SEPARATION AND DISTRIBUTION AGREEMENT
BY AND AMONG
AT&T CORP.,
LUCENT TECHNOLOGIES INC.
AND
NCR CORPORATION
DATED AS OF FEBRUARY 1, 1996 AND
AMENDED AND RESTATED AS OF
MARCH 29, 1996
SEPARATION AND DISTRIBUTION AGREEMENT
THIS SEPARATION AND DISTRIBUTION AGREEMENT, dated as of
February 1, 1996, as amended and restated as of March 29, 1996, is by and among
AT&T, Lucent and NCR. Capitalized terms used herein and not otherwise defined
shall have the respective meanings assigned to them in Article I hereof.
WHEREAS, the Board of Directors of AT&T has determined that it
is in the best interests of AT&T and its shareholders to separate AT&T's
existing businesses into three independent businesses;
WHEREAS, in furtherance of the foregoing, it
is appropriate
and desirable to transfer the Lucent Assets to Lucent and its
Subsidiaries and
to cause Lucent and its Subsidiaries to assume the Lucent
Liabilities, all as
more fully described in this Agreement and the Ancillary
Agreements;
WHEREAS, the Board of Directors of AT&T has further determined
that it is appropriate and desirable, on the terms and conditions contemplated
hereby, to cause Lucent to offer and sell for its own account in the IPO a
limited number of shares of Lucent Common Stock, and subsequently for AT&T to
distribute to holders of shares of AT&T Common Stock the outstanding shares of
Lucent Common Stock owned directly or indirectly by AT&T;
WHEREAS, the Distribution is intended to qualify
as a tax-free
spin-off under Section 355 of the Code;
WHEREAS, it is also expected that, following certain
additional transfers of Assets and assignments and assumptions of Liabilities,
AT&T will distribute to its shareholders all of the capital stock of NCR held
directly or indirectly by AT&T and that, in connection therewith, AT&T and NCR
will enter into such additional agreements as may be necessary to address
matters not addressed by this Agreement or the Ancillary Agreements; and
WHEREAS, it is appropriate and desirable to set forth the
principal corporate transactions required to effect the Separation, the IPO and
the Distribution and certain other agreements that will govern certain matters
relating to the Separation, the IPO and the Distribution and the relationship of
AT&T, Lucent, NCR and their respective Subsidiaries following the IPO and the
Distribution.
NOW, THEREFORE, the parties, intending to be
legally bound,
agree as follows:
ARTICLE I
DEFINITIONS
For the purpose of this Agreement the following terms shall
have the following meanings:
1.1. ACTION means any demand, action, suit, countersuit,
arbitration, inquiry, proceeding or investigation by or before any federal,
state, local, foreign or international Governmental Authority or any arbitration
or mediation tribunal.
1.2. AFFILIATE of any Person means a Person that controls, is
controlled by, or is under common control with such Person.
As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
1.3. AGENT means the distribution agent to
be appointed by
AT&T to distribute to the shareholders of AT&T the shares of
Lucent Common Stock
held by AT&T pursuant to the Distribution.
1.4. AGREEMENT means this Separation and
Distribution
Agreement, including all of the Schedules hereto.
1.5. AMERICAN RIDGE means American Ridge
Insurance Company, a
Vermont corporation.
1.6. ANCILLARY AGREEMENTS means the deeds, lease assignments
and assumptions, leases, subleases and sub-subleases, and the supplemental and
other agreements and instruments related thereto, substantially in the forms
attached as Schedule 2.5, the AT&T General Purchase Agreement and the
supplemental and other agreements related thereto, the Brand License Agreement,
the Employee Benefits Agreement, the Interim Services and Systems Replication
Agreement, the NCR Volume Purchase Agreement, the Patent Assignments and related
agreements regarding powers of attorney, the Patent Defensive Protection
Agreements, the Patent Joint Ownership Agreement, the Patent License Agreement,
the Tax Sharing Agreement, the Technology Access and Development Project
Agreement, the Technology Assignment and Joint Ownership Agreements, the
Technology License Agreement, the Trade Dress Assignment, the Trademark and
Service Mark Assignment, the VTNS Agreement, and the agreements and other
documents comprising the Non-U.S. Plan.
1.7. APPLICABLE DEADLINE has the meaning set
forth in Section
9.3(b).
1.8. ARBITRATION ACT means the United States
Arbitration Act,
9 U.S.C. Sections 1-14, as the same may be amended from time to
time.
1.9. ARBITRATION DEMAND DATE has the meaning set
forth in
Section 9.3(a).
1.10. ARBITRATION DEMAND NOTICE has the meaning
set forth in
Section 9.3(a).
1.11. ASSETS means assets, properties and rights (including
goodwill), wherever located (including in the possession of vendors or other
third parties or elsewhere), whether real, personal or mixed, tangible,
intangible or contingent, in each case whether or not recorded or reflected or
required to be recorded or reflected on the books and records or financial
statements of any Person, including the following:
(a) all accounting and other books, records and
files whether
in paper, microfilm, microfiche, computer tape or disc,
magnetic tape
or any other form;
(b) all apparatus, computers and other
electronic data
processing equipment, fixtures, machinery, equipment,
furniture, office
equipment, automobiles, trucks, aircraft, rolling stock,
vessels, motor
vehicles and other transportation equipment, special and
general tools,
test devices, prototypes and models and other
tangible personal
property;
(c) all inventories of materials, parts, raw
materials,
supplies, work-in-process and finished goods and products;
(d) all interests in real property of
whatever nature,
including easements, whether as owner, mortgagee
or holder of a
Security Interest in real property, lessor,
sublessor, lessee,
sublessee or otherwise;
(e) all interests in any capital stock or
other equity
interests of any Subsidiary or any other Person, all
bonds, notes,
debentures or other securities issued by any
Subsidiary or any other
Person, all loans, advances or other extensions of
credit or capital
contributions to any Subsidiary or any other Person
and all other
investments in securities of any Person;
(f) all license agreements, leases of personal
property, open
purchase orders for raw materials, supplies, parts
or services,
unfilled orders for the manufacture and sale of
products and other
contracts, agreements or commitments;
(g) all deposits, letters of credit and
performance and surety
bonds;
(h) all written technical information, data,
specifications,
research and development information, engineering
drawings, operating
and maintenance manuals, and materials and
analyses prepared by
consultants and other third parties;
(i) all domestic and foreign patents,
copyrights, trade names,
trademarks, service marks and registrations and
applications for any of
the foregoing, mask works, trade secrets, inventions,
other proprietary
information and licenses from third Persons granting
the right to use
any of the foregoing;
(j) all computer applications, programs and
other software,
including operating software, network software,
firmware, middleware,
design software, design tools, systems documentation and
instructions;
(k) all cost information, sales and pricing
data, customer
prospect lists, supplier records, customer and supplier
lists, customer
and vender data, correspondence and lists, product
literature, artwork,
design, development and manufacturing files, vendor
and customer
drawings, formulations and specifications, quality
records and reports
and other books, records, studies, surveys,
reports, plans and
documents;
(l) all prepaid expenses, trade accounts and
other accounts
and notes receivables;
(m) all rights under contracts or agreements,
all claims or
rights against any Person arising from the ownership of
any Asset, all
rights in connection with any bids or offers and all
claims, choses in
action or similar rights, whether accrued or contingent;
(n) all rights under insurance policies and all
rights in the
nature of insurance, indemnification or contribution;
(o) all licenses (including radio and
similar licenses),
permits, approvals and authorizations which have been
issued by any
Governmental Authority;
(p) cash or cash equivalents, bank accounts,
lock boxes and
other deposit arrangements; and
(q) interest rate, currency, commodity or other
swap, collar,
cap or other hedging or similar agreements or
arrangements.
1.12. AT&T means AT&T Corp., a New York
corporation.
1.13. AT&T COMMON STOCK means the Common Stock,
$1.00 par
value per share, of AT&T.
1.14. AT&T CP RATE during any month of determination shall be
equal to the weighted average rate on all AT&T commercial paper (across all
maturities) for such month.
1.15. AT&T GENERAL PURCHASE AGREEMENT
means the General
Purchase Agreement, dated as of the date hereof, as amended, by
and between AT&T
and Lucent.
1.16. AT&T GROUP means AT&T and each Person (other than any
member of the Lucent Group) that is an Affiliate of AT&T immediately after the
Closing Date (including any member of the NCR Group).
1.17. AT&T INDEMNITEES has the meaning set forth
in Section
5.2.
1.18. AT&T LABORATORIES means the Assets of AT&T's Bell
Laboratories division described or listed on Schedule 1.18 and any other Assets
of AT&T's Bell Laboratories division that primarily relate to the AT&T Services
Business or the NCR Business.
1.19. AT&T SERVICES BUSINESS means: (a) the business and
operations of the telecommunications services divisions and Subsidiaries and the
financial services and leasing divisions and Subsidiaries of AT&T consisting
principally of the Communications Services Group, AT&T Wireless Services, Inc.
and its Subsidiaries, Universal Card Services, Inc. and its Subsidiaries, AT&T
Capital Corporation and its Subsidiaries, AT&T Solutions, AT&T Laboratories,
Submarine Systems and, subject to Section 2.9(a), AT&T Ventures; (b) except as
otherwise expressly provided herein, any terminated, divested or discontinued
businesses or operations that at the time of termination, divestiture or
discontinuation primarily related to the AT&T Services Business as then
conducted; and (c) the terminated, divested or discontinued businesses and
operations listed or described on Schedule 1.19.
1.20. AT&T SERVICES GROUP means each member of
the AT&T Group
other than any member of the NCR Group.
1.21. AT&T VENTURES means AT&T Ventures, a
limited
partnership.
1.22. ATTI means AT&T International Inc., a
Delaware
corporation.
1.23. BRAND LICENSE AGREEMENT means the
Brand License
Agreement, dated as of the date hereof, by and between AT&T and
Lucent.
1.24. CHANGE OF CONTROL of any Person means any of the
following: (a) the consummation of a merger, consolidation, or similar business
combination involving such Person, or a sale or other disposition of all or
substantially all of the assets of such Person; (b) the acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of 40% or more of
either (i) the then outstanding shares of common stock of such Person, or (ii)
the combined voting power of the then outstanding voting securities of such
Person entitled to vote generally in the election of directors; or (c)
individuals who, as of the Distribution Date, constitute the Board of Directors
of such Person (the "Incumbent Board") cease for any reason to constitute at
least a majority of such Board; provided, however, that any individual becoming
a director subsequent to the Distribution Date (other than any such individual
whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of any
Person other than the Board) whose election or nomination for election by the
stockholders of such Person was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board.
1.25. CLOSING means the receipt by Lucent of the
net proceeds
of the IPO in accordance with the terms of the Underwriting
Agreement.
1.26. CLOSING DATE means the first time at which any shares of
Lucent Common Stock are sold to the Underwriters pursuant to the IPO in
accordance with the terms of the Underwriting Agreement.
1.27. CODE means the Internal Revenue Code of
1986, as
amended.
1.28. COMMISSION means the Securities and
Exchange Commission.
1.29. CONSENTS means any consents, waivers or
approvals from,
or notification requirements to, any third parties.
1.30. CONTINGENT CLAIM COMMITTEE,
CONTINGENT GAIN AND
CONTINGENT LIABILITIES have the respective meanings set forth in
Section 6.1.
1.31. CPR means the Center for Public Resources.
1.32. DELAYED TRANSFER ASSETS means any Lucent Assets that are
expressly provided in this Agreement or any Ancillary Agreement to be
transferred after the date of this Agreement.
1.33. DELAYED TRANSFER LIABILITIES means any Lucent
Liabilities that are expressly provided in this Agreement or any Ancillary
Agreement to be assumed after the date of this Agreement.
