chase Bank, N.A., as collateral
agent, dated as of October 1, 2004 ("GUARANTEE AND COLLATERAL AGREEMENT"), and
(v) the Amended and Restated Collateral Sharing Agreement made by Lucent
Technologies Inc. and certain of its subsidiaries in favor of JPMorgan Chase
Bank, N.A., as collateral agent, dated October 1, 2004; and (vi) the Amended and
Restated Cash Collateral Agreement Dated as of October 1, 2004.
14
Section 3.07 SEC Filings. (a) Lucent has made available to Alcatel
(i) its annual reports on Form 10-K for its fiscal years ended September 30,
2003, 2004 and 2005, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended after September 30, 2005, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
stockholders of Lucent held since September 30, 2004, and (iv) all of its other
reports, statements, schedules and registration statements filed with the SEC
since September 30, 2005 (the documents referred to in this Section 3.07(a)
being referred to in this Agreement collectively as the "LUCENT SEC DOCUMENTS").
(b) As of its filing date or, if amended prior to the date of this
Agreement, as of the date of the last such amendment prior to the date of this
Agreement, each Lucent SEC Document complied as to form in all material respects
with the applicable requirements of the Exchange Act, the 1933 Act and the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ ACT").
(c) As of its filing date, or, if amended prior to the date of this
Agreement, as of the date of the last such amendment prior to the date of this
Agreement, each Lucent SEC Document filed pursuant to the Exchange Act did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) Each registration statement constituting a Lucent SEC Document,
as amended or supplemented, if applicable, filed with the SEC by Lucent pursuant
to the 1933 Act as of the date such statement or amendment became effective did
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(e) Lucent has established and maintains a system of "disclosure
controls and procedures" and "internal control over financial reporting" (as
such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15
under the Exchange Act) sufficient to provide reasonable assurance (i) that
transactions are recorded as necessary to permit preparation of financial
statements in conformity with United States generally accepted accounting
principles ("US GAAP"), consistently applied, (ii) that transactions are
executed only in accordance with the authorization of management and (iii)
regarding prevention or timely detection of the unauthorized acquisition, use or
disposition of Lucent's assets. As of September 30, 2005, (x) there were no
"material weaknesses" (as defined by the Public Company Accounting Oversight
Board) and (y) there was no series of multiple "significant deficiencies" (as
defined by the Public Company Accounting Oversight Board) that was reasonably
likely to collectively represent a "material weakness" in the design or
operation of Lucent's internal controls. Since September 30, 2005, neither
Lucent nor any of its Subsidiaries nor, to Lucent's knowledge, Lucent's
independent auditors, have identified or been made aware of (A) any material
weakness in the system of internal controls utilized by Lucent and its
Subsidiaries, (B) any fraud, whether or not material, that involves Lucent's
management or other employees who have a role in the preparation of financial
statements or the internal controls utilized by Lucent and its Subsidiaries or
(C) any material claim or allegation regarding any of the foregoing.
15
(f) The "disclosure controls and procedures" (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) utilized by Lucent are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by Lucent in the reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such
information required to be disclosed is accumulated and communicated to Lucent's
management as appropriate to allow timely decisions regarding required
disclosure and to enable the Chief Executive Officer and Chief Financial Officer
of Lucent to make the certifications required under the Exchange Act with
respect to such reports.
Section 3.08 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Lucent
(including any related notes and schedules) included in its annual reports on
Form 10-K and the quarterly reports on Form 10-Q, in each case referred to in
Section 3.07, fairly present in all material respects, in conformity with US
GAAP, applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Lucent and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end audit adjustments and to any other adjustments described therein,
including the notes thereto). For purposes of this Agreement, "LUCENT BALANCE
SHEET" means the consolidated balance sheet of Lucent as of December 31, 2005
set forth in Lucent's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 2005 and "LUCENT BALANCE SHEET DATE" means December 31, 2005.
Section 3.09 Disclosure Documents. (a) Subject to the last sentence
of this Section 3.09(a), neither the proxy statement of Lucent (the "LUCENT
PROXY STATEMENT") to be filed with the SEC in connection with the Merger, nor
any amendment or supplement thereto, will, at the date on which the Lucent Proxy
Statement or any such amendment or supplement is first mailed to stockholders of
Lucent or at the time such stockholders vote on the adoption of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Lucent Proxy
Statement will, when filed, comply as to form in all material respects with the
requirements of the Exchange Act. Notwithstanding the foregoing, no
representation or warranty is made by Lucent in this Section 3.09(a) with
respect to statements made or incorporated by reference therein based on
information supplied by or on behalf of Alcatel or Merger Subsidiary for
inclusion or incorporation by reference in Lucent Proxy Statement.
(b) None of the information supplied or to be supplied by or on
behalf of Lucent for inclusion or incorporation by reference in the Alcatel
Circular (as defined in Section 4.09) or in the Form F-4 (as defined in Section
4.09) or any amendment or supplement thereto will, at the date on which the
Alcatel Circular or any such supplement or amendment thereto is first mailed to
the shareholders of Alcatel or at the time such shareholders vote on the matters
constituting the Alcatel Shareholder Approval (as defined in Section 4.02) or at
the time the Form F-4 or any such amendment or supplement becomes effective
under the 1933 Act, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact
16
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 3.10 Absence of Certain Changes. (a) Except as set forth on
Section 3.10 of the Lucent Disclosure Letter, from the Lucent Balance Sheet Date
to the date of this Agreement, Lucent and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and there has not
been:
(i) any event, occurrence, change or development of a state of
circumstances or facts which has had, individually or in the aggregate, a
Material Adverse Effect on Lucent; or
(ii) any action taken by Lucent or any Subsidiary of Lucent that, if
taken on or after the date of this Agreement, would conflict with or
constitute a violation of Section 5.01 (other than clauses (c) or (g) of
Section 5.01).
(b) Since the date of this Agreement, there shall not have been any
event, occurrence, change or development of a state of circumstances or facts
which has had, individually or in the aggregate, a Material Adverse Effect on
Lucent.
Section 3.11 No Undisclosed Material Liabilities. There are no
material liabilities of Lucent or any Subsidiary of Lucent of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities disclosed or provided for in Lucent Balance Sheet
or in the notes thereto;
(b) liabilities incurred in the ordinary course of business since
the Lucent Balance Sheet Date which would not, individually or in the aggregate,
have a Material Adverse Effect on Lucent;
(c) liabilities disclosed in the Filed Lucent SEC Documents or set
forth on Section 3.11(c) of the Lucent Disclosure Letter; and
(d) liabilities arising, or expressly permitted to be incurred,
under this Agreement (including Section 5.01).
Section 3.12 Investigation; Litigation. Except as set forth on
Section 3.12 of the Lucent Disclosure Letter, as of the date of this Agreement,
(a) there is no investigation or review pending or, to the knowledge of Lucent,
threatened by any governmental body, agency or official with respect to Lucent
or any of its Subsidiaries; and (b) there is no action, suit, claim,
investigation or proceeding pending against or, to the knowledge of Lucent,
threatened against or affecting Lucent or any of its Subsidiaries or any of
their respective properties or assets before any court or arbitrator or any
governmental body, agency or official, in each of cases (a) and (b) which would,
individually or in the aggregate, have a Material Adverse Effect on Lucent.
Section 3.13 Taxes. (a) Except as set forth in the Lucent SEC
Documents (including the notes thereto) or as otherwise set forth on Section
3.13 of the Lucent Disclosure
17
Letter or as would not, individually or in the aggregate, have a Material
Adverse Effect on Lucent: (i) all Tax Returns required to be filed with any
taxing authority by, or with respect to, Lucent and its Subsidiaries (and any
affiliated or unitary group of which any such Person was a member) have been
filed in accordance with all applicable laws and, as of the time of filing, such
Tax Returns correctly reflected the facts regarding the income, business,
assets, operations, activities and the status of Lucent and its Subsidiaries;
(ii) Lucent and its Subsidiaries (and any affiliated or unitary group of which
any such Person was a member) have timely and duly paid all Taxes required to be
paid by any of them; (iii) Lucent and its Subsidiaries (and any affiliated or
unitary group of which any such Person was a member) have timely withheld and
paid over to the proper taxing authorities all Taxes and other amounts required
to be so withheld and paid over; (iv) Lucent and its Subsidiaries have made
provision for all Taxes payable by Lucent and its Subsidiaries for which no Tax
Return has yet been filed; (v) the charges, accruals and reserves for Taxes with
respect to Lucent and its Subsidiaries reflected on the Lucent Balance Sheet are
adequate under US GAAP to cover the Tax liabilities accruing through the date
thereof; (vi) there is no action, suit, proceeding, audit or claim now proposed
in writing or pending against or with respect to Lucent or any of its
Subsidiaries in respect of any Tax where there is a reasonable possibility of an
adverse determination; (vii) neither Lucent nor any of its Subsidiaries is
liable for any Tax imposed on any entity other than such Person, except as the
result of the application of Treas. Reg. ss. 1.1502-6 (and any comparable
provision of the tax laws of any state, local or foreign jurisdiction) to the
affiliated group of which Lucent is the common parent; (viii) neither Lucent nor
any of its Subsidiaries is a party to, is bound by or has any obligation under
any tax sharing or similar agreement or arrangement; (ix) Lucent is not and has
not been, a United States Real Property Holding Corporation within the meaning
of Section 897(c)(2) of the Code during the applicable period set forth in
Section 897(c)(1)(A)(ii) of the Code; and (x) there are no liens for Taxes upon
any asset of Lucent or any of its Subsidiaries except for liens for Taxes not
yet due.
(b) Except as disclosed in Section 3.13(b) of the Lucent Disclosure
Letter, and except as to matters the substance and maximum potential liability
for Taxes in respect of which both have been (1) previously disclosed to Alcatel
and (2) fully and independently reserved for on the Lucent Balance Sheet,
neither Lucent nor any of its Subsidiaries has participated in any material
"listed transaction" within the meaning of Treasury Regulation Section 1.6011-4
for any taxable year as to which the statute of limitations has not expired.
(c) Neither Lucent nor any of its Subsidiaries has taken or agreed
to take any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to (i) prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) cause
the stockholders of Lucent to recognize gain pursuant to Section 367(a)(1) of
the Code other than any such stockholder that would be a "five-percent
transferee shareholder" of Alcatel (within the meaning of United States Treasury
Regulations Section 1.367(a)-3(c)(5)(ii)) following the Merger that does not
enter into a five-year gain recognition agreement in the form provided in
Treasury Regulation Section 1.367(a)-8(b).
For purposes of this Agreement, "TAXES" shall mean any and all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, excise, stamp, real or personal
property, ad valorem, withholding, social security (or
18
similar), unemployment, occupation, use, service, service use, license, net
worth, payroll, franchise, severance, transfer, recording, employment, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, profits, disability, sales, registration, value
added, alternative or add-on minimum, estimated or other taxes, assessments or
charges imposed by any federal, state, local or foreign governmental entity and
any interest, penalties, or additions to tax attributable thereto. For purposes
of this Agreement, "TAX RETURNS" shall mean any return, report, form or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.14 Employee Benefit Plan; Employment and Labor Matters. (a)
For purposes of this Agreement, "LUCENT EMPLOYEE PLAN" shall mean each material
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), each material employment,
severance or similar contract, plan, arrangement or policy applicable to any
director, former director, employee or former employee of Lucent or any of its
Subsidiaries and each material plan or arrangement, providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical benefits,
disability benefits, workers' compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance benefits) which is
maintained, administered or contributed to by Lucent or any of its Subsidiaries
and covers any employee or director or former employee or director of Lucent or
any of its Subsidiaries, or under which Lucent or any of its Subsidiaries has
any liability, other than statutorily mandated plans or "multiemployer plans,"
as defined in Section 3(37) of ERISA ("MULTIEMPLOYER PLANS"). Except as set
forth on Section 3.14(a) of the Lucent Disclosure Letter, neither Lucent nor any
of its Subsidiaries contributes to a Multiemployer Plan in the United States.
(b) Except as set forth on Section 3.14(b) of the Lucent Disclosure
Letter, each Lucent Employee Plan has been maintained in compliance with its
terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations (including but not limited to ERISA and the Code) which
are applicable to such plan, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on Lucent.
(c) Neither Lucent nor any affiliate of Lucent has incurred a
material liability under Title IV of ERISA that has not been satisfied in full,
and no condition exists that presents a material risk to Lucent or any affiliate
of Lucent of incurring any such liability other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due).
(d) Except as set forth on Section 3.14(d) of the Lucent Disclosure
Letter, with respect to each Lucent Employee Plan which is intended to be
qualified under Section 401(a) of the Code either the Internal Revenue Service
has issued a favorable determination letter that has not been revoked, or an
application for a favorable determination letter was timely submitted to the
Internal Revenue Service for which no final action has been taken by the
Internal Revenue Service.
19
(e) Except as set forth on Section 3.14(e) of the Lucent Disclosure
Letter, and except for liabilities that are statutorily mandated, or that would
not, on an individual basis, exceed $500,000, no director or officer or other
employee of Lucent or any of its Subsidiaries will become entitled to any
retirement, severance or similar benefit or enhanced or accelerated benefit
(including enhanced eligibility for severance benefits, eligibility for enhanced
severance benefits, any acceleration of vesting or lapse of repurchase rights or
obligations with respect to any employee stock option or other benefit under any
stock option plan or compensation plan or arrangement of Lucent) as a result of
the transactions contemplated hereby (either alone or as a result of a
termination of employment benefit which is a "change of control" benefit).
(f) Section 3.14(f) of the Lucent Disclosure Letter lists each
material United States collective bargaining agreement to which Lucent or any of
its Subsidiaries is a party or which is otherwise applicable to any of their
respective employees. The consummation of the transactions contemplated by this
Agreement will not give rise to any obligation to pay any amounts under, or
permit any union or similar labor organization to open negotiations with respect
to the terms of, any such United States collective bargaining agreement.
(g) Except for such matters which would not have, individually or
in the aggregate, a Material Adverse Effect on Lucent, or as set forth on
Section 3.14(g) of the Lucent Disclosure Letter, (i) as of the date of this
Agreement, (1) there are no strikes or lockouts with respect to any employees of
Lucent or any of its Subsidiaries, (2) to the knowledge of Lucent, there is no
union organizing effort pending or threatened against Lucent or any of its
Subsidiaries, (3) there is no unfair labor practice, labor dispute (other than
routine individual grievances) or labor arbitration proceeding pending or, to
the knowledge of Lucent, threatened against Lucent or any of its Subsidiaries,
and (4) there is no slowdown, or work stoppage in effect or, to the knowledge of
Lucent, threatened with respect to any employees of Lucent or any of its
Subsidiaries and (ii) Lucent and its Subsidiaries are in compliance with all
applicable laws respecting employment, employment practices, labor, occupational
safety and health and wages and hours, including all civil rights and
anti-discrimination laws, rules and regulations and laws concerning unfair labor
practices.
Section 3.15 Compliance with Laws. (a) Since January 1, 2003, Lucent
and its Subsidiaries have conducted their respective businesses in compliance
with all applicable laws, statutes, ordinances, rules, judgments, orders,
decrees or regulations, except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Lucent. No personal loan
or other extension of credit by Lucent or any of its Subsidiaries to any of
their respective executive officers or directors has been made or modified
(other than as permitted by Section 13 of the Exchange Act and Section 402 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) since July 31, 2002. This Section 3.15 does not relate
to Taxes, which are the subject of Section 3.13, to environmental matters, which
are the subject of Section 3.16, or to matters relating to Intellectual
Property, which are the subject of Section 3.17.
(b) Except as set forth on Section 3.15(b) of the Lucent Disclosure
Letter, from January 1, 2003 to the date of this Agreement and to the best of
their knowledge, information and belief, Lucent and its Subsidiaries, and their
respective officers, directors, employees and agents have not corruptly made,
promised, offered, or authorized any payment or
20
transfer of anything of value, directly or indirectly, to any government
official, employee or agent for the purpose of (i) influencing such government
official, employee or agent to take any action or decision or to omit to take
any action, in his or her official capacity, (ii) inducing such government
official, employee or agent to use his or her influence with a government or
instrumentality to affect any act or decision of the government or
instrumentality, or (iii) securing any improper advantage.
(c) From January 1, 2003 to the date of this Agreement and to the
best of their knowledge, information and belief, Lucent and its Subsidiaries
have not caused any of their respective consultants, joint venture partners
and/or representatives (including resellers), in connection with its
relationship with Lucent or any of its Subsidiaries, to corruptly make, promise,
offer, or authorize any payment or transfer of anything of value, directly or
indirectly, to any government official, employee or agent for the purpose of (i)
influencing such government official, employee or agent to take any action or
decision or to omit to take any action, in his or her official capacity, (ii)
inducing such government official, employee or agent to use his or her influence
with a government or instrumentality to affect any act or decision of the
government or instrumentality, or (iii) securing any improper advantage.
