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EXECUTION COPY
SEPARATION AND DISTRIBUTION AGREEMENT
BY AND BETWEEN
LUCENT TECHNOLOGIES INC.
AND
AGERE SYSTEMS INC.
DATED AS OF FEBRUARY 1, 2001
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TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................. i
ARTICLE I DEFINITIONS........................................................................... 1
ARTICLE II THE SEPARATION........................................................................ 14
2.1. Transfer of Assets and Assumption of Liabilities..................................................... 14
2.2. Agere Assets......................................................................................... 15
2.3. Agere Liabilities.................................................................................... 16
2.4. Termination of Agreements............................................................................ 18
2.5. Documents Relating to Transfer of Real Property Interests and Tangible Property Located Thereon...... 19
2.6. Documents Relating to Other Transfers of Assets and Assumption of Liabilities........................ 20
2.7. Other Ancillary Agreements........................................................................... 20
2.8. The Non-U.S. Plan.................................................................................... 21
2.9. Intentionally Omitted................................................................................ 21
2.10. Disclaimer of Representations and Warranties...................................................... 21
2.11. Financing Arrangements............................................................................ 21
2.12. Governmental Approvals and Consents............................................................... 22
2.13. Novation of Assumed Agere Liabilities............................................................. 23
2.14. Novation of Assumed Liabilities other than Agere Liabilities...................................... 24
2.15. Third Party Intellectual Property License Agreements.............................................. 24
ARTICLE III THE IPO AND ACTIONS PENDING THE IPO................................................... 27
3.1. Transactions Prior to the IPO........................................................................ 27
3.2. Proceeds of the IPO.................................................................................. 27
3.3. Conditions Precedent to Consummation of the IPO...................................................... 28
3.4. Charter; Bylaws; Rights Plan......................................................................... 29
3.5. Agere Common Stock................................................................................... 29
ARTICLE IV THE DISTRIBUTION...................................................................... 29
4.1. The Distribution..................................................................................... 29
4.2. Actions Prior to the Distribution.................................................................... 30
4.3. Conditions to Distribution........................................................................... 31
4.4. Fractional Shares.................................................................................... 32
4.5. The Agere Board of Directors......................................................................... 32
ARTICLE V MUTUAL RELEASES; INDEMNIFICATION...................................................... 32
5.1. Release of Pre-Closing Claims........................................................................ 32
5.2. Indemnification by Agere............................................................................. 34
5.3. Indemnification by Lucent............................................................................ 35
5.4. Indemnification Obligations Net of Insurance Proceeds and Other Amounts.............................. 35
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5.5. Procedures for Indemnification of Third Party Claims................................................. 36
5.6. Additional Matters................................................................................... 38
5.7. Remedies Cumulative.................................................................................. 38
5.8. Survival of Indemnities.............................................................................. 39
5.9. Alleged Infringement or Misappropriation............................................................. 39
ARTICLE VI CONTINGENT GAINS AND CONTINGENT LIABILITIES........................................... 40
6.1. Definitions Relating to Contingent Gains and Contingent Liabilities.................................. 40
6.2. Contingent Gains..................................................................................... 44
6.3. Exclusive Contingent Liabilities..................................................................... 45
6.4. Shared Contingent Liabilities........................................................................ 45
6.5. Payments............................................................................................. 45
6.6. Procedures to Determine Status of Contingent Liability or Contingent Gain............................ 46
6.7. Certain Case Allocation Matters...................................................................... 46
6.8. Termination of Certain Article VI Provisions......................................................... 47
ARTICLE VII INTERIM OPERATIONS AND CERTAIN OTHER MATTERS.......................................... 47
7.1. Insurance Matters.................................................................................... 47
7.2. Operating Financial Liabilities...................................................................... 48
7.3. Certain Business Matters............................................................................. 50
7.4. Late Payments........................................................................................ 51
ARTICLE VIII EXCHANGE OF INFORMATION; CONFIDENTIALITY.............................................. 51
8.1. Agreement for Exchange of Information; Archives...................................................... 51
8.2. Ownership of Information............................................................................. 52
8.3. Compensation for Providing Information............................................................... 52
8.4. Record Retention..................................................................................... 52
8.5. Limitations of Liability............................................................................. 53
8.6. Other Agreements Providing for Exchange of Information............................................... 53
8.7. Production of Witnesses; Records; Cooperation........................................................ 53
8.8. Confidentiality...................................................................................... 54
8.9. Protective Arrangements.............................................................................. 55
ARTICLE IX DISPUTE RESOLUTION.................................................................... 55
9.1. Disputes............................................................................................. 55
9.2. Escalation; Mediation................................................................................ 55
9.3. Court Actions........................................................................................ 56
ARTICLE X FURTHER ASSURANCES AND ADDITIONAL COVENANTS........................................... 56
10.1. Further Assurances................................................................................ 56
10.2. Qualification as Tax-Free Distribution............................................................ 58
10.3. Changes in Agere Stock Ownership Following the Distribution....................................... 58
10.4. Changes in Lucent Stock Ownership Following the Distribution...................................... 59
10.5. Compliance with SDA Agreement and CDA Agreement................................................... 59
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ARTICLE XI TERMINATION........................................................................... 59
11.1. Termination by Mutual Consent..................................................................... 59
11.2. Other Termination................................................................................. 60
11.3. Effect of Termination............................................................................. 60
ARTICLE XII MISCELLANEOUS......................................................................... 60
12.1. Counterparts; Entire Agreement; Corporate Power................................................... 60
12.2. Governing Law..................................................................................... 61
12.3. Assignability..................................................................................... 61
12.4. Third Party Beneficiaries......................................................................... 62
12.5. Notices........................................................................................... 62
12.6. Severability...................................................................................... 63
12.7. Force Majeure..................................................................................... 63
12.8. Publicity......................................................................................... 63
12.9. Expenses.......................................................................................... 63
12.10. Headings.......................................................................................... 63
12.11. Survival of Covenants............................................................................. 64
12.12. Waivers of Default................................................................................ 64
12.13. Specific Performance.............................................................................. 64
12.14. Amendments........................................................................................ 64
12.15. Interpretation.................................................................................... 64
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SCHEDULES
Schedule 1.7................... Agere BL Assets
Schedule 1.12(a)............... Supply and Vendor Contracts and Agreements
Schedule 1.12(d)............... Federal, State, and Local Government Contracts and Agreements
Schedule 1.12(e)............... Capital or Operating Equipment Lease Obligations
Schedule 1.12(g)............... Other Agere Contracts
Schedule 1.77.................. Non-U.S. Plan
Schedule 2.1(c)................ Delayed Transfer Assets and Liabilities
Schedule 2.2(a)(i)............. Agere Assets
Schedule 2.2(a)(iv)............ Capital Stock of Transferred Subsidiaries and Other Third Parties
Schedule 2.2(b)(i)............. Excluded Assets
Schedule 2.2(b)(iv)............ Excluded Contracts and Agreements
Schedule 2.3(b)(v)............. Identified Environmental Liabilities
Schedule 2.4(b)(ii)............ Excluded Terminated Agreements
Schedule 2.5................... Real Estate Documentation
Schedule 2.15(a)(1)............ Assigned Intellectual Property License Agreements
Schedule 2.15(a)(2)............ Designated Intellectual Property License Agreements
Schedule 2.15(b)............... Royalty, License Fee and Similar Arrangements
Schedule 6.1(e)................ Exclusive Agere Contingent Gains and Liabilities
Schedule 6.1(g)................ Exclusive Lucent Contingent Gains and Liabilities
Schedule 6.1(j)................ Shared Contingent Gains
Schedule 6.1(k)................ Shared Contingent Liabilities
Schedule 6.6................... Third Party Claims, Actions
Schedule 7.2(a)................ Agere OFLs
EXHIBITS
Exhibit A...................... Restated Certificate of Incorporation of Agere
Exhibit B...................... Amended and Restated Bylaws of Agere
Exhibit C...................... Rights Agreement of Agere
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SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of
February 1, 2001, is by and between Lucent and Agere. Capitalized terms used
herein and not otherwise defined shall have the respective meanings assigned to
them in Article I hereof.
R E C I T A L S
WHEREAS, the Board of Directors of Lucent has determined that
it is in the best interests of Lucent and its stockholders to separate Lucent's
existing businesses into two independent businesses;
WHEREAS, in furtherance of the foregoing, it is appropriate and
desirable to transfer the Agere Assets to Agere and its Subsidiaries and to
cause Agere and its Subsidiaries to assume the Agere Liabilities, all as more
fully described in this Agreement and the Ancillary Agreements;
WHEREAS, the Board of Directors of Lucent has further
determined that it is appropriate and desirable, on the terms and conditions
contemplated hereby, to cause Agere to offer and sell for its own account in the
IPO a limited number of shares of Agere Common Stock;
WHEREAS, Lucent currently intends, after the IPO, to
distribute to holders of shares of Lucent Common Stock, through a spinoff, a
splitoff or a combination of both transactions, the outstanding shares of Agere
Common Stock then owned directly or indirectly by Lucent;
WHEREAS, the Distribution is intended to qualify as a tax-free
spin-off under Section 355 of the Code; and
WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect the Separation, the IPO and
the Distribution and certain other agreements that will govern certain matters
relating to the Separation, the IPO and the Distribution and the relationship of
Lucent, Agere and their respective Subsidiaries following the IPO and the
Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall
have the following meanings:
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1.1. ACTION means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.
1.2. AFFILIATE of any Person means a Person that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
1.3. AGENT means the distribution agent to be appointed by Lucent
to distribute to the stockholders of Lucent all of the shares of Agere Common
Stock held by Lucent pursuant to the Distribution.
1.4. AGERE means Agere Systems Inc., a Delaware corporation,
formerly known as Lucent ME Corp.
1.5. AGERE ASSETS has the meaning set forth in Section 2.2(a).
1.6. AGERE BALANCE SHEET means the audited combined balance sheet
of Agere and its Subsidiaries, including the notes thereto, as of September 30,
2000.
1.7. AGERE BL ASSETS means the Assets of Bell Laboratories
specifically identified on Schedule 1.7.
1.8. AGERE BUSINESS means: (a)(i) the business and operations of
the microelectronics group of Lucent that designs and manufactures integrated
circuits and optoelectronic components; and (ii) such other businesses and
operations relating thereto currently carried on by the microelectronics
business group of Lucent; and (b) except as otherwise expressly provided herein,
any terminated, divested or discontinued businesses or operations that at the
time of termination, divestiture or discontinuation primarily related to the
Agere Business (as described in the foregoing clause (a)) as then conducted, but
in each case, excluding the businesses and operations related to the Excluded
Assets.
1.9. AGERE CLASS A COMMON STOCK means the Class A Common Stock,
$0.0l par value per share, of Agere to be issued by Agere under certain
circumstances as contemplated by Section 3.5.
1.10. AGERE CLASS B COMMON STOCK means the Class B Common Stock,
$0.0l par value per share, of Agere to be issued by Agere under certain
circumstances as contemplated by Section 3.5.
1.11. AGERE COMMON STOCK means the Common Stock, $0.0l par value per
share, of Agere; provided, however, that under certain circumstances as
contemplated by Section 3.5, references to Agere Common Stock shall be to Agere
Class A Common Stock or Agere Class B
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Common Stock as set forth in Section 3.5.