1.34. DETERMINATION REQUEST means a written request made to
the Contingent Claim Committee, pursuant to Section 5.5(b), for a determination
as to whether a Third Party Claim specified in such request constitutes a Shared
Contingent Liability.
1.35. DISTRIBUTION means the distribution by AT&T on a pro
rata basis to holders of AT&T Common Stock of all of the outstanding shares of
Lucent Common Stock owned by AT&T on the Distribution Date as set forth in
Article IV.
1.36. DISTRIBUTION DATE means the date
determined pursuant to
Section 4.1 on which the Distribution occurs.
1.37. EFFECTIVE IPO DATE means the date on which
the IPO
Registration Statement is declared effective by the Commission.
1.38. EFFECTIVE TIME means 5:00 p.m., Eastern
Standard Time or
Eastern Daylight Time (whichever shall be then in effect), on
the Distribution
Date.
1.39. EMPLOYEE BENEFITS AGREEMENT means the
Employee Benefits
Agreement, dated as of the date hereof, as amended, by and
between AT&T and
Lucent.
1.40. ENVIRONMENTAL LAW means any federal, state, local,
foreign or international statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, common law (including tort and
environmental nuisance law), legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any Governmental Authority, now or
hereafter in effect relating to health, safety, pollution or the environment
(including ambient air, surface water, groundwater, land surface or subsurface
strata) or to emissions, discharges, releases or threatened releases of any
substance currently or at any time hereafter listed, defined, designated or
classified as hazardous, toxic, waste, radioactive or dangerous, or otherwise
regulated, under any of the foregoing, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of any such substances, including the Comprehensive Environmental
Response, Compensation and Liability Act, the Superfund Amendments and
Reauthorization Act and the Resource Conservation and Recovery Act and
comparable provisions in state, local, foreign or international law.
1.41. ENVIRONMENTAL LIABILITIES means all Liabilities relating
to, arising out of or resulting from any Environmental Law or contract or
agreement relating to environmental, health or safety matters (including all
removal, remediation or cleanup costs, investigatory costs, governmental
response costs, natural resources damages, property damages, personal injury
damages, costs of compliance with any settlement, judgment or other
determination of Liability and indemnity, contribution or similar obligations)
and all costs and expenses (including allocated costs of in-house counsel and
other personnel), interest, fines, penalties or other monetary sanctions in
connection therewith.
1.42. ESCALATION NOTICE has the meaning set
forth in Section
9.2.
1.43. EXCESS PORTION has the meaning specified
in Section 6.1.
1.44. EXCHANGE ACT means the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder.
1.45. EXCLUDED ASSETS has the meaning set forth
in Section
2.2(b).
1.46. EXCLUDED LIABILITIES has the meaning set
forth in
Section 2.3(b).
1.47. EXCLUSIVE AT&T CONTINGENT GAIN,
EXCLUSIVE AT&T
CONTINGENT LIABILITY, EXCLUSIVE LUCENT CONTINGENT GAIN,
EXCLUSIVE LUCENT
CONTINGENT LIABILITY, EXCLUSIVE NCR CONTINGENT GAIN, EXCLUSIVE
NCR CONTINGENT
LIABILITY AND EXCLUSIVE CONTINGENT LIABILITY have the
respective meanings set
forth in Section 6.1.
1.48. FINANCING FACILITY means the commercial
paper facility
and related credit agreement to be entered into prior to the
Closing Date by and
among AT&T, Lucent, and an agent or co-agents selected by
AT&T and Lucent,
pursuant to which, prior to the Closing Date, AT&T will issue commercial paper
or otherwise borrow an amount determined by AT&T and, as of the Closing Date,
Lucent will become the sole obligor and AT&T will have no further liability or
obligation thereunder.
1.49. GOVERNMENTAL APPROVALS means any notices, reports or
other filings to be made, or any consents, registrations, approvals, permits or
authorizations to be obtained from, any Governmental Authority.
1.50. GOVERNMENTAL AUTHORITY shall mean any federal, state,
local, foreign or international court, government, department, commission,
board, bureau, agency, official or other regulatory, administrative or
governmental authority.
1.51. GROUP means any of the AT&T Services
Group, the Lucent
Group or the NCR Group, as the context requires.
1.52. IDENTIFIED BELL LABS SERVICES means:
(a) environmental, health and safety
services provided by
Lucent Bell Laboratories, including (i)
compatibility, product
compliance, telephone network interconnect,
product design and
mandatory standards consultation services, (ii)
wireless safety,
radiation protection and product safety services,
(iii) groundwater
remediation services, (iv) environmental and energy
management, and (v)
industrial hygiene, safety and toxicology;
(b) technical support services provided
by Lucent Bell
Laboratories, including (i) technical cataloging
and processing
services and (ii) product design shop services;
(c) additional research and similar services
provided by
Lucent Bell Laboratories;
(d) information systems reengineering
center services,
including systems design and programming support for
human resource,
billing, procurement and facilities systems; and
(e) services provided by Lucent Bell
Laboratories relating to
projects initiated prior to the date hereof but not
completed prior to
the Closing Date.
1.53. INDEMNIFYING PARTY has the meaning set
forth in Section
5.4(a).
1.54. INDEMNITEE has the meaning set forth in
Section 5.4(a).
1.55. INDEMNITY PAYMENT has the meaning set
forth in Section
5.4(a).
1.56. INFORMATION means information, whether or not patentable
or copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
1.57. INSURANCE POLICIES means the insurance policies written
by insurance carriers unaffiliated with AT&T pursuant to which Lucent or one or
more of its Subsidiaries (or their respective officers or directors) will be
insured parties after the Closing Date.
1.58. INSURANCE PROCEEDS means those monies:
(a) received by an insured from an insurance
carrier;
(b) paid by an insurance carrier on behalf of
the insured; or
(c) received (including by way of set off) from
American Ridge
or any of its Subsidiaries or from any third party in
the nature of
insurance, contribution or indemnification in respect of
any Liability
(other than pursuant to or in connection with any RBOC
Agreement);
in any such case net of any applicable premium adjustments (including reserves
and retrospectively rated premium adjustments) and net of any costs or expenses
(including allocated costs of in-house counsel and other personnel) incurred in
the collection thereof.
1.59. INTERIM SERVICES AND SYSTEMS REPLICATION
AGREEMENT means
the Interim Services and Systems Replication Agreement, dated
as of the date
hereof, by and among AT&T, Lucent and NCR.
1.60. IPO means the initial public offering by Lucent of
shares of Lucent Common Stock pursuant to the IPO Registration Statement.
1.61. IPO REGISTRATION STATEMENT means the registration
statement on Form S-1 to be filed under the Securities Act, pursuant to which
the Lucent Common Stock to be issued in the IPO will be registered, together
with all amendments thereto.
1.62. LIABILITIES means any and all losses, claims, charges,
debts, demands, actions, causes of action, suits, damages, obligations,
payments, costs and expenses, sums of money, accounts, reckonings, bonds,
specialties, indemnities and similar obligations, exonerations, covenants,
contracts, controversies, agreements, promises, doings, omissions, variances,
guarantees, make whole agreements and similar obligations, and other
liabilities, including all contractual obligations, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, and including those arising under
any law, rule, regulation, Action, threatened or contemplated Action (including
the costs and expenses of demands, assessments, judgments, settlements and
compromises relating thereto and attorneys' fees and any and all costs and
expenses (including allocated costs of in-house counsel and other personnel),
whatsoever
reasonably incurred in investigating, preparing or defending against any such
Actions or threatened or contemplated Actions), order or consent decree of any
Governmental Authority or any award of any arbitrator or mediator of any kind,
and those arising under any contract, commitment or undertaking, including those
arising under this Agreement or any Ancillary Agreement, in each case, whether
or not recorded or reflected or required to be recorded or reflected on the
books and records or financial statements of any Person.
1.63. LUCENT means Lucent Technologies Inc., a
Delaware
corporation, formerly known as NS-MPG Inc.
1.64. LUCENT ASSETS has the meaning set forth in
Section
2.2(a).
1.65. LUCENT BALANCE SHEET means the audited consolidated
balance sheet of Lucent, including the notes thereto, as of December 31, 1995.
1.66. LUCENT BELL LABORATORIES means the Assets
of AT&T's Bell
Laboratories division as of the date hereof other than the
Assets of AT&T
Laboratories.
1.67. LUCENT BUSINESS means: (a) the business
and operations
of the telecommunications equipment divisions and
Subsidiaries of AT&T
consisting principally of the Network Systems Group, the Global Business
Communications Systems Group, the Consumer Products Group, the Microelectronics
Group, AT&T Paradyne and Lucent Bell Laboratories; and (b) except as otherwise
expressly provided herein, any terminated, divested or discontinued businesses
or operations that at the time of termination, divestiture or discontinuation
primarily related to the Lucent Business as then conducted.
1.68. LUCENT COMMON STOCK means the Common
Stock, $.01 par value per share, of Lucent.
1.69. LUCENT CONTRACTS means the following contracts and
agreements to which AT&T or any of its Affiliates is a party or by which it or
any of its Affiliates or any of their respective Assets is bound, whether or not
in writing, except for any such contract or agreement that is contemplated to be
retained by AT&T or any member of the AT&T Group pursuant to any provision of
this Agreement or any Ancillary Agreement:
(a) any supply or vendor contracts or agreements
listed or
described on Schedule 1.69(a);
(b) any contract or agreement entered into in
the name of, or
expressly on behalf of, any division, business unit or
member of the
Lucent Group (other than ATTI or any Person controlled by
ATTI);
(c) any contract or agreement that relates
primarily to the
Lucent Business;
(d) federal, state and local government and
other contracts
and agreements that are listed or described on Schedule
1.69(d) and any
other government contracts or agreements entered into
after the date
hereof and prior to the Closing Date that relate
primarily to the
Lucent Business;
(e) any contract or agreement to which ATTI or
any Person
controlled by ATTI is a party (or by which any of the
Assets of ATTI or
any such Person is
bound), other than (i) any such contract or agreement
to which AT&T
World Services, Inc. is a party that primarily
relates to AT&T's
EasyLink Services business, AT&T's International
Correspondence
Assistance Program, or to AT&T's Federal Systems,
including the
contracts and agreements listed or described on
Schedule 1.69(e)(i),
(ii) any joint venture or other contract or
agreement listed or
described on Schedule 1.69(e)(ii), and (iii) any
such contract or
agreement that relates primarily to the AT&T Services
Business or the
NCR Business;
(f) any contract or agreement
representing capital or
operating equipment lease obligations reflected on the
Lucent Balance
Sheet, including obligations as lessee under those
contracts or
agreements listed on Schedule 1.69(f) (as such
Schedule may be
supplemented by mutual agreement of the parties after
the date hereof
and prior to the Closing Date to assign capital and
operating equipment
lease obligations executed and delivered after the date
of the Lucent
Balance Sheet);
(g) any contract or agreement that is
otherwise expressly
contemplated pursuant to this Agreement or any of
the Ancillary
Agreements to be assigned to Lucent or any member of the
Lucent Group;
(h) (i) any guarantee, indemnity,
representation, warranty or
other Liability of any member of the Lucent Group or the
AT&T Group in
respect of any other Lucent Contract, any Lucent
Liability or the
Lucent Business (including guarantees of
financing incurred by
customers or other third parties in connection with
purchases of
products or services from the Lucent Business), and (ii)
the contracts,
agreements and other documents listed or
described on Schedule
1.69(h));
(i) the arrangements between AT&T and NEC Corp.
with respect
to the joint venture known as AT&T Japan Semiconductor
Marketing, Ltd.;
and
(j) any Lucent OFL.
No RBOC Agreement shall be deemed to be a Lucent Contract, except to the extent
expressly set forth herein.