Section 3.16 Environmental Matters.
(a) Except as set forth on Section 3.16 of the Lucent Disclosure
Letter:
(i) Lucent is in compliance with all applicable
Environmental Laws (which compliance includes the possession by Lucent of
all permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance would not, individually or in the
aggregate, have a Material Adverse Effect on Lucent;
(ii) there is no Environmental Claim pending or threatened
against Lucent or, to the best knowledge of Lucent, against any Person
whose liability for any Environmental Claim Lucent has or may have retained
or assumed either contractually or by operation of law, except for any such
Environmental Claims which would not, individually or in the aggregate,
have a Material Adverse Effect on Lucent;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the Release or
presence of any Hazardous Material, which could form the basis of any
Environmental Claim against Lucent or, to the best knowledge of Lucent,
against any Person whose liability for any Environmental Claim Lucent has
or may have retained or assumed either contractually or by operation of law
which would, individually or in the aggregate, have a Material Adverse
Effect on Lucent; and
(iv) there is no Cleanup of Hazardous Materials being
conducted or planned at any property currently or formerly owned or
operated by
21
Lucent, except for such Cleanups which would not, individually or in the
aggregate have a Material Adverse Effect on Lucent.
(b) For purposes of this Agreement:
(i) "CLEANUP" means all actions required to: (A) cleanup,
remove, treat or remediate Hazardous Materials in the indoor or outdoor
environment; (B) prevent the Release of Hazardous Materials so that they do not
migrate, endanger or threaten to endanger public health or welfare or the indoor
or outdoor environment; (C) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (D) respond to any government requests for
information or documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of Hazardous
Materials in the indoor or outdoor environment.
(ii) "ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or notice (written or oral) by any Person alleging
potential liability (including potential liability for investigatory costs,
Cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (a) the presence or Release of any Hazardous Materials at any location,
whether or not owned or operated by Lucent or Alcatel, or (b) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
(iii) "ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment, including laws relating to Releases or threatened Releases
of Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, disposal, transport or handling
of Hazardous Materials and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.
(iv) "HAZARDOUS MATERIALS" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, or defined
as such by, or regulated as such under, any Environmental Law.
(v) "RELEASE" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
Section 3.17 Intellectual Property.
22
(a) For purposes of this Agreement, the term "INTELLECTUAL
PROPERTY" means all registered and unregistered service marks, trademarks, trade
names, corporate names, trade dress, Internet domain names, identifying symbols,
logos, emblems, signs or insignia, including all goodwill associated therewith,
and all applications, registrations, and renewals in connection therewith; all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), and all U.S. and foreign patents, patent applications, and patent
disclosures (and all rights related thereto, including all reissues, divisions,
continuations, continuations-in-part, substitutions, extensions, or renewals of
any of the foregoing); all copyrights, and all applications, registrations, and
renewals in connection therewith; all computer programs, including any and all
software implementations of algorithms, models and methodologies whether in
source code or object code form, databases and compilations, including any and
all data and collections of data, all documentation, including user manuals and
training materials, related to any of the foregoing and the content and
information contained on any web site; all confidential information, technology,
know-how, inventions, processes, formulae, algorithms, models and methodologies
(such confidential items, collectively "TRADE SECRETS"); and any licenses to use
any of the foregoing.
(b) Except as set forth on Section 3.17(b) of the Lucent Disclosure
Letter or as would not, individually or in the aggregate, have a Material
Adverse Effect on Lucent:
(i) Lucent, or one of its Subsidiaries, owns or possesses
adequate licenses or other legal rights to use, sell or license all
Intellectual Property used in the present conduct of the businesses of
Lucent and its Subsidiaries, free and clear of all Liens other than Liens
in respect of the Collateral Agreements;
(ii) no claims or, to the knowledge of Lucent, threat of claims
have been asserted by any Person related to the use of any Intellectual
Property in the conduct of the businesses of Lucent and its Subsidiaries;
(iii) no settlement agreements, consents, judgments, orders,
forbearance to ▇▇▇ or similar obligations limit or restrict Lucent's or any
Subsidiary's rights in and to any Intellectual Property, other than the
granting of a license or a covenant not to ▇▇▇;
(iv) it is the policy of Lucent and its Subsidiaries to not
knowingly infringe any valid Intellectual Property right of any Person, and
Lucent and its Subsidiaries have, to Lucent and its Subsidiaries'
knowledge, abided by their policy of not knowingly infringing any valid
Intellectual Property right of any Person;
(v) to the knowledge of Lucent, no third party is infringing or
otherwise violating any Intellectual Property owned by Lucent or its
Subsidiaries;
23
(vi) Lucent and its Subsidiaries take reasonable measures to
protect the confidentiality of their Trade Secrets. To the knowledge of
Lucent, no Trade Secret of Lucent or its Subsidiaries has been disclosed or
authorized to be disclosed to any third party other than pursuant to a
written nondisclosure agreement that adequately protects Lucent's and its
Subsidiaries' proprietary interests in and to such Trade Secrets;
(vii) the consummation of the transactions as specified herein
will not result in the loss or impairment of Lucent's and its Subsidiaries'
rights to own or use any of the Intellectual Property nor will such
consummation require the consent of any third party in respect of any such
Intellectual Property; and
(viii) Lucent and its Subsidiaries have conducted their respective
businesses in compliance with all applicable laws, statutes, ordinances and
regulations relating to, or in respect of, Intellectual Property.
Section 3.18 Vendor Financing. Section 3.18 of the Lucent Disclosure
Letter contains a true, complete and accurate list, as of the date of this
Agreement, of (i) all financing arrangements (including loans, deferred payment
arrangements in excess of one year and equity-linked arrangements) to customers
(including distributors to customers) or vendors of Lucent or any of its
Subsidiaries which have been provided by Lucent and/or any of its Subsidiaries
or are guaranteed (including by guarantee to an institution providing such
loan), secured or supported in any respect by Lucent and/or any of its
Subsidiaries (collectively, "LUCENT VENDOR FINANCING") with an aggregate
principal amount of financing or available commitment greater than $25,000,000
and (ii) all contracts, agreements, commitments and other arrangements relating
to Lucent Vendor Financing with an aggregate principal amount of financing or
available commitment greater than $25,000,000.
Section 3.19 Takeover Statutes. The Board of Directors of Lucent has
taken the necessary action to make inapplicable to this Agreement, the Merger
and the other transactions contemplated hereby Section 203 of the Delaware Law
and any other applicable antitakeover or similar statute or regulation.
Section 3.20 Finders' or Advisors' Fees. Except for ▇.▇. ▇▇▇▇▇▇
Securities Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Lucent or any of its Subsidiaries who might be entitled to any fee
or commission in connection with the transactions contemplated by this
Agreement.
Section 3.21 Opinions of Financial Advisors. Lucent has received the
opinion of each of ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. to the
effect that, as of the date of this Agreement, the Exchange Ratio is fair, from
a financial point of view, to the holders of Shares (other than Alcatel or any
of its Subsidiaries or affiliates).
24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALCATEL
Except as set forth in any Alcatel SEC Document (as defined in Section
4.07(a)), filed and publicly available prior to the date of this Agreement (the
"FILED ALCATEL SEC DOCUMENTS"), excluding any disclosure in such Filed Alcatel
SEC Document set forth in any risk factor section and in any section relating to
forward-looking statements, and except as set forth in the Alcatel Disclosure
Letter (subject to Section 10.11(b)), Alcatel represents and warrants to Lucent
that:
Section 4.01 Corporate Organization. Alcatel is a societe anonyme
duly organized, validly existing and in good standing under the laws of the
Republic of France. Alcatel has all powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except for those the absence of which would not, individually or in
the aggregate, have a Material Adverse Effect on Alcatel. Merger Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Merger Subsidiary has all corporate powers and
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted, except for those the absence of which
would not, individually or in the aggregate, have a Material Adverse Effect on
Merger Subsidiary. Alcatel is duly qualified to do business and is in good
standing in each jurisdiction (to the extent such concepts exist in such
jurisdictions) where the character of the property owned, operated or leased by
it or the nature of its activities makes such qualification necessary, except
for those jurisdictions where the failure to be so qualified or be in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on Alcatel. Since the date of its incorporation, Merger Subsidiary has
not engaged in any activities other than in connection with or as contemplated
by this Agreement. Alcatel has made available to Lucent true and complete copies
of Alcatel's articles of association and by-laws as currently in effect and
Merger Subsidiary's certificate of incorporation and by-laws as currently in
effect.
Section 4.02 Corporate Authorization. (a) The execution, delivery and
performance by Alcatel and Merger Subsidiary of this Agreement and the
consummation by Alcatel and Merger Subsidiary of the transactions contemplated
hereby are within the powers of Alcatel and Merger Subsidiary and have been duly
authorized by all necessary corporate or other action, except for the
affirmative vote of the holders representing more than 50% (in the case of
clause (iv) below) or two-thirds (in the case of clauses (i)-(iii) below), as
applicable, of the voting rights attached to the Alcatel Ordinary Shares cast at
the Alcatel Shareholder Meeting (as defined in Section 6.04), authorizing and
approving: (i) the issuance of Alcatel Ordinary Shares in connection with the
Merger pursuant to L225-148 of the French Commercial Code, (ii) the issuance of
ADSs and Alcatel Ordinary Shares for delivery upon the exercise or settlement of
Lucent Stock Options or instruments, and upon exercise or conversion of Lucent
Warrants, Lucent Convertible Debt and Lucent Stock-Based Accounts, (iii) the
adoption of the New Alcatel By-Laws, and (iv) the election of the members of the
Board of Directors contemplated by Section 2.02(a) (collectively, the "ALCATEL
SHAREHOLDER APPROVAL"). This Agreement has been duly and validly executed and
delivered by each of Alcatel and Merger Subsidiary and, assuming that this
Agreement constitutes the valid and binding agreement of Lucent, constitutes a
valid and binding agreement of each of Alcatel and Merger Subsidiary enforceable
against such party
25
in accordance with its terms. The ADSs and the underlying Alcatel Ordinary
Shares issued pursuant to the Merger, when issued in accordance with the terms
of this Agreement, will be duly authorized, validly issued and fully paid (and,
with respect to the ADSs nonassessable), and not subject to preemptive rights.
(b) Alcatel's Board of Directors, at a meeting duly called and
held, has (i) determined that this Agreement and the transactions contemplated
hereby (including the Merger) are in the best interests of Alcatel, (ii) duly
and validly approved and adopted this Agreement and the transactions
contemplated hereby (including the Merger), and (iii) resolved (subject to
Section 6.04) to recommend to its shareholders the approval of the matters
constituting the Alcatel Shareholder Approval.
(c) The Alcatel Shareholder Approval is the only vote of the
holders of any class or series of Alcatel's capital stock necessary under
applicable law to approve and adopt the matters constituting the Alcatel
Shareholder Approval.
Section 4.03 Governmental Authorization. The execution, delivery and
performance by Alcatel and Merger Subsidiary of this Agreement and the
consummation by Alcatel and Merger Subsidiary of the transactions contemplated
hereby (including the Merger) require no action by or in respect of, or filing
with, any governmental body, agency, official or authority other than (a) the
filing of a certificate of merger in accordance with Delaware Law, (b)
compliance with any applicable requirements of the HSR Act, (c) compliance with
any applicable requirements of the EC Merger Regulation, (d) compliance with any
applicable requirements of any other foreign antitrust laws or regulations, (e)
compliance with any applicable requirements of the Exchange Act, (f) compliance
with any applicable requirements of the 1933 Act, (g) compliance with French
securities regulatory requirements, including those of the AMF, (h) compliance
with any applicable requirements of the Exon-▇▇▇▇▇▇ Act and (i) other actions or
filings which if not taken or made would not, individually or in the aggregate,
have a Material Adverse Effect on Alcatel.
Section 4.04 Non-Contravention. Except as set forth on Section 4.04
of the separate disclosure letter delivered by Alcatel to Lucent dated as of the
date of this Agreement (the "ALCATEL DISCLOSURE LETTER"), the execution,
delivery and performance by Alcatel and Merger Subsidiary of this Agreement and
the consummation by Alcatel and Merger Subsidiary of the transactions
contemplated hereby do not and will not (a) assuming receipt of Alcatel
Shareholder Approval, contravene or conflict with or constitute a violation of
the articles of association and by-laws of Alcatel or the certificate of
incorporation or by-laws or equivalent organizational documents of any of its
Subsidiaries (including Merger Subsidiary), (b) assuming compliance with the
matters referred to in Section 4.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Alcatel or any of its Subsidiaries, (c)
constitute a violation of or default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of Alcatel
or any of its Subsidiaries or to a loss of any benefit to which Alcatel or any
of its Subsidiaries is entitled under any provision of any agreement, contract
or other instrument binding upon Alcatel or any of its Subsidiaries or any
license, franchise, permit or other similar authorization held by Alcatel or any
of its Subsidiaries or (d) result in the creation or imposition of any Lien on
any asset of Alcatel or any of its Subsidiaries, except for such contraventions,
26
conflicts or violations referred to in clause (b) or violations, defaults,
rights of termination, cancellation or acceleration, or losses or Liens referred
to in clause (c) or (d) that would not, individually or in the aggregate, have a
Material Adverse Effect on Alcatel. Except as disclosed in Section 4.04 of the
Alcatel Disclosure Letter, neither Alcatel nor any Subsidiary of Alcatel is a
party to any agreement that expressly limits the ability of Alcatel or any
Subsidiary of Alcatel to compete in or conduct any line of business or compete
with any Person or in any geographic area or during any period of time, in each
case, if such limitation is or is reasonably likely to be material to Alcatel
and its Subsidiaries, taken as a whole.
Section 4.05 Capitalization of Alcatel. As of February 24, 2006, the
issued capital stock of Alcatel consists of 1,429,278,636 shares with a nominal
value of (euro)2 per share, all of which are Alcatel Ordinary Shares. As of the
close of business on February 24, 2006, (i) there were 143,700,120 ADSs
representing an aggregate of 143,700,120 Alcatel Ordinary Shares issued and
outstanding, (ii) there were 115,539,007 Alcatel Ordinary Shares that could be
issued pursuant to Alcatel's stock option incentive plans and share subscription
options set forth on Section 4.05 of the Alcatel Disclosure Letter
(collectively, the "ALCATEL STOCK OPTION PLANS"), (iii) there were 2,719,130
Alcatel Ordinary Shares that could be issued upon redemption of bonds issued by
a subsidiary of Alcatel and redeemable for Alcatel Ordinary Shares, and (iv)
there were 63,192,019 Alcatel Ordinary Shares that could be issued upon
conversion of convertible bonds issued by Alcatel. All outstanding shares of
capital stock of Alcatel have been duly authorized and validly issued and are
fully paid. Except as set forth in this Section 4.05 and except for changes
since the close of business on February 24, 2006, resulting from the exercise of
employee stock options outstanding on such date or options or other stock-based
awards granted thereafter and except for the shares to be issued in connection
with the Merger, there are outstanding (a) no shares of capital stock or other
voting securities of Alcatel, (b) no securities of Alcatel convertible into or
exchangeable for shares of capital stock or voting securities of Alcatel, and
(c) no options, warrants or other rights to acquire from Alcatel, and no
preemptive or similar rights, subscription or other rights, convertible
securities, agreements, arrangements, or commitments of any character, relating
to the capital stock of Alcatel, obligating Alcatel to issue, transfer or sell
any capital stock, voting security or securities convertible into or
exchangeable for capital stock or voting securities of Alcatel or obligating
Alcatel to grant, extend or enter into any such option, warrant, subscription or
other right, convertible security, agreement, arrangement or commitment (the
items in clauses (a), (b) and (c) being referred to collectively as the "ALCATEL
SECURITIES"). There are no outstanding obligations of Alcatel or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Alcatel Securities.
Section 4.06 Subsidiaries. (a) Each Subsidiary of Alcatel is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization (to the extent such concepts exist in such
jurisdictions), has all powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, consents and approvals the
absence of which would not, individually or in the aggregate, have a Material
Adverse Effect on Alcatel. Each Subsidiary of Alcatel is duly qualified to do
business and is in good standing in each jurisdiction (to the extent such
concepts exist in such jurisdictions) where the character of the property owned,
operated or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Material Adverse Effect on Alcatel.