1.12. AGERE CONTRACTS means the following contracts and agreements
to which Lucent or any of its Affiliates is a party or by which it or any of its
Affiliates or any of their respective Assets is bound, whether or not in
writing, except for any such contract or agreement that is contemplated to be
retained by Lucent or any member of the Lucent Group pursuant to any provision
of this Agreement or any Ancillary Agreement:
(a) any supply or vendor contracts or agreements listed or
described on Schedule 1.12(a) and any other supply or vendor contracts or
agreements entered into after the date hereof and prior to the Closing Date that
relate primarily to the Agere Business;
(b) any contract or agreement entered into in the name of, or
expressly on behalf of, any division, business unit or member of the Agere
Group;
(c) any contract or agreement, including any joint venture
agreement, that relates primarily to the Agere Business;
(d) federal, state and local government and other contracts
and agreements that are listed or described on Schedule 1.12(d);
(e) any contract or agreement representing capital or
operating equipment lease obligations reflected on the Agere Balance Sheet,
including obligations as lessee under those contracts or agreements listed on
Schedule 1.12(e);
(f) any contract or agreement that is otherwise expressly
contemplated pursuant to this Agreement or any of the Ancillary Agreements to be
assigned to Agere or any member of the Agere Group;
(g) (i) any guarantee, indemnity, representation, warranty or
other Liability of any member of the Agere Group or the Lucent Group in respect
of any other Agere Contract, any Agere Liability or the Agere Business
(including guarantees of financing incurred by customers or other third parties
in connection with purchases of products or services from the Agere Business),
and (ii) the contracts, agreements and other documents listed or described on
Schedule 1.12(g)); and
(h) any Agere OFL.
1.13. AGERE CUMULATIVE OWNERSHIP CHANGE means the total percentage
Change in Agere Stock Ownership immediately after a proposed Change in Agere
Stock Ownership and shall be calculated by multiplying (a) a fraction, (i) the
numerator of which is the sum of (A) the total number of shares of Agere stock
proposed to be issued, or for which there is a change in ownership, in the
proposed Change in Agere Stock Ownership, (B) the total number of shares of
Agere stock issued, or for which there has been a change in ownership, in all
prior Changes in Agere Stock Ownership, and (C) the number of shares of Agere
stock determined by Lucent and Agere on or prior to the Closing Date, and (ii)
the denominator of which is the total number of
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shares of Agere stock that would be outstanding after the proposed Change in
Agere Stock Ownership (referred to in the foregoing clause (A)), by (b) 100.
1.14. AGERE GROUP means Agere, each Subsidiary of Agere and each
other Person that is either controlled directly or indirectly by Agere
immediately after the Closing Date or that is contemplated to be controlled by
Agere pursuant to the Non-U.S. Plan (other than any Person that is contemplated
not to be controlled by Agere pursuant to the Non-U.S. Plan).
1.15. AGERE INDEMNITEES has the meaning set forth in Section 5.3(a).
1.16. AGERE LIABILITIES has the meaning set forth in Section 2.3(a).
1.17. AGERE OFL'S has the meaning set forth in Section 7.2(a).
1.18. AGREEMENT means this Separation and Distribution Agreement,
including all of the Schedules and Exhibits hereto.
1.19. ANCILLARY AGREEMENTS means the deeds, lease assignments and
assumptions, leases, subleases and sub-subleases, and the supplemental and other
agreements and instruments related thereto, substantially in the forms attached
as Schedule 2.5, the Fiber Product Purchase Agreement, the Microelectronics
Product Purchase Agreement, the ORiNOCO Product Purchase Agreement, the Employee
Benefits Agreement and other related agreements thereto, the Interim Services
and Systems Replication Agreement, the Tax Sharing Agreement, the Patent
Assignments, the Technology Assignment and Joint Ownership Agreement, the Patent
and Technology License Agreement, the Trademark License Agreement, the Trademark
Assignment, the Trade Dress Assignment, the Development Project Agreement, the
Joint Design Center Operating Agreement and the agreements and other documents
comprising the Non-U.S. Plan.
1.20. ASSETS means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(a) all accounting and other books, records and files whether
in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any
other form;
(b) all apparatus, computers and other electronic data
processing equipment, fixtures, machinery, equipment, furniture, office
equipment, automobiles, trucks, aircraft rolling stock, vessels, motor vehicles
and other transportation equipment, special and general tools, test devices,
prototypes and models and other tangible personal property;
(c) all inventories of materials, parts, raw materials,
supplies, work-in-process and finished goods and products;
(d) all interests in real property of whatever nature,
including easements,
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whether as owner, mortgagee or holder of a Security Interest in real property,
lessor, sublessor, lessee, sublessee or otherwise;
(e) all interests in any capital stock or other equity
interests of any Subsidiary or any other Person, all bonds, notes, debentures or
other securities issued by any Subsidiary or any other Person, all loans,
advances or other extensions of credit or capital contributions to any
Subsidiary or any other Person and all other investments in securities of any
Person;
(f) all license agreements, leases of personal property, open
purchase orders for raw materials, supplies, parts or services, unfilled orders
for the manufacture and sale of products and other contracts, agreements or
commitments;
(g) all deposits, letters of credit and performance and surety
bonds;
(h) all written technical information, data, specifications,
research and development information, engineering drawings, operating and
maintenance manuals, and materials and analyses prepared by consultants and
other third parties;
(i) all domestic and foreign patents, copyrights, trade names,
trademarks, service marks and registrations and applications for any of the
foregoing, mask works, trade secrets, inventions, other proprietary information
and licenses from third Persons granting the right to use any of the foregoing;
(j) all computer applications, programs and other software,
including operating software, network software firmware, middleware, design
software, design tools, systems documentation and instructions;
(k) all cost information, sales and pricing data, customer
prospect lists, supplier records, customer and supplier lists, customer and
vendor data, correspondence and lists, product literature, artwork, design,
development and manufacturing files, vendor and customer drawings, formulations
and specifications, quality records and reports and other books, records,
studies, surveys, reports, plans and documents;
(l) all prepaid expenses, trade accounts and other accounts
and notes receivables;
(m) all rights under contracts or agreements, all claims or
rights against any Person arising from the ownership of any Asset, all rights in
connection with any bids or offers and all claims, choices in action or similar
rights, whether accrued or contingent;
(n) all rights under insurance policies and all rights in the
nature of insurance, indemnification or contribution;
(o) all licenses (including radio and similar licenses),
permits, approvals and authorizations which have been issued by any Governmental
Authority;
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(p) cash or cash equivalents, bank accounts, lock boxes and
other deposit arrangements; and
(q) interest rate, currency, commodity or other swap, collar,
cap or other hedging or similar agreements or arrangements.
1.21. BELL LABORATORIES means the Assets of Lucent's Bell
Laboratories division as of the date hereof.
1.22. CDA AGREEMENT means the Contribution and Distribution
Agreement among Lucent and Avaya Inc., dated as of September 30, 2000.
1.23. CHANGE IN AGERE STOCK OWNERSHIP means any change in the
ownership of any class of stock of Agere or of options or other interests
exchangeable for or convertible into any class of stock of Agere including,
without limitation, a change resulting from issuance of any class of stock of
Agere in connection with a public offering, private placement, stock or asset
acquisition, merger, option grant or capital contribution, or any change in
ownership required to be reported on Schedule 13D or 13G (or successor schedules
thereto) with the Commission, occurring during the period set forth in Section
10.3 of this Agreement. Notwithstanding the foregoing, a Change in Agere Stock
Ownership shall not include changes in ownership resulting from public trading
that are not required to be reported on Schedule 13D or 13G (or successor
schedules thereto) or issuances of stock in connection with the performance of
services as an employee or director of Agere or any member of the Agere Group or
Lucent or any member of the Lucent Group in a transaction which Section 83 of
the Code applies. This definition and the application thereof is intended to
monitor compliance with Section 355(e) of the Code following the Distribution
and shall be interpreted accordingly. Any clarification or change in the statute
or regulations promulgated under Section 355(e) of the Code shall be
incorporated in this definition and its interpretation.
1.24. CHANGE IN LUCENT STOCK OWNERSHIP means any change in the
ownership of any class of stock of Lucent or of options or other interests
exchangeable for or convertible into any class of stock of Lucent including,
without limitation, a change resulting from issuance of any class of stock of
Lucent in connection with a public offering, private placement, stock or asset
acquisition, merger, option grants or capital contribution, or any change in
ownership required to be reported on Schedule 13D or 13G (or successor schedules
thereto) with the Commission, occurring during the period set forth in Section
10.4 of this Agreement. Notwithstanding the foregoing, a Change in Lucent Stock
Ownership shall not include changes in ownership resulting from public trading
that are not required to be reported on Schedule 13D or 13G (or successor
schedules thereto) or issuances of stock in connection with the performance of
services as an employee or director of Lucent or any member of the Lucent Group
in a transaction which Section 83 of the Code applies. This definition and the
application thereof are intended to monitor compliance with Section 355(e) of
the Code following the Distribution and shall be interpreted accordingly. Any
clarification or change in the statute or regulations promulgated under Section
355(e) of the Code shall be incorporated in this definition and its
interpretation.
1.25. CLOSING DATE means the first time at which any shares of Agere
Common Stock
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are sold to the Underwriters pursuant to the IPO in accordance with the terms of
the Underwriting Agreement.
1.26. CODE means the Internal Revenue Code of 1986, as amended.
1.27. COMMISSION means the Securities and Exchange Commission.
1.28. CONSENTS means any consents, waivers or approvals from, or
notification requirements to, any third parties.
1.29. CONTINGENT CLAIM COMMITTEE, CONTINGENT GAIN AND CONTINGENT
LIABILITIES have the respective meanings set forth in Section 6.1.
1.30. DELAYED TRANSFER ASSETS means any Agere Assets that are
expressly provided in this Agreement or any Ancillary Agreement to be
transferred after the date of this Agreement.
1.31. DELAYED TRANSFER LIABILITIES means any Agere Liabilities that
are expressly provided in this Agreement or any Ancillary Agreement to be
assumed after the date of this Agreement.
1.32. DETERMINATION REQUEST means a written request made to the
Contingent Claim Committee, pursuant to Section 5.5(b), for a determination as
to whether a Third Party Claim specified in such request constitutes a Shared
Contingent Liability.
1.33. DEVELOPMENT PROJECT AGREEMENT means the Development Project
Agreement, dated as of the date hereof, by and between Lucent and Agere.
1.34. DISTRIBUTION means the distribution of Agere Common Stock by
Lucent in one or more transactions occurring after the IPO that collectively
have the effect that all shares of Agere Common Stock held by Lucent are
distributed to holders of shares of Lucent Common Stock.
1.35. DISTRIBUTION DATE means one or more dates determined in
accordance with Section 4.3 on which the Distribution occurs.
1.36. EMPLOYEE BENEFITS AGREEMENT means the Employee Benefits
Agreement, dated as of the date hereof, by and between Lucent and Agere.
1.37. ENVIRONMENTAL LAW means any federal, state, local, foreign or
international statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, common law (including tort and environmental
nuisance law), legal doctrine, order, judgment, decree, injunction, requirement
or agreement with any Governmental Authority, now or hereafter in effect,
relating to health, safety, pollution or the environment (including ambient air,
surface water, groundwater, land surface or subsurface strata) or to emissions,
discharges, releases or threatened releases of any substance currently or at any
time hereafter listed, defined, designated or classified as hazardous, toxic,
waste, radioactive or dangerous, or otherwise regulated, under any of the
foregoing, or otherwise relating to the manufacture, processing, distribution,
use,
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treatment, storage, disposal, transport or handling of any such substances,
including the Comprehensive Environmental Response, Compensation and Liability
Act, the Superfund Amendments and Reauthorization Act and the Resource
Conservation and Recovery Act and comparable provisions in state, local, foreign
or international law.