1.70. LUCENT GROUP means Lucent, each Subsidiary of Lucent and
each other Person that is either controlled directly or indirectly by Lucent
immediately after the Closing Date or that is contemplated to be controlled by
Lucent pursuant to the Non-U.S. Plan (other than any Person that is contemplated
not to be controlled by Lucent pursuant to the Non-U.S. Plan).
1.71. LUCENT INDEMNITEES has the meaning set
forth in Section
5.3(a).
1.72. LUCENT LIABILITIES has the meaning set
forth in Section
2.3(a).
1.73. LUCENT OFL'S has the meaning set forth in
Section
7.3(a).
1.74. NCR means NCR Corporation (formerly named AT&T Global
Information Solutions Company), a Maryland corporation.
1.75. NCR BUSINESS means: (a) the computer
products, computer
systems, data processing and information solutions business and
operations as
conducted by NCR and its Subsidiaries; (b) except as otherwise
expressly
provided herein, any terminated, divested
or discontinued businesses or operations (i) that at the time of termination,
divestiture or discontinuation primarily related to the NCR Business as then
conducted, or (ii) that were conducted by NCR, or any Person that at any time
was an Affiliate of NCR, prior to the acquisition of NCR by AT&T; and (c) the
terminated, divested or discontinued businesses and operations listed or
described on Schedule 1.75.
1.76. NCR COMMON STOCK means the Common Stock,
par value $5.00
per share, of NCR.
1.77. NCR COVERED LIABILITIES has the meaning
set forth in
Section 5.3(b).
1.78. NCR DISTRIBUTION means the distribution by AT&T on a pro
rata basis to holders of AT&T Common Stock of all of the outstanding shares of
NCR owned directly or indirectly by AT&T.
1.79. NCR GROUP means NCR, each Subsidiary of
NCR and each
other Person that is either controlled directly or indirectly by
NCR immediately
after the Closing or that is contemplated to be controlled by NCR
pursuant to
the Non-U.S. Plan.
1.80. NCR INDEMNITEES has the meaning set forth
in Section
5.2.
1.81. NCR VOLUME PURCHASE AGREEMENT means the
Volume Purchase
Agreement, dated as of the date hereof, by and between NCR and
Lucent.
1.82. NYSE means The New York Stock Exchange,
Inc.
1.83. NASSAU METALS LIABILITIES means all Environmental
Liabilities primarily relating to, arising out of or resulting from the
operations of AT&T Nassau Metals Corporation, as conducted at any time prior to,
on or after the Closing Date.
1.84. NON-LUCENT ASSETS means any Assets of AT&T or any of its
Affiliates (including any member of the NCR Group) other than Lucent Assets.
1.85. NON-U.S. PLAN means the Non-U.S. Plan, comprised of the
series of transactions, agreements and other arrangements, pursuant to which the
non-U.S. Assets and Liabilities of AT&T and its Affiliates have been or will be
assigned among the parties hereto, which are set forth or described in Schedule
1.85 (as such Schedule may be supplemented by mutual consent of the parties
prior to the Closing Date).
1.86. OFL'S mean all liabilities, obligations, contingencies
and instruments and other Liabilities of any member of the AT&T Group of a
financial nature with third parties existing on the date hereof or entered into
or established between the date hereof and the Closing Date, including any of
the following:
(a) foreign exchange contracts;
(b) letters of credit;
(c) guarantees of third party loans to customers;
(d) surety bonds (excluding surety for workers'
compensation
self-insurance);
(e) interest support agreements on third party
loans to
customers;
(f) performance bonds or guarantees issued by
third parties;
(g) swaps or other derivatives contracts; and
(h) recourse arrangements on the sale of
receivables or notes.
1.87. OTHER DISCONTINUED OPERATIONS means (a) the business and
operations as conducted by any RBOC prior to its divestiture from AT&T, (b)
Cincinnati Bell Concession Service and (c) any other terminated, divested or
discontinued businesses and operations of AT&T, Lucent or NCR or of any former
or current Affiliate of AT&T, Lucent or NCR (whether such business or operations
were terminated, divested or discontinued prior to, at the time or after such
Person was, became or ceased to be an Affiliate of AT&T, Lucent or NCR) that are
not listed or described in, or on the Schedules to, the definitions of AT&T
Services Business, Lucent Business or NCR Business or on Schedule 2.3(a)(v).
1.88. PATENT ASSIGNMENTS means the six Patent Assignments,
effective as of March 29, 1996, executed and delivered by AT&T to Lucent, NCR to
AT&T, AT&T to NCR, Lucent to NCR, and Lucent to AT&T.
1.89. PATENT DEFENSIVE PROTECTION AGREEMENTS means the two
Defensive Protection Agreements, effective as of March 29, 1996, by and between
AT&T and Lucent, and by and between Lucent and NCR, respectively.
1.90. PATENT JOINT OWNERSHIP AGREEMENT means
the Patent Joint
Ownership Agreement, effective as of March 29, 1996, by and
between AT&T and
Lucent.
1.91. PATENT LICENSE AGREEMENT means the
Patent License
Agreement, effective as of March 29, 1996, by and among AT&T,
Lucent and NCR.
1.92. PERSON means an individual, a general or limited
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, a limited liability entity, any other entity and any Governmental
Authority.
1.93. PRIME RATE means the rate which Chemical Bank (or any
successor thereto or other major money center commercial bank agreed to by the
parties hereto) announces from time to time as its prime lending rate, as in
effect from time to time.
1.94. PROSPECTUS means each preliminary, final
or supplemental
prospectus forming a part of the IPO Registration Statement.
1.95. RBOC means each of Ameritech Corporation,
Bell Atlantic
Corporation, BellSouth Corporation, NYNEX Corporation, Pacific Telesis Group,
SBC Communications Inc., and U S West, Inc., and each of their respective
Affiliates, and the respective successors and assigns of any of the foregoing.
1.96. RBOC AGREEMENTS means the Agreement Concerning
Contingent Liabilities, Tax Matters and Termination of Certain Agreements among
AT&T, and the Bell System Operating Companies Regional Holding Companies and
affiliates, and the Agreement Regarding Sharing of Environmental Liabilities.
1.97. RBOC LIABILITY means any Liability of any
member of any
Group relating to, arising out of or resulting from any RBOC
Agreement.
1.98. RBOC PLAN means the Plan of Reorganization
filed on
December 16, 1982, in the United States District Court for the
District of
Columbia in United States v. Western Electric Co., Inc., Civil
Action No.
82-0192, as modified by the Court's orders and as thereafter
amended, modified
or supplemented.
1.99. RECORD DATE means the close of business on the date to
be determined by the AT&T Board of Directors as the record date for determining
shareholders of AT&T entitled to receive shares of Lucent Common Stock in the
Distribution.
1.100. RELATED EXCLUSIVE CONTINGENT LIABILITIES
has the
meaning set forth in Section 6.1.
1.101. RETAINED RECEIVABLES means any and all accounts
receivable and other rights to payment for goods or services sold, leased or
otherwise provided in the conduct of the Lucent Business that as of the date
hereof are payable by a third Person to AT&T, whether past due, due or to become
due on or prior to June 30, 1996, including any interest, sales or use taxes,
finance charges, late or returned check charges and other obligations of the
account debtor with respect thereto, and any proceeds of any of the foregoing,
that are (a) reflected in the CBS System for accounts receivable arising in the
Global Business Communications Systems Group, (b) reflected in the CARMS system
for accounts receivable arising in the Network Systems Group or the
Microelectronics Group, or (c) accounts receivables arising in the Consumer
Products Group if the account debtor is one of the 20 largest third-party
domestic customers of the Consumer Products Group as of the date hereof;
provided, however, that any accounts receivable arising in the Network Systems
Group or the Microelectronics Group shall not be Retained Receivables if such
accounts receivable were more than 90 days past due as of the date hereof.
1.102. RIDGE LUCENT POLICIES means any insurance policies
written by American Ridge or any other captive insurance company of AT&T
covering the Lucent Business or any member of the Lucent Group.
1.103. SECURITIES ACT means the Securities
Act of 1933, as
amended, together with the rules and regulations promulgated
thereunder.
1.104. SECURITY INTEREST means any mortgage, security
interest, pledge, lien, charge, claim, option, right to acquire, voting or other
restriction, right-of-way, covenant, condition, easement, encroachment,
restriction on transfer, or other encumbrance of any nature whatsoever.
1.105. SEPARATION means the transfer of the Lucent Assets to
Lucent and its Subsidiaries and the assumption by Lucent and its Subsidiaries of
the Lucent Liabilities, all as more fully described in this Agreement and the
Ancillary Agreements.
1.106. SHARED AT&T PERCENTAGE, SHARED NCR
PERCENTAGE, SHARED
LUCENT PERCENTAGE, SHARED PERCENTAGE, SHARED CONTINGENT
GAIN AND SHARED
CONTINGENT LIABILITY have the respective meanings set forth in Section 6.1.
1.107. SUBMARINE SYSTEMS means the Assets, businesses and
operations of AT&T's Submarine Systems, Inc., and the additional Assets listed
or described in Section 2.2(b)(vi).
1.108. SUBSIDIARY of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by the terms thereof ordinary voting power
to elect at least a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more
of its Subsidiaries, or by such Person and one or more of its Subsidiaries;
provided, however that no Person that is not directly or indirectly wholly owned
by any other Person shall be a Subsidiary of such other Person unless such other
Person controls, or has the right, power or ability to control, that Person.
1.109. TAX SHARING AGREEMENT means the Tax Sharing Agreement,
dated as of the date hereof, as amended, by and among AT&T, Lucent and NCR.
1.110. TAXES has the meaning set forth in the
Tax Sharing
Agreement.
1.111. TECHNOLOGY ACCESS AND DEVELOPMENT PROJECT AGREEMENT
means the Technology Access and Development Project Agreement, dated as of the
date hereof, by and between NCR and Lucent.
1.112. TECHNOLOGY ASSIGNMENT AND JOINT OWNERSHIP AGREEMENTS
means the two Technology Assignment and Joint Ownership Agreements, effective as
of March 29, 1996, by and between AT&T and Lucent, and by and among AT&T, Lucent
and NCR, respectively.
1.113. TECHNOLOGY LICENSE AGREEMENT means
the Technology
License Agreement, effective as of March 29, 1996, by and among
AT&T, Lucent and
NCR.
1.114. TELECOMMUNICATIONS SERVICE means any service providing
the transmission of voice, data, image or other messages, by radio or by aid of
wire, cable or other like connection now known or later developed between the
points of origin and reception of such transmission or by means of any
combination of the foregoing, including telecommunications services commonly
characterized as local, toll (whether intraLATA or interLATA), long distance and
cellular (whether mobile or fixed).
1.115. THIRD PARTY CLAIM has the meaning set
forth in Section
5.5(a).
1.116. TRADE DRESS ASSIGNMENT means the Trade
Dress
Assignment, dated as of the date hereof, by AT&T to Lucent.
1.117. TRADEMARK AND SERVICE MARK ASSIGNMENT means the
Trademark and Service Mark Assignment, dated as of the date hereof, by AT&T to
Lucent.
1.118. UNDERWRITERS means the managing
underwriters for the
IPO.
1.119. UNDERWRITING AGREEMENT means the underwriting agreement
to be entered into among Lucent and the Underwriters with respect to the IPO.
1.120. VALUE has the meaning set forth in
Section 6.1.
1.121. VTNS AGREEMENT means the Virtual
Telecommunications
Network Service Agreement, between AT&T and Lucent, dated as of
the date hereof.
1.122. WORKING CAPITAL FACILITY means the Working Capital
Agreement to be entered into by Lucent, as borrower, and Chemical Bank, as
Agent, and the Lending Banks named therein, to fund the working capital
requirements of Lucent following the date hereof.