27
(b) Except as set forth on Section 4.06(b) of the Alcatel
Disclosure Letter, all of the outstanding capital stock of, or other ownership
interests in, each Subsidiary of Alcatel are owned by Alcatel, directly or
indirectly, free and clear of any material Lien and free of any other material
limitation or restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other ownership interests). There
are no outstanding (i) securities convertible into or exchangeable for shares of
capital stock or other voting securities or ownership interests in any
Subsidiary of Alcatel, and (ii) options, warrants, preemptive or similar rights,
subscriptions or other rights, convertible securities, agreements, arrangements
or commitments of any character, relating to the capital stock of any Subsidiary
of Alcatel, obligating Alcatel or any of its Subsidiaries to issue, transfer or
sell, any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary of Alcatel or obligating
Alcatel or any Subsidiary of Alcatel to grant, extend or enter into any such
option, warrant, subscription or other right, convertible security, agreement,
arrangement or commitment (the items in clauses (i) and (ii) of this sentence
being referred to in this Agreement collectively as the "ALCATEL SUBSIDIARY
SECURITIES"). There are no outstanding obligations of Alcatel or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Alcatel
Subsidiary Securities.
Section 4.07 SEC Filings. (a) Alcatel has made available to Lucent
(i) its annual reports on Form 20-F for its fiscal years ended December 31,
2003, 2004 and 2005, (ii) its proxy or information statements relating to
meetings, of, or actions taken without a meeting by, the shareholders of Alcatel
held since December 31, 2004, and (iii) all of its other reports, statements,
schedules and registration statements filed with the SEC since December 31, 2005
(the documents referred to in this Section 4.07(a) being referred to in this
Agreement collectively as the "ALCATEL SEC DOCUMENTS").
(b) As of its filing date or, if amended prior to the date of this
Agreement, as of the date of the last such amendment prior to the date of this
Agreement, each Alcatel SEC Document complied as to form in all material
respects with the applicable requirements of the Exchange Act, the 1933 Act and
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act.
(c) As of its filing date, or, if amended prior to the date of this
Agreement, as of the date of the last such amendment prior to the date of this
Agreement, each Alcatel SEC Document filed pursuant to the Exchange Act, did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) Each registration statement constituting an Alcatel SEC
Document, as amended or supplemented, if applicable, filed with the SEC by
Alcatel pursuant to the 1933 Act as of the date such statement or amendment
became effective did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading.
(e) Alcatel has taken all steps necessary to establish a system of
"disclosure controls and procedures" and "internal control over financial
reporting" (as such terms are defined in paragraphs (e) and (f), respectively,
of Rule 13a-15 under the Exchange Act).
28
Since December 31, 2005 to the date hereof, Alcatel's independent auditors have
not notified Alcatel or any of its Subsidiaries of (A) any material weakness in
the system of internal controls utilized by Alcatel and its Subsidiaries, (B)
any fraud, whether or not material, that involves Alcatel's management or other
employees who have a role in the preparation of financial statements or the
internal controls utilized by Alcatel and its Subsidiaries or (C) any material
claim or allegation regarding any of the foregoing. The report of the Chairman
of the Board of Directors of Alcatel dated March 30, 2006, given pursuant to
Article L.225-37 of the French Commercial Code, accurately describes the design
and operation of Alcatel's system of internal control over financial reporting
for the period covered thereby.
(f) The "disclosure controls and procedures" (as defined in Rules
13a-15(e) and 15d-15(e) of the Exchange Act) utilized by Alcatel are reasonably
designed to ensure that all information (both financial and non-financial)
required to be disclosed by Alcatel in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that all such
information required to be disclosed is accumulated and communicated to
Alcatel's management as appropriate to allow timely decisions regarding required
disclosure and to enable the Chief Executive Officer and Chief Financial Officer
of Alcatel to make the certifications required under the Exchange Act with
respect to such reports.
Section 4.08 Financial Statements. The audited consolidated financial
statements of Alcatel (including any related notes and schedules) included in
its annual reports on Form 20-F for Alcatel's fiscal years ended December 31,
2003 and 2004 as referred to in Section 4.07(a)(i) fairly present in all
material respects, in conformity with generally accepted accounting principles
in France applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Alcatel and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended, and
such audited consolidated financial statements are reconciled to US GAAP as
required by and in accordance with the requirements of the Exchange Act. The
audited consolidated financial statements of Alcatel (including any notes and
schedules) included in the annual report on Form 20-F for Alcatel's fiscal year
ended December 31, 2005 fairly present in all material respects, in conformity
with International Financial Reporting Standards ("IFRS") (except as may be
indicated in the notes thereto), the consolidated financial position of Alcatel
and its consolidated Subsidiaries as of the date thereof and their consolidated
results of operations and changes in financial position for the period then
ended, and such audited consolidated financial statements are reconciled to US
GAAP as required by and in accordance with the requirements of the Exchange Act.
For purposes of this Agreement, "ALCATEL BALANCE SHEET" means the consolidated
balance sheet of Alcatel as of December 31, 2005 set forth in Alcatel's annual
report on Form 20-F for Alcatel's fiscal year ended December 31, 2005, and
"ALCATEL BALANCE SHEET DATE" means December 31, 2005.
Section 4.09 Disclosure Documents. (a) Subject to the last sentence
of Section 4.09(b), the Registration Statement on Form F-4 of Alcatel (the "FORM
F-4")and the Registration Statement on Form F-6 of Alcatel (the "FORM F-6") to
be filed under the 1933 Act relating to the issuance of ADSs in the Merger and
the issuance of Alcatel Ordinary Shares underlying such ADSs that may be
required to be filed with the SEC, and any amendments or supplements thereto,
will, when filed, subject to the last sentence of Section 4.09(b)), comply as to
form in all
29
material respects with the applicable requirements of the Exchange Act and the
1933 Act. The circular of Alcatel ("ALCATEL CIRCULAR") to be delivered to, or
put at the disposal of, Alcatel's shareholders in connection with obtaining the
Alcatel Shareholder Approval at the Alcatel Shareholder Meeting will, when
provided to Alcatel's shareholders, subject to the last sentence of Section
4.09(b), comply as to form and substance in all material respects with the
applicable requirements of French securities regulations.
(b) None of the Alcatel Circular or any amendment or supplement
thereto, will, at the date on which the Alcatel Circular or any amendment or
supplement thereto is first mailed to shareholders of Alcatel or at the time
such shareholders vote on the matters constituting the Alcatel Shareholder
Approval, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Neither the Form F-4,
the Form F-6 nor any amendment or supplement thereto will at the time it becomes
effective under the 1933 Act or at the time of the Alcatel Shareholder Meeting
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. Notwithstanding the foregoing, no representation or warranty is
made by Alcatel in this Section 4.09 with respect to statements made or
incorporated by reference therein based on information supplied by or on behalf
of Lucent for inclusion or incorporation by reference in the Alcatel Circular,
the Form F-4 or the Form F-6.
(c) None of the information supplied or to be supplied by or on
behalf of Alcatel for inclusion or incorporation by reference in the Lucent
Proxy Statement or any amendment or supplement thereto will, at the date on
which the Lucent Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of Lucent or at the time such stockholders vote on the
adoption of this Agreement, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.10 Absence of Certain Changes. (a) From the Alcatel Balance
Sheet Date to the date of this Agreement, Alcatel and its Subsidiaries have
conducted their business in the ordinary course consistent with past practice
and there has not been:
(i) any event, occurrence, change or development of a state of
circumstances or facts which has had, individually or in the aggregate, a
Material Adverse Effect on Alcatel; or
(ii) any action taken by Alcatel or any Subsidiary that, if taken on
or after the date of this Agreement, would conflict with or constitute a
violation of Section 6.01 (other than clauses (c) or (g) of Section 6.01).
(b) Since the date of this Agreement, there shall not have been
any event, occurrence, change or development of a state of circumstances or
facts which has had, individually or in the aggregate, a Material Adverse Effect
on Alcatel.
30
Section 4.11 No Undisclosed Material Liabilities. There are no
material liabilities of Alcatel or any Subsidiary of Alcatel of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, other than:
(a) liabilities disclosed or provided for in the Alcatel Balance
Sheet or in the notes thereto;
(b) liabilities incurred in the ordinary course of business since
the Alcatel Balance Sheet Date which would not, individually or in the
aggregate, have a Material Adverse Effect on Alcatel;
(c) liabilities disclosed in the Filed Alcatel SEC Documents or set
forth on Section 4.11(c) of the Alcatel Disclosure Letter; and
(d) liabilities arising, or expressly permitted to be incurred,
under this Agreement (including Section 6.01).
Section 4.12 Investigation; Litigation. Except as set forth on
Section 4.12 of the Alcatel Disclosure Letter, as of the date of this Agreement
(a) there is no investigation or review pending or, to the knowledge of Alcatel,
threatened by any governmental body, agency or official with respect to Alcatel
or any of its Subsidiaries; and (b) there is no action, suit, claim,
investigation or proceeding pending against or, to the knowledge of Alcatel,
threatened against or affecting Alcatel or any of its Subsidiaries or any of
their respective properties or assets before any court or arbitrator or any
governmental body, agency or official, in each of cases (a) and (b), which
would, individually or in the aggregate, have a Material Adverse Effect on
Alcatel.
Section 4.13 Taxes. (a) Except as set forth in the Alcatel SEC
Documents (including the notes thereto) or as otherwise set forth on Section
4.13 of the Alcatel Disclosure Letter or as would not, individually or in the
aggregate, have a Material Adverse Effect on Alcatel, (i) all Tax Returns
required to be filed with any taxing authority by, or with respect to, Alcatel
and its Subsidiaries (and any affiliated or unitary group of which any such
Person was a member) have been filed in accordance with all applicable laws and,
as of the time of filing, such Tax Returns correctly reflected the facts
regarding the income, business, assets, operations, activities and the status of
Alcatel and its Subsidiaries; (ii) Alcatel and its Subsidiaries (and any
affiliated or unitary group of which any such Person was a member) have timely
and duly paid all Taxes required to be paid by any of them; (iii) Alcatel and
its Subsidiaries (and any affiliated or unitary group of which any such Person
was a member) have timely withheld and paid over to the proper taxing
authorities all Taxes and other amounts required to be so withheld and paid
over; (iv) Alcatel and its Subsidiaries have made provision for all Taxes
payable by Alcatel and its Subsidiaries for which no Tax Return has yet been
filed; (v) the charges, accruals and reserves for Taxes with respect to Alcatel
and its Subsidiaries reflected on the Alcatel Balance Sheet are adequate under
IFRS to cover the Tax liabilities accruing through the date thereof; (vi) there
is no action, suit, proceeding, audit or claim now proposed in writing or
pending against or with respect to Alcatel or any of its Subsidiaries in respect
of any Tax where there is a reasonable possibility of an adverse determination;
(vii) neither Alcatel nor any of its Subsidiaries is liable for any Tax imposed
on any entity other than such Person, except as the result of the application of
Treas. Reg. ss. 1.1502-6 (and any comparable provision of the tax laws of any
state, local or
31
foreign jurisdiction) to the group of which Alcatel is the common parent; (viii)
neither Alcatel nor any of its Subsidiaries is a party to, is bound by or has
any obligation under any tax sharing or similar agreement or arrangement; and
(ix) there are no liens for Taxes upon any asset of Alcatel or any of its
Subsidiaries except for liens for Taxes not yet due.
(b) Except as disclosed in Section 4.13(b) of the Alcatel
Disclosure Letter, and except as to matters the substance and maximum potential
liability for Taxes in respect of which both have been (1) previously disclosed
to Lucent and (2) fully and independently reserved for on the Alcatel Balance
Sheet, neither Alcatel nor any of its Subsidiaries has participated in any
material "listed transaction" within the meaning of Treasury Regulation Section
1.6011-4 for any taxable year as to which the statute of limitations has not
expired.
(c) Neither Alcatel nor any of its Subsidiaries has taken or agreed
to take any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to (i) prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) cause
the stockholders of Lucent to recognize gain pursuant to Section 367(a)(1) of
the Code, other than any such stockholder that would be a "five-percent
transferee shareholder" of Alcatel (within the meaning of United States Treasury
Regulations Section 1.367(a)-3(c)(5)(ii)) following the Merger that does not
enter into a five-year gain recognition agreement in the form provided in
Treasury Regulation Section 1.367(a) - 8(b).
Section 4.14 Employee Benefit Plans; Employment and Labor Matters.
(a) For purposes of this Agreement, "ALCATEL EMPLOYEE PLAN" shall mean each
material "employee benefit plan," as defined in Section 3(3) of ERISA, each
material employment, severance or similar contract, plan, arrangement or policy
applicable to any director, former director, employee or former employee of
Alcatel or any of its Subsidiaries and each material plan or arrangement,
providing for compensation, bonuses, profit-sharing, stock option or other stock
related rights or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured arrangements), health
or medical benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by Alcatel or any
of its Subsidiaries and covers any employee or director or former employee or
director of Alcatel or any of its Subsidiaries, or under which Alcatel or any of
its Subsidiaries has any liability, other than statutorily mandated plans or
Multiemployer Plans. Neither Alcatel nor any of its Subsidiaries contributes to
a Multiemployer Plan in the United States.
(b) Each Alcatel Employee Plan has been maintained in compliance
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations (including but not limited to ERISA and the Code)
which are applicable to such plan, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect on Alcatel.
(c) Neither Alcatel nor any affiliate of Alcatel has incurred a
material liability under Title IV of ERISA that has not been satisfied in full,
and no condition exists that presents a material risk to Alcatel or any
affiliate of Alcatel of incurring any such liability other
32
than liability for premiums due the Pension Benefit Guaranty Corporation (which
premiums have been paid when due).
(d) Each Alcatel Employee Plan which is intended to be qualified
under Section 401(a) of the Code either the Internal Revenue Service has issued
a favorable determination letter that has not been revoked, or an application
for a favorable determination letter was timely submitted to the Internal
Revenue Service for which no final action has been taken by the Internal Revenue
Service.
(e) Except for liabilities that are statutorily mandated, or that
would not, on an individual basis, exceed $500,000, no director or officer or
other employee of Alcatel or any of its Subsidiaries will become entitled to any
retirement, severance or similar benefit or enhanced or accelerated benefit
(including enhanced eligibility for severance benefits, eligibility for enhanced
severance benefits, any acceleration of vesting or lapse of repurchase rights or
obligations with respect to any employee stock option or other benefit under any
stock option plan or compensation plan or arrangement of Alcatel) as a result of
the transactions contemplated hereby (either alone or as a result of a
termination of employment benefit which is a "change of control" benefit).
(f) Section 4.14(f) of the Alcatel Disclosure Letter lists each
material United States collective bargaining agreement to which Alcatel or any
of its Subsidiaries is a party or which is otherwise applicable to any of their
respective employees. The consummation of the transactions contemplated by this
Agreement will not give rise to any obligation to pay any amounts under, or
permit any union or similar labor organization to open negotiations with respect
to the terms of, any such United States collective bargaining agreement.
(g) Except for such matters which would not have, individually or
in the aggregate, a Material Adverse Effect on Alcatel, (i) as of the date of
this Agreement, (1) there are no strikes or lockouts with respect to any
employees of Alcatel or any of its Subsidiaries, (2) to the knowledge of
Alcatel, there is no union organizing effort pending or threatened against
Alcatel or any of its Subsidiaries, (3) there is no unfair labor practice, labor
dispute (other than routine individual grievances) or labor arbitration
proceeding pending or, to the knowledge of Alcatel, threatened against Alcatel
or any of its Subsidiaries, and (4) there is no slowdown, or work stoppage in
effect or, to the knowledge of Alcatel, threatened with respect to any employees
of Alcatel or any of its Subsidiaries and (ii) Alcatel and its Subsidiaries are
in compliance with all applicable laws respecting employment, employment
practices, labor, occupational safety and health and wages and hours, including
all civil rights and anti-discrimination laws, rules and regulations and laws
concerning unfair labor practices.
Section 4.15 Compliance with Laws. (a) Since January 1, 2003, Alcatel
and its Subsidiaries have conducted their respective businesses in compliance
with all applicable laws, statutes, ordinances, rules, judgments, orders,
decrees or regulations, except for any violations that, individually or in the
aggregate, would not have a Material Adverse Effect on Alcatel. No personal loan
or other extension of credit by Alcatel or any of its Subsidiaries to any of
their respective executive officers or directors has been made or modified
(other than as permitted by Section 13 of the Exchange Act and Section 402 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act) since July 31, 2002. This Section 4.15 does not relate
to Taxes, which are the subject of Section 4.13, to
33
environmental matters, which are the subject of Section 4.16, or to matters
relating to Intellectual Property, which are the subject of Section 4.17.
(b) Except as set forth on Section 3.15(b) of the Alcatel
Disclosure Letter, from January 1, 2003 to the date of this Agreement and to the
best of their knowledge, information and belief, Alcatel and its Subsidiaries,
and their respective officers, directors, employees and agents have not
corruptly made, promised, offered, or authorized any payment or transfer of
anything of value, directly or indirectly, to any government official, employee
or agent for the purpose of (i) influencing such government official, employee
or agent to take any action or decision or to omit to take any action, in his or
her official capacity, (ii) inducing such government official, employee or agent
to use his or her influence with a government or instrumentality to affect any
act or decision of the government or instrumentality, or (iii) securing any
improper advantage.