1.38. ENVIRONMENTAL LIABILITIES means all Liabilities relating to,
arising out of or resulting from any Environmental Law or contract or agreement
relating to environmental, health or safety matters (including all removal,
remediation or cleanup costs, investigatory costs, response costs, natural
resources damages, property damages, personal injury damages, costs of
compliance with any product take back requirements or with any settlement,
judgment or other determination of Liability and indemnity, contribution or
similar obligations) and all costs and expenses, interest, fines, penalties or
other monetary sanctions in connection therewith.
1.39. ESCALATION NOTICE has the meaning set forth in Section 9.2.
1.40. EXCHANGE has the meaning set forth in Section 2.11(c).
1.41. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
1.42. EXCLUDED ASSETS has the meaning set forth in Section 2.2(b).
1.43. EXCLUDED EMPLOYEE LIABILITIES shall mean the employee-related
liabilities retained by Lucent with respect to its employee retirees and
deferred vested former employees, as set forth in the Employee Benefits
Agreement.
1.44. EXCLUDED LIABILITIES has the meaning set forth in Section
2.3(b).
1.45. EXCLUSIVE LUCENT CONTINGENT GAIN, EXCLUSIVE LUCENT CONTINGENT
LIABILITY, EXCLUSIVE AGERE CONTINGENT GAIN, EXCLUSIVE AGERE CONTINGENT LIABILITY
AND EXCLUSIVE CONTINGENT LIABILITY have the respective meanings set forth in
Section 6.1.
1.46. FIBER PRODUCT PURCHASE AGREEMENT means the Fiber Product
Purchase Agreement, dated as of the date hereof, by and between Lucent and
Agere.
1.47. FINANCING FACILITY means the commercial paper facility and
related credit agreement to be entered into prior to the Closing Date by and
among Lucent, Agere, and an agent or co-agents selected by Lucent and Agere,
pursuant to which, prior to the Closing Date, Lucent will issue commercial paper
or otherwise borrow an amount determined by Lucent and, as of the Closing Date,
Agere will become the sole obligor and Lucent will have no further liability or
obligation thereunder.
1.48. FIRST BEACON means First Beacon Insurance Company, a Vermont
corporation.
1.49. GOVERNMENTAL APPROVALS means any notices, reports or other
filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any
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Governmental Authority.
1.50. GOVERNMENTAL AUTHORITY shall mean any federal, state, local,
foreign or international court, government, department, commission, board,
bureau, agency, official or other regulatory, administrative or governmental
authority.
1.51. GRL means Lucent Technologies GRL Corporation, a Delaware
corporation.
1.52. GROUP means either the Agere Group or the Lucent Group, as the
context requires.
1.53. IDENTIFIED ENVIRONMENTAL LIABILITIES has the meaning set forth
in Section 2.3(b)(v).
1.54. INDEMNIFYING PARTY has the meaning set forth in Section
5.4(a).
1.55. INDEMNITEE has the meaning set forth in Section 5.4(a).
1.56. INDEMNITY PAYMENT has the meaning set forth in
Section 5.4(a).
1.57. INFORMATION means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
1.58. INSURANCE POLICIES means the insurance policies written by
insurance carriers, including those affiliated with Lucent, pursuant to which
Agere or one or more of its Subsidiaries (or their respective officers or
directors) will be insured parties after the Closing Date.
1.59. INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance carrier;
(b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of set off) from First Beacon
or any of its Subsidiaries or from any third party in the nature of insurance,
contribution or indemnification in respect of any Liability;
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
incurred in the
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collection thereof.
1.60. INTERIM SERVICES AND SYSTEMS REPLICATION AGREEMENT means the
Interim Services and Systems Replication Agreement, dated as of the date hereof,
by and between Lucent and Agere.
1.61. IP INDEMNIFIED PARTY AND IP INDEMNIFYING PARTY have the
respective meanings set forth in Section 5.9.
1.62. IPO means the initial public offering (and not the Exchange)
by Agere of shares of Agere Common Stock pursuant to the IPO Registration
Statement.
1.63. IPO REGISTRATION STATEMENT means the registration statement on
Form S-l to be filed under the Securities Act, pursuant to which the Agere
Common Stock to be issued in the IPO will be registered, together with all
amendments thereto.
1.64. JOINT DESIGN CENTER OPERATING AGREEMENT means the Joint Design
Center Operating Agreement, dated as of the date hereof, by and between Lucent
and Agere.
1.65. LIABILITIES means any and all losses, claims, charges, debts,
demands, actions, causes of action, suits, damages, obligations, payments, costs
and expenses, sums of money, accounts, reckonings, bonds, specialties,
indemnities and similar obligations, exoneration, covenants, contracts,
controversies, agreements, promises, doings, omissions, variances, guarantees,
make whole agreements and similar obligations, and other liabilities and
requirements, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses, whatsoever reasonably incurred in investigating, preparing or
defending against any such Actions or threatened or contemplated Actions), order
or consent decree of any Governmental Authority or any award of any arbitrator
or mediator of any kind, and those arising under any contract, commitment or
undertaking, including those arising under this Agreement or any Ancillary
Agreement, in each case, whether or not recorded or reflected or required to be
recorded or reflected on the books and records or financial statements of any
Person.
1.66. LTII means Lucent Technologies International Inc., a Delaware
corporation.
1.67. LUCENT means Lucent Technologies Inc., a Delaware corporation.
1.68. LUCENT BUSINESS means: (a)(i) the business and operations of
the service provider networks business that provides public networking systems
and software to communications service providers and public network operators
around the world, and (ii) all other businesses (including the businesses and
operations related to the Excluded Assets) not otherwise included in the Agere
Business; and (b) except as otherwise expressly provided herein, any terminated,
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divested or discontinued businesses or operations that at the time of
termination, divestiture or discontinuation primarily related to the Lucent
Business (as described in the foregoing clause (a)) as then conducted.
1.69. LUCENT COMMON STOCK means the Common Stock, $0.01 par value
per share, of Lucent.
1.70. LUCENT CUMULATIVE OWNERSHIP CHANGE means the total percentage
Change in Lucent Stock Ownership immediately after a proposed Change in Lucent
Stock Ownership and shall be calculated by multiplying (a) a fraction, (i) the
numerator of which is the sum of (A) the total number of shares of Lucent stock
proposed to be issued, or for which there is a change in ownership, in the
proposed Change in Lucent Stock Ownership, (B) the total number of shares of
Lucent stock issued, or for which there has been a change in ownership, in all
prior Changes in Lucent Stock Ownership, and (C) the number of shares of Lucent
stock determined by Lucent and Agere on or prior to the Closing Date, and (ii)
the denominator of which is the total number of shares of Lucent stock that
would be outstanding after the proposed Change in Lucent Stock Ownership
(referred to in the foregoing clause (A)), by (b) 100.
1.71. LUCENT CP RATE during any month of determination shall be
equal to the weighted average rate on all Lucent commercial paper (across all
maturities) for such month.
1.72. LUCENT GROUP means Lucent and each Person (other than any
member of the Agere Group) that is an Affiliate of Lucent immediately after the
Closing Date.
1.73. LUCENT INDEMNITEES has the meaning set forth in Section 5.2.
1.74. MICROELECTRONICS PRODUCT PURCHASE AGREEMENT means the
Microelectronics Product Purchase Agreement, dated as of the date hereof, by and
between Lucent and Agere.
1.75. NON-AGERE ASSETS means any assets of Lucent or any of its
Affiliates other than Agere Assets.
1.76. NON-NEGOTIATION PERIOD means the period beginning on the date
of this Agreement and ending six months after the last Distribution Date.
1.77. NON-U.S. PLAN means the Non-U.S. Plan, comprised of the series
of transactions, agreements and other arrangements, pursuant to which the
non-U.S. Assets and Liabilities of Lucent and its Affiliates, including LTII,
have been or will be transferred between the parties hereto, which are set forth
or described in Schedule 1.77 (as such Schedule may be supplemented by mutual
consent of the parties prior to the Closing Date).
1.78. NYSE means The New York Stock Exchange, Inc.
1.79. OFL'S mean all liabilities, obligations, contingencies and
instruments and other Liabilities of any member of the Lucent Group of a
financial nature with third parties existing on the date hereof, including any
of the following:
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(a) foreign exchange contracts;
(b) letters of credit;
(c) guarantees of third party loans to customers;
(d) surety bonds (excluding surety for workers' compensation
self-insurance);
(e) interest support agreements on third party loans to
customers;
(f) performance bonds or guarantees issued by third parties;
(g) swaps or other derivatives contracts; and
(h) recourse arrangements on the sale of receivables or notes.
1.80. ORINOCO PRODUCT PURCHASE AGREEMENT means the ORiNOCO Product
Purchase Agreement, dated as of the date hereof, by and between Lucent and
Agere.
1.81. PATENT ASSIGNMENTS means, collectively, the Patent Assignment,
effective as of January 31, 2001, executed and delivered by Lucent to Agere
Systems Guardian Corp., and the Patent Assignment, effective as of January 31,
2001, executed and delivered by Lucent to Agere Systems Optoelectronics Guardian
Corp.
1.82. PATENT AND TECHNOLOGY LICENSE AGREEMENT means the Patent and
Technology License Agreement, effective as of the date hereof, by and among
Lucent, GRL, Lucent Technologies Intellectual Property Guardian Corp., Lucent
Technologies Optical Networking Guardian Corp., Lucent Technologies Wireless
Guardian Corp., Lucent Technologies Fiber Guardian Corp., Agere, Agere Systems
Guardian Corp. and Agere Systems Optoelectronics Guardian Corp.
1.83. PERSON means an individual, a general or limited partnership,
a corporation, a trust, a joint venture, an unincorporated organization, a
limited liability entity, any other entity and any Governmental Authority.
1.84. PRIME RATE means the rate which The Chase Manhattan Bank (or
any successor thereto or other major money center commercial bank agreed to by
the parties hereto) announces from time to time as its prime lending rate, as in
effect from time to time.
1.85. PROSPECTUS means each preliminary, final or supplemental
prospectus forming a part of the IPO Registration Statement.
1.86. RECORD DATE means the close of business on the date to be
determined by the Lucent Board of Directors as the record date for determining
stockholders of Lucent entitled to receive shares of Agere Common Stock in the
Distribution.
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1.87. RELATED EXCLUSIVE CONTINGENT LIABILITIES has the meaning set
forth in Section 6.1.
1.88. SDA AGREEMENT means the Separation and Distribution Agreement
among AT&T Corp., Lucent and NCR Corporation, dated as of February 1, 1996 and
amended and restated as of March 29, 1996.
1.89. SECOND ANNIVERSARY PERIOD means the period beginning on the
date of this Agreement and ending on the second anniversary of the last
Distribution Date.
1.90. SECURITIES ACT means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
1.91. SECURITY INTEREST means any mortgage, security interest,
pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
1.92. SEPARATION means the transfer of the Agere Assets to Agere and
its Subsidiaries and the assumption by Agere and its Subsidiaries of the Agere
Liabilities, all as more fully described in this Agreement and the Ancillary
Agreements.
1.93. SHARED LUCENT PERCENTAGE, SHARED AGERE PERCENTAGE, SHARED
PERCENTAGE, SHARED CONTINGENT GAIN AND SHARED CONTINGENT LIABILITIES have the
respective meanings set forth in Section 6.1.
1.94. SUBSIDIARY of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however that no Person that is not directly or indirectly wholly owned
by any other Person shall be a Subsidiary of such other Person unless such other
Person controls, or has the right, power or ability to control, that Person.
1.95. TAX SHARING AGREEMENT means the Tax Sharing Agreement, dated
as of the date hereof, by and between Lucent and Agere.
1.96. TAXES has the meaning set forth in the Tax Sharing Agreement.
1.97. TECHNOLOGY ASSIGNMENT AND JOINT OWNERSHIP AGREEMENT means the
Technology Assignment and Joint Ownership Agreement, effective as of January 31,
2001, by and between Lucent and Agere.