ARTICLE II
THE SEPARATION
2.1. TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES. (a)
Each of AT&T and NCR hereby assigns, transfers, conveys and delivers to Lucent,
and agrees to cause its applicable Subsidiaries to assign, transfer, convey and
deliver to Lucent, and Lucent hereby accepts from each of AT&T and NCR and their
respective Subsidiaries, all of AT&T's and NCR's and their applicable
Subsidiaries' respective right, title and interest in all Lucent Assets, other
than the Delayed Transfer Assets.
(b) Lucent hereby assumes and agrees faithfully to perform and
fulfill all the Lucent Liabilities, other than the Delayed Transfer Liabilities,
in accordance with their respective terms. Lucent shall be responsible for all
Lucent Liabilities, regardless of when or where such Liabilities arose or arise,
or whether the facts on which they are based occurred prior to or subsequent to
the date hereof, regardless of where or against whom such Liabilities are
asserted or determined (including any Lucent Liabilities arising out of claims
made by AT&T's, Lucent's or NCR's respective directors, officers, employees,
agents, Subsidiaries or Affiliates against any member of the AT&T Group or the
Lucent Group) or whether asserted or determined prior to the date hereof, and
regardless of whether arising from or alleged to arise from negligence,
recklessness, violation of law, fraud or misrepresentation by any member of the
AT&T Group or the Lucent Group or any of their respective directors, officers,
employees, agents, Subsidiaries or Affiliates.
(c) Each of the parties hereto agrees that the Delayed
Transfer Assets will be assigned, transferred, conveyed and delivered, and the
Delayed Transfer Liabilities will be assumed, in accordance with the terms of
the agreements that provide for such assignment, transfer, conveyance and
delivery, or such assumption, after the date of this Agreement or as otherwise
set forth on Schedule 2.1(c). Following such assignment, transfer, conveyance
and delivery of any Delayed Transfer Asset, or the assumption of any Delayed
Transfer Liability, the applicable Delayed Transfer Asset or Delayed Transfer
Liability shall be treated for all purposes of this Agreement and the Ancillary
Agreements as an Lucent Asset or an Lucent Liability, as the case may be.
(d) In the event that at any time or from time to time
(whether prior to or after the Distribution Date), any party hereto (or any
member of such party's respective Group), shall receive or otherwise possess any
Asset that is allocated to any other Person pursuant to this Agreement or any
Ancillary Agreement, such party shall promptly transfer, or cause to be
transferred, such Asset to the Person so entitled thereto. Prior to any such
transfer, the Person receiving or possessing such Asset shall hold such Asset in
trust for any such other Person.
2.2. LUCENT ASSETS. (a) For purposes of this
Agreement,
"Lucent Assets" shall mean (without duplication):
(i) any and all Assets that are expressly
contemplated by this
Agreement or any Ancillary Agreement (or Schedule
2.2(a)(i) or any
other Schedule hereto or thereto) as Assets to be
transferred to Lucent
or any other member of the Lucent Group;
(ii) all issued and outstanding capital stock of
ATTI and any
and all Assets owned by ATTI or its Subsidiaries as of
the date of the
transfer of such capital stock to Lucent pursuant to
Section 2.8(b),
except for the Assets contemplated to be sold or
otherwise transferred
to any member of the AT&T Group pursuant to the Non-U.S.
Plan;
(iii) any Exclusive Lucent Contingent Gain and
any Shared
Lucent Percentage of any Shared Contingent Gain;
(iv) (A) any amounts actually paid to AT&T
after the Closing
Date pursuant to any RBOC Agreement in respect of any
Lucent Liability
or any Nassau Metals Liability, (B) any rights of any
member of the
Lucent Group under any RBOC Agreement in respect
of any Lucent
Liability or any Nassau Metals Liability, and (C)
subject to Section
7.1, any rights of any member of the Lucent Group
under any of the
Insurance Policies, including any rights thereunder
arising after the
Distribution Date in respect of any Insurance
Policies that are
occurrence policies;
(v) (A) any Assets that Section 2.5(b)
contemplates will be
transferred to, or be retained by, any member of the
Lucent Group, (B)
any Lucent Contracts and (C) all issued and outstanding
capital stock
of AT&T Nassau Metals Corporation and the other
Subsidiaries of AT&T
listed on Schedule 2.2(a)(v);
(vi) any Assets reflected in the Lucent
Balance Sheet as
Assets of Lucent and its Subsidiaries, subject to any
dispositions of
such Assets subsequent to the date of the Lucent Balance
Sheet; and
(vii) except as contemplated by Section
2.5(b), any and all
Assets owned or held immediately prior to the Closing
Date by AT&T or
any of its Subsidiaries that are used primarily in the
Lucent Business.
The intention of this clause (vii) is only to rectify
any inadvertent
omission of transfer or conveyance of any Assets that,
had the parties
given specific consideration to such Asset as of the date
hereof, would
have otherwise been classified as a Lucent Asset. No
Asset shall be
deemed to be a Lucent Asset solely as a result of this
clause (vii) if
such Asset is within the category or type of Asset
expressly covered by
the subject matter of an Ancillary Agreement. In
addition, no Asset
shall be deemed a Lucent Asset solely as a result of
this clause (vii)
unless a claim with respect thereto is made by Lucent
on or prior to
the first anniversary of the Distribution Date.
Notwithstanding the foregoing, the Lucent Assets shall not in any event include
the Excluded Assets referred to in Section 2.2(b) below.
(b) For the purposes of this Agreement,
"Excluded Assets"
shall mean:
(i) the Assets listed or described on Schedule
2.2(b)(i);
(ii) the Retained Receivables;
(iii) any and all Assets that are expressly
contemplated by
this Agreement or any Ancillary Agreement (or the
Schedules hereto or
thereto) as Assets to be retained by AT&T or any other
member of the
AT&T Group (including the NCR Group);
(iv) any contract or agreement described in
clause (e)(i)
through (e)(iii) of the definition of Lucent Contract;
(v) except to the extent expressly set
forth in Section
2.2(a)(iii) or (iv), respectively, (A) any Contingent
Gains and (B) any
rights in respect of, or proceeds received pursuant
to, any RBOC
Agreement; and
(vi) all Assets (including land, buildings,
manufacturing
equipment and inventory) of the undersea repeaters
factory of Lucent's
Microelectronic Group located in Clark, New Jersey.
2.3. LUCENT LIABILITIES. (a) For the purposes of
this
Agreement, "Lucent Liabilities" shall mean (without duplication):
(i) any and all Liabilities that are expressly
contemplated by
this Agreement or any Ancillary Agreement (or the
Schedules hereto or
thereto) as Liabilities to be assumed by Lucent or any
member of the
Lucent Group, and all agreements, obligations and
Liabilities of any
member of the Lucent Group under this Agreement or any of
the Ancillary
Agreements;
(ii) all Liabilities (other than Taxes based
on, or measured
by reference to, net income), including any
employee-related
Liabilities and Environmental Liabilities, primarily
relating to,
arising out of or resulting from:
(A) the operation of the Lucent
Business, as
conducted at any time prior to, on or after the
Closing Date
(including any Liability relating to,
arising out of or
resulting from any act or failure to act by
any director,
officer, employee, agent or representative
(whether or not
such act or failure to act is or was within
such Person's
authority));
(B) the operation of any business
conducted by any
member of the Lucent Group at any time after
the Closing Date
(including any Liability relating to,
arising out of or
resulting from any act or failure to act by
any director,
officer, employee, agent or representative
(whether or not
such act or failure to act is or was within
such Person's
authority)); or
(C) any Lucent Assets (including any
Lucent Contracts
and any real property and leasehold interests);
in any such case whether arising before, on or after the
Closing Date;
(iii) subject to the terms of Article VI, all
Exclusive Lucent
Contingent Liabilities and the Shared Lucent Percentage
of any Shared
Contingent Liabilities;
(iv) all Liabilities relating to, arising out
of or resulting
from the Working Capital Facility and, as of the
Closing Date, the
Financing Facility, in each case
other than any third party costs and expenses incurred by
any member of
the AT&T Group;
(v) all Liabilities relating to, arising out
of or resulting
from any of the terminated, divested or discontinued
businesses and
operations listed or described on Schedule 2.3(a)(v);
(vi) all Liabilities of ATTI or its
Subsidiaries, as of the
date of the transfer of the capital stock of ATTI to
Lucent pursuant to
Section 2.8(b), except for the Liabilities contemplated
to be assumed
by any member of the AT&T Group pursuant to the Non-U.S.
Plan, and all
Liabilities of any other member of the Lucent Group; and
(vii) all Liabilities reflected as liabilities
or obligations
of Lucent in the Lucent Balance Sheet, subject to any
discharge of such
Liabilities subsequent to the date of the Lucent Balance Sheet.
Notwithstanding the foregoing, the Lucent Liabilities shall not include the
Excluded Liabilities referred to in Section 2.3(b) below. Subject to Articles V
and VI hereof, the Lucent Liabilities shall not include any Nassau Metals
Liabilities.
(b) For the purposes of this Agreement,
"Excluded Liabilities"
shall mean:
(i) any and all Liabilities that are expressly
contemplated by
this Agreement or any Ancillary Agreement (or the
Schedules hereto or
thereto) as Liabilities to be retained or assumed by
AT&T or any other
member of the AT&T Group (including the NCR Group), and
all agreements
and obligations of any member of the AT&T Group under
this Agreement or
any of the Ancillary Agreements;
(ii) subject to the terms of Article VI, all
Exclusive AT&T
Services Contingent Liabilities and Exclusive
NCR Contingent
Liabilities and the Shared AT&T Percentage and
the Shared NCR
Percentage of any Shared Contingent Liabilities; and
(iii) except as set forth in any Ancillary
Agreement, all
Environmental Liabilities accrued as of the date hereof
solely relating
to, arising out of or resulting from the existence of
any leasehold
interest that is an Lucent Asset if the applicable
lessor, sublessor or
sub-sublessor under the applicable lease, sublease or
sub-sublease is a
member of the AT&T Services Group or the NCR Group.
2.4. TERMINATION OF AGREEMENTS. (a) Except as set forth in
Section 2.4(b), in furtherance of the releases and other provisions of Section
5.1 hereof, Lucent and each member of the Lucent Group, on the one hand, and
each of AT&T, NCR and the respective members of the AT&T Services Group and the
NCR Group, on the other hand, hereby terminate, any and all agreements,
arrangements, commitments or understandings, whether or not in writing, between
or among Lucent and/or any member of the Lucent Group, on the one hand, and AT&T
or NCR and/or any member of the AT&T Services Group or the NCR Group, on the
other hand, effective as of the Closing Date; provided, however, to the extent
any such agreement, arrangement, commitment or understanding is inconsistent
with any Ancillary Agreement, such termination shall be effective as of the date
of effectiveness of the applicable Ancillary Agreement. No such terminated
agreement, arrangement, commitment or understanding (including any provision
thereof which purports
to survive termination) shall be of any further force or effect after the
Closing Date (or, to the extent contemplated by the proviso to the immediately
preceding sentence, after the effective date of the applicable Ancillary
Agreement). Each party shall, at the reasonable request of any other party,
take, or cause to be taken, such other actions as may be necessary to effect the
foregoing.
(b) The provisions of Section 2.4(a) shall not apply to any of
the following agreements, arrangements, commitments or understandings (or to any
of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and
each other agreement or instrument expressly contemplated by this Agreement or
any Ancillary Agreement to be entered into by any of the parties hereto or any
of the members of their respective Groups); (ii) any agreements, arrangements,
commitments or understandings listed or described on Schedule 2.4(b)(ii); (iii)
any agreements, arrangements, commitments or understandings to which any Person
other than the parties hereto and their respective Affiliates is a party (it
being understood that to the extent that the rights and obligations of the
parties and the members of their respective Groups under any such agreements,
arrangements, commitments or understandings constitute Lucent Assets or Lucent
Liabilities, they shall be assigned pursuant to Section 2.1); (iv) any
intercompany accounts payable or accounts receivable accrued as of the Closing
Date that are reflected in the books and records of the parties or otherwise
documented in writing in accordance with past practices; (v) any agreements,
arrangements, commitments or understandings to which AT&T Capital Corporation or
any other non-wholly owned Subsidiary of AT&T, Lucent or NCR, as the case may
be, is a party (it being understood that directors' qualifying shares or similar
interests will be disregarded for purposes of determining whether a Subsidiary
is wholly owned); (vi) any written Tax sharing or Tax allocation agreements to
which any member of any Group is a party; and (vii) any other agreements,
arrangements, commitments or understandings that this Agreement or any Ancillary
Agreement expressly contemplates will survive the Closing Date.