(c) From January 1, 2003 to the date of this Agreement and to the
best of their knowledge, information and belief, Alcatel and its Subsidiaries
have not caused any of their respective consultants, joint venture partners
and/or representatives (including resellers), in connection with its
relationship with Alcatel or any of its Subsidiaries, to corruptly make,
promise, offer, or authorize any payment or transfer of anything of value,
directly or indirectly, to any government official, employee or agent for the
purpose of (i) influencing such government official, employee or agent to take
any action or decision or to omit to take any action, in his or her official
capacity, (ii) inducing such government official, employee or agent to use his
or her influence with a government or instrumentality to affect any act or
decision of the government or instrumentality, or (iii) securing any improper
advantage.
Section 4.16 Environmental Matters. (i) Alcatel is in compliance with
all applicable Environmental Laws (which compliance includes the possession by
Alcatel of all permits and other governmental authorizations required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof), except where failure to be in compliance would not, individually or in
the aggregate, have a Material Adverse Effect on Alcatel;
(ii) there is no Environmental Claim pending or threatened
against Alcatel or, to the best knowledge of Alcatel, against any Person
whose liability for any Environmental Claim Alcatel has or may have
retained or assumed either contractually or by operation of law, except for
any such Environmental Claims which would not, individually or in the
aggregate, have a Material Adverse Effect on Alcatel;
(iii) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the Release or
presence of any Hazardous Material which could form the basis of any
Environmental Claim against Alcatel, or to the best knowledge of Alcatel,
against any Person whose liability for any Environmental Claim Alcatel has
or may have retained or assumed either contractually or by operation of law
which would, individually or in the aggregate, have a Material Adverse
Effect on Alcatel; and
34
(iv) there is no Cleanup of Hazardous Materials being
conducted or planned at any property currently or formerly owned or
operated by Alcatel, except for such Cleanups which would not, individually
or in the aggregate have a Material Adverse Effect on Alcatel.
Section 4.17 Intellectual Property. Except as set forth on Section
4.17 of the Alcatel Disclosure Letter or as would not, individually or in the
aggregate, have a Material Adverse Effect on Alcatel:
(i) Alcatel, or one of its Subsidiaries, owns or possesses
adequate licenses or other legal rights to use, sell or license all
Intellectual Property used in the present conduct of the businesses of
Alcatel and its Subsidiaries, free and clear of all Liens;
(ii) no claims or, to the knowledge of Alcatel, threat of
claims have been asserted by any Person related to the use of any
Intellectual Property in the conduct of the businesses of Alcatel and its
Subsidiaries;
(iii) no settlement agreements, consents, judgments, orders,
forbearance to ▇▇▇ or similar obligations limit or restrict Alcatel's or
any Subsidiary's rights in and to any Intellectual Property other than the
granting of a license or a covenant not to ▇▇▇;
(iv) it is the policy of Alcatel and its Subsidiaries to not
knowingly infringe any valid Intellectual Property right of any Person, and
Alcatel and its Subsidiaries have, to Alcatel and its Subsidiaries'
knowledge, abided by their policy of not knowingly infringing any valid
Intellectual Property right of any Person;
(v) to the knowledge of Alcatel, no third party is infringing
or otherwise violating any Intellectual Property owned by Alcatel or its
Subsidiaries;
(vi) Alcatel and its Subsidiaries take reasonable measures to
protect the confidentiality of their Trade Secrets. To the knowledge of
Alcatel, no Trade Secret of Alcatel or its Subsidiaries has been disclosed
or authorized to be disclosed to any third party other than pursuant to a
written nondisclosure agreement that adequately protects Alcatel's and its
Subsidiaries' proprietary interests in and to such Trade Secrets;
(vii) the consummation of the transactions as specified herein
will not result in the loss or impairment of Alcatel's and its
Subsidiaries' rights to own or use any of the Intellectual Property nor
will such consummation require the consent of any third party in respect of
any such Intellectual Property; and
35
(viii) Alcatel and its Subsidiaries have conducted their
respective businesses in compliance with all applicable laws, statutes,
ordinances and regulations relating to, or in respect of, Intellectual
Property.
Section 4.18 Vendor Financing. Section 4.18 of the Alcatel Disclosure
Letter contains a true, complete and accurate list, as of the date of this
Agreement, of (i) all financing arrangements (including loans, deferred payment
arrangements in excess of one year and equity-linked arrangements) to customers
(including distributors to customers) or vendors of Alcatel or any of its
Subsidiaries which have been provided by Alcatel or any of its Subsidiaries or
are guaranteed (including by guarantee to an institution providing such loan),
secured or supported in any respect by Alcatel or any of its Subsidiaries
(collectively, "ALCATEL VENDOR FINANCING") with an aggregate principal amount of
financing or available commitment greater than $25,000,000 and (ii) all
contracts, agreements, commitments and other arrangements relating to Alcatel
Vendor Financing with an aggregate principal amount of financing or available
commitment greater than $25,000,000.
Section 4.19 Finders' or Advisors' Fees. Except for ▇▇▇▇▇▇▇, Sachs &
Co., whose fees will be paid by Alcatel, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Alcatel or any of its Subsidiaries who might be entitled to any fee
or commission in connection with the transactions contemplated by this
Agreement.
Section 4.20 Opinion of Financial Advisor. Alcatel has received the
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair, from a financial point of view, to
Alcatel.
Section 4.21 Takeover Statutes. The Board of Directors of Alcatel has
taken the necessary action, if any, to make inapplicable to this Agreement, the
Merger and the other transactions contemplated hereby any applicable
antitakeover or similar statute or regulation under French law or any other
applicable antitakeover law.
ARTICLE V
COVENANTS OF LUCENT
Lucent agrees that:
Section 5.01 Conduct of Lucent. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement pursuant
to Section 9.01, Lucent and its Subsidiaries shall conduct their respective
businesses in the ordinary course consistent with past practice and shall use
their respective reasonable best efforts to preserve intact their respective
business organizations and relationships with third parties (including employees
and those Persons having business dealings with them). Without limiting the
generality of the foregoing, except (i) as set forth on Section 5.01 of the
Lucent Disclosure Letter, (ii) with the prior written consent of Alcatel (which
consent shall not be unreasonably withheld, delayed or conditioned), (iii) as
may be required by applicable law or (iv) as expressly
36
contemplated by this Agreement, from the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement pursuant to
Section 9.01:
(a) Lucent will not, and will not permit any of its Subsidiaries
to, adopt or propose any change in its certificate of incorporation or by-laws
(or comparable organizational documents) or otherwise take any action to exempt
any person or entity (other than Alcatel) from any applicable antitakeover law,
provided that the organizational documents of Subsidiaries may be changed in a
way that is not material;
(b) Lucent will not, and will not permit any Subsidiary of Lucent
to, adopt, enter into or effect any plan or agreement of complete or partial
liquidation, dissolution, merger (excluding acquisitions permitted under Section
5.01(i)), consolidation, spin-off, restructuring, recapitalization or other
material reorganization of Lucent or any of its Subsidiaries (other than any
such action between its wholly owned Subsidiaries);
(c) Lucent will not, and will not permit any Subsidiary of Lucent
to, issue, sell, transfer, pledge, dispose of or encumber any shares of capital
stock of any class or series of Lucent or its Subsidiaries, or issue, sell or
transfer securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class or series of Lucent or its Subsidiaries, or materially amend the
terms of any outstanding capital stock other than upon issuance of Shares upon
exercise or settlement of Lucent Stock Options or Lucent Stock-Based Accounts,
Lucent Convertible Debt or Lucent Warrants, and in cases other than those in
connection with employee benefit and compensation matters to the extent
permitted by Section 5.01 of the Lucent Disclosure Letter;
(d) (i) Lucent will not, and will not permit any Subsidiary of
Lucent to, split, combine, subdivide or reclassify any of its outstanding shares
of capital stock, and (ii) Lucent will not declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock;
(e) Lucent will not, and will not permit any Subsidiary of Lucent
to, redeem, purchase or otherwise acquire directly or indirectly any of Lucent's
capital stock, except for repurchases, redemptions or acquisitions (i) required
by the terms of its capital stock or any securities outstanding on the date of
this Agreement, or (ii) required by or in connection with the respective terms,
as of the date of this Agreement, of any Lucent Stock Option Plan or any
dividend reinvestment plan as in effect on the date of this Agreement in the
ordinary course of the operations of such plan consistent with past practice and
only to the extent consistent with Section 7.04;
(f) Lucent will not amend the terms (including the terms relating
to accelerating the vesting or lapse of repurchase rights or obligations) of any
outstanding options to purchase Shares;
(g) Lucent will not, and will not permit any Subsidiary of Lucent
to, make or commit to make any capital expenditure, other than capital
expenditures set forth on Section 5.01 of the Lucent Disclosure Letter;
37
(h) Lucent will not, and will not permit any Subsidiary of Lucent
to, increase the compensation or benefits of any current or former director,
officer or employee, except for increases in the ordinary course of business
consistent with past practice or as required under applicable law or any
existing agreement or commitment;
(i) except for (1) acquisitions of assets in the ordinary course of
business consistent with past practices, (2) acquisitions pursuant to existing
contracts or commitments as set forth on Section 5.01(i) of the Lucent
Disclosure Letter, and (3) acquisitions not in excess of $500,000,000 in the
aggregate, Lucent will not, and will not permit any of its Subsidiaries to,
acquire assets or stock (or similar ownership interests) of any other Person;
(j) Lucent will not, and will not permit any of its Subsidiaries
to, sell, transfer, lease, license, pledge, encumber or otherwise dispose of any
material (as determined with respect to Lucent and its Subsidiaries taken as a
whole) assets or stock, other than (i) inventory, receivables and vendor
financing loans in the ordinary course of business consistent with past practice
and (ii) pursuant to existing contracts or commitments;
(k) except for any such change which is required in order to remain
in compliance with US GAAP or applicable law, Lucent will not, and will not
permit any Subsidiary of Lucent to, change any method of financial accounting or
accounting practice used by it;
(l) Lucent will not, and will not permit any Subsidiary of Lucent
to, enter into any material joint venture, partnership or other similar
arrangement or materially amend or modify in an adverse manner the terms of (or
waive any material rights under) any existing material joint venture,
partnership or other similar arrangement (other than any such action between its
wholly owned Subsidiaries);
(m) Except as set forth in Section 5.01 of the Lucent Disclosure
Letter, Lucent will not, and will not permit any of its Subsidiaries to, incur
material indebtedness, other than (1) pursuant to the credit facilities of
Lucent existing on the date of this Agreement, or (2) to refinance, extend or
renew the maturity of any existing indebtedness in an amount not to exceed such
existing indebtedness, provided that such refinancing or extension is at
prevailing market interest rates and otherwise on terms not materially less
favorable in aggregate than the existing indebtedness being so refinanced or
extended;
(n) Lucent will not, and will not permit any of its Subsidiaries
to, enter into or commit to provide any Lucent Vendor Financing not in effect as
of the date of this Agreement other than in accordance with Section 5.01 of the
Lucent Disclosure Letter;
(o) other than with respect to the settlement, payment, discharge
or compromise in the ordinary course of business of litigation arising in the
ordinary course of Lucent's and its Subsidiaries' business, or settlements
providing solely for the payment of money damages that are (i) subject to
reserves existing as of the date of this Agreement in accordance with US GAAP,
(ii) covered by existing insurance policies or (iii) otherwise less than
$50,000,000 in the aggregate, Lucent will not, and will not permit any of its
Subsidiaries to, settle, pay, discharge or compromise any material claim
(including arbitration) or litigation;
38
(p) Lucent will not, and will not permit any of its Subsidiaries
to, (i) enter into, modify or amend any "material contract" ( as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC), other than in the
ordinary course of business, or (ii) enter into any contract or agreement which
expressly limits the ability of Lucent or any Subsidiary of Lucent, or would
limit Alcatel or any Subsidiary of Alcatel after the Effective Time, to compete
in or conduct any line of business or compete with any Person or in any
geographic area or during any period of time, in each case, if such limitation
is or is reasonably likely to be material to Lucent and its Subsidiaries, taken
as a whole, or, following the Effective Time, to Alcatel and its Subsidiaries,
taken as a whole;
(q) Lucent will not, and will not permit any of its subsidiaries
to, enter into any new line of business material to it and its Subsidiaries,
taken as a whole;
(r) Lucent will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
Section 5.02 Lucent Stockholder Meeting; Proxy Material. Lucent shall
take, in accordance with applicable law and its certificate of incorporation and
bylaws, all action necessary to convene a meeting of its stockholders (the
"LUCENT STOCKHOLDER MEETING") on a date mutually agreed between Lucent and
Alcatel, which date shall be as promptly as practicable and in no event later
than sixty (60) calendar days after the Form F-4 is declared effective by the
SEC for the purpose of voting on the approval and adoption of this Agreement and
the Merger and shall use its reasonable best efforts to cause the Lucent
Stockholder Meeting to be held on the same day as the Alcatel Shareholder
Meeting. Except as provided in the next sentence, the Board of Directors of
Lucent shall recommend adoption of this Agreement by Lucent's stockholders. The
Board of Directors of Lucent shall be permitted to (i) not recommend to Lucent's
stockholders that they give the Lucent Stockholder Approval, (ii) withdraw or
modify in a manner adverse to Alcatel its recommendation to Lucent's
stockholders that they give the Lucent Stockholder Approval or (iii) recommend
any Lucent Superior Proposal (as defined in Section 5.03) other than the Merger
and the transactions contemplated by this Agreement (each, a "LUCENT CHANGE IN
RECOMMENDATION"), but only if (1) the Board of Directors of Lucent by a majority
vote determines, in its good faith judgment and after consultation with outside
legal counsel, that the failure of the Board of Directors to effect such Lucent
Change in Recommendation would be reasonably likely to result in a breach of the
directors' fiduciary obligations to the Lucent stockholders under applicable law
and (2) in the case of 5.02(iii) only, the Board of Directors of Lucent has
complied with its obligations under Section 5.03. In connection with the Lucent
Stockholder Meeting, Lucent will use its reasonable best efforts, subject to the
immediately preceding sentence, to obtain the Lucent Stockholder Approval and
will otherwise comply with all legal requirements applicable to the Lucent
Stockholder Meeting. The parties agree that (in accordance with Section 146 of
Delaware Law) this Agreement shall be submitted for adoption by Lucent's
stockholders at the Lucent Stockholder Meeting regardless of whether or not
there is a Lucent Change in Recommendation. Lucent agrees that (i) except in
order to obtain a quorum or as otherwise advisable under applicable law, it
shall not adjourn, postpone or cancel (or propose to adjourn, postpone or
cancel) the Lucent Stockholder Meeting and (ii) it shall use its reasonable best
efforts to obtain the requisite quorum and other approvals of Lucent's
stockholders necessary to obtain the Lucent Stockholder Approval.