1.98. THIRD ANNIVERSARY PERIOD means the period beginning on the
date of this
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Agreement and ending on the third anniversary of the last Distribution Date.
1.99. THIRD PARTY CLAIM has the meaning set forth in Section 5.5(a).
1.100. TRADE DRESS ASSIGNMENT means the Trade Dress Assignment, dated
as of the date hereof, executed and delivered by Lucent to Agere.
1.101. TRADEMARK ASSIGNMENT means the Trademark Assignment, dated as
of the date hereof, executed and delivered by Lucent to Agere.
1.102. TRADEMARK LICENSE AGREEMENT means the Trademark License
Agreement, dated as of the date hereof, by and between Lucent and Agere.
1.103. UNDERWRITERS means the managing underwriters for the IPO.
1.104. UNDERWRITING AGREEMENT means the underwriting agreement to be
entered into among Agere and the Underwriters with respect to the IPO.
1.105. VALUE has the meaning set forth in Section 6.1.
1.106. WORKING CAPITAL FACILITY means the Working Capital Agreement
to be entered into by Agere, as borrower, the bank named therein as agent, and
the lending banks named therein, to fund the working capital requirements of
Agere following the date hereof.
ARTICLE II
THE SEPARATION
2.1. Transfer of Assets and Assumption of Liabilities
(a) Lucent hereby contributes, assigns, transfers, conveys and
delivers to Agere, and agrees to cause its applicable Subsidiaries to
contribute, assign, transfer, convey and deliver to Agere, and Agere hereby
accepts from Lucent and its applicable Subsidiaries, all of Lucent's and such
Subsidiaries' respective rights, titles and interests in and to all Agere
Assets, other than the Delayed Transfer Assets.
(b) Agere hereby accepts, assumes and agrees faithfully to
perform, discharge and fulfill all the Agere Liabilities, other than the Delayed
Transfer Liabilities, in accordance with their respective terms. Agere shall be
responsible for all Agere Liabilities, regardless of when or where such
Liabilities arose or arise, or whether the facts on which they are based
occurred prior to or subsequent to the date hereof, regardless of where or
against whom such Liabilities are asserted or determined (including any Agere
Liabilities arising out of claims made by Lucent's or Agere's respective
directors, officers, employees, agents, Subsidiaries or Affiliates against any
member of the Lucent Group or the Agere Group) or whether asserted or determined
prior to the date hereof, and regardless of whether arising from or alleged to
arise from negligence, recklessness, violation of law, fraud or
misrepresentation by any member of the Lucent Group or the Agere Group or any of
their respective directors, officers, employees,
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agents, Subsidiaries or Affiliates.
(c) Each of the parties hereto agrees that the Delayed
Transfer Assets will be contributed, assigned, transferred, conveyed and
delivered, and the Delayed Transfer Liabilities will be accepted and assumed, in
accordance with the terms of the agreements that provide for such contribution,
assignment, transfer, conveyance and delivery, or such acceptance or assumption,
after the date of this Agreement or as otherwise set forth on Schedule 2.1(c).
Following such contribution, assignment, transfer, conveyance and delivery of
any Delayed Transfer Asset, or the acceptance and assumption of any Delayed
Transfer Liability, the applicable Delayed Transfer Asset or Delayed Transfer
Liability shall be treated for all purposes of this Agreement and the Ancillary
Agreements as an Agere Asset or an Agere Liability, as the case may be.
(d) In the event that at any time or from time to time
(whether prior to or after any Distribution Date), any party hereto (or any
member of such party's respective Group), shall receive or otherwise possess any
Asset that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer, or cause to be
transferred, such Asset to the Person so entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for any such other Person.
2.2. Agere Assets
(a) For purposes of this Agreement, "Agere Assets" shall mean
(without duplication):
(i) any and all Assets that are expressly
contemplated by this Agreement or any Ancillary Agreement (or Schedule 2.2(a)(i)
or any other Schedule hereto or thereto) as Assets to be transferred to Agere or
any other member of the Agere Group;
(ii) any Exclusive Agere Contingent Gain and any
Shared Agere Percentage of any Shared Contingent Gain;
(iii) subject to Section 7.1, any rights of any
member of the Agere Group under any of the Insurance Policies, including any
rights thereunder arising after any Distribution Date in respect of any
Insurance Policies that are occurrence policies;
(iv) (A) any Assets that Section 2.5(b) contemplates
will be transferred to, or be retained by, any member of the Agere Group, (B)
any Agere Contracts, (C) the Agere BL Assets, (D) all issued and outstanding
capital stock of the Subsidiaries of Lucent listed on Schedule 2.2(a)(iv), and
(E) the shares of capital stock of certain entities held by Lucent as listed on
Schedule 2.2(a)(iv);
(v) any Assets reflected in the Agere Balance Sheet
as Assets of Agere and its Subsidiaries, subject to any dispositions of such
Assets subsequent to the date of the Agere Balance Sheet; and
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(vi) except as contemplated by Section 2.5(b), any
and all Assets owned or held immediately prior to the Closing Date by Lucent or
any of its Subsidiaries that are used primarily in the Agere Business. The
intention of this clause (vi) is only to rectify any inadvertent omission of
transfer or conveyance of any Assets that, had the parties given specific
consideration to such Asset as of the date hereof, would have otherwise been
classified as an Agere Asset. No Asset shall be deemed to be a Agere Asset
solely as a result of this clause (vi) if such Asset is within the category or
type of Asset expressly covered by the subject matter of an Ancillary Agreement.
In addition, no Asset shall be deemed a Agere Asset solely as a result of this
clause (vi) unless a claim with respect thereto is made by Agere on or prior to
the first anniversary of the first Distribution Date.
Notwithstanding the foregoing, the Agere Assets shall not in any event include
the Excluded Assets referred to in Section 2.2(b).
(b) For the purposes of this Agreement, "Excluded Assets"
shall mean:
(i) the Assets listed or described on Schedule
2.2(b)(i);
(ii) Bell Laboratories (other than the Agere BL
Assets and any other intellectual property assigned and/or licensed to Agere or
any member of the Agere Group pursuant to any of the Ancillary Agreements);
(iii) any and all Assets that are expressly
contemplated by this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Assets to be retained by Lucent or any other member of the
Lucent Group;
(iv) any contract or agreement listed or described on
Schedule 2.2(b)(iv);
(v) the business, assets and operations of Lucent's
(A) fiber optical solutions group; (B) Lucent Venture Partners group; and (C)
New Ventures group; and
(iv) except to the extent expressly set forth in
Section 2.2(a)(ii) or (iii), respectively, any Contingent Gains.
2.3. Agere Liabilities
(a) For the purposes of this Agreement, "Agere Liabilities"
shall mean (without duplication):
(i) any and all Liabilities that are expressly
contemplated by this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Liabilities to be assumed by Agere or any member of the
Agere Group, and all agreements, obligations and Liabilities of any member of
the Agere Group under this Agreement or any of the Ancillary Agreements;
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(ii) all Liabilities (other than Taxes based on, or
measured by reference to, net income), including any employee-related
Liabilities (other than Excluded Employee Liabilities) and Environmental
Liabilities (other than the Identified Environmental Liabilities), primarily
relating to, arising out of or resulting from:
(A) the operation of the Agere Business, as
conducted at any time prior to, on or after the Closing Date (including any
Liability relating to, arising out of or resulting from any act or failure to
act by any director, officer, employee, agent or representative (whether or not
such act or failure to act is or was within such Person's authority));
(B) the operation of any business conducted
by any member of the Agere Group at any time after the Closing Date (including
any Liability relating to, arising out of or resulting from any act or failure
to act by any director, officer, employee, agent or representative (whether or
not such act or failure to act is or was within such Person's authority)); or
(C) any Agere Assets (including any Agere
Contracts and any real property and leasehold interests);
in any such case whether arising before, on or after the Closing Date;
(iii) subject to the terms of Article VI, all
Exclusive Agere Contingent Liabilities and the Shared Agere Percentage of any
Shared Contingent Liabilities;
(iv) all Liabilities relating to, arising out of or
resulting from the Working Capital Facility and, as of the Closing Date,
Financing Facility, in each case other than any third party costs and expenses
incurred by any member of the Lucent Group;
(v) all Liabilities relating to, arising out of or
resulting from any of the terminated, divested or discontinued businesses and
operations of the Agere Business; and
(vi) all Liabilities reflected as liabilities or
obligations of Agere in the Agere Balance Sheet, subject to any discharge of
such Liabilities subsequent to the date of the Agere Balance Sheet.
Notwithstanding the foregoing, the Agere Liabilities shall not include the
Excluded Liabilities referred to in Section 2.3(b) below.
(b) For the purposes of this Agreement, "Excluded Liabilities"
shall mean:
(i) any and all Liabilities that are expressly
contemplated by this Agreement or any Ancillary Agreement (or the Schedules
hereto or thereto) as Liabilities to be retained or assumed by Lucent or any
other member of the Lucent Group, and all agreements and obligations of any
member of the Lucent Group under this Agreement or any of the Ancillary
Agreements;
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(ii) any and all liabilities relating to, arising out
of or resulting from any Excluded Assets;
(iii) subject to the terms of Article VI, all
Exclusive Lucent Contingent Liabilities and the Shared Lucent Percentage of any
Shared Contingent Liabilities;
(iv) the Excluded Employee Liabilities;
(v) the Environmental Liabilities set forth on
Schedule 2.3(b)(v) (the "Identified Environmental Liabilities"); and
(iv) all Environmental Liabilities accrued as of the
date hereof solely relating to, arising out of or resulting from the existence
of any leasehold interest that is an Agere Asset if the applicable lessor,
sublessor or sub-sublessor under the applicable lease, sublease or subsublease
is a member of the Lucent Group.
2.4. Termination of Agreements
(a) Except as set forth in Section 2.4(b), in furtherance of
the releases and other provisions of Section 5.1 hereof, Agere and each member
of the Agere Group, on the one hand, and Lucent and each member of the Lucent
Group, on the other hand, hereby terminate any and all agreements, arrangements,
commitments or understandings, whether or not in writing, between or among Agere
and/or any member of the Agere Group, on the one hand, and Lucent and/or any
member of the Lucent Group, on the other hand, effective as of the date hereof.
No such terminated agreement, arrangement, commitment or understanding
(including any provision thereof which purports to survive termination) shall be
of any further force or effect after the date hereof. Each party shall, at the
reasonable request of any other party, take, or cause to be taken, such other
actions as may be necessary to effect the foregoing.
(b) The provisions of Section 2.4(a) shall not apply to any of
the following agreements, arrangements, commitments or understandings (or to any
of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and
each other agreement or instrument expressly contemplated by this Agreement or
any Ancillary Agreement to be entered into by any of the parties hereto or any
of the members of their respective Groups); (ii) any agreements, arrangements,
commitments or understandings listed or described on Schedule 2.4(b)(ii); (iii)
any agreements, arrangements, commitments or understandings to which any Person
other than the parties hereto and their respective Affiliates is a party (it
being understood that to the extent that the rights and obligations of the
parties and the members of their respective Groups under any such agreements,
arrangements, commitments or understandings constitute Agere Assets or Agere
Liabilities, they shall be assigned pursuant to Section 2.1); (iv) any
intercompany accounts payable or accounts receivable accrued as of the Closing
Date that are reflected in the books and records of the parties or otherwise
documented in writing in accordance with past practices; (v) any agreements,
arrangements, commitments or understandings to which any non-wholly owned
Subsidiary of Lucent or Agere, as the case may be, is a party (it being
understood that directors' qualifying shares or similar interests will be
disregarded for purposes of determining whether a Subsidiary is wholly owned);
(vi) any written Tax sharing or Tax allocation agreements to which
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any member of any Group is a party; and (vii) any other agreements,
arrangements, commitments or understandings that this Agreement or any Ancillary
Agreement expressly contemplates will survive the Closing Date.