2.5. DOCUMENTS RELATING TO TRANSFER OF REAL PROPERTY INTERESTS
AND TANGIBLE PROPERTY LOCATED THEREON. (a) In furtherance of the assignment,
transfer and conveyance of Lucent Assets and the assumption of Lucent
Liabilities set forth in Section 2.1(a) and (b), simultaneously with the
execution and delivery hereof or as promptly as practicable thereafter, each of
AT&T, Lucent and NCR, or their applicable Subsidiaries, is executing and
delivering or will execute and deliver deeds, lease assignments and assumptions,
leases, subleases and sub-subleases substantially in the forms attached as
Schedule 2.5 (which in certain cases includes different forms for real property
and leasehold interests located outside of the United States), with such changes
as may be necessary to conform to any laws, regulations or usage applicable in
the jurisdiction in which the relevant real property is located.
Set forth in,
or referenced by, such Schedule is, among other things, a summary of each
property or interest therein to be conveyed, assigned, leased, subleased or
sub-subleased, the applicable entities relevant to each property and their
capacities with respect to each property (e.g., as transferor, transferee,
assignor, assignee, lessor, lessee, sublessor, sublessee, sub-sublessor or
sub-sublessee), and any terms applicable to each property that are not specified
in the forms of deed, lease assignment and assumption, lease, sublease or
sub-sublease (e.g., rent and term).
(b) Except as otherwise expressly provided in this Agreement
or any Ancillary Agreement, all tenant improvements, fixtures, furniture, office
equipment, servers, private branch exchanges, artwork and other tangible
property (other than equipment subject to capital or operating equipment leases,
which will be transferred or retained based on whether the associated capital or
operating equipment lease is or is not an Lucent Contract)
located as of the date hereof on any real property that is covered by any
Ancillary Agreement referred to in Section 2.5(a), including the Schedules
thereto, shall, except to the extent expressly set forth on a Schedule referred
to in Section 2.5(a), be transferred or retained as follows:
(i) DEEDS AND ASSIGNMENTS. In the case of any
real property or
leasehold interests covered by an Ancillary
Agreement set forth on
Schedule 2.5 that is a deed or lease assignment and
assumption, all
such tangible property will be transferred to the
transferee or
assignee of the applicable real property or leasehold
interest;
(ii) SHARED FACILITIES WITHOUT THIRD PARTY
LEASES. In the case
of any real property or leasehold interests covered
by an Ancillary
Agreement set forth on Schedule 2.5 that is a lease, all
such tangible
property will be retained by the lessor under the
applicable lease,
except that any such tangible property (other than tenant
improvements,
fixtures, furniture and artwork) used exclusively by
the lessee shall
be transferred to, or retained by, the lessee.
(iii) SHARED DOMESTIC FACILITIES WITH THIRD
PARTY LEASES. In
the case of any real property or leasehold interests
located in the
United States covered by an Ancillary Agreement set
forth on Schedule
2.5 that is a sublease or sub-sublease, all such tangible
property will
be retained by the sublessor or sub-sublessor,
respectively, under the
applicable sublease or sub-sublease, except that any
such tangible
property (other than tenant improvements, fixtures
and artwork),
including furniture used exclusively by the sublessee or
sub-sublessee,
respectively, shall be transferred to, or retained by,
such sublessee
or sub-sublessee.
(iv) SHARED NON-U.S. FACILITIES WITH THIRD
PARTY LEASES. In
the case of any real property or leasehold interests
located outside of
the United States covered by an Ancillary
Agreement set forth on
Schedule 2.5 that is a sublease or sub-sublease, all
such tangible
property will be retained by the sublessor or
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 any other Group, if the transfer of such Asset to, or the
retention of such Asset by, such first Group would not interfere in any material
respect with either the business or operations of any such other Group.
Notwithstanding the foregoing provisions of this Section 2.5(b), any artwork
located as of the date hereof in the private office of any senior manager or
officer of any Group may, at the election of such senior manager or officer, be
retained by, or transferred to, the Group by which such executive is employed as
of the Closing Date.
(c) In the case of any real property or leasehold interest
that is covered by Section 2.5(b)(i) and any of Section 2.5(b)(ii), (iii) or
(iv), all such tangible property shall first be allocated pursuant to the
provisions of Section 2.5(b)(i) and thereafter pursuant to whichever of such
other clauses is applicable.
2.6. DOCUMENTS RELATING TO OTHER TRANSFERS OF
ASSETS AND
ASSUMPTION OF LIABILITIES. In furtherance of the assignment,
transfer and
conveyance of Lucent Assets and the assumption of Lucent
Liabilities set forth
in Section 2.1(a) and (b), simultaneously
with the execution and delivery hereof or as promptly as practicable thereafter,
(i) each of AT&T and NCR shall execute and deliver, and each shall cause its
respective Subsidiaries to execute and deliver, such bills of sale, stock
powers, certificates of title, assignments of contracts and other instruments of
transfer, conveyance and assignment as and to the extent necessary to evidence
the transfer, conveyance and assignment of all of AT&T's, NCR's and their
respective Subsidiaries' right, title and interest in and to the Lucent Assets
to Lucent and (ii) Lucent shall execute and deliver, to AT&T, NCR and their
respective Subsidiaries such bills of sale, stock powers, certificates of title,
assumptions of contracts and other instruments of assumption as and to the
extent necessary to evidence the valid and effective assumption of the Lucent
Liabilities by Lucent.
2.7. OTHER ANCILLARY AGREEMENTS. (a) Effective
as of the date
hereof, except as provided in Section 2.7(b) or Section 2.8, each
of AT&T,
Lucent and NCR will execute and deliver all Ancillary Agreements
to which it is
a party.
(b) Effective as of March 29, 1996, the parties shall execute and
deliver each of the following Ancillary Agreements to which it is a party:
(i) the Patent Assignments and related
agreements regarding
powers of attorney;
(ii) the Patent License Agreement;
(iii) the Patent Joint Ownership Agreement;
(iv) the Patent Defensive Protection Agreements;
(v) the Technology Assignment and Joint
Ownership Agreements;
and
(vi) the Technology License Agreement.
(a) 2.8. THE NON-U.S. PLAN. (a) Each of AT&T,
Lucent and NCR
shall take, and shall cause each member of its respective Group to
take, such
action as reasonably necessary to consummate the transactions
contemplated by
the Non-U.S. Plan (whether prior to or after the Closing Date).
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.
(b) After the date hereof and on or prior to the Closing Date,
AT&T shall transfer all of its right, title and interest in and to all of the
issued and outstanding capital stock in each of ATTI and NCS Ventures, Inc., a
Delaware corporation, to Lucent by means of a contribution of such capital stock
by AT&T to Lucent. The parties hereto shall execute, or cause to be executed,
such transfer instruments as they mutually deem appropriate to effectuate and
evidence such transfer.
2.9. AT&T VENTURES; LUCENT FOUNDATION. (a) On or prior to the
Closing Date, AT&T shall transfer to Lucent 35% of AT&T's interest as a limited
partner in AT&T Ventures and Lucent shall assume all Liabilities of a limited
partner of AT&T Ventures relating to such interest. AT&T and Lucent shall use
reasonable best efforts to cooperate so that Lucent will be admitted to AT&T
Ventures as a limited partner in respect of such interest. Without duplication
of any such Liability assumed in its capacity as a limited
partner, Lucent shall indemnify, defend and hold harmless each AT&T Indemnitee
and each NCR Indemnitee from and against 35% of any and all Liabilities of the
AT&T Indemnitees or the NCR Indemnitees, respectively, relating to, arising out
of or resulting from AT&T Ventures, including in respect of any capital calls or
commitments and in connection with the operation or management thereof.
(b) (i) Following the date hereof, Lucent will incorporate a
private foundation to be qualified under Section 501(c)(3) of the Code. The AT&T
Foundation will make an $18 million grant to the new foundation formed by
Lucent, as soon as is reasonably practicable following such new foundation's
request, subject to the satisfaction by such new foundation of the following
requirements: the election or appointment of a governing board of directors or
trustees, the adoption of by-laws, the hiring of a professional staff, the
formulation of a mission statement, and commencement of the development of
programs and priorities for funding grants. The determination as to whether such
requirements have been satisfied shall be made by the trustees of the AT&T
Foundation in their sole discretion and shall be binding on all parties. Such
$18 million grant shall be payable, at the AT&T Foundation's election, in cash
or in appreciated property (or any combination thereof). All determinations with
respect to the fair market value of any appreciated property will be made by the
trustees of the AT&T Foundation in their sole discretion and shall be binding on
all parties.
(ii) The AT&T Foundation has approved a 1996 grant budget that
includes grants totalling $13 million relating to Lucent initiatives. The staffs
of the AT&T Foundation and the new foundation to be formed by Lucent pursuant to
subparagraph (i) above will work together to administer the grants relating to
these Lucent initiatives. In the event such $13 million has not been fully
disbursed prior to the Distribution Date, the AT&T Foundation will transfer to
the new foundation formed by Lucent an amount equal to the portion of such $13
million that has not been disbursed, and such foundation will assume the
obligation to make grants equal to such remaining amount. The AT&T Foundation
will also allocate up to $1 million of its 1996 administrative budget for
administrative costs related to Lucent programs.
2.10. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. (a) Each
of AT&T (on behalf of itself and each member of the AT&T Services Group), Lucent
(on behalf of itself and each member of the Lucent Group) and NCR (on behalf of
itself and each member of the NCR Group) understands and agrees that, except as
expressly set forth herein (including in Section 7.2(g)) or in any Ancillary
Agreement, no party to this Agreement, any Ancillary Agreement or any other
agreement or document contemplated by this Agreement, any Ancillary Agreement or
otherwise, is representing or warranting in any way as to the Assets, businesses
or Liabilities transferred or assumed as contemplated hereby or thereby, as to
any consents or approvals required in connection therewith, as to the value or
freedom from any Security Interests of, or any other matter concerning, any
Assets of such party, or as to the absence of any defenses or right of setoff or
freedom from counterclaim with respect to any claim or other Asset, including
any accounts receivable, of any party, or as to the legal sufficiency of any
assignment, document or instrument delivered hereunder to convey title to any
Asset or thing of value upon the execution, delivery and filing hereof or
thereof. Except as may expressly be set forth herein or in any Ancillary
Agreement, all such Assets are being transferred on an "as is," "where is" basis
(and, in the case of any real property, by means of a quitclaim or similar form
deed or conveyance) and the respective transferees shall bear the economic and
legal risks that any conveyance shall prove to be insufficient to vest in the
transferee good and marketable title, free and clear of any Security Interest.
2.11. FINANCING ARRANGEMENTS. (a) Prior to the Closing Date,
AT&T and Lucent shall enter into the Financing Facility. AT&T and Lucent agree
to take all such reasonable action as may be necessary to permit AT&T to borrow
such amount as it shall determine under the Financing Facility prior to the
Closing Date and to assure the assignment to and the assumption by Lucent of all
obligations thereunder and the full release and discharge of each of AT&T and
any other member of the AT&T Group of all of its obligations thereunder as of
the Closing Date in accordance with the terms of the Financing Facility. AT&T
and Lucent shall participate in the preparation of all materials and
presentations as may be reasonably necessary to secure funding pursuant to the
Financing Facility, including rating agency presentations necessary to obtain
the requisite ratings needed to secure the financing under the Financing
Facility and such assignment, assumption, release and discharge. As of the time
of such assignment, assumption, release and discharge, AT&T shall pay all third
party costs and expenses incurred by any member of the AT&T Group associated
with the Financing Facility.