39
Section 5.03 Other Offers. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement pursuant to
Section 9.01, Lucent and its Subsidiaries will not, and Lucent will not permit
any of the officers, directors, employees, investment bankers, consultants,
representatives and other agents of Lucent and its Subsidiaries to (and shall
instruct such Persons not to), directly or indirectly, take any action to (a)
solicit, initiate or knowingly encourage or facilitate the making of any Lucent
Acquisition Proposal or any inquiry with respect thereto or engage in
discussions or negotiations or enter into any agreement, arrangement or
understanding with respect to a Lucent Acquisition Proposal, (b) disclose or
provide any non-public information relating to Lucent or any Subsidiary of
Lucent to any Person with respect thereto, (c) afford access to the properties,
books or records of Lucent or any Subsidiary of Lucent to, any Person that has
made, or to Lucent's knowledge, is considering making, any Lucent Acquisition
Proposal, (d) approve or recommend, or propose to approve or recommend, or
execute or enter into any letter of intent, agreement in principle, merger
agreement, option agreement, acquisition agreement or other agreement relating
to a Lucent Acquisition Proposal, or (e) propose publicly or agree to any of the
foregoing relating to a Lucent Acquisition Proposal; provided that nothing
contained in this Section 5.03 shall prevent Lucent, prior to the receipt of
Lucent Stockholder Approval, from furnishing non-public information to, or
entering into discussions or negotiations with, any Person in connection with an
unsolicited bona fide written Lucent Acquisition Proposal received from such
Person prior to the receipt of Lucent Stockholder Approval, so long as prior to
furnishing non-public information to, or entering into discussions or
negotiations with, such Person, (i) the Board of Directors of Lucent by a
majority vote determines in its good faith judgment that such Lucent Acquisition
Proposal is reasonably expected to lead to a Lucent Superior Proposal (after
consulting with its financial advisors), taking into account any revisions to
the terms of the Merger or this Agreement proposed by Alcatel after being
notified pursuant to this Section 5.03, (ii) Lucent is not then in breach of its
obligations under this Section 5.03 and (iii) Lucent enters into, and receives
from such Person, an executed confidentiality agreement on terms no less
favorable to Lucent than those contained in the Confidentiality Agreement (as
defined in Section 7.03). Nothing contained in this Agreement shall prevent the
Board of Directors of Lucent from complying with Rule 14d-9 and Rule 14e-2 under
the Exchange Act with regard to a Lucent Acquisition Proposal; provided that
Lucent shall not make any disclosure or take any action that amounts to a Lucent
Change in Recommendation other than in compliance with Section 5.02. Lucent
further agrees that it shall (a) promptly (and in no event later than 24 hours
after receipt of any Lucent Acquisition Proposal) notify (which notice shall be
provided orally and in writing and shall identify the Person making such Lucent
Acquisition Proposal and set forth the material terms thereof) Alcatel after
receipt of any Lucent Acquisition Proposal, or any request for non-public
information relating to Lucent or any Subsidiary of Lucent or for access to the
properties, books or records of Lucent or any Subsidiary of Lucent by any Person
that has made, or to Lucent's knowledge intends to make, a Lucent Acquisition
Proposal, and (b) keep Alcatel informed of the status and material terms of any
such Lucent Acquisition Proposal or request (including any material amendments
or proposed material amendments). Lucent and its Subsidiaries will, and Lucent
will cause the officers, directors, employees, investment bankers, consultants
and other agents of Lucent and its Subsidiaries to, immediately cease and cause
to be terminated all discussions and negotiations, if any, that have taken place
prior to the date of this Agreement with any parties with respect to any Lucent
Acquisition Proposal.
40
For purposes of this Agreement, "LUCENT ACQUISITION PROPOSAL" means any
offer or proposal for, or any indication of interest in, any (i) direct or
indirect acquisition or purchase of a business or assets that constitute 20% or
more of the net revenues, net income or the assets of Lucent and its
Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase
of (A) 20% or more of any class of equity securities of Lucent or (B) 50% or
more of any class of equity securities of any of Lucent's Subsidiaries whose
business constitutes 20% or more of the net revenues, net income or assets of
Lucent and its Subsidiaries, taken as a whole, (iii) tender offer or exchange
offer that, if consummated, would result in any person beneficially owning (A)
20% or more of any class of equity securities of Lucent or (B) 50% or more of
any class of equity securities of any of Lucent's Subsidiaries whose business
constitutes 20% or more the net revenues, net income or assets of Lucent and its
Subsidiaries, taken as a whole, or (iv) merger, consolidation, spin-off,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving Lucent or any of its Subsidiaries whose business
constitutes 20% or more of the net revenues, net income or assets of Lucent and
its Subsidiaries, taken as a whole, pursuant to which the stockholders of Lucent
or such Subsidiary, as applicable, immediately prior to such transaction (other
than the counterparty in such transaction) would own less than 80% of any class
of equity securities of the resultant entity(ies), in each case other than the
transactions contemplated by this Agreement or expressly permitted by Section
5.01 (including the items set forth in Section 5.01 of the Lucent Disclosure
Letter). For purposes of this Agreement, "LUCENT SUPERIOR PROPOSAL" means any
bona fide Lucent Acquisition Proposal for or in respect of at least a majority
of the outstanding Shares or all or substantially all of Lucent's and its
Subsidiaries' assets, taken as a whole, on terms that the Board of Directors of
Lucent determines in its good faith judgment (after consultation with outside
legal counsel and a financial advisor of recognized reputation) and taking into
account all of the terms and conditions of such Lucent Acquisition Proposal,
including any break-up fees, expense reimbursement provisions and conditions to
consummation, as well as any revisions to the terms of the Merger or this
Agreement proposed by Alcatel after being notified pursuant to this Section
5.03) are more favorable to Lucent's stockholders than the Merger (after taking
into account any such revised terms).
Section 5.04 Shareholder Rights Plan. Lucent agrees that, in the
event any Person commences a tender offer or exchange offer under the U.S.
federal securities laws that constitutes a Lucent Acquisition Proposal, Lucent
shall, promptly but not later than the tenth business day following the
commencement of such offer, adopt a shareholder rights plan in customary form,
unless the Board of Directors of Lucent by a majority vote determines, in its
good faith judgment and after consultation with outside legal counsel, that the
adoption of such rights plan would be reasonably likely to result in a breach of
the directors' fiduciary obligations to the Lucent stockholders under applicable
law.
ARTICLE VI
COVENANTS OF ALCATEL
Alcatel agrees that:
Section 6.01 Conduct of Alcatel. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement
pursuant to Section 9.01,
41
Alcatel and its Subsidiaries shall conduct their respective businesses in the
ordinary course consistent with past practice and shall use their respective
reasonable best efforts to preserve intact their respective business
organizations and relationships with third parties (including employees and
those Persons having business dealings with them). Without limiting the
generality of the foregoing, except (i) as set forth on Section 6.01 of the
Alcatel Disclosure Letter, (ii) with the prior written consent of Lucent (which
consent shall not be unreasonably withheld, delayed or conditioned), (iii) as
may be required by applicable law or (iv) as expressly contemplated by this
Agreement, from the date of this Agreement until the earlier of the Effective
Time or the termination of this Agreement pursuant to Section 9.01:
(a) Alcatel will not, and will not permit any of its Subsidiaries
to, adopt or propose any change in its certificate of incorporation or by-laws
(or comparable organizational documents) or otherwise take any action to exempt
any person or entity (other than Lucent) from any applicable antitakeover law,
provided that the organizational documents of Subsidiaries may be changed in a
way that is not material;
(b) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, adopt, enter into or effect any plan or agreement of complete or partial
liquidation, dissolution, merger (excluding acquisitions permitted under Section
6.01(i)), consolidation, spin-off, restructuring, recapitalization or other
material reorganization of Alcatel or any of its Subsidiaries (other than any
such action between its wholly owned Subsidiaries);
(c) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, issue, sell, transfer, pledge, dispose of or encumber any shares of capital
stock of any class or series of Alcatel or its Subsidiaries, or issue, sell or
transfer securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital stock
of any class or series of Alcatel or its Subsidiaries, other than upon issuance
of Shares upon exercise or settlement of Alcatel Stock Options or materially
amend the terms of any outstanding capital stock;
(d) (i) Alcatel will not, and will not permit any Subsidiary of
Alcatel to, split, combine, subdivide or reclassify any of its outstanding
shares of capital stock, and (ii) Alcatel will not declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock other than the regular annual dividend approved by the
Alcatel stockholders at the annual general meeting of Alcatel;
(e) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, redeem, purchase or otherwise acquire directly or indirectly any of
Alcatel's capital stock, except for repurchases, redemptions or acquisitions (i)
required by the terms of its capital stock or any securities outstanding on the
date of this Agreement, or (ii) required by or in connection with the respective
terms, as of the date of this Agreement, of any stock option plan of Alcatel or
its Subsidiaries or any dividend reinvestment plan as in effect on the date of
this Agreement in the ordinary course of the operations of such plan consistent
with past practice and only to the extent consistent with Section 7.04;
42
(f) Alcatel will not amend the terms (including the terms relating
to accelerating the vesting or lapse of repurchase rights or obligations) of any
outstanding options to purchase ADSs or Alcatel Ordinary Shares;
(g) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, make or commit to make any capital expenditure, other than capital
expenditures set forth on Section 6.01 of the Alcatel Disclosure Letter;
(h) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, increase the compensation or benefits of any current or former director,
officer or employee, except for increases in the ordinary course of business
consistent with past practice or as required under applicable law or any
existing agreement or commitment;
(i) except for (1) acquisitions of assets in the ordinary course of
business consistent with past practices (2) acquisitions pursuant to existing
contracts or commitments as set forth on Section 6.01(i) of the Alcatel
Disclosure Letter and (3) acquisitions not in excess of $500,000,000 in the
aggregate, of which no individual acquisition shall exceed $300,000,000, Alcatel
will not, and will not permit any of its Subsidiaries to, acquire assets or
stock (or similar ownership interests) of any other Person;
(j) Alcatel will not, and will not permit any of its Subsidiaries
to, sell, transfer, lease, license, pledge, encumber or otherwise dispose of any
material (as determined with respect to Alcatel and its Subsidiaries taken as a
whole) assets or stock, other than (i) inventory, receivables and vendor
financing loans in the ordinary course of business consistent with past practice
and (ii) pursuant to existing contracts or commitments;
(k) except for any such change which is required in order to remain
in compliance with IFRS or applicable law, Alcatel will not, and will not permit
any Subsidiary of Alcatel to, change any method of financial accounting or
accounting practice used by it;
(l) Alcatel will not, and will not permit any Subsidiary of Alcatel
to, enter into any material joint venture, partnership or other similar
arrangement or materially amend or modify in an adverse manner the terms of (or
waive any material rights under) any existing material joint venture,
partnership or other similar arrangement (other than any such action between its
wholly owned Subsidiaries);
(m) Except as set forth in Section 6.01 of the Alcatel Disclosure
Letter, Alcatel will not, and will not permit any of its Subsidiaries to, incur
material indebtedness, other than (1) pursuant to the credit facilities of
Alcatel existing on the date of this Agreement, or (2) to refinance, extend or
renew the maturity of any existing indebtedness in an amount not to exceed such
existing indebtedness, provided that such refinancing or extension is at
prevailing market interest rates and otherwise on terms not materially less
favorable in aggregate than the existing indebtedness being so refinanced or
extended;
(n) Alcatel will not, and will not permit any of its Subsidiaries
to, enter into or commit to provide any Alcatel Vendor Financing not in effect
as of the date of this Agreement other than in accordance with Section 6.01 of
the Alcatel Disclosure Letter;
43
(o) other than with respect to the settlement, payment, discharge
or compromise in the ordinary course of business of litigation arising in the
ordinary course of Alcatel's and its Subsidiaries' business, or settlements
providing solely for the payment of money damages that are (i) subject to
reserves existing as of the date of this Agreement in accordance with IFRS, (ii)
covered by existing insurance policies or (iii) otherwise less than $50,000,000
in the aggregate, Alcatel will not, and will not permit any of its Subsidiaries
to, settle, pay, discharge or compromise any material claim (including
arbitration) or litigation;
(p) Alcatel will not, and will not permit any of its Subsidiaries
to, (i) enter into, modify or amend any "material contract" ( as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC), other than in the
ordinary course of business, or (ii) enter into any contract or agreement which
expressly limits the ability of Alcatel or any Subsidiary of Alcatel, or would
limit Lucent or any Subsidiary of Lucent after the Effective Time, to compete in
or conduct any line of business or compete with any Person or in any geographic
area or during any period of time, in each case, if such limitation is or is
reasonably likely to be material to Alcatel and its Subsidiaries, taken as a
whole, or, following the Effective Time, to Lucent and its Subsidiaries, taken
as a whole;
(q) Alcatel will not, and will not permit any of its Subsidiaries
to, enter into any new line of business material to it and its Subsidiaries,
taken as a whole;
(r) Alcatel will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
Section 6.02 Obligations of Merger Subsidiary. Alcatel will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 6.03 Director and Officer Liability. (a) For a period of six
(6) years from the Effective Time, Alcatel shall maintain in effect the
exculpation, indemnification and advancement of expenses provisions of any
certificate of incorporation and by-laws or similar organization documents of
Lucent and its Subsidiaries in effect immediately prior to the Effective Time
and with respect to acts or omissions prior to the Effective Time or in any
indemnification agreements of Lucent or its Subsidiaries with any of their
respective directors, officers or employees in effect immediately prior to the
Effective Time and with respect to acts or omissions prior to the Effective
Time, and shall not amend, repeal or otherwise modify any such provisions or the
exculpation, indemnification or advancement of expenses provisions of the
Surviving Corporation's certificate of incorporation and by-laws in any manner
that would adversely affect the rights thereunder of any individuals who at the
Effective Time were current or former directors, officers or employees of Lucent
or any of its Subsidiaries.
(b) For a period of six years after the Effective Time, Alcatel
shall, and shall cause the Surviving Corporation to, indemnify and hold harmless
the individuals who on or prior to the Effective Time were officers, directors
and employees of Lucent or its Subsidiaries or were serving at the request of
Lucent as an officer, director or employee of any other corporation, partnership
or joint venture, trust, employee benefit plan or other enterprise
(collectively, the "INDEMNITEES") with respect to all acts or omissions by them
in their capacities
44
as such or taken at the request of Lucent or any of its Subsidiaries at any time
prior to the Effective Time to the extent provided under Lucent's certificate of
incorporation and by-laws in effect on the date of this Agreement (including
with respect to the advancement of expenses). Alcatel shall, and shall cause the
Surviving Corporation to, honor all indemnification agreements with the
Indemnitees (including under Lucent's by-laws) in effect as of the date of this
Agreement in accordance with the terms thereof. Lucent represents that it has
made available to Alcatel all such indemnification agreements prior to the date
of this Agreement.
(c) For six years after the Effective Time, Alcatel shall procure
the provision of officers' and directors' liability insurance in respect of acts
or omissions occurring prior to the Effective Time covering each such Person
currently covered by Lucent's officers' and directors' liability insurance
policy on terms with respect to coverage and in amounts no less than those of
the policy in effect on the date of this Agreement; provided, that if the
aggregate annual premiums for such insurance at any time during such period
shall exceed 250% of the per annum rate of premium paid by Lucent and its
Subsidiaries as of the date of this Agreement for such insurance, then Alcatel
shall, or shall cause its Subsidiaries to, provide only such coverage as shall
then be available at an annual premium equal to 250% of such rate.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers or conveys all or substantially all its properties
and assets to any Person, then, and in each such case, Alcatel shall cause
proper provision to be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 6.03.
(e) The provisions of this Section 6.03 are intended to be for the
benefit of, and will be enforceable by, each indemnified party, his or her heirs
and his or her representatives. Alcatel shall pay all reasonable expenses,
including reasonable attorneys' fees, that may be incurred by any Indemnitee in
enforcing the indemnity and other obligations provided in this Section 6.03,
provided that such indemnitee is successful in enforcing any such enforcement
claim.
Section 6.04 Alcatel Shareholder Meeting; Form F-4. Alcatel shall take
in accordance with applicable law and its articles of association and by-laws,
all action necessary to convene an extraordinary meeting of its shareholders
(the "ALCATEL SHAREHOLDER MEETING") on a date mutually agreed between Lucent and
Alcatel, which date shall be as promptly as practicable and in no event later
than sixty (60) calendar days after the Form F-4 is declared effective by the
SEC for the purpose of approving the matters constituting the Alcatel
Shareholder Approval and shall use its reasonable best efforts to cause the
Alcatel Shareholder Meeting to be held on the same day as the Lucent Stockholder
Meeting. The resolutions proposed at the Alcatel Shareholder Meeting, together
with all other corporate documents provided by applicable law (including expert
reports, if required) (the "ALCATEL NECESSARY CORPORATE DOCUMENTS"), shall be
sufficient for the valid approval of the issuance of the Alcatel Ordinary Shares
in accordance with this Agreement. Except as provided in the next sentence, the
Board of Directors of Alcatel shall recommend approval of the matters
constituting the Alcatel Shareholder Approval. The Board of Directors of Alcatel
shall be permitted to (i) not recommend to Alcatel's shareholders that they give
the Alcatel Shareholder Approval, (ii) withdraw or modify in a manner adverse to
45
Lucent its recommendation to Alcatel's shareholders that they give the Alcatel
Shareholder Approval or (iii) recommend any Alcatel Superior Proposal (as
defined in Section 6.07) other than the Merger and the transactions contemplated
by this Agreement (each, a "ALCATEL CHANGE IN RECOMMENDATION"), but only if (1)
the Board of Directors of Alcatel by a majority vote determines, in its good
faith judgment and after consultation with outside legal counsel, that the
failure of the Board of Directors to effect such Alcatel Change in
Recommendation would be reasonably likely to result in a breach of the
directors' fiduciary obligations to Alcatel or the Alcatel shareholders under
applicable law and (2) in the case of 6.02(iii) only, the Board of Directors of
Alcatel has complied with its obligations under Section 6.07. In connection with
the Alcatel Shareholder Meeting, Alcatel will use its reasonable best efforts,
subject to the immediately preceding sentence, to obtain the Alcatel Shareholder
Approval and will otherwise comply with all legal requirements applicable to the
Alcatel Shareholder Meeting. Alcatel shall promptly take any action required to
be taken under foreign or state securities or Blue Sky laws in connection with
the issuance of ADSs in connection with the Merger. The parties agree that the
Alcatel Shareholder Meeting to obtain the Alcatel Shareholder Approval shall be
duly called and held regardless of whether or not there is an Alcatel Change in
Recommendation. Alcatel agrees that (i) except in order to obtain a quorum or as
otherwise advisable under applicable law, it shall not adjourn, postpone or
cancel (or propose to adjourn, postpone or cancel) the Alcatel Shareholder
Meeting and (ii) it shall use its reasonable best efforts to obtain the
requisite quorum and other approvals of Alcatel's shareholders necessary to
obtain the Alcatel Shareholder Approval.