2.5. Documents Relating to Transfer of Real Property Interests and
Tangible Property Located Thereon
(a) In furtherance of the contribution, assignment, transfer
and conveyance of Agere Assets and the acceptance and assumption of Agere
Liabilities set forth in Section 2.1(a) and (b), simultaneously with the
execution and delivery hereof or as promptly as practicable thereafter each of
Lucent and Agere, or their applicable Subsidiaries, is executing and delivering
or will execute and deliver deeds, lease assignments and assumptions, leases,
subleases and sub-subleases substantially in the forms attached as Schedule 2.5
(which in certain cases includes different forms for real property and leasehold
interests located outside of the United States), with such changes as may be
necessary to conform to any laws, regulations or usage applicable in the
jurisdiction in which the relevant real property is located. Set forth in, or
referenced by, such Schedule are, among other things, a summary of each property
or interest therein to be conveyed, assigned, leased, subleased or
sub-subleased, the applicable entities relevant to each property and their
capacities with respect to each property (e.g., as transferor, transferee,
assignor, assignee, lessor, lessee, sublessor, sublessee, sub-sublessor or
sub-sublessee), and any terms applicable to each property that are not specified
in the forms of deed, lease assignment and assumption, lease, sublease or
sub-sublease (e.g., rent and term).
(b) Except as otherwise expressly provided in this Agreement
or any Ancillary Agreement, all tenant improvements, fixtures, furniture, office
equipment, servers, private branch exchanges, artwork and other tangible
property (other than equipment subject to capital or operating equipment leases,
which will be transferred or retained based on whether the associated capital or
operating equipment lease is or is not an Agere Contract) located as of the date
hereof on any real property that is covered by any Ancillary Agreement referred
to in Section 2.5(a), including the Schedules thereto, shall, except to the
extent expressly set forth on a Schedule referred to in Section 2.5(a), be
transferred or retained as follows:
(i) Deeds and Assignments. In the case of any real
property or leasehold interests covered by an Ancillary Agreement set forth on
Schedule 2.5 that is a deed or lease assignment and assumption, all such
tangible property will be transferred to the transferee or assignee of the
applicable real property or leasehold interest.
(ii) Shared Facilities that are Owned. In the case of
any real property or leasehold interests covered by an Ancillary Agreement set
forth on Schedule 2.5 that is a lease, all such tangible property will be
retained by the lessor under the applicable lease, except that any such tangible
property (other than tenant improvements, fixtures, furniture and artwork) used
exclusively by the lessee shall be transferred to, or retained by, the lessee.
(iii) Shared Domestic Facilities with Third Party
Leases. In the case of any real property or leasehold interests located in the
United States covered by an Ancillary Agreement set forth on Schedule 2.5 that
is a sublease or sub-sublease, all such tangible property
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will be retained by the sublessor or sub-sublessor, respectively, under the
applicable sublease or sub-sublease, except that any such tangible property
(other than tenant improvements, fixtures and artwork), including furniture used
exclusively by the sublessee or sub-sublessee, respectively, shall be
transferred to, or retained by, such sublessee or sub-sublessee.
(iv) Shared Non-U.S. Facilities with Third Party
Leases. In the case of any real property or leasehold interests located outside
of the United States covered by an Ancillary Agreement set forth on Schedule 2.5
that is a sublease or sub-sublease, all such tangible property will be retained
by the sublessor or sub-sublessor, respectively, under the applicable sublease
or sub-sublease, except that any such tangible property (other than tenant
improvements, fixtures, furniture and artwork) used exclusively by the sublessee
or sub-sublessee, respectively, shall be transferred to, or retained by, such
sublessee or sub-sublessee.
In the case of this Section 2.5(b), all determinations as to exclusive use by
any member of a Group shall be made without regard to infrequent and immaterial
use by the members of the other Group, if the transfer of such Asset to, or the
retention of such Asset by, such first Group would not interfere in any material
respect with either the business or operations of any such other Group.
Notwithstanding the foregoing provisions of this Section 2.5(b), any artwork
located as of the date hereof in the private office of any executive or officer
of any Group may, at the election of such executive or officer, be retained by,
or transferred to, the Group by which such executive or officer is employed as
of the Closing Date.
(c) In the case of any real property or leasehold interest
that is covered by Section 2.5(b)(i) and any of Section 2.5(b)(ii), (iii) or
(iv), all such tangible property shall first be allocated pursuant to the
provisions of Section 2.5(b)(i) and thereafter pursuant to whichever of such
other clauses is applicable.
2.6. Documents Relating to Other Transfers of Assets and Assumption
of Liabilities
In furtherance of the assignment, transfer and conveyance of
Agere Assets and the assumption of Agere Liabilities set forth in Section 2.1(a)
and (b) simultaneously with the execution and delivery hereof or as promptly as
practicable thereafter, (i) Lucent shall execute and deliver, and shall cause
its Subsidiaries to execute and deliver, such bills of sale, stock powers,
certificates of title, assignments of Contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of Lucent's and its Subsidiaries'
right, title and interest in and to the Agere Assets to Agere, and (ii) Agere
shall execute and deliver, to Lucent and its Subsidiaries such bills of sale,
stock powers, certificates of title, assumptions of contracts and other
instruments of assumption as and to the extent necessary to evidence the valid
and effective assumption of the Agere Liabilities by Agere.
2.7. Other Ancillary Agreements
Effective as of the date hereof, except as provided in Section
2.8, each of Lucent and Agere will execute and deliver all Ancillary Agreements
to which it is a party.
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2.8. The Non-U.S. Plan
Each of Lucent and Agere shall take, and shall cause each
member of its respective Group to take, such action as reasonably necessary to
consummate the transactions contemplated by the Non-U.S. Plan (whether prior to
or after the Closing Date). Notwithstanding anything in this Agreement or in any
Ancillary Agreement to the contrary, no party shall be entitled to receive or
retain any Asset unless such party shall have paid any consideration
contemplated to be paid in connection therewith pursuant to the Non-U.S. Plan.
2.9. Intentionally Omitted
2.10. Disclaimer of Representations and Warranties
Each of Lucent (on behalf of itself and each member of the
Lucent Group) and Agere (on behalf of itself and each member of the Agere Group)
understands and agrees that, except as expressly set forth herein or in any
Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any
other agreement or document contemplated by this Agreement, any Ancillary
Agreement or otherwise, is representing or warranting in any way as to the
Assets, businesses or Liabilities transferred or assumed as contemplated hereby
or thereby, as to any consents or approvals required in connection therewith, as
to the value or freedom from any Security Interests of, or any other matter
concerning, any Assets of such party, or as to the absence of any defenses or
right of setoff or freedom from counterclaim with respect to any claim or other
Asset, including any accounts receivable, of any party, or as to the legal
sufficiency of any assignment, document or instrument delivered hereunder to
convey title to any Asset or thing of value upon the execution, delivery and
filing hereof or thereof. Except as may expressly be set forth herein or in any
Ancillary Agreement, all such Assets are being transferred on an "as is," "where
is" basis (and, in the case of any real property, by means of a quitclaim or
similar form deed or conveyance) and the respective transferees shall bear the
economic and legal risks that (i) any conveyance shall prove to be insufficient
to vest in the transferee good and marketable title, free and clear of any
Security Interest, and (ii) any necessary Consents or Governmental Approvals are
not obtained or that any requirements of laws or judgments are not complied
with.
2.11. Financing Arrangements
(a) Prior to the Closing Date, Lucent and Agere shall enter
into the Financing Facility. Lucent and Agere agree to take all such reasonable
action as may be necessary to permit Lucent to borrow such amount as it shall
determine under the Financing Facility prior to the Closing Date and to assure
the assignment to and the assumption by Agere of all obligations thereunder and
the full release and discharge of each of Lucent and any other member of the
Lucent Group of all of its obligations thereunder as of the Closing Date in
accordance with the terms of the Financing Facility. Lucent and Agere shall
participate in the preparation of all materials and presentations as may be
reasonably necessary to secure funding pursuant to the Financing Facility,
including rating agency presentations necessary to obtain the requisite ratings
needed to secure the financing under the Financing Facility and such assignment,
assumption,
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release and discharge. As of the time of such assignment, assumption, release
and discharge, Lucent shall pay all third party costs and expenses incurred by
any member of the Lucent Group associated with the Financing Facility.
(b) Simultaneously with or following the execution and
delivery of this Agreement, Agere intends to enter into the Working Capital
Facility. Agere agrees to cause all obligations of Lucent or any other member of
the Lucent Group, if any, under the Working Capital Facility to be terminated at
the Closing Date. Agere shall pay all expenses associated with the Working
Capital Facility.
(c) Prior to the Closing Date, Lucent may enter into certain
arrangements regarding the exchange of certain debt obligations of Lucent for
Agere Common Stock held by Lucent (the "Exchange"). Lucent and Agere agree to
take all such reasonable action as may be necessary to facilitate the Exchange
including without limitation the disclosure of the Exchange, as reasonably
appropriate in the IPO Registration Statement, the entry by Agere prior to any
Distribution Date into such agreements as reasonably required to effectuate any
arrangements made by Lucent with respect to Agere Common Stock in connection
with the Exchange (including without limitation the registration and sale of any
such Agere Common Stock not sold in the IPO) and the sale of any Agere Common
Stock in the Exchange in conjunction with the IPO. Lucent shall pay all third
party costs and expenses incurred by any member of the Lucent Group associated
with the Exchange.
2.12. Governmental Approvals and Consents
(a) To the extent that the Separation requires any
Governmental Approvals or Consents, the parties will use their reasonable best
efforts to obtain any such Governmental Approvals and Consents.
(b) If and to the extent that the valid, complete and
perfected transfer or assignment (or novation of any federal government
contract) to the Agere Group of any Agere Assets (or from the Agere Group of any
Non-Agere Assets) would be a violation of applicable laws or require any Consent
or Governmental Approval in connection with the Separation, the IPO or the
Distribution, then, unless Lucent shall otherwise determine, the transfer or
assignment to or from the Agere Group, as the case may be, of such Agere Assets
or Non-Agere Assets, respectively, shall be automatically deemed deferred and
any such purported transfer or assignment shall be null and void until such time
as all legal impediments are removed and/or such Consents or Governmental
Approvals have been obtained. Notwithstanding the foregoing, such Asset shall be
deemed an Agere Asset for purposes of determining whether any Liability is an
Agere Liability.
(c) If the transfer or assignment of any Assets intended to be
transferred or assigned hereunder including pursuant to the Non-U.S. Plan, is
not consummated prior to or at the Closing Date, whether as a result of the
provisions of Section 2.12(b) or for any other reason, then the Person retaining
such Asset shall thereafter hold such Asset for the use and benefit insofar as
reasonably possible, of the Person entitled thereto (at the expense of the
Person entitled thereto). In addition, the Person retaining such Asset shall
take such other actions as may
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be reasonably requested by the Person to whom such Asset is to be transferred in
order to place such Person, insofar as reasonably possible, in the same position
as if such Asset had been transferred as contemplated hereby and so that all the
benefits and burdens relating to such Agere Assets (or such Non-Agere Assets, as
the case may be), including possession, use, risk of loss, potential for gain,
and dominion, control and command over such Assets, are to inure from and after
the Closing Date to the Agere Group (or the Lucent Group, as the case may be).