(b) Simultaneously with or following the execution and
delivery of this Agreement, Lucent intends to enter into the Working Capital
Facility. Lucent agrees to cause all obligations of AT&T or any other member of
the AT&T Group, if any, under the Working Capital Facility to be terminated at
the Closing Date. Lucent shall pay all expenses associated with the Working
Capital Facility.
2.12. GOVERNMENTAL APPROVALS AND CONSENTS. (a)
To the extent
that the Separation requires any Governmental Approvals or
Consents, the parties
will use their reasonable best efforts to obtain any such
Governmental Approvals
and Consents.
(b) If and to the extent that the valid, complete and
perfected transfer or assignment (or novation of any federal government
contract) to the Lucent Group of any Lucent Assets (or from the Lucent Group of
any Non-Lucent Assets) would be a violation of applicable laws or require any
Consent or Governmental Approval in connection with the Separation, the IPO or
the Distribution, then, unless AT&T shall otherwise determine, the transfer or
assignment to or from the Lucent Group, as the case may be, of such Lucent
Assets or Non-Lucent Assets, respectively, shall be automatically deemed
deferred and any such purported transfer or assignment shall be null and void
until such time as all legal impediments are removed and/or such Consents or
Governmental Approvals have been obtained. Notwithstanding the foregoing, such
Asset shall be deemed an Lucent Asset for purposes of determining whether any
Liability is an Lucent Liability.
(c) If the transfer or assignment of any Assets intended to be
transferred or assigned hereunder, including pursuant to the Non-U.S. Plan, is
not consummated prior to or at the Closing Date, whether as a result of the
provisions of Section 2.12(b) or for any other reason, then the Person retaining
such Asset shall thereafter hold such Asset for the use and benefit, insofar as
reasonably possible, of the Person entitled thereto (at the expense of the
Person entitled thereto). In addition, the Person retaining such Asset shall
take such other actions as may be reasonably requested by the Person to whom
such Asset is to be transferred in order to place such Person, insofar as
reasonably possible, in the same position as if such Asset had been transferred
as contemplated hereby and so that all the benefits and burdens relating to such
Lucent Assets (or such Non-Lucent Assets, as the case may be), including
possession, use, risk of loss, potential for gain, and dominion, control and
command over such Assets, are to inure from and after the Closing Date to the
Lucent Group (or the AT&T Group, as the case may be).
(d) If and when the Consents and/or Governmental Approvals,
the absence of which caused the deferral of transfer of any Asset pursuant to
Section 2.12(b), are obtained, the transfer of the applicable Asset shall be
effected in accordance with the terms of this Agreement and/or the applicable
Ancillary Agreement.
(e) The Person retaining an Asset due to the deferral of the
transfer of such Asset shall not be obligated, in connection with the foregoing,
to expend any money unless the necessary funds are advanced by the Person
entitled to the Asset, other than reasonable out-of-pocket expenses, attorneys'
fees and recording or similar fees, all of which shall be promptly reimbursed by
the Person entitled to such Asset.
2.13. NOVATION OF ASSUMED LUCENT LIABILITIES. (a) Each of
AT&T, Lucent and NCR, at the request of any of the others, shall use their
reasonable best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate (including with respect
to any federal government contract) or assign all obligations under agreements,
leases, licenses and other obligations or Liabilities (including Lucent OFL's)
of any nature whatsoever that constitute Lucent Liabilities or Nassau Metals
Liabilities, or to obtain in writing the unconditional release of all parties to
such arrangements other than any member of the Lucent Group, so that, in any
such case, Lucent and its Subsidiaries will be solely responsible for such
Liabilities; provided, however, that none of AT&T, Lucent or NCR shall be
obligated to pay any consideration therefor to any third party from whom such
consents, approvals, substitutions and amendments are requested.
(b) If AT&T, Lucent or NCR is unable to obtain, or to cause to
be obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the AT&T Services Group or the NCR Group, as
the case may be, shall continue to be bound by such agreements, leases, licenses
and other obligations and, unless not permitted by law or the terms thereof
(except to the extent expressly set forth in Section 7.3 in the case of Lucent
OFL's), Lucent shall, as agent or subcontractor for AT&T, NCR or such other
Person, as the case may be, pay, perform and discharge fully all the obligations
or other Liabilities of AT&T, NCR or such other Person, as the case may be,
thereunder from and after the date hereof. Lucent shall indemnify each AT&T
Indemnitee and each NCR Indemnitee, and hold each of them harmless against any
Liabilities arising in connection therewith. Except as expressly set forth in
Section 7.3 in the case of Lucent OFL's, each of AT&T and NCR, as the case may
be, shall, without further consideration, pay and remit, or cause to be paid or
remitted, to Lucent promptly all money, rights and other consideration received
by it or any member of its respective Group in respect of such performance
(unless any such consideration is an Excluded Asset). If and when any such
consent, approval, release, substitution or amendment shall be obtained or such
agreement, lease, license or other rights or obligations shall otherwise become
assignable or able to be novated, each of AT&T and NCR, as the case may be,
shall thereafter assign, or cause to be assigned, all its rights, obligations
and other Liabilities thereunder or any rights or obligations of any member of
its respective Group to Lucent without payment of further consideration and
Lucent shall, without the payment of any further consideration, assume such
rights and obligations.
2.14. NOVATION OF ASSUMED LIABILITIES OTHER THAN LUCENT
LIABILITIES. (a) Each of AT&T, Lucent and NCR, at the request of any of the
others, shall use their reasonable best efforts to obtain, or to cause to be
obtained, any consent, substitution, approval or amendment required to novate or
assign all obligations under agreements, leases, licenses and other obligations
or Liabilities of any nature whatsoever that do not constitute Lucent
Liabilities or Nassau Metals Liabilities, or to obtain in writing the
unconditional release of
all parties to such arrangements other than any member of the AT&T Group, so
that, in any such case, the members of the AT&T Group will be solely responsible
for such Liabilities; provided, however, that none of AT&T, Lucent or NCR shall
be obligated to pay any consideration therefor to any third party from whom such
consents, approvals, substitutions and amendments are requested.
(b) If AT&T, Lucent or NCR is unable to obtain, or to cause to
be obtained, any such required consent, approval, release, substitution or
amendment, the applicable member of the Lucent Group shall continue to be bound
by such agreements, leases, licenses and other obligations and, unless not
permitted by law or the terms thereof, AT&T shall cause a member of the AT&T
Group, as agent or subcontractor for such member of the Lucent Group, to pay,
perform and discharge fully all the obligations or other Liabilities of such
member of the Lucent Group thereunder from and after the date hereof. AT&T shall
indemnify each Lucent Indemnitee and hold each of them harmless against any
Liabilities arising in connection therewith. Lucent shall cause each member of
the Lucent Group without further consideration, to pay and remit, or cause to be
paid or remitted, to AT&T or to another member of the AT&T Group specified by
AT&T promptly all money, rights and other consideration received by it or any
member of the Lucent Group in respect of such performance. If and when any such
consent, approval, release, substitution or amendment shall be obtained or such
agreement, lease, license or other rights or obligations shall otherwise become
assignable or able to be novated, Lucent shall promptly assign, or cause to be
assigned, all its rights, obligations and other Liabilities thereunder or any
rights or obligations of any member of the Lucent Group to AT&T or to another
member of the AT&T Group specified by AT&T without payment of further
consideration and AT&T, without the payment of any further consideration shall,
or shall cause such other member of the AT&T Group to, assume such rights and
obligations.
2.15. THIRD PARTY PATENT LICENSE AGREEMENTS.
(a) Except as
otherwise set forth in this Section 2.15, effective as of the
date of execution
of the Patent Assignments and other agreements set forth in
Section 2.7(b), AT&T
hereby: (i) grants to each of Lucent and NCR the right to share with AT&T the
license rights granted by any third party to AT&T pursuant to any patent license
agreement between AT&T and such third party existing as of the date hereof and
(ii) grants to Lucent the right to receive any net royalty payments from third
parties pursuant to the patent license agreements referred to in clause (i)
above. Except as otherwise set forth in this Section 2.15, AT&T will retain all
rights in and to the patent license agreements referred to in this Section 2.15.
(b) The grants set forth in the first sentence of Section
2.15(a) shall not apply to (i) the patent license agreements set forth in
Schedule 2.15(b) or (ii) any other patent license agreement with respect to
which there otherwise exists, on or prior to the date of execution of the Patent
Assignments, written provision for the allocation or sharing of rights under
such patent license agreement between or among any two or all three of AT&T,
Lucent and NCR.
(c) Except as set forth in Section 2.15(d), in the event that
any grant of rights set forth in Section 2.15(a) would violate or is found to
violate the terms of, or result in the loss of rights or imposition of penalty
under, any patent license agreement covered thereby, or would not be effective
subsequent to the Distribution Date, such grant of rights with respect to such
patent license agreement shall be deemed null and void and, in lieu thereof, (i)
effective as of the Distribution Date, AT&T hereby transfers any such patent
license agreement to Lucent without retaining any rights therein (and AT&T
waives any
such right it could otherwise retain) and (ii) Lucent shall use all reasonable
efforts to arrange for the grant by the applicable third party of comparable
rights (other than any right to receive royalty payments) to each of AT&T and
NCR, provided that none of Lucent, AT&T or NCR shall be obligated to pay any
consideration therefor.
(d) In the event that any transfer set forth in Section
2.15(c) would violate or is found to violate the terms of, or result in the loss
of rights or imposition of penalty under, any patent license agreement covered
thereby, or would not be effective subsequent to the Distribution Date, such
transfer shall be deemed null and void and, in lieu thereof, (i) AT&T hereby
retains all rights under any such patent license agreement, (ii) AT&T will pay
over to Lucent any royalty payments it may receive from any third party pursuant
to any such patent license agreement and (iii) AT&T shall use all reasonable
efforts to arrange for the grant by the applicable third party of comparable
rights (other than any right to royalty payments) to each of Lucent and NCR,
provided that none of Lucent, AT&T or NCR shall be obligated to pay any
consideration therefor.
(e) In the event that license rights under any patent license
agreement intended to be granted or transferred to Lucent under this Section
2.15 are not effectively granted or transferred (including in the event such
grant or transfer is not effective after the Distribution Date and/or the
parties are unable to arrange for the grant by the applicable third party of
comparable license rights to Lucent), then, at the written request of Lucent:
(i) AT&T will exercise any have-made rights it may have under the applicable
third-party license agreement to have Lucent make, and will purchase from
Lucent, such products or other materials as Lucent may direct using the
applicable third-party patents as to which AT&T has such have-made rights (at
the price and on the terms to be paid and agreed to by the Person or Persons to
whom AT&T may be directed to sell such products or other materials pursuant to
the following clause (ii)); and (ii) following any such purchase, AT&T will sell
such products or other materials to such Person or Persons, on such terms, as
may be directed by Lucent (except that AT&T will not be required to make any
representations, warranties or commitments in respect thereof other than to
provide to such Person or Persons the representations, warranties and
commitments of Lucent in respect thereof, for which only Lucent, and not AT&T,
will be responsible). In connection with the foregoing, Lucent will cause the
Person or Persons to which such products or other materials are sold to
acknowledge in writing that only Lucent and the members of the Lucent Group, and
not AT&T or any member of the AT&T Group, will be responsible to such Person or
Persons in respect of such products or other materials. Nothing in this Section
(e) shall be construed to require AT&T or any member of the AT&T Group to
violate any applicable laws, rules or regulations of any Governmental Authority.