Section 6.05 Stock Exchange Listing. Alcatel shall use its reasonable
best efforts to (a) cause the ADSs (and, if required, the underlying shares of
Alcatel Ordinary Shares) to be issued in connection with the Merger and made
available for issuance pursuant to Section 1.04 to be listed on the NYSE,
subject to official notice of issuance and (b) obtain the approval (visa) of the
AMF on the prospectus relating to the Alcatel Ordinary Shares and the approval
of Euronext Paris SA to the listing of the Alcatel Ordinary Shares, in each case
to be issued on the Effective Date (so that the listing of the Alcatel Ordinary
Shares takes place at the Effective Time, or as soon as practicable thereafter)
as part of the transactions contemplated by this Agreement or made available for
issuance pursuant to Section 1.04 subject to official notice of issuance.
Section 6.06 Employee Benefits. (a) At least through December 31,
2007, Alcatel shall provide or cause to be provided to individuals who are
employed as of the Effective Time by Lucent and its Subsidiaries or by Alcatel
and its Subsidiaries and who remain employed by Alcatel or any Subsidiary of
Alcatel (collectively, the "AFFECTED EMPLOYEES") (i) base salary no less
favorable than the base salary provided the applicable Affected Employee
immediately prior to the Effective Time and (ii) aggregate employee benefits
(including, but not limited to, retirement and health and welfare plans, but
excluding any equity-based programs) that are no less favorable than those
provided to the applicable group of Affected Employees immediately prior to the
Effective Time (including, but not limited to, retirement and health and welfare
plans, but excluding any equity-based programs). It is the intention of the
parties that (x) the compensation and employee benefits provided to Affected
Employees following the Closing Date be within industry-competitive ranges and
that similar compensation and employee benefit programs be provided to similarly
situated Affected Employees notwithstanding whether such employees were
historical employees of Alcatel and its Subsidiaries or Lucent and its
46
Subsidiaries. Following the Effective Time, Alcatel shall maintain or cause to
be maintained in effect pursuant to their terms (including any provision on
amendment and termination) all severance plans, programs, and policies of Lucent
and its Subsidiaries and of Alcatel and its Subsidiaries that are in effect as
of the Effective Time, provided, that, in no event shall any amendments to, or
terminations of, any such plans, policies, and programs that are adverse to
covered employees be made prior to the second anniversary of the Effective Time.
Notwithstanding the foregoing, the provisions of this Section 6.06(a) shall not
apply with respect to Affected Employees whose employment is governed by a
collective bargaining or similar agreement.
(b) From and after the Effective Time, Alcatel shall, and shall
cause its Subsidiaries to, recognize service with Alcatel and Lucent and their
respective Subsidiaries prior to the Effective Time (to the same extent
recognized under the corresponding Alcatel Employee Plan or Lucent Employee
Plan, as applicable) for all purposes (including, without limitation,
eligibility to participate, vesting, benefit accrual, eligibility to commence
benefits, and severance) under any benefit plans of Alcatel or its Subsidiaries
in which the applicable Affected Employee participates; provided, however, that
such credit need not be provided for purposes of benefit accrual under defined
benefit plans and that the foregoing shall not result in any duplication of
benefits. Alcatel will, or will cause the Surviving Corporation to, (i) waive
all limitations as to preexisting conditions, exclusions and waiting periods
with respect to participation and coverage requirements applicable to the
Affected Employees under any welfare benefit plans that such employees may be
eligible to participate in after the Effective Time, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Effective Time under any welfare plan
maintained for the Affected Employees immediately prior to the Effective Time,
and (ii) provide each Affected Employee with credit for any copayments and
deductibles paid in the applicable plan year prior to the Effective Time in
satisfying any applicable deductible or out-of-pocket requirements under any
welfare plans that such employees are eligible to participate in after the
Effective Time.
(c) From and after the Effective Time, Alcatel and its Subsidiaries
shall honor in accordance with their terms all Lucent Employee Plans and Alcatel
Employee Plans. Subject to Section 6.06(a), no provision of this Section 6.06
shall be construed as a limitation on the right of Alcatel and its Subsidiaries
to amend or terminate any specific Lucent Employee Plan or Alcatel Employee Plan
which Lucent or Alcatel would otherwise have under the terms of such Lucent
Employee Plan or Alcatel Employee Plan.
(d) Without limiting the generality of Section 10.10, no provision
of this Section 6.06 shall be construed to create a right in any employee or
beneficiary of such employee under a Lucent Employee Plan or Alcatel Employee
Plan.
Section 6.07 Other Offers. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement pursuant to
Section 9.01, Alcatel and its Subsidiaries will not, and Alcatel will not permit
any of the officers, directors, employees, investment bankers, consultants,
representatives and other agents of Alcatel and its Subsidiaries to (and shall
instruct such Persons not to), directly or indirectly, take any action to (a)
solicit, initiate or knowingly encourage or facilitate the making of any Alcatel
Acquisition Proposal or any inquiry with respect thereto or engage in
discussions or negotiations or enter into any
47
agreement, arrangement or understanding with respect to an Alcatel Acquisition
Proposal, (b) disclose or provide any non-public information relating to Alcatel
or any Subsidiary of Alcatel to any Person with respect thereto, (c) afford
access to the properties, books or records of Alcatel or any Subsidiary of
Alcatel to, any Person that has made, or to Alcatel's knowledge, is considering
making, any Alcatel Acquisition Proposal, (d) approve or recommend, or propose
to approve or recommend, or execute or enter into any letter of intent,
agreement in principle, merger agreement, option agreement, acquisition
agreement or other agreement relating to an Alcatel Acquisition Proposal or (e)
propose publicly or agree to any of the foregoing relating to an Alcatel
Acquisition Proposal; provided that nothing contained in this Section 6.07 shall
prevent Alcatel, prior to the receipt of the Alcatel Shareholder Approval, from
furnishing non-public information to, or entering into discussions or
negotiations with, any Person in connection with an unsolicited bona fide
written Alcatel Acquisition Proposal received from such Person prior to Alcatel
Shareholder Approval, so long as prior to furnishing non-public information to,
or entering into discussions or negotiations with, such Person, (i) the Board of
Directors of Alcatel by a majority vote determines in its good faith judgment
that such Alcatel Acquisition Proposal is reasonably expected to lead to an
Alcatel Superior Proposal (after consulting with its financial advisors), taking
into account any revisions to the terms of the Merger or this Agreement proposed
by Lucent after being notified pursuant to this Section 6.07, (ii) Alcatel is
not then in breach of its obligations under this Section 6.07 and (iii) Alcatel
enters into, and receives from such Person, an executed confidentiality
agreement on terms no less favorable to Alcatel than those contained in the
Confidentiality Agreement (as defined in Section 7.03). Nothing contained in
this Agreement shall prevent the Board of Directors of Alcatel from complying
with Rule 14d-9 and Rule 14e-2 under the Exchange Act (or any non-United States
equivalent) with regard to an Alcatel Acquisition Proposal; provided that
Alcatel shall not make any disclosure or take any action that amounts to an
Alcatel Change in Recommendation other than in compliance with Section 6.04.
Alcatel further agrees that it shall (a) promptly (and in no event later than 24
hours after receipt of any Alcatel Acquisition Proposal) notify (which notice
shall be provided orally and in writing and shall identify the Person making
such Alcatel Acquisition Proposal and set forth the material terms thereof)
Lucent after receipt of any Alcatel Acquisition Proposal, or any request for
non-public information relating to Alcatel or any Subsidiary of Alcatel or for
access to the properties, books or records of Alcatel or any Subsidiary of
Alcatel by any Person that has made, or to Alcatel's knowledge intends to make
an Alcatel Acquisition Proposal, and (b) keep Lucent informed of the status and
material terms of any such Alcatel Acquisition Proposal or request (including
any material amendments or proposed material amendments). Alcatel and its
Subsidiaries will, and Alcatel will cause the officers, directors, employees,
investment bankers, consultants and other agents of Alcatel and its Subsidiaries
to, immediately cease and cause to be terminated all discussions and
negotiations, if any, that have taken place prior to the date of this Agreement
with any parties with respect to any Alcatel Acquisition Proposal.
For purposes of this Agreement, "ALCATEL ACQUISITION PROPOSAL" means any
offer or proposal for, or any indication of interest in, any (i) direct or
indirect acquisition or purchase of a business or assets that constitute 20% or
more of the net revenues, net income or the assets of Alcatel and its
Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase
of (A) 20% or more of any class of equity securities of Alcatel or (B) 50% or
more of any class of equity securities of any of Alcatel's Subsidiaries whose
business constitutes 20% or more of the net revenues, net income or assets of
Alcatel and its Subsidiaries, taken as a whole, (iii) tender offer or exchange
offer that, if consummated, would result in any person beneficially owning
48
(A) 20% or more of any class of equity securities of Alcatel or (B) 50% or more
of any class of equity securities of any of Alcatel's Subsidiaries whose
business constitutes 20% or more the net revenues, net income or assets of
Alcatel and its Subsidiaries, taken as a whole, or (iv) merger, consolidation,
spin-off, business combination, recapitalization, liquidation, dissolution or
similar transaction involving Alcatel or any of its Subsidiaries whose business
constitutes 20% or more of the net revenues, net income or assets of Alcatel and
its Subsidiaries, taken as a whole, pursuant to which the shareholders of
Alcatel or such Subsidiary, as applicable, immediately prior to such transaction
(other than the counterparty in such transaction) would own less than 80% of any
class of equity securities of the resultant entity(ies), in each case other than
the transactions contemplated by this Agreement or expressly permitted by
Section 6.01 (including the items set forth in Section 6.01 of the Alcatel
Disclosure Letter). For purposes of this Agreement, "ALCATEL SUPERIOR PROPOSAL"
means any bona fide Alcatel Acquisition Proposal for or in respect of at least a
majority of the outstanding Alcatel Ordinary Shares or all or substantially all
of Alcatel's and its Subsidiaries' assets, taken as a whole, on terms that the
Board of Directors of Alcatel determines in its good faith judgment (after
consultation with outside legal counsel and a financial advisor of recognized
reputation) and taking into account all of the terms and conditions of such
Alcatel Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, as well as any revisions to the terms
of the Merger or this Agreement proposed by Lucent after being notified pursuant
to this Section 6.07), are more favorable to Alcatel's shareholders than the
Merger (after taking into account any such revised terms).
Section 6.08 Business in Sanctioned Countries. Alcatel covenants and
agrees to take all such actions as may be necessary to ensure that from and
after the Effective Time, the operations and governance of Alcatel and its
Subsidiaries will comply with and be permissible under applicable United States
laws relating to the transaction of business involving Sanction-Subject Persons.
The term "Sanction-Subject Persons" means any country, entity or individual that
is designated as a target of United States economic sanctions implemented by the
United States Department of the Treasury's Office of Foreign Assets Control
under 31 CFR Chapter V.
ARTICLE VII
COVENANTS OF ALCATEL AND LUCENT
The parties hereto agree that:
Section 7.01 Reasonable Best Efforts. Subject to the terms and
conditions set forth in this Agreement and applicable law, Lucent and Alcatel
shall each cooperate with the other and shall use (and shall cause their
respective Subsidiaries to use) their respective reasonable best efforts to
promptly (i) take or cause to be taken all actions, and do or cause to be done
all things, necessary, proper or advisable under this Agreement and applicable
laws (including under HSR Act, EC Merger Regulation, other competition laws and
the Exon-▇▇▇▇▇▇ Act) to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including,
preparing and filing as promptly as practicable (or any specific time as the
parties mutually agree) all documentation to effect all necessary filings,
notices, petitions, statements, registrations, submissions of information,
applications and other documents, (ii) obtain all approvals, consents,
registrations, permits, authorizations and
49
other confirmations required to be obtained from any third party necessary,
proper or advisable under this Agreement and applicable laws (including under
HSR Act, EC Merger Regulation, other competition laws and the Exon-▇▇▇▇▇▇ Act)
to consummate the Merger and the other transactions contemplated by this
Agreement, (iii) defend any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated by this Agreement and (iv) execute and deliver any
additional instruments necessary to consummate the transactions contemplated by
this Agreement. Subject to the terms and conditions set forth in this Agreement
and applicable law, Alcatel and Lucent will (1) promptly notify the other party
of any communication to that party from any governmental authority in respect of
any filing, investigation or inquiry concerning this Agreement or Merger; (2) if
practicable, permit the other party the opportunity to review in advance all the
information relating to Lucent and its Subsidiaries or Alcatel and its
Subsidiaries, as the case may be, that appears in any filing made with, or
written materials submitted to, any third party and/or any governmental
authority in connection with the Merger and the other transactions contemplated
by this Agreement and incorporate the other party's reasonable comments; (3) not
participate in any substantive meeting or discussion with any governmental
authority in respect of any filing, investigation, or inquiry concerning this
Agreement or the Merger unless it consults with the other party in advance, and,
to the extent permitted by such governmental authority, gives the other party
the opportunity to attend; (4) furnish the other party with copies of all
correspondences, filings, and written communications between them and their
Subsidiaries and representatives, on the one hand, and any governmental
authority or its respective staff, on the other hand, with respect to this
Agreement and the Merger, except that any materials concerning valuation of the
transaction or internal financial information may be redacted; and (5) use
reasonable best efforts to offer to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including taking all such further action as reasonably may be necessary to
resolve such objections, if any, as the United States Federal Trade Commission,
the Antitrust Division of the United States Department of Justice, state
antitrust enforcement authorities or competition authorities of any other nation
or other jurisdiction or any other person may assert under Regulatory Law (as
hereinafter defined) with respect to the transactions contemplated hereby, and
to avoid or eliminate each and every impediment under any law that may be
asserted by any governmental entity or authority with respect to the Merger so
as to enable the Closing to occur as soon as expeditiously possible. The parties
agree that, subject to the last sentence of this Section 7.01, the use of
"reasonable best efforts" shall include proposing, negotiating, committing to
and effecting, by consent decree, hold separate order or otherwise, (x) the
sale, divestiture or disposition of such assets or businesses of either party or
its Subsidiaries or affiliates and (y) restrictions, or actions that after the
Closing Date would limit Alcatel's or its Subsidiaries' (including the Surviving
Corporation's) or affiliates' freedom of action with respect to, or its ability
to retain, one or more of its or its Subsidiaries' (including the Surviving
Corporation's) businesses, product lines or assets, in each case as may be
required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or proceeding
that would otherwise have the effect of preventing or materially delaying the
Closing. For purposes of this Agreement, "Regulatory Law" means the ▇▇▇▇▇▇▇ Act
of 1890, the ▇▇▇▇▇▇▇ Antitrust Act of 1914, the HSR Act, the Federal Trade
Commission Act of 1914 and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and
50
other laws, including any antitrust, competition or trade regulation laws that
are designed or intended to (i) prohibit, restrict or regulate actions having
the purpose or effect of monopolization or restraint of trade or lessening
competition through merger or acquisition or (ii) protect the national security
or the national economy of any nation. Notwithstanding anything else contained
herein, the provisions of this Section 7.01 shall not be construed to (i)
require either party to undertake any efforts, or to take or consent to any
action if such efforts, action or consent would be reasonably likely to result
in a Detriment or (ii) take or consent to any action inconsistent with Article
II hereof. The parties acknowledge that, without limitation, (i) any requirement
to divest a significant portion of the assets of ▇▇▇▇ Laboratories other than
the assets referred to in Section 2.08 of the Lucent Disclosure Letter, (ii) any
material loss of control over Lucent that would materially affect Alcatel's
ability to manage Lucent's business or (iii) any material loss of control over
the business of Alcatel in the United States that would materially affect
Alcatel's ability to manage its business in the United States, shall be deemed a
Detriment.