(d) If and when the Consents and/or Governmental Approvals,
the absence of which caused the deferral of transfer of any Asset pursuant to
Section 2.12(b), are obtained, the transfer of the applicable Asset shall be
effected in accordance with the terms of this Agreement and/or the applicable
Ancillary Agreement.
(e) The Person retaining an Asset due to the deferral of the
transfer of such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such Asset.
2.13. Novation of Assumed Agere Liabilities
(a) Each of Lucent and Agere, at the request of the other,
shall use its reasonable best efforts to obtain, or to cause to be obtained, any
consent, substitution, approval or amendment required to novate (including with
respect to any federal government contract) or assign all obligations under
agreements, leases, licenses and other obligations or Liabilities (including
Agere OFL's) of any nature whatsoever that constitute Agere Liabilities, or to
obtain in writing the unconditional release of all parties to such arrangements
other than any member of the Agere Group, so that, in any such case, Agere and
its Subsidiaries will be solely responsible for such Liabilities; provided,
however, that neither Lucent nor Agere shall be obligated to pay any
consideration therefor to any third party from whom such consents, approvals,
substitutions and amendments are requested. Lucent and Agere agree to enter into
a novation agreement with the United States government providing for the
assignment of prime United States government contracts that are Agere Contracts
from Lucent to Agere substantially in the form of the novation agreement
prescribed by the Federal Acquisition Regulation or upon such terms as may be
reasonably requested by the United States government and to provide the
documents prescribed by the Federal Acquisition Regulation to be filed with such
novation request.
(b) If Lucent or Agere is unable to obtain, or to cause to be
obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the Lucent Group shall continue to be bound
by such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof (except to the extent expressly set forth
in Section 7.2 in the case of Agere OFL's), Agere shall, as agent or
subcontractor for Lucent or such other Person, as the case may be, pay, perform
and discharge fully all the obligations or other Liabilities of Lucent or such
other Person, as the case may be, thereunder from and after the date here of.
Agere shall indemnify each Lucent Indemnitee, and hold each of them harmless
against any Liabilities arising in connection therewith. Except as expressly set
forth in Section 7.2 in the case of Agere OFL's, Lucent shall, without further
consideration, pay
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and remit, or cause to be paid or remitted to Agere promptly all money, rights
and other consideration received by it or any member of its respective Group in
respect of such performance (unless any such consideration is an Excluded
Asset). If and when any such consent, approval, release, substitution or
amendment shall be obtained or such agreement, lease, license or other rights or
obligations shall otherwise become assignable or able to be novated, Lucent
shall thereafter assign, or cause to be assigned, all its rights, obligations
and other Liabilities thereunder or any rights or obligations of any member of
its Group to Agere without payment of further consideration and Agere shall,
without the payment of any further consideration, assume such rights and
obligations.
2.14. Novation of Assumed Liabilities other than Agere Liabilities
(a) Each of Lucent and Agere, at the request of the other,
shall use its reasonable best efforts to obtain, or to cause to be obtained, any
consent, substitution, approval or amendment required to novate or assign all
obligations under agreements, leases, licenses and other obligations or
Liabilities of any nature whatsoever that do not constitute Agere Liabilities,
or to obtain in writing the unconditional release of all parties to such
arrangements other than any member of the Lucent Group, so that, in any such
case, the members of the Lucent Group will be solely responsible for such
Liabilities; provided, however, that neither Lucent nor Agere shall be obligated
to pay any consideration therefor to any third party from whom such consents,
approvals, substitutions and amendments are requested.
(b) If Lucent or Agere is unable to obtain, or to cause to be
obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the Agere Group shall continue to be bound
by such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof, Lucent shall cause a member of the Lucent
Group, as agent or subcontractor for such member of the Agere Group, to pay,
perform and discharge fully all the obligations or other Liabilities of such
member of the Agere Group thereunder from and after the date hereof. Lucent
shall indemnify each Agere Indemnitee and hold each of them harmless against any
Liabilities arising in connection therewith. Agere shall cause each member of
the Agere Group without further consideration, to pay and remit, or cause to be
paid or remitted, to Lucent or to another member of the Lucent Group specified
by Lucent promptly all money, rights and other consideration received by it or
any member of the Agere Group in respect of such performance. If and when any
such consent, approval, release, substitution or amendment shall be obtained or
such agreement, lease, license or other rights or obligations shall otherwise
become assignable or able to be novated, Agere shall promptly assign, or cause
to be assigned, all its rights, obligations and other Liabilities thereunder or
any rights or obligations of any member of the Agere Group to Lucent or to
another member of the Lucent Group specified by Lucent without payment of
further consideration and Lucent, without the payment of any further
consideration shall, or shall cause such other member of the Lucent Group to,
assume such rights and obligations.
2.15. Third Party Intellectual Property License Agreements
(a) Effective as of the date hereof, Lucent, to the extent
Lucent has the right to do so and only to that extent, hereby (i) assigns to
Agere, the license agreements listed in
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Schedule 2.15(a)(1), (ii) grants to Agere the right to receive directly from
third parties any net royalty payments otherwise due to Lucent pursuant to the
intellectual property license agreements listed on Schedule 2.15(a)(2), and
(iii) grants to Agere the right to share with Lucent and otherwise have the
benefit of any license rights granted by any third parties to Lucent pursuant to
any existing intellectual property license agreements, provided that such
sharing does not in any way diminish or abridge the rights or benefits retained
by Lucent. Agere shall be responsible for, and agrees to fulfill, all financial
and other performance obligations with respect to the license agreements listed
in Schedule 2.15(a)(1), and to be responsible for and fulfill all financial
obligations with respect to the license agreements listed in Schedule
2.15(a)(2). To the extent that Lucent may not have the right to make the
foregoing assignments or grants, Lucent has no objection to Agere attempting to
obtain such rights.
(b) Notwithstanding the assignment to Agere Systems Guardian
Corp. or Agere Systems Optoelectronics Guardian Corp. of rights in certain
patents and patent applications pursuant to Patent Assignments, Lucent will
continue to collect royalties, license fees, and other similar payments pursuant
to existing intellectual property license agreements to which it is a party as
of the date hereof, or has a right to collect royalties pursuant to an
arrangement with AT&T Corp., except for intellectual property license agreements
listed on Schedules 2.15(a)(1) or 2.15(a)(2). Lucent shall pay to Agere a
portion of such royalties, license fees, and other similar payments, as set
forth in Schedule 2.15(b). Upon completion of the payments set forth in Schedule
2.15(b), Lucent shall be released of any financial obligations with respect to
such existing intellectual property license agreements.
(c) Except for the rights in the intellectual property license
agreements listed on Schedules 2.15(a)(1) or 2.15(a)(2), or intellectual
property related agreements which relate specifically to the Agere Business and
were executed or entered into by the Agere Business (for the purposes of
clarity, the just mentioned intellectual property related agreements do not
include agreements (i) entered into by an employee of the Intellectual Property
Business group or officers who supervise such business on behalf of Lucent and
were acting in that capacity, or (ii) entered into by an employee of Bell Labs
involving work not funded by Agere, or (iii) which grant patent licenses to a
third party (other than agreements in which the patent grant is incidental to
the main purpose of the agreement), or (iv) entered into in connection with the
settlement of litigation), or as otherwise set forth in Section 2.15(b), Lucent
will retain all licenses, rights and royalty payments in and to any and all
existing intellectual property license agreements with third parties, including
the sole right to amend or modify such agreements; provided that any amendment
or modification will not extend or enlarge the rights granted to a licensee
under patents assigned by Lucent to Agere Systems Guardian Corp. or Agere
Systems Optoelectronics Guardian Corp. pursuant to a Patent Assignment.
(d) Lucent hereby further grants to Agere a sublicense to
make, have made, use, lease, offer to sell, sell, and import any and all
products and services, under any and all patent license rights with respect to
which Lucent has received from any third party a right to sublicense, but only
to the extent that Lucent has a right to grant such sublicense without payment
of royalties. In the event that any grant of rights set forth in this Section
2.15(d) would violate or is found to violate the terms of, or result in the loss
of rights or imposition of penalty
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under, any patent license agreement covered thereby, or would not be effective
subsequent to any Distribution Date, such grant of rights with respect to such
patent license agreement shall be deemed null and void. To the extent that
Lucent's right to grant sublicenses to divested entities under any license
agreement is limited to a grant made within a specified time period after a
divestiture, then the sublicenses granted to Agere under this Section 2.15(d)
shall be deemed to have occurred at the earliest date permitted in such license
agreement.
(e) In the event that Agere receives a claim of infringement
of one or more third party patents (i) under which Lucent has "have-made" rights
pursuant to a license agreement effective prior to the date hereof, and (ii)
which are not effectively sublicensed to Agere pursuant to any other subsection
of this Section 2.15, then, at the written request of Agere, Lucent, in its sole
discretion, may exercise such have-made rights to have Agere make, and will
purchase from Agere, such products or other materials which have been alleged to
infringe such third-party patent(s). Following any such purchase, Lucent will
sell such products or other materials to an Agere customer, on such terms, as
may be requested by Agere (except that Lucent will not be required to make any
representations, warranties or commitments in respect thereof other than to
provide to such customer the representations, warranties and commitments of
Agere in respect thereof, for which only Agere, and not Lucent, will be
responsible). In connection with the foregoing, Agere will cause the customer to
which such products or other materials are sold to acknowledge in writing that
only Agere, and not Lucent, will be responsible to such customer in respect to
such products or other materials. Nothing in this Section 2.15(e) shall be
construed to obligate Lucent to violate any applicable laws, rules or
regulations of any Governmental Authority, or perform any act which would be
unlicensed under such third party patent license agreement.
(f) In the event Lucent makes any sales for Agere under the
foregoing Section 2.15(e), then: (i) Agere will promptly reimburse Lucent for
any deficit between the amount paid by Lucent to Agere and the amount collected
by Lucent from the customer to whom the products or other materials are sold if
the amount collected is less than the amount paid by Lucent, and for all costs
and expenses that Lucent may incur in connection with such actions, plus a fee
of two percent (2%) of the amount paid by Lucent to Agere with respect to such
purchases and sales; and (ii) Agere will indemnify and hold harmless Lucent for
all liabilities that may arise as a result of such actions, including any claims
by the customer that purchased such products or materials, any loss incurred on
the sale of such products or materials by Lucent to the customer requested by
Agere, or arising out of the failure of such customer to purchase such products
or materials on the terms requested by Agere, and any claims alleging any
infringement of any patent, copyright, trademark or misappropriation of a trade
secret, any product liability claims, and any other claims, in connection with
such products or materials.
(g) Agere agrees that it will fulfill any obligations that
exist to a third party with respect to any intellectual property agreements to
which the provisions of Sections 2.15(a) and (d) apply.
(h) Notwithstanding anything in this Agreement or any of the
Ancillary Agreements to the contrary, Agere agrees that it will not enter into
any agreement with a third party to license patents to such third party that are
licensed to that third party pursuant to an
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agreement with Lucent entered into prior to the date hereof, if such agreement
would result in a reduction of royalties paid or to be paid to Lucent by the
third party.
ARTICLE III
THE IPO AND ACTIONS PENDING THE IPO
3.1. Transactions Prior to the IPO
(a) Subject to the conditions specified in Section 3.3, Lucent
and Agere shall use their reasonable best efforts to consummate the IPO. Such
actions shall include, but not necessarily be limited to, those specified in
this Section 3.1.