(f) In the event AT&T makes any purchases and sales as
directed by Lucent under the foregoing paragraph (e), then: (i) Lucent will
promptly reimburse AT&T for all costs and expenses (including allocated costs of
in-house counsel and other personnel) that AT&T or any member of the AT&T Group
may incur in connection with such actions, plus a fee of two percent (2%); and
(ii) Lucent will indemnify and hold harmless AT&T and each AT&T Indemnitee for
all Liabilities that may arise as a result of such actions (including any claims
by the purchaser of such products or materials, any loss incurred on the sale of
such products or materials by AT&T to the Person or Persons directed by Lucent,
or arising out of the failure of such Person or Persons to purchase such
products or materials on the terms directed by Lucent, and any claims alleging
any infringement of any patent, copyright, trademark or misappropriation of a
trade secret, any product liability claims, and any other claims, in connection
with such products or materials).
(g) Each of AT&T, Lucent and NCR agrees that it will fulfill
any obligations it may have to any third party pursuant to the patent license
agreements to which the provisions of this Section 2.15 apply.
2.16. CERTAIN TERMINATION RIGHTS. (a)
Notwithstanding anything
in this Agreement or any Ancillary Agreement to the contrary, the
rights granted
to Lucent and the members of the Lucent Group shall be subject to
the provisions
of this Section 2.16.
(b) Except as otherwise expressly provided in this Section
2.16, in the event that, at any time prior to the fifth anniversary of this
Agreement, Lucent or any member of the Lucent Group offers, furnishes or
provides, either directly or indirectly (whether through any reseller or joint
venture or otherwise), any Telecommunications Services of the type offered by
the AT&T Services Business as of the Closing Date, then:
(i) pursuant to Section 2.5 and Article IX
of the Brand
License Agreement, AT&T may, in its sole discretion,
terminate all or
any portion of the rights granted to Lucent and the
members of the
Lucent Group pursuant to the Brand License Agreement;
(ii) AT&T may, in its sole discretion,
terminate all or any
remaining portion of the purchase commitments made
by AT&T and the
members of the AT&T Group in the AT&T General Purchase
Agreement;
(iii) AT&T may, in its sole discretion,
exercise either the
Full Grant rights or the Partial Grant rights
described in
subparagraphs 8.4(b) and 8.4(c), respectively, of
the Supplemental
General Purchase Agreement, dated as of the date
hereof, between AT&T
and Lucent;
(iv) AT&T may, in its sole discretion,
terminate all or any
portion of the rights to patents and technology of AT&T
or any member
of the AT&T Group granted to Lucent and the members of
the Lucent Group
pursuant to the Patent License Agreement and the
Technology License
Agreement; and
(v) at AT&T's direction, which may be
given in its sole
discretion, Lucent and the members of the Lucent Group
will reconvey to
AT&T or any member of the AT&T Group all of their
right, title and
interest in any and all patents and technology in which
Lucent or any
member of the Lucent Group was granted an undivided
one-half interest
pursuant to the Patent Assignments or the Technology
Assignment and
Joint Ownership Agreement.
(c) Lucent and the members of the Lucent Group shall not be
deemed to offer, furnish or provide, either directly or indirectly, any
Telecommunications Services (and Section 2.16(b) will not apply) solely by
virtue of either of the following:
(i) a passive investment by Lucent or any of
the members of
the Lucent Group of, in the aggregate, (A) less
than 5% of the
ownership interest in any Person that offers,
furnishes or provides
Telecommunications Services in the United States or (B)
not more than
15% of the ownership interest in any Person that
offers, furnishes or
provides Telecommunications Services solely outside
of the United
States (it being understood that Telecommunications
Services operating
outside the United States will be considered solely
outside the United
States notwithstanding the ability
of such Telecommunications Services to receive
transmissions from or
send transmissions to the United States, so
long as such
Telecommunications Services may not be used to
send and receive
transmissions solely within the United States); or
(ii) an investment by Lucent or any of the
members of the
Lucent Group of, in the aggregate, not more than 40% of
the ownership
interest in any Person outside the United States formed
for the purpose
of building a network or similar system for the
provision of
Telecommunications Services solely outside of the United
States, which
network or system is built by Lucent or any members
of the Lucent
Group; so long as Lucent and the members of the Lucent
Group divest
such interest to, in the aggregate, not more than 15% of
the ownership
interest in such Person within one year of
commencement of the
provision of any Telecommunications Services over
such network or
system, or such longer period as may be necessary
to permit such
reduction in interest and to which AT&T shall consent,
which consent
will not be unreasonably withheld; or
(iii) the offer, furnishing or provision by
Lucent and the
members of the Lucent Group, either directly or
indirectly, of
Telecommunications Services from which the aggregate
revenues in any
fiscal year do not exceed one percent of the
aggregate revenues of
Lucent and the members of the Lucent Group for such
fiscal year,
provided that, in determining whether such one percent
threshold has
been met, any resale of Telecommunications Services
provided by AT&T or
any member of the AT&T Group to Lucent or any member
of the Lucent
Group pursuant to the VTNS Agreement or any tariff or
contract shall
not be considered as Telecommunications Services
offered, furnished or
provided by Lucent and the members of the Lucent Group.
ARTICLE III
THE IPO AND ACTIONS PENDING THE IPO
3.1. TRANSACTIONS PRIOR TO THE IPO. (a) Subject
to the
conditions specified in Section 3.3, AT&T and Lucent shall use
their reasonable
best efforts to consummate the IPO. Such actions shall include,
but not
necessarily be limited to, those specified in this Section 3.1.
(b) Lucent shall file the IPO Registration Statement, and such
amendments or supplements thereto, as may be necessary in order to cause the
same to become and remain effective as required by law or by the
Underwriters,
including, but not limited to, filing such amendments to the IPO Registration
Statement as may be required by the Underwriting Agreement, the Commission or
federal, state or foreign securities laws. AT&T and Lucent shall also cooperate
in preparing, filing with the Commission and causing to become effective a
registration statement registering the Lucent Common Stock under the Exchange
Act, and any registration statements or amendments thereof which are required to
reflect the establishment of, or amendments to, any employee benefit and other
plans necessary or appropriate in connection with the IPO, the Separation, the
Distribution or the other transactions contemplated by this Agreement and the
Ancillary Agreements.
(c) Lucent shall enter into the Underwriting Agreement, in
form and substance reasonably satisfactory to Lucent and shall comply with its
obligations thereunder.
(d) AT&T and Lucent shall consult with each other and the
Underwriters regarding the timing, pricing and other material matters with
respect to the IPO.
(e) Lucent shall use its reasonable best efforts to take all
such action as may be necessary or appropriate under state securities and blue
sky laws of the United States (and any comparable laws under any foreign
jurisdictions) in connection with the IPO.
(f) Lucent shall prepare, file and use reasonable best efforts
to seek to make effective, an application for listing of the Lucent Common Stock
issued in the IPO on the NYSE, subject to official notice of
issuance.
(g) Lucent shall participate in the preparation of materials
and presentations as the Underwriters shall deem necessary or desirable.
(h) Lucent shall pay all third party costs, fees and expenses
relating to the IPO, all of the reimbursable expenses of the Underwriters
pursuant to the Underwriting Agreement, all of the costs of producing, printing,
mailing and otherwise distributing the Prospectus, as well as the Underwriters'
discount as provided in the Underwriting Agreement.
3.2. PROCEEDS OF THE IPO. The IPO will be a
primary offering
of Lucent Common Stock and the net proceeds of the IPO will be
retained by
Lucent.
3.3. CONDITIONS PRECEDENT TO CONSUMMATION OF THE IPO. As soon
as practicable after the date of this Agreement, the parties hereto shall use
their reasonable best efforts to satisfy the following conditions to the
consummation of the IPO. The obligations of the parties to consummate the IPO
shall be conditioned on the satisfaction, or waiver by AT&T, of the following
conditions:
(a) The IPO Registration Statement shall have
been filed and
declared effective by the Commission, and there shall be
no stop-order
in effect with respect thereto.
(b) The Financing Facility shall have been
executed and
delivered, pursuant to which AT&T shall have
borrowed an amount of
funds determined by AT&T, and AT&T shall be
satisfied in its sole
discretion that as of the Closing Date it will
have no further
liability or obligation whatsoever under either the
Working Capital
Facility or the Financing Facility.
(c) The actions and filings with regard to
state securities
and blue sky laws of the United States (and any
comparable laws under
any foreign jurisdictions) described in Section 3.1
shall have been
taken and, where applicable, have become effective or
been accepted.
(d) The Lucent Common Stock to be issued in the
IPO shall have
been accepted for listing on the NYSE, on official notice
of issuance.
(e) Lucent shall have entered into the
Underwriting Agreement
and all conditions to the obligations of Lucent and
the Underwriters
shall have been satisfied or waived.
(f) AT&T shall be satisfied in its sole
discretion that it
will own at least 80.1% of the outstanding Lucent
Common Stock
following the IPO on a fully diluted basis, after giving
effect to the
issuance of any shares of restricted stock or employee
stock options to
any employees of Lucent, and all other conditions
to permit the
Distribution to qualify as a tax-free distribution to
AT&T, Lucent and
AT&T's shareholders shall, to the extent applicable as
of the time of
the IPO, be satisfied and there shall be no event or
condition that is
likely to cause any of such conditions not to be
satisfied as of the
time of the Distribution or thereafter.
(g) No order, injunction or decree issued
by any court or
agency of competent jurisdiction or other legal
restraint or
prohibition preventing the consummation of the Separation
or the IPO or
any of the other transactions contemplated by this
Agreement or any
Ancillary Agreement shall be in effect.
(h) Such other actions as the parties hereto
may, based upon
the advice of counsel, reasonably request to be
taken prior to the
Separation and the IPO in order to assure the successful
completion of
the Separation and the IPO and the other transactions
contemplated by
this Agreement shall have been taken.
(i) This Agreement shall not have been
terminated.
(j) A pricing committee of AT&T officers
designated by the
Board of Directors of AT&T shall have determined that
the terms of the
IPO are acceptable to AT&T.
ARTICLE IV
THE DISTRIBUTION
4.1. THE DISTRIBUTION. (a) Subject to Section 4.3 hereof, on
or prior to the Distribution Date, AT&T will deliver to the Agent for the
benefit of holders of record of AT&T Common Stock on the Record Date, a single
stock certificate, endorsed by AT&T in blank, representing all of the
outstanding shares of Lucent Common Stock then owned by AT&T or any member of
the AT&T Group, and shall cause the transfer agent for the shares of AT&T Common
Stock to instruct the Agent to distribute on the Distribution Date the
appropriate number of such shares of Lucent Common Stock to each such holder or
designated transferee or transferees of such holder.
(b) Subject to Section 4.4, each holder of AT&T Common Stock
on the Record Date (or such holder's designated transferee or transferees) will
be entitled to receive in the Distribution a number of shares of Lucent Common
Stock equal to the number of shares of AT&T Common Stock held by such holder on
the Record Date multiplied by a fraction the numerator of which is the number of
shares of Lucent Common Stock beneficially owned by AT&T or any other member of
the AT&T Group on the Record Date and the denominator of which is the number of
shares of AT&T Common Stock outstanding on the Record Date.
(c) Lucent and AT&T, as the case may be, will provide to the
Agent all share certificates and any information required in order to complete
the Distribution on the basis specified above.
4.2. ACTIONS PRIOR TO THE DISTRIBUTION. (a) AT&T and Lucent
shall prepare and mail, prior to the Distribution Date, to the holders of AT&T
Common Stock, such information concerning Lucent, its business, operations and
management, the Distribution and such other matters as AT&T shall reasonably
determine and as may be required by law. AT&T and Lucent will prepare, and
Lucent will, to the extent required under applicable law, file with the
Commission any such documentation and any requisite no action letters which AT&T
determines are necessary or desirable to effectuate the Distribution and AT&T
and Lucent shall each use its reasonable best efforts to obtain all necessary
approvals from the Commission with respect thereto as soon as practicable.