Section 7.02 Preparation of Proxy Statement/Prospectus; Form F-4,
Form F-6. (a) Lucent and Alcatel shall cooperate with one another (a) in
connection with the preparation of the Lucent Proxy Statement, the Alcatel
Circular, the Alcatel Necessary Corporate Documents, the Form F-4 and the Form
F-6, (b) in determining whether any action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required, or any
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (c) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Lucent Proxy Statement, the Alcatel
Circular, the Form F-4 and the Form F-6 and seeking timely to obtain any such
actions, consents, approvals or waivers. The Lucent Proxy Statement will be
included as part of the Form F-4. Each of Lucent and Alcatel shall use
reasonable best efforts to have the Lucent Proxy Statement cleared by the SEC
and the Form F-4 and Form F-6 declared effective by the SEC as promptly as
practicable and to keep the Form F-4 and Form F-6 effective as long as is
necessary to consummate the Merger and the transactions contemplated by this
Agreement. Lucent and Alcatel shall, as promptly as practicable after receipt
thereof, provide the other party copies of any written comments and advise the
other party of any oral comments with respect to the Lucent Proxy Statement, the
Alcatel Circular, the Alcatel Necessary Corporate Documents, the Form F-4 and
the Form F-6 received by any governmental body or authority. The parties shall
cooperate and provide the other with a reasonable opportunity to review and
comment on any amendment or supplement to the Lucent Proxy Statement, the
Alcatel Circular, the Alcatel Necessary Corporate Documents, the Form F-4 or the
Form F-6 prior to filing such documents with any governmental body or authority,
and will provide each other with a copy of all such filings made with any
governmental body or authority.
(b) Except as otherwise set forth in this Agreement, no amendment
or supplement (including by incorporation by reference) to the Lucent Proxy
Statement, the Alcatel Circular, the Alcatel Necessary Corporate Documents, the
Form F-4 or the Form F-6 shall be made without the approval of both Lucent and
Alcatel, which approval shall not be unreasonably withheld or delayed; provided
that Lucent, in connection with a Lucent Change in Recommendation, and Alcatel,
in connection with an Alcatel Change in Recommendation, may amend or supplement
the Lucent Proxy Statement, the Alcatel Circular, the Alcatel Necessary
Corporate Documents, the Form F-4 or the Form F-6 (including by incorporation by
reference)
51
pursuant to a Qualifying Amendment to effect such a change, and in such event,
the right of approval set forth in this Section 7.02(b) shall apply only with
respect to information relating to the other party or its business, financial
condition or results of operations, and shall be subject to the right of each
party to have its Board of Directors' deliberations and conclusions to be
accurately described. A "QUALIFYING AMENDMENT" means an amendment or supplement
to the Lucent Proxy Statement, Form F-4 or the Alcatel Necessary Corporate
Documents (including by incorporation by reference) to the extent that it
contains (i) a Lucent Change in Recommendation or an Alcatel Change in
Recommendation (as the case may be), (ii) a statement of the reasons of the
Board of Directors of Lucent or Alcatel (as the case may be) for making such
Lucent Change in Recommendation or Alcatel Change in Recommendation (as the case
may be) and (iii) additional information reasonably related to the foregoing.
(c) Lucent will advise Alcatel, and Alcatel will advise Lucent,
promptly after it receives notice thereof, of the times when the Form F-4 and
Form F-6 have become effective, when the Alcatel Circular obtains the "visa" of
the AMF, the issuance of any stop order, the suspension of the qualification of
the ADSs or Alcatel Ordinary Shares issuable in connection with the Merger for
offering or sale in any jurisdiction or any request by any governmental body or
authority for amendment of the Lucent Proxy Statement, the Alcatel Circular, the
Alcatel Necessary Corporate Documents, the Form F-4 or the Form F-6.
(d) Alcatel shall file the opinion described in Section 8.03(d)
with the SEC on a post-effective amendment to the Form F-4, unless requested
otherwise by Lucent prior to the Effective Time.
Section 7.03 Access to Information; Compliance Program; Transition
Committee.
(a) From the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to Section 9.01, to the
extent permitted by applicable law, Lucent and Alcatel will give the other
party, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and records
of such party and its Subsidiaries, furnish to the other party, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such Persons may reasonably request
and will instruct its own employees, counsel and financial advisors to cooperate
with the other party in its investigation of the business of Lucent or Alcatel,
as the case may be; provided that no investigation of the other party's business
shall affect any representation or warranty given by either party hereunder, and
no party shall be required to afford such access if it would cause a significant
risk, in the reasonable judgment of the disclosing party, of a loss of privilege
to the disclosing party. Lucent agrees to comply with the provisions of Section
7.03(a) of the Lucent Disclosure Letter with respect to access to certain
information. All information obtained by Alcatel or Lucent pursuant to this
Section shall be kept confidential in accordance with, and shall otherwise be
subject to the terms of, the Confidentiality Agreement dated February 9, 2006
between Alcatel and Lucent (the "CONFIDENTIALITY AGREEMENT"), which
Confidentiality Agreement will continue in full force and effect in accordance
with its terms.
52
(b) The parties will work together in order to develop a mutually
acceptable compliance program, in general based on the current compliance
program of Lucent, to address the combined company's compliance following the
Effective Time with its obligations under the Foreign Corrupt Practices Act,
OECD rules and other relevant laws. This policy will include: (i) key policies
and procedures; (ii) training, education and communication; (iii) approval
system for gifts, expenses and similar items; and (iv) auditing, monitoring and
reporting.
(c) From the date of this Agreement until the earlier of the
Effective Time and the termination of this Agreement pursuant to Section 9.01,
and subject to applicable law, Lucent and Alcatel will cooperate with each other
in implementing the plan and procedures set forth in Section 7.03(c) of the
Alcatel Disclosure Letter. In connection with this obligation, Lucent and
Alcatel shall each as promptly as practicable after the execution of this
Agreement designate certain of their respective employees as coordinators for
this purpose.
(d) Alcatel and Lucent shall create a special transition committee
(the "TRANSITION COMMITTEE") that shall be co-chaired by the Chief Executive
Officer of Alcatel and the Chief Executive Officer of Lucent and shall be
composed of such chief executive officers and an even number of designees, half
of whom shall be designated by each of Alcatel and Lucent. After the date of
this Agreement and prior to the Effective Time, the Transition Committee shall
examine various alternatives regarding the manner in which to best organize and
manage the business of Alcatel and its Subsidiaries (including Lucent) after the
Effective Time, subject to applicable law.
Section 7.04 Tax Treatment. (a) Each of Alcatel and Lucent will use
its reasonable best efforts, and each agrees to cooperate with the other and
provide the other with such documentation, information and materials as may be
reasonably necessary, proper or advisable to (i) cause the Merger to qualify as
a reorganization within the meaning of Section 368(a) of the Code and to obtain
the opinion of counsel referred to in Section 8.03(d), (ii) avoid gain
recognition to the stockholders of Lucent pursuant to Section 367(a)(1) of the
Code and (iii) enable the parties to obtain, prior to the Closing Date, any
rulings from the IRS relating to the Merger, including any rulings under Section
367 of the Code that are referred to in Section 8.03(d) of this Agreement. If
Lucent notifies Alcatel that Lucent desires to seek a ruling from the IRS
relating to the Merger, then the parties shall jointly submit the request for
such a ruling and work together in good faith in the preparation of such
request. Alcatel shall not make any submission or representation to the IRS in
connection with the Merger, including in connection with a ruling request,
without the approval of Lucent. Neither Alcatel nor Lucent will take or fail to
take (and, following the Merger, Alcatel will cause Lucent not to take or fail
to take) any action which action (or failure to act) would reasonably be
expected to (i) cause the Merger to fail to qualify as a reorganization within
the meaning of Section 368(a) of the Code or (ii) cause stockholders of Lucent
to recognize gain pursuant to Section 367(a)(1) of the Code, other than any such
stockholder that would be a "five-percent transferee shareholder" of Alcatel
(within the meaning of US Treasury Regulation Section 1.367(a)-3(c) (5)(ii))
following the Merger that does not enter into a five-year gain recognition
agreement in the form provided in Treasury Regulation Section 1.367 (a)-8(b).
With respect to the Merger, Alcatel will (and following the Merger will cause
Lucent to) file all required information with its Tax Returns and maintain all
records required for Tax purposes, including,
53
without limitation, the reporting requirements contained in United States
Treasury Regulation Section 1.367(a)-3(c)(6).
(b) Alcatel shall use its reasonable best efforts to provide to
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ a certificate substantially in the form attached
hereto as Section 7.04(b) to the Alcatel Disclosure Letter. Lucent shall use its
reasonable best efforts to provide to Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ a
certificate substantially in the form attached hereto as Section 7.04(b) to the
Lucent Disclosure Letter.
(c) Alcatel will make arrangements with each five-percent
transferee shareholder, as defined in Treasury Regulation Section
1.367(a)-3(c)(5)(ii), if any, to ensure that such shareholder will be informed
of any disposition of any property that would require the recognition of gain
under such person's gain recognition agreement entered into under Treasury
Regulation Section 1.367(a)-8.
Section 7.05 Public Announcements. Alcatel and Lucent will consult
with each other and provide each other with the opportunity to review and
comment upon any press release or any public statement with respect to this
Agreement or the transactions contemplated hereby prior to the issuance of such
press release or the making of such public statement unless otherwise required
by applicable law or any listing agreement with any national securities
exchange. Alcatel and Lucent agree to issue a joint press release announcing the
execution of this Agreement.
Section 7.06 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of Lucent or Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of Lucent or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Corporation
any and all right, title and interest in, to and under any of the rights,
properties or assets of Lucent acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 7.07 Notices of Certain Events. (a) Each of Lucent and
Alcatel shall promptly notify the other party of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement; and
(ii) any notice or other communication from any governmental
or regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) Lucent and Alcatel shall promptly notify the other party of
any actions, suits, claims, investigations or proceedings commenced or, to the
best of its knowledge, threatened against, relating to or involving or otherwise
affecting such party or any of its Subsidiaries which relate to the consummation
of the transactions contemplated by this Agreement.
54
(c) Prior to the Effective Time, Lucent shall cause to be delivered
to Alcatel a letter identifying, to the best of Lucent's knowledge, all Persons
who are, at the time of the Lucent Stockholder Meeting, "affiliates" of Lucent
for purposes of Rule 145 under the 1933 Act. Lucent shall furnish such
information and documents as Alcatel may reasonably request for the purpose of
reviewing such list. Lucent shall use its reasonable best efforts to cause each
Person who is so identified as an affiliate to deliver to Alcatel on or prior to
the Effective Time a letter agreement substantially in the form of Exhibit D to
this Agreement.
Section 7.08 .Payment of Dividends. From the date of this Agreement
until the earlier of the Effective Time and the termination of this Agreement
pursuant to Section 9.01, Alcatel and Lucent will coordinate with each other
regarding the declaration of dividends in respect of the shares of Alcatel
Ordinary Shares and the Shares and the record dates and payment dates relating
thereto, it being the intention of the parties that holders of Shares will not
receive two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to their Shares and the shares of Alcatel Ordinary Shares
any holder of Shares receives in exchange therefor in connection with the
Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01 Conditions to the Obligations of Each Party. The
obligations of Lucent, Alcatel and Merger Subsidiary to consummate the Merger
are subject to the satisfaction (or, to the extent legally permissible, waiver)
of the following conditions:
(a) the Lucent Stockholder Approval shall have been obtained in
accordance with Delaware Law;
(b) the Alcatel Shareholder Approval shall have been obtained in
accordance with applicable French law;
(c) any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated;
(d) the European Commission shall have issued a decision under
Article 6(1)(b)or 8(1) or 8(2) of the EC Merger Regulation (or shall be deemed
to have done so under Article 10(6) thereof), declaring the transactions
contemplated hereby compatible with EC Common Market;
(e) the parties shall (i) have received all required governmental
antitrust and/or competition approvals and consents (excluding those specified
in foregoing paragraphs (c) and (d)), and (ii) have made all requisite filings,
notices or notifications, other than, in the case of each of clauses (i) and
(ii), those the absence of which would not result in a Material Adverse Effect
on Lucent or Alcatel;
(f) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit or enjoin the consummation
of the Merger;
55
(g) the Form F-4 shall have been declared effective by the SEC
under the 1933 Act, and no stop order suspending the effectiveness of the Form
F-4 shall be in effect and no proceedings for such purpose shall be pending
before or threatened by the SEC; and the approval (visa) of the registration
statement by the AMF relating to the Alcatel Ordinary Shares to be issued on the
Effective Date as part of the transactions contemplated by this Agreement shall
have been obtained;
(h) ADSs (and, if required, the underlying shares of Alcatel
Ordinary Shares) to be issued in the Merger shall have been approved for listing
on the NYSE, subject to official notice of issuance and the AMF and the Euronext
Paris SA shall have approved the listing of the Alcatel Ordinary Shares to be
issued on the Effective Date as part of the transactions contemplated by this
Agreement;
(i) at or prior to the Effective Time, the Committee on Foreign
Investment in the United States ("CFIUS") shall have notified Alcatel in writing
that it has determined not to investigate the transactions contemplated by this
Agreement (including the Merger) pursuant to the powers vested in it by the
Exon-▇▇▇▇▇▇ Act or, in the event that CFIUS has undertaken such an
investigation, CFIUS has terminated such investigation or the President of the
United States has determined not to take any action that would result in a
Detriment;
(j) there shall not be instituted or pending any action, litigation
or proceeding by any governmental authority (whether domestic, foreign or
supranational) before any court or governmental authority or agency, domestic,
foreign or supranational, (i) seeking to prohibit, materially restrain or
otherwise materially interfere with the Merger or the ownership or operation by
Alcatel or any Subsidiary of Alcatel of all or any material portion of the
business or assets of Lucent or any of its Subsidiaries or of Alcatel or any of
its Subsidiaries or to compel Alcatel or any Subsidiary of Alcatel to dispose of
or hold separate all or any material portion of the business or assets of Lucent
or any of its Subsidiaries or of Alcatel or any of its Subsidiaries, or (ii)
seeking divestiture of any Shares (or shares of stock of the Surviving
Corporation) or seeking to impose or confirm limitations on the ability of
Alcatel or any Subsidiary of Alcatel effectively to exercise full rights of
ownership of the Shares (or shares of stock of the Surviving Corporation)
including the right to vote any Shares (or shares of stock of the Surviving
Corporation) on any matters properly presented to stockholders, in the case of
clause (i) or clause (ii) which would reasonably be expected to materially
adversely affect the financial condition, business or annual results of
operations of Lucent and its Subsidiaries taken as a whole or Alcatel and its
Subsidiaries taken as a whole (any such matter described in clauses (i) or (ii)
of this Agreement being referred to in this Agreement as a "DETRIMENT");
(k) there shall not be any statute, rule, regulation, injunction,
order or decree or decision, enacted, enforced, promulgated, entered, issued or
deemed applicable to the Merger and the other transactions contemplated hereby
(or in the case of any statute, rule or regulation, awaiting signature or
reasonably expected to become law), by any court, government or governmental
authority or agency or legislative body, domestic, foreign or supranational,
that is reasonably likely, directly or indirectly, to result in a Detriment;
56
Section 8.02 Conditions to the Obligations of Alcatel and Merger
Subsidiary. The obligations of Alcatel and Merger Subsidiary to consummate the
Merger are subject to the satisfaction (or, to the extent legally permissible,
waiver) of the following further conditions:
(a) Lucent shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time;
(b) (i) the representations and warranties of Lucent contained in
this Agreement that are qualified by a "Material Adverse Effect" qualification
shall be true in all respects as so qualified when made and at and as of the
Effective Time as if made at and as of such time (provided that the accuracy of
representations and warranties that by their terms speak as of a specified date
will be determined as of such date); (ii) the representations and warranties of
Lucent contained in this Agreement that are not qualified by a "Material Adverse
Effect" qualification (other than the representations and warranties of Lucent
contained in the second sentence of Section 3.05) shall be true in all respects
when made and at and as of the Effective Time as if made at and as of such time
(provided that the accuracy of representations and warranties that by their
terms speak as of a specified date will be determined as of such date), except
for failure to be so true and correct which would not, individually or in the
aggregate, have a Material Adverse Effect on Lucent, and (iii) the
representation and warranty of Lucent contained in the second sentence of
Section 3.05 shall be in true in all material respects as of the date specified
in such representation and warranty;
(c) Alcatel shall have received a certificate of Lucent, signed by
a senior executive officer of Lucent, certifying to the effect that the
conditions set forth in Sections 8.02(a) and 8.02(b) have been satisfied; and
(d) The fair market value of the Plan Assets as of the Plan Asset
Measurement Date shall not be less than the Plan Asset Target. For purposes of
this Section 8.02(d): (i) "PLAN ASSETS" shall mean assets held under the Major
Pension Plans, less the amount of all contributions to such plans following
September 30, 2005; (ii) "MAJOR PENSION PLANS" shall mean those pension plans
maintained by Lucent or any of its Subsidiaries and reflected in "major plans"
under the column headed "pension benefits September 30, 2005" on page 61 of
Lucent's annual report on Form 10-K for its fiscal year ended September 30,
2005; (iii) "PLAN ASSET MEASUREMENT DATE" shall mean the last day of the month
last ending prior to the Closing Date and (iv) "Plan Asset Target" shall mean
$28,600,000,000 if the Plan Measurement Date is on or prior to September 30,
2006, reduced by $200,000,000 as of the first day of each calendar month
thereafter through December 2006, but in no event less that $28,000,000,000.