(b) Agere shall file the IPO Registration Statement, and such
amendments or supplements thereto, as may be necessary in order to cause the
same to become and remain effective as required by law or by the Underwriters,
including, but not limited to, filing such amendments to the IPO Registration
Statement as may be required by the Underwriting Agreement, the Commission or
federal, state or foreign securities laws. Lucent and Agere shall also cooperate
in preparing, filing with the Commission and causing to become effective a
registration statement registering the Agere Common Stock under the Exchange
Act, and any registration statements or amendments thereof which are required to
reflect the establishment of, or amendments to, any employee benefit and other
plans necessary or appropriate in connection with the IPO, the Separation, the
Distribution or the other transactions contemplated by this Agreement and the
Ancillary Agreements.
(c) Agere shall enter into the Underwriting Agreement, in form
and substance reasonably satisfactory to Agere and shall comply with its
obligations thereunder.
(d) Lucent and Agere shall consult with each other and the
Underwriters regarding the timing, pricing and other material matters with
respect to the IPO.
(e) Agere shall use its reasonable best efforts to take all
such action as may be necessary or appropriate under state securities and blue
sky laws of the United States (and any comparable laws under any foreign
jurisdictions) in connection with the IPO.
(f) Agere shall prepare, file and use reasonable best efforts
to seek to make effective, an application for listing of the Agere Common Stock
issued in the IPO on the NYSE, subject to official notice of issuance.
(g) Agere shall participate in the preparation of materials
and presentations as Lucent or the Underwriters shall deem necessary or
desirable.
(h) Agere shall pay all third party costs, fees and expenses
relating to the IPO, all of the reimbursable expenses of the Underwriters
pursuant to the Underwriting Agreement, all of the costs of producing, printing,
mailing and otherwise distributing the Prospectus, as well as the Underwriters'
discount as provided in the Underwriting Agreement.
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3.2. Proceeds of the IPO
The IPO will be a primary offering of Agere Common Stock and
the net proceeds of the IPO will be retained by Agere.
3.3. Conditions Precedent to Consummation of the IPO
(a) As soon as practicable after the date of this Agreement,
the parties hereto shall use their reasonable best efforts to satisfy the
following conditions to the consummation of the IPO. The obligations of the
parties to consummate the IPO shall be conditioned on the satisfaction, or
waiver by Lucent, of the following conditions:
(i) The IPO Registration Statement shall have been
filed and declared effective by the Commission, and there shall be no stop-order
in effect with respect thereto and no proceeding for that purpose shall have
been instituted by the Commission.
(ii) The Financing Facility shall have been executed
and delivered, pursuant to which Lucent shall have borrowed an amount of funds
determined by Lucent, and Lucent shall be satisfied in its sole discretion that
as of the Closing Date it will have no further liability or obligation
whatsoever under either the Working Capital Facility or the Financing Facility.
(iii) The actions and filings with regard to state
securities and blue sky laws of the United States (and any comparable laws under
any foreign jurisdictions) referenced in Section 3.1(e) shall have been taken
and, where applicable, have become effective or been accepted.
(iv) The Agere Common Stock to be issued in the IPO
shall have been accepted for listing on the NYSE, on official notice of
issuance.
(v) Agere shall have entered into the Underwriting
Agreement and all conditions to the obligations of Agere and the Underwriters
shall have been satisfied or waived.
(vi) Lucent shall be satisfied in its sole discretion
that it will own at least 80.1% of the total voting power with respect to the
election and removal of directors of the outstanding Agere Common Stock (or the
Agere Class A Common Stock and Agere Class B Common Stock, if two classes of
Agere common stock are issued pursuant to Section 3.5) following the IPO on a
fully diluted basis, after giving effect to the issuance of any shares or
options to any employees of Agere in accordance with Section 10.2 hereof; and
all other conditions to permit the Distribution to qualify as a tax-free
distribution to Lucent, Agere and Lucent's stockholders shall, to the extent
applicable as of the time of the IPO, be satisfied and there shall be no event
or condition that is likely to cause any of such conditions not to be satisfied
as of the time of the Distribution or thereafter.
(vii) No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the
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Separation or the IPO or any of the other transactions contemplated by this
Agreement or any Ancillary Agreement shall be in effect.
(viii) Such other actions as the parties hereto may,
based upon the advice of counsel, reasonably request to be taken prior to the
Separation and the IPO in order to assure the successful completion of the
Separation and the IPO and the other transactions contemplated by this Agreement
shall have been taken.
(ix) This Agreement shall not have been terminated.
(x) Lucent shall have determined that the terms of
the IPO are acceptable to Lucent.
(b) The foregoing conditions are for the sole benefit of
Lucent and shall not give rise to or create any duty on the part of Lucent or
the Lucent Board of Directors to waive or not waive such conditions or in any
way limit Lucent's right to terminate this Agreement as set forth in Article XI
or alter the consequences of any such termination from those specified in such
Article. Any determination made by the Lucent Board of Directors prior to the
IPO concerning the satisfaction or waiver of any or all of the conditions set
forth in this Section 3.3 shall be conclusive.
3.4. Charter; Bylaws; Rights Plan
At or prior to the Closing Date, Lucent and Agere shall each
take all actions that may be required to provide for the adoption by Agere of
the Restated Certificate of Incorporation of Agere substantially in the form
attached as Exhibit A, the Amended and Restated Bylaws of Agere substantially in
the form attached as Exhibit B, and the Rights Agreement of Agere substantially
in the form attached as Exhibit C.
3.5. Agere Common Stock
Prior to the Closing Date, Lucent and Agere shall each take
all actions that may be required to provide for Agere to issue Class A Common
Stock and Class B Common Stock if Lucent, in its sole discretion, determines
that such issuance is required for Lucent to meet the "control" test as defined
in Section 368(c) of the Code in connection with the Distribution, with such
terms and conditions as may reasonably be required to satisfy such test and with
such other terms and conditions as reasonably acceptable to each of Lucent and
Agere. In such event, all references herein to Agere Common Stock with
respect to the IPO and the Exchange shall be deemed references to Agere Class A
Common Stock and all references herein to Agere Common Stock with respect to the
Distribution shall be deemed references to Agere Class B Common Stock.
ARTICLE IV
THE DISTRIBUTION
4.1. The Distribution
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(a) Agere shall cooperate with Lucent to accomplish the
Distribution and shall, at Lucent's direction, promptly take any and all actions
necessary or desirable to effect the Distribution, including, without
limitation, the registration under the Securities Act of Agere Common Stock on
an appropriate registration form or forms to be designated by Lucent. Lucent
shall select any investment bank or manager in connection with the Distribution,
as well as any financial printer, solicitation and/or exchange agent and
financial, legal, accounting and other advisors for Lucent; provided that
nothing herein shall prohibit Agere from engaging (at its own expense) its own
financial, legal, accounting and other advisors in connection with the
Distribution. Agere and Lucent, as the case may be, will provide to the Agent
all share certificates and any information required in order to complete the
Distribution.
(b) In the event that Lucent determines that the Distribution
will be a spinoff, this Section 4.1(b) shall be effective and shall apply to
such spinoff.
(i) Subject to Section 4.3 hereof, on or prior to the
Distribution Date, Lucent will deliver to the Agent for the benefit of holders
of record of Lucent Common Stock on the Record Date, a single stock certificate,
endorsed by Lucent in blank, representing all of the outstanding shares of Agere
Common Stock then owned by Lucent or any member of the Lucent Group, and shall
cause the transfer agent for the shares of Lucent Common Stock to instruct the
Agent to distribute on the Distribution Date the appropriate number of such
shares of Agere Common Stock to each such holder or designated transferee or
transferees of such holder. The Distribution shall be effective at 11:59 p.m.
Eastern Standard Time on the Distribution Date.
(ii) Subject to Section 4.4, each holder of Lucent
Common Stock on the Record Date (or such holder's designated transferee or
transferees) will be entitled to receive in the Distribution a number of shares
of Agere Common Stock equal to the number of shares of Lucent Common Stock held
by such holder on the Record Date multiplied by a fraction the numerator of
which is the number of shares of Agere Common Stock beneficially owned by Lucent
or any other member of the Lucent Group on the Record Date and the denominator
of which is the number of shares of Lucent Common Stock outstanding on the
Record Date.
4.2. Actions Prior to the Distribution
(a) Lucent and Agere shall prepare and mail, prior to any
Distribution Date, to the holders of Lucent Common Stock, such information
concerning Agere, its business, operations and management, the Distribution and
such other matters as Lucent shall reasonably determine and as may be required
by law. Lucent and Agere will prepare, and Agere will, to the extent required
under applicable law, file with the Commission any such documentation and any
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requisite no action letters which Lucent determines are necessary or desirable
to effectuate the Distribution and Lucent and Agere shall each use its
reasonable best efforts to obtain all necessary approvals from the Commission
with respect thereto as soon as practicable.
(b) Lucent and Agere shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.
(c) Lucent and Agere shall take all reasonable steps necessary
and appropriate to cause the conditions set forth in Section 4.3 (subject to
Section 11.2(b)) to be satisfied and to effect the Distribution on any
Distribution Date.
(d) Agere shall prepare and file, and shall use its reasonable
best efforts to have approved, an application for the listing of the Agere
Common Stock to be distributed in the Distribution on the NYSE, subject to
official notice of distribution.
4.3. Conditions to Distribution
(a) Following consummation of the IPO, Lucent currently
intends to effect the Distribution by September 30, 2001 by means of a spinoff,
a splitoff or a combination of both transactions. Lucent shall, in its sole
discretion, determine the terms of the Distribution, including without
limitation, the form, structure and all other terms of any transaction and/or
offering to effect the Distribution. Subject to any restrictions contained in
the Underwriting Agreement, Lucent shall have the sole discretion to determine
the date of consummation of the Distribution at any time after the Closing Date
and on or prior to September 30, 2001; and such date or dates as so determined
by Lucent in accordance with this Article IV is referred to herein as the
"Distribution Date". Lucent shall be obligated to consummate the Distribution no
later than September 30, 2001, subject to the satisfaction, or waiver by Lucent
in its sole discretion, of the conditions set forth below. In the event that any
such condition shall not have been satisfied or waived on or before September
30, 2001, Lucent shall consummate the Distribution as promptly as practicable
following the satisfaction or waiver of all such conditions.
(i) A private letter ruling from the Internal Revenue
Service shall have been obtained, and shall continue in effect, to the effect
that, among other things, the Distribution will qualify as a tax-free
distribution for federal income tax purposes under Section 355 of the Code and
the transfer to Agere of the Agere Assets and the assumption by Agere of the
Agere Liabilities in connection with the Separation will not result in the
recognition of any gain or loss to Lucent, Agere or Lucent's or Agere's
stockholders for federal income tax purposes, and such ruling shall be in form
and substance satisfactory to Lucent in its sole discretion.
(ii) Any material Governmental Approvals and Consents
necessary to consummate the Distribution shall have been obtained and be in full
force and effect.
(iii) No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Distribution shall be in effect,
and no other event outside the control of Lucent shall have occurred or failed
to occur that prevents the consummation of the Distribution.
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(b) The foregoing conditions are for the sole benefit of
Lucent and shall not give rise to or create any duty on the part of Lucent or
the Lucent Board of Directors to waive or not waive such conditions or in any
way limit Lucent's right to terminate this Agreement as set forth in Article XI
or alter the consequences of any such termination from those specified in such
Article. Any determination made by the Lucent Board of Directors prior to the
Distribution concerning the satisfaction or waiver of any or all of the
conditions set forth in this Section 4.3 shall be conclusive.
4.4. Fractional Shares
In the event that Lucent determines that the Distribution will
be a spinoff, this Section 4.4 shall be effective and apply to such spinoff. As
soon as practicable after the Distribution Date, Lucent shall direct the Agent
to determine the number of whole shares and fractional shares of Agere Common
Stock allocable to each holder of record or beneficial owner of Lucent Common
Stock as of the Record Date, to aggregate all such fractional shares and sell
the whole shares obtained thereby at the direction of Lucent either to Lucent,
in open market transactions or otherwise, in each case at then prevailing
trading prices, and to cause to be distributed to each such holder or for the
benefit of each such beneficial owner, in lieu of any fractional share, such
holder's or owner's ratable share of the proceeds of such sale, after making
appropriate deductions of the amount required to be withheld for federal income
tax purposes and after deducting an amount equal to all brokerage charges,
commissions and transfer taxes attributed to such sale.
4.5. The Agere Board of Directors
Lucent and Agere shall each take all actions which may be
required to elect or otherwise appoint as directors of Agere, on or prior to the
first Distribution Date, persons to be designated by a nominating committee of
Agere's Board of Directors (which nominating committee shall be comprised of
individuals who are at such time neither officers nor directors of Lucent) as
additional or substitute members of the Board of Directors of Agere on such
Distribution Date.
ARTICLE V
MUTUAL RELEASES; INDEMNIFICATION
5.1. Release of Pre-Closing Claims
(a) Except as provided in Section 5.1(c), effective as of the
Closing Date, Agere does hereby, for itself and each other member of the Agere
Group, their respective Affiliates (other than any member of the Lucent Group),
successors and assigns, and all Persons who at any time prior to the Closing
Date have been stockholders, directors, officers, agents or employees of any
member of the Agere Group (in each case, in their respective capacities as
such), remise, release and forever discharge Lucent and the members of the
Lucent Group, their respective Affiliates (other than any member of the Agere
Group), successors and assigns, and all Persons who at any time prior to the
Closing Date have been stockholders, directors, officers, agents or employees of
any member of the Lucent Group (in each case, in their respective
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capacities as such), and their respective heirs, executors, administrators,
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Closing Date, including in connection with the
transactions and all other activities to implement any of the Separation, the
IPO and the Distribution.
(b) Except as provided in Section 5.1(c), effective as of the
Closing Date, Lucent does hereby, for itself and each other member of the Lucent
Group, their respective Affiliates (other than any member of the Agere Group),
successors and assigns, and all Persons who at any time prior to the Closing
Date have been stockholders, directors, officers, agents or employees of any
member of the Lucent Group (in each case, in their respective capacities as
such), remise, release and forever discharge Agere, the respective members of
the Agere Group, their respective Affiliates (other than any member of the
Lucent Group), successors and assigns, and all Persons who at any time prior to
the Closing Date have been stockholders, directors, officers, agents or
employees of any member of the Agere Group (in each case, in their respective
capacities as such), and their respective heirs, executors, administrators
successors and assigns, from any and all Liabilities whatsoever, whether at law
or in equity (including any right of contribution), whether arising under any
contract or agreement, by operation of law or otherwise, existing or arising
from any acts or events occurring or failing to occur or alleged to have
occurred or to have failed to occur or any conditions existing or alleged to
have existed on or before the Closing Date, including in connection with the
transactions and all other activities to implement any of the Separation, the
IPO and the Distribution.
(c) Nothing contained in Section 5.1(a) or (b) shall impair
any right of any Person to enforce this Agreement, any Ancillary Agreement or
any agreements, arrangements, commitments or understandings that are specified
in Section 2.4(b) or the applicable Schedules thereto not to terminate as of the
Closing Date, in each case in accordance with its terms. Nothing contained in
Section 5.1(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from any
agreement among any members of the Lucent Group or the Agere Group that is
specified in Section 2.4(b) or the applicable Schedules thereto as not to
terminate as of the Closing Date, or any other Liability specified in such
Section 2.4(b) as not to terminate as of the Closing Date;
(ii) any Liability, contingent or otherwise, assumed,
transferred, assigned or allocated to the Group of which such Person is a member
in accordance with, or any other Liability of any member of any Group under,
this Agreement or any Ancillary Agreement;
(iii) any Liability for the sale, lease, construction
or receipt of goods, property or services purchased, obtained or used in the
ordinary course of business by a member of one Group from a member of the other
Group prior to the Closing Date;
(iv) any Liability for unpaid amounts for products or
services or refunds owing on products or services due on a value-received basis
for work done by a member
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of one Group at the request or on behalf of a member of the other Group;
(v) any Liability that the parties may have with
respect to indemnification or contribution pursuant to this Agreement for claims
brought against the parties by third Persons, which Liability shall be governed
by the provisions of this Article V and Article VI and, if applicable, the
appropriate provisions of the Ancillary Agreements; or
(vi) any Liability the release of which would result
in the release of any Person other than a Person released pursuant to this
Section 5.1.
In addition, nothing contained in Section 5.1(a) shall release Lucent from
honoring its existing obligations to indemnify any director, officer or employee
of Agere who was a director, officer or employee of Lucent on or prior to the
Closing Date, to the extent such director, officer or employee becomes a named
defendant in any litigation involving Lucent and was entitled to such
indemnification pursuant to then existing obligations.
(d) Agere shall not make, and shall not permit any member of
the Agere Group to make, any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any indemnification,
against Lucent or any member of the Lucent Group, or any other Person released
pursuant to Section 5.1(a), with respect to any Liabilities released pursuant to
Section 5.1(a). Lucent shall not, and shall not permit any member of the Lucent
Group, to make any claim or demand, or commence any Action asserting any claim
or demand, including any claim of contribution or any indemnification against
Agere or any member of the Agere Group, or any other Person released pursuant to
Section 5.1(b), with respect to any Liabilities released pursuant to Section
5.l(b).
(e) It is the intent of each of Lucent and Agere, by virtue of
the provisions of this Section 5.1, to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Closing Date, between or among Agere or any member of the Agere Group, on the
one hand, and Lucent or any member of the Lucent Group, on the other hand
(including any contractual agreements or arrangements existing or alleged to
exist between or among any such members on or before the Closing Date), except
as expressly set forth in Section 5.1(c). At any time, at the request of any
other party, each party shall cause each member of its respective Group to
execute and deliver releases reflecting the provisions hereof.
5.2. Indemnification by Agere
Except as provided in Section 5.4, Agere shall indemnify
defend and hold harmless Lucent, each member of the Lucent Group and each of
their respective directors, officers and employees, and each of the heirs,
executors, successors and assigns of any of the foregoing (collectively, the
"Lucent Indemnitees"), from and against any and all Liabilities of the Lucent
Indemnitees relating to, arising out of or resulting from any of the following
items (without duplication):
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(i) the failure of Agere or any other member of the
Agere Group or any other Person to pay, perform or otherwise promptly discharge
any Agere Liabilities or Agere Contract in accordance with its respective terms,
whether prior to or after the Closing Date or the date hereof;
(ii) the Agere Business, any Agere Liability or any
Agere Contract;
(iii) any material breach by Agere or any member of
the Agere Group of this Agreement or any of the Ancillary Agreements; and
(iv) any untrue statement or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, with respect to all information contained in any IPO Registration
Statement or Prospectus.
5.3. Indemnification by Lucent
Lucent shall indemnify, defend and hold harmless Agere, each
member of the Agere Group and each of their respective directors, officers ad
employees, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "Agere Indemnitees"), from and against any and
all Liabilities of the Agere Indemnitees relating to, arising out of or
resulting from any of the following items (without duplication):
(i) the failure of Lucent or any other member of the
Lucent Group or any other Person to pay, perform or otherwise promptly discharge
any Liabilities of the Lucent Group other than the Agere Liabilities, whether
prior to or after the Closing Date or the date hereof;
(ii) the Lucent Business or any Liability of the
Lucent Group other than the Agere Liabilities; and
(iii) any material breach by Lucent or any member of
the Lucent Group of this Agreement or any of the Ancillary Agreements.
5.4. Indemnification Obligations Net of Insurance Proceeds and
Other Amounts
(a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article V or Article VI will
be net of Insurance Proceeds that actually reduce the amount of the Liability.
Accordingly, the amount which any party (an "Indemnifying Party") is required to
pay to any Person entitled to indemnification hereunder (an "Indemnitee") will
be reduced by any Insurance Proceeds theretofore actually recovered by or on
behalf of the Indemnitee in respect of the related Liability. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an
amount equal to the excess of the Indemnity Payment received over the amount of
the Indemnity Payment that would have been due if the Insurance Proceeds had
been
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received, realized or recovered before the Indemnity Payment was made.
(b) In the case of any Shared Contingent Liability, any
Insurance Proceeds actually received, realized or recovered by any party in
respect of the Shared Contingent Liability will be shared among the parties in
such manner as may be necessary so that the obligations of the parties for such
Shared Contingent Liability, net of such Insurance Proceeds, will remain in
proportion to their respective Shared Percentages, regardless of which party or
parties may actually receive, realize or recover such Insurance Proceeds.
(c) An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "wind-fall" (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
Nothing contained in this Agreement or any Ancillary Agreement shall obligate
any member of any Group to seek to collect or recover any Insurance Proceeds.
5.5. Procedures for Indemnification of Third Party Claims
(a) If an Indemnitee shall receive notice or otherwise learn
of the assertion by a Person (including any Governmental Authority) who is not a
member of the Lucent Group or the Agere Group of any claim or of the
commencement by any such Person of any Action (collectively, a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 5.2 or 5.3, or any other
Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give
such Indemnifying Party written notice thereof within 20 days after becoming
aware of such Third Party Claim. Any such notice shall describe the Third Party
Claim in reasonable detail. If any Person shall receive notice or otherwise
learn of the assertion of a Third Party Claim which may reasonably be determined
to be a Shared Contingent Liability, Agere or Lucent, as appropriate depending
on which Group such Person is a member of, shall give the other party to this
Agreement written notice thereof within 20 days after such Person becomes aware
of such Third Party Claim. Any such notice shall describe the Third Party Claim
in reasonable detail. Notwithstanding the foregoing, the failure of any
Indemnitee or other Person to give notice as provided in this Section 5.5(a)
shall not relieve the related Indemnifying Party of its obligations under this
Article V, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice.
(b) If the Indemnitee receiving any notice pursuant to Section
5.5(a) or any other party to this Agreement believes that the Third Party Claim
is or may be a Shared Contingent Liability, such Indemnitee or other party may
make a Determination Request at any time following any notice given by the
Indemnitee to an Indemnifying Party. Unless the parties have acknowledged that
the applicable Third Party Claim (including any Third Party Claim set forth on
Schedule 6.6) is not a Shared Contingent Liability or unless a determination to
such effect has been made in accordance with Section 6.6, Lucent shall be
entitled (but not obligated) to assume the defense of such Third Party Claim as
if it were the Indemnifying Party hereunder.
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In any such event, Lucent shall be entitled to reimbursement of all the costs
and expenses of such defense once a final determination or acknowledgment is
made as to the status of the Third Party Claim; provided that, if such Third
Party Claim is determined to be a Shared Contingent Liability, such costs and
expenses shall be shared as provided in Section 5.5(c).
(c) Lucent shall assume the defense of, and may, subject to
Section 5.5(g), seek to settle or compromise, any Third Party Claim that is a
Shared Contingent Liability, and the costs and expenses thereof shall be
included in the calculation of the amount of the applicable Shared Contingent
Liability in determining the reimbursement obligations of the other party with
respect thereto pursuant to Section 6.4. Any Indemnitee in respect of a Shared
Contingent Liability shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but all fees and expenses of such counsel shall be the expense of such
Indemnitee.
(d) Other than in the case of a Shared Contingent Liability,
an Indemnifying Party may elect to defend (and, unless the Indemnifying Party
has specified any reservations or exceptions, to seek to settle or compromise),
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, any Third Party Claim. Within 30 days after the receipt of notice from
an Indemnitee in accordance with Section 5.5(a) (or sooner, if the nature of
such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party will assume