Section 8.03 Conditions to the Obligations of Lucent. The obligation
of Lucent to consummate the Merger is subject to the satisfaction (or, to the
extent legally permissible, waiver) of the following further conditions:
(a) Alcatel shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Effective Time;
(b) (i) the representations and warranties of Alcatel contained in
this Agreement that are qualified by a "Material Adverse Effect" qualification
shall be true in all
57
respects as so qualified when made and at and as of the Effective Time as if
made at and as of such time (provided that the accuracy of representations and
warranties that by their terms speak as of a specified date will be determined
as of such date); (ii) the representations and warranties of Alcatel contained
in this Agreement that are not qualified by a "Material Adverse Effect"
qualification (other than the representations and warranties of Lucent contained
in the first sentence of Section 4.05) shall be true in all respects when made
and at and as of the Effective Time as if made at and as of such time (provided
that the accuracy of representations and warranties that by their terms speak as
of a specified date will be determined as of such date), except for failure to
be so true and correct which would not, individually or in the aggregate, have a
Material Adverse Effect on Alcatel, and (iii) the representation and warranty of
Alcatel contained in the first sentence of Section 4.05 shall be in true in all
material respects as of the date specified in such representation and warranty;
(c) Lucent shall have received a certificate of Alcatel, signed by
a senior executive officer of Alcatel, certifying to the effect that the
conditions set forth in Sections 8.03(a) and 8.03(b) have been satisfied; and
(d) Lucent shall have received an opinion of Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇ in form and substance reasonably satisfactory to Lucent, on the
basis of certain facts, representations and assumptions set forth or referred to
in such opinion, dated the Effective Time, to the effect that (i) the Merger
will be treated for United States federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the Code and
that each of Alcatel, Merger Subsidiary and Lucent will be a party to the
reorganization within the meaning of Section 368(b) of the Code and (ii) each
transfer of Shares to Alcatel by a stockholder of Lucent pursuant to the Merger
will not be subject to Section 367(a)(1) of the Code. In rendering such opinion,
such counsel shall be entitled to rely upon (among other things) (x) and require
certain representations of officers of Alcatel and Lucent reasonably requested
by counsel, including without limitation those contained in certificates
substantially in the form attached as Section 7.04(b) of the Alcatel Disclosure
Letter and Lucent Disclosure Letter, respectively, and (y) any rulings received
by the parties from the IRS with respect to the Merger (and any representations
of Alcatel or Lucent made in connection therewith), including any ruling
received by the parties to the effect that the Merger will not be subject to
section 367(a)(1) of the Code (and any representations of Alcatel or Lucent made
in connection therewith). The opinion may assume that all applicable reporting
requirements have been satisfied and that any stockholder who is a "five-percent
transferee shareholder" with respect to Alcatel within the meaning of United
States Treasury Regulations Section 1.367(a)-3(c)(5)(ii) will in a timely and
effective manner file the agreement described in United States Treasury
Regulations Section 1.367(a)-3(c)(1)(iii)(B). After receipt of Lucent
Stockholder Approval, Lucent shall not waive receipt of a tax opinion from
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ as a condition to closing unless further approval
of the shareholders of Lucent is obtained with appropriate disclosure.
ARTICLE IX
TERMINATION
Section 9.01 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of the
58
Merger and this Agreement by the stockholders of Lucent or any approval of the
matters constituting the Alcatel Shareholder Approval by the shareholders of
Alcatel):
(a) by mutual written consent of Lucent and Alcatel;
(b) by either Lucent or Alcatel,
(i) if the Effective Time shall not have occurred on or
before December 31, 2006 (the "END DATE"); provided that if (x) the
Effective Time has not occurred by December 31, 2006 solely by reason of
non-satisfaction of one or more of the conditions set forth in Sections
8.01(c), 8.01(d), 8.01(e) or 8.01(h) and (y) all other conditions in
Article VIII have been satisfied or (to the extent legally permissible)
waived or are then capable of being satisfied, the End Date will be
extended one or more times up to and including March 31, 2007; provided
further that the right to terminate this Agreement under this Section
9.01(b)(i) shall not be available to any party whose failure to fulfill in
any material respect any obligation under this Agreement has caused or
resulted in the failure of the Effective Time to occur on or before
December 31, 2006, in the case of a failure prior to that date, or March
31, 2007, in the case of any such failure after December 31, 2006;
(ii) if the Lucent Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at the Lucent
Stockholder Meeting or any adjournment thereof;
(iii) if the Alcatel Shareholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at the
Alcatel Shareholder Meeting or any adjournment thereof;
(iv) if there shall be any law or regulation that makes
consummation of the Merger illegal or otherwise prohibited or if any
judgment, injunction, order or decree enjoining Alcatel or Lucent from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(c) by Alcatel, if (i) there is a Lucent Change in Recommendation
or (ii) the Lucent Stockholder Meeting shall not have been called and held as
required by Section 5.02;
(d) by Lucent, if (i) there is an Alcatel Change in
Recommendation or (ii) the Alcatel Shareholder Meeting shall not have been
called and held as required by Section 6.04.
(e) by Lucent, if Alcatel shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 8.01 or 8.03, and (B) is incapable of being cured by Alcatel or is
not cured by Alcatel within 60 days following receipt of written notice from
Lucent of such breach or failure to perform;
59
(f) by Alcatel, if Lucent shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach or
failure to perform (A) would give rise to the failure of a condition set forth
in Section 8.01 or 8.02, and (B) is incapable of being cured by Lucent or is not
cured by Lucent within 60 days following receipt of written notice from Alcatel
of such breach or failure to perform;
The party desiring to terminate this Agreement pursuant to clause (b),
(c) or (d) of this Section 9.01 shall give written notice of such termination to
the other party in accordance with Section 10.01, specifying the provision of
this Agreement pursuant to which such termination is effected.
Section 9.02 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that (a) the agreements
contained in this Section 9.02, in Article X, in the last sentence of Section
7.03, and in the Confidentiality Agreement shall survive the termination of this
Agreement and (b) no such termination shall relieve any party of any liability
or damages resulting from any willful material breach by that party of this
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile or similar
writing) and shall be given,
if to Alcatel or Merger Subsidiary, to:
Alcatel
▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Facsimile No.: ▇▇▇ ▇ ▇▇ ▇▇ ▇▇ ▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇
General Counsel
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to Lucent, to:
Lucent Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇., Esq.
Senior Vice President, General Counsel and Corporate
Secretary
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. Each such notice, request
or other communication shall be effective (i) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate facsimile confirmation is received or (ii) if given by any other
means, when delivered at the address specified in this Section.
Section 10.02 Non-Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement.
Section 10.03 Amendments; No Waivers. (a) Any provision of this
Agreement (including the Exhibits hereto and the Lucent Disclosure Letter and
the Alcatel Disclosure Letter) may be amended or waived prior to the Effective
Time if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by Lucent, Alcatel and Merger Subsidiary, or in the case
of a waiver, by the party against whom the waiver is to be effective; provided
that after the adoption of this Agreement by the stockholders of Lucent, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of Lucent, (ii) any term of the
articles of association and by-laws of Alcatel or (iii) any of the terms or
conditions of this Agreement if such alteration or change would adversely affect
the holders of any shares of capital stock of Lucent.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 10.04 Expenses. (a) Except as otherwise specified in this
Section 10.04 or agreed in writing by the parties, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such cost or expense;
provided that all liability for transfer taxes (other than transfer taxes to be
paid by Alcatel in connection with the issuance and creation of ADSs and the
underlying Alcatel Ordinary Shares in the Merger, as provided in Section
1.02(b)) incurred by
61
Lucent or Lucent's stockholders in connection with the transactions contemplated
hereby shall be paid by the Surviving Corporation out of its own funds and will
not be paid, directly or indirectly, by Alcatel.
(b) If
(i) (A) either Lucent or Alcatel terminates this Agreement
pursuant to Section 9.01(b)(ii) or if Alcatel terminates this Agreement
pursuant to Section 9.01(c)(ii) and (B) prior to the Lucent Stockholder
Meeting (in the case of a termination pursuant to Section 9.01(b)(ii)) or
the date of termination (in the case of a termination pursuant to Section
9.01(c)(ii)), a Lucent Acquisition Proposal was made known to Lucent or was
made known directly to the stockholders of Lucent or otherwise became
publicly known or any third party has publicly announced an intention
(whether or not conditional) to make a Lucent Acquisition Proposal; or
(ii) Alcatel terminates this Agreement pursuant to Section
9.01(c)(i),
then in any case described in clause (i) or (ii), Lucent shall pay to
Alcatel by wire transfer of immediately available funds an amount equal to
$250,000,000 (the "LUCENT INITIAL FEE"). The Lucent Initial Fee shall be
paid immediately upon termination of this Agreement. Receipt by Alcatel of
the Lucent Initial Fee shall constitute conclusive evidence that this
Agreement has been validly terminated and, upon receipt of the Lucent
Initial Fee, Lucent shall be fully released and discharged from any
liability or obligation resulting from or under this Agreement, except as
otherwise provided in Sections 9.02(b) and 10.04(c).
(c) If:
(i) (A) either Lucent or Alcatel terminates this Agreement
pursuant to Section 9.01(b)(ii), (B) prior to the Lucent Stockholder
Meeting, a Lucent Acquisition Proposal was made known to Lucent or was made
known directly to the stockholders of Lucent or otherwise became publicly
known or any third party has publicly announced an intention (whether or
not conditional) to make a Lucent Acquisition Proposal, and (C) Lucent
enters into an agreement with respect to, or consummates, any Lucent
Acquisition Proposal with any Person within twelve months after such
termination of this Agreement; or
(ii) (A) if Alcatel terminates this Agreement pursuant to
Section 9.01(c) and (B) Lucent enters into an agreement with respect to, or
consummates, any Lucent Acquisition Proposal with any Person within twelve
months after such termination of this Agreement;
then in any case described in clause (i) or (ii), Lucent shall pay to Alcatel by
wire transfer of immediately available funds an amount equal to $500,000,000
(the "LUCENT TERMINATION FEE") no later than the time of Lucent's entering into
an agreement with respect to any Lucent Acquisition Proposal with any Person or,
if there is no such agreement, upon consummation of
62
such Lucent Acquisition Proposal, and shall be offset by any amounts previously
paid to Alcatel pursuant to Section 10.04(b). Acceptance by Alcatel of the
Lucent Termination Fee shall constitute conclusive evidence that this Agreement
has been validly terminated and, upon acceptance of the Lucent Termination Fee,
Lucent shall be fully released and discharged from any liability or obligation
resulting from or under this Agreement, except as otherwise provided in Section
9.02(b). Lucent acknowledges that the agreements contained in Sections 10.04(b)
and (c) are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Alcatel would not enter into this Agreement;
accordingly, if Lucent fails to pay when due the amounts due pursuant to
Sections 10.04(b) and (c) Alcatel shall be entitled to interest on the amounts
set forth in Sections 10.04(b) and (c) at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made.
(d) If
(i) (A) either Lucent or Alcatel terminates this Agreement
pursuant to Section 9.01(b)(iii) or if Lucent terminates this Agreement
pursuant to Section 9.01(d)(ii) and (B) prior to the Alcatel Shareholder
Meeting (in the case of a termination pursuant to Section 9.01(b)(iii)) or
the date of termination (in the case of a termination pursuant to Section
9.01(d)(ii)), an Alcatel Acquisition Proposal was made known to Alcatel or
was made known directly to the shareholders of Alcatel or otherwise became
publicly known or any third party has publicly announced an intention
(whether or not conditional) to make an Alcatel Acquisition Proposal; or
(ii) Lucent terminates this Agreement pursuant to Section
9.01(d)(i);
then in any case described in clause (i) or (ii), Alcatel shall pay to Lucent by
wire transfer of immediately available funds an amount equal to $250,000,000
(the "ALCATEL INITIAL FEE"). The Alcatel Initial Fee shall be paid immediately
upon termination of this Agreement. Acceptance by Lucent of the Alcatel Initial
Fee shall constitute conclusive evidence that this Agreement has been validly
terminated and, upon acceptance of the Alcatel Initial Fee, Alcatel and Merger
Subsidiary shall be fully released and discharged from any liability or
obligation resulting from or under this Agreement except as otherwise provided
in Sections 9.02(b) and 10.04(e).
(e) If:
(i) (A) either Lucent or Alcatel terminates this Agreement
pursuant to Section 9.01(b)(iii), (B) prior to the Alcatel Shareholder
Meeting, an Alcatel Acquisition Proposal was made known to Alcatel or was
made known directly to the shareholders of Alcatel or otherwise became
publicly known or any third party has publicly announced an intention
(whether or not conditional) to make an Alcatel Acquisition Proposal, and
(C) Alcatel enters into an agreement with respect to, or consummates, any
Alcatel Acquisition Proposal
63
with any Person within twelve months after such termination of this
Agreement; or
(ii) (A) if Lucent terminates this Agreement pursuant to Section
9.01(d) and (B) Alcatel enters into an agreement with respect to, or
consummates, any Alcatel Acquisition Proposal with any Person within twelve
months after such termination of this Agreement;
then in any case described in clause (i) or (ii), Alcatel shall pay to Lucent by
wire transfer of immediately available funds an amount equal to $500,000,000
(the "ALCATEL TERMINATION FEE"), which shall be paid no later than the time of
Alcatel's entering into an agreement with respect to any Alcatel Acquisition
Proposal with any Person or, if there is no such agreement, upon consummation of
such Alcatel Acquisition Proposal, and shall be offset by any amounts previously
paid to Lucent pursuant to Section 10.04(d). Acceptance by Lucent of the Alcatel
Termination Fee shall constitute conclusive evidence that this Agreement has
been validly terminated and, upon acceptance of the Alcatel Termination Fee,
Alcatel and Merger Subsidiary shall be fully released and discharged from any
liability or obligation resulting from or under this Agreement, except as
otherwise provided in Section 9.02(b). Alcatel acknowledges that the agreements
contained in Sections 10.04(d) and (e) are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, Lucent would
not enter into this Agreement; accordingly, if Alcatel fails to pay when due the
amounts due pursuant to this Section 10.04(d) and (e), Lucent shall be entitled
to interest on the amounts set forth in this Section 10.04(d) and (e) at the
prime rate of Citibank, N.A. in effect on the date such payment was required to
be made.
Section 10.05 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
Section 10.06 Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without regard
to principles of conflicts of law.
Section 10.07 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal or state court located in the State of Delaware, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 10.01 shall be deemed
effective service of process on such party.
64
Section 10.08 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 10.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts (including by facsimile), each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received (by telecopy or otherwise) counterparts of this
Agreement signed by all of the other parties hereto.
Section 10.10 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the Exhibits hereto and the Lucent Disclosure Letter and
the Alcatel Disclosure Letter) and the Confidentiality Agreement constitute the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement and thereof. Except for the provisions of Section 1.02 (which shall be
for the benefit of the holders of Shares as of immediately prior to the
Effective Time) and Section 6.03 (which shall be for the benefit of the
Indemnitees), no provision of this Agreement or any other agreement contemplated
hereby is intended to confer on any Person other than the parties hereto any
rights or remedies.
Section 10.11 Interpretation. (a) When a reference is made in this
Agreement to an Article, a Section, Exhibit or Schedule, such reference shall be
to an Article of, a Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. All terms defined in this Agreement shall have the
defined meanings when used in any certificate or other document made or
delivered pursuant thereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any statute defined or referred to herein means such
statute as from time to time amended, modified or supplemented, including by
succession of comparable successor statutes and references to all attachments
thereto and instruments incorporated therein. References to a Person are also to
its permitted successors and assigns. Each of the parties has participated in
the drafting and negotiation of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement must be construed as if it is
drafted by all of the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of authorship of any of the
provisions of this Agreement.
(b) Any matter disclosed in the Alcatel Disclosure Letter or
the Lucent Disclosure Letter, as the case may be, in respect of any
representation or covenant made by such party shall be deemed to be disclosed
for purposes of the other representations and covenants
65
made by such party to the extent that such disclosure (in light of its form and
substance) would reasonably be expected to be pertinent to such other
representation(s) and covenant(s).
Section 10.12 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
66
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LUCENT TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
ALCATEL
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
AURA MERGER SUB, INC.
By: /s/ ▇▇▇▇-▇▇▇▇▇▇ Beaufret
---------------------------------------
▇▇▇▇-▇▇▇▇▇▇ Beaufret
President
[signature page]
67