(b) AT&T and Lucent shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.
(c) AT&T and Lucent shall take all reasonable steps necessary
and appropriate to cause the conditions set forth in Section 4.3 (subject to
Sections 4.3(d)) to be satisfied and to effect the Distribution on the
Distribution Date.
(d) Lucent shall prepare and file, and shall use its
reasonable best efforts to have approved, an application for the listing of the
Lucent Common Stock to be distributed in the Distribution on the NYSE, subject
to official notice of distribution.
4.3. CONDITIONS TO DISTRIBUTION. The AT&T Board currently
intends to effect the Distribution by December 31, 1996. Subject to any
restrictions contained in the Underwriting Agreement, the AT&T Board shall have
the sole discretion to determine the date of consummation of the Distribution at
any time after the Closing Date and on or prior to December 31, 1996. AT&T shall
be obligated to consummate the Distribution no later than December 31, 1996,
subject to the satisfaction, or waiver by the AT&T Board in its sole discretion,
of the conditions set forth below. In the event that any such condition shall
not have been satisfied or waived on or before December 31, 1996, AT&T shall
consummate the Distribution as promptly as practicable following the
satisfaction or waiver of all such conditions.
(a) a private letter ruling from the Internal
Revenue Service
shall have been obtained, and shall continue in effect,
to the effect
that, among other things, the Distribution will qualify
as a tax-free
distribution for federal income tax purposes under
Section 355 of the
Code and the transfer to Lucent of the Lucent Assets and
the assumption
by Lucent of the Lucent Liabilities in connection with
the Separation
will not result in the recognition of any gain or loss to
AT&T, Lucent
or AT&T's or Lucent's shareholders for federal income tax
purposes, and
such ruling shall be in form and substance satisfactory
to AT&T in its
sole discretion;
(b) any material Governmental Approvals and
Consents necessary
to consummate the Distribution shall have been obtained
and be in full
force and effect;
(c) no order, injunction or decree issued
by any court or
agency of competent jurisdiction or other legal
restraint or
prohibition preventing the consummation of the
Distribution shall be in
effect and no other event outside the control of
AT&T shall have
occurred or failed to occur that prevents the
consummation of the
Distribution; and
(d) no other events or developments shall
have occurred
subsequent to the Closing Date that, in the judgment
of the Board of
Directors of AT&T, would result in the Distribution
having a material
adverse effect on AT&T or on the shareholders of AT&T.
The foregoing conditions are for the sole benefit of AT&T and shall not give
rise to or create any duty on the part of AT&T or the AT&T Board of Directors to
waive or not waive any such condition.
4.4. FRACTIONAL SHARES. As soon as practicable after the
Distribution Date, AT&T shall direct the Agent to determine the number of whole
shares and fractional shares of Lucent Common Stock allocable to each holder of
record or beneficial owner of AT&T Common Stock as of the Record Date, to
aggregate all such fractional shares and sell the whole shares obtained thereby
at the direction of AT&T either to AT&T, in open market transactions or
otherwise, in each case at then prevailing trading prices, and to cause to be
distributed to each such holder or for the benefit of each such beneficial
owner, 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. AT&T and the Agent shall use their reasonable best efforts to
aggregate the shares of AT&T Common Stock that may be held by any beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.
4.5. THE LUCENT BOARD OF DIRECTORS. AT&T and Lucent shall each
take all actions which may be required to elect or otherwise appoint as
directors of Lucent, on or prior to the Distribution Date, persons to be
designated by a nominating committee of Lucent's Board of Directors (which
nominating committee shall be comprised of individuals who are at such time
neither officers nor directors of AT&T) as additional or substitute members of
the Board of Directors of Lucent on the Distribution Date.
ARTICLE V
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, Lucent does hereby, for itself
and each other member of the Lucent Group, their respective Affiliates (other
than any member of the AT&T Group), successors and assigns, and all Persons who
at any time prior to the Closing Date have been shareholders, directors,
officers, agents or employees of any member of the Lucent Group (in each case,
in their respective capacities as such), remise, release and forever discharge
each of AT&T and NCR, the respective members of the AT&T Services Group and the
NCR Group, their respective Affiliates (other than any member of the Lucent
Group), successors and assigns, and all Persons who at any time prior to the
Closing Date have been shareholders, directors, officers, agents or employees of
any member of the AT&T Services Group or the NCR Group (in each case, in their
respective capacities as such), and their respective heirs, executors,
administrators, successors and assigns, from any and all Liabilities whatsoever,
whether at law or in equity (including any right of contribution), whether
arising under any contract or agreement, by operation of law or otherwise,
existing or arising from any acts or events occurring or failing to occur or
alleged to
have occurred or to have failed to occur or any conditions existing or alleged
to have existed on or before the Closing Date, including in connection with the
transactions and all other activities to implement any of the Separation, the
IPO and the Distribution.
(b) Except as provided in Section 5.1(c), effective as of the
Closing Date, each of AT&T and NCR does hereby, for itself and each other member
of the AT&T Services Group and the NCR Group, their respective Affiliates (other
than any member of the Lucent Group), successors and assigns, and all Persons
who at any time prior to the Closing Date have been shareholders, directors,
officers, agents or employees of any member of the AT&T Services Group or the
NCR Group (in each case, in their respective capacities as such), remise,
release and forever discharge Lucent, the respective members of the Lucent
Group, their respective Affiliates (other than any member of the AT&T Group),
successors and assigns, and all Persons who at any time prior to the Closing
Date have been shareholders, directors, officers, agents or employees of any
member of the Lucent Group (in each case, in their respective capacities as
such), and their respective heirs, executors, administrators, successors and
assigns, from any and all Liabilities whatsoever, whether at law or in equity
(including any right of contribution), whether arising under any contract or
agreement, by operation of law or otherwise, existing or arising from any acts
or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or
before the Closing Date, including in connection with the transactions and all
other activities to implement any of the Separation, the IPO and the
Distribution.
(c) Nothing contained in Section 5.1(a) or (b) shall impair
any right of any Person to enforce this Agreement, any Ancillary Agreement or
any agreements, arrangements, commitments or understandings that are specified
in Section 2.4(b) or the applicable Schedules thereto not to terminate as of the
Closing Date, in each case in accordance with its terms. Nothing contained in
Section 5.1(a) or (b) shall release any Person from:
(i) any Liability provided in or resulting from
any agreement
among any members of the AT&T Services Group, the
Lucent Group or the
NCR Group that is specified in Section 2.4(b) or
the applicable
Schedules thereto as not to terminate as of the Closing
Date, or any
other Liability specified in such Section 2.4(b) as not
to terminate as
of the Closing Date;
(ii) any Liability, contingent or
otherwise, assumed,
transferred, assigned or allocated to the Group of which
such Person is
a member in accordance with, or any other Liability of
any member of
any Group under, this Agreement or any Ancillary
Agreement;
(iii) any Liability for the sale, lease,
construction or
receipt of goods, property or services purchased,
obtained or used in
the ordinary course of business by a member of one Group
from a member
of any other Group prior to the Closing Date;
(iv) any Liability for unpaid amounts for
products or services
or refunds owing on products or services due on a
value-received basis
for work done by a member of one Group at the request or
on behalf of a
member of another Group;
(v) any Liability that the parties may have
with respect to
indemnification or contribution pursuant to this
Agreement for claims
brought against the parties by third Persons, which
Liability shall be
governed by the provisions of this Article V
and Article VI and, if applicable, the appropriate
provisions of the
Ancillary Agreements; or
(vi) any Liability the release of which would
result in the
release of any Person other than a Person released
pursuant to this
Section 5.1; provided that the parties agree not to
bring suit or
permit any of their Subsidiaries to bring suit against
any Person with
respect to any Liability to the extent that such
Person would be
released with respect to such Liability by this Section
5.1 but for the
provisions of this clause (vi).
(d) Lucent shall not make, and shall not permit any member of
the Lucent Group to make, any claim or demand, or commence any Action asserting
any claim or demand, including any claim of contribution or any indemnification,
against AT&T, NCR or any member of the AT&T Services Group or NCR Group, or any
other Person released pursuant to Section 5.1(a), with respect to any
Liabilities released pursuant to Section 5.1(a). AT&T shall not, and shall not
permit any member of the AT&T Services Group, to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of
contribution or any indemnification, against Lucent or any member of the Lucent
Group, or any other Person released pursuant to Section 5.1(b), with respect to
any Liabilities released pursuant to Section 5.1(b). NCR shall not, and shall
not permit any member of the NCR Group, to make any claim or demand, or commence
any Action asserting any claim or demand, including any claim of contribution or
any indemnification, against Lucent or any member of the Lucent Group, or any
other Person released pursuant to Section 5.1(b), with respect to any
Liabilities released pursuant to Section 5.1(b).
(e) It is the intent of each of AT&T, Lucent and NCR by virtue
of the provisions of this Section 5.1 to provide for a full and complete release
and discharge of all Liabilities existing or arising from all acts and events
occurring or failing to occur or alleged to have occurred or to have failed to
occur and all conditions existing or alleged to have existed on or before the
Closing Date, between or among Lucent or any member of the Lucent Group, on the
one hand, and AT&T, NCR or any member of the AT&T Services Group or the NCR
Group, on the other hand (including any contractual agreements or arrangements
existing or alleged to exist between or among any such members on or before the
Closing Date), except as expressly set forth in Section 5.1(c). At any time, at
the request of any other party, each party shall cause each member of its
respective Group to execute and deliver releases reflecting the provisions
hereof.
5.2. INDEMNIFICATION BY LUCENT. Except as provided in Section
5.4, Lucent shall indemnify, defend and hold harmless AT&T, each member of the
AT&T Services Group and each of their respective directors, officers and
employees, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the "AT&T Indemnitees"), and NCR, each member of
the NCR Group and each of their respective directors, officers and employees,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "NCR Indemnitees"), from and against any and all Liabilities
of the AT&T Indemnitees and the NCR Indemnitees, respectively, relating to,
arising out of or resulting from any of the following items (without
duplication):
(a) the failure of Lucent or any other member
of the Lucent
Group or any other Person to pay, perform or
otherwise promptly
discharge any Lucent Liabilities, any Nassau Metals
Liabilities or
Lucent Contract in accordance with their respective
terms, whether
prior to or after the Closing Date or the date hereof;
(b) the Lucent Business, any Lucent Liability,
any Lucent
Contract or any Nassau Metals Liabilities;
(c) any breach by Lucent or any member of the
Lucent Group of
this Agreement or any of the Ancillary Agreements; and
(d) any untrue statement or alleged untrue
statement of a
material fact or omission or alleged omission to state a
material fact
required to be stated therein or necessary to make
the statements
therein not misleading, with respect to all
information contained in
any IPO Registration Statement or Prospectus.
5.3. INDEMNIFICATION BY AT&T AND BY NCR. (a) AT&T shall
indemnify, defend and hold harmless Lucent, each member of the Lucent Group and
each of their respective directors, officers and employees, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively,
the "Lucent Indemnitees"), from and against any and all Liabilities of the
Lucent Indemnitees relating to, arising out of or resulting from any of the
following items (without duplication):
(i) the failure of AT&T or any other member of
the AT&T Group
or any other Person to pay, perform or otherwise promptly
discharge any
Liabilities of the AT&T Group other than the Lucent
Liabilities, the
Nassau Metals Liabilities and the NCR Covered
Liabilities, whether
prior to or after the Closing Date or the date hereof;
(ii) the AT&T Services Business or any
Liability of the AT&T
Group other than the Lucent Liabilities, the Nassau
Metals Liabilities
and the NCR Covered Liabilities; and
(iii) any breach by AT&T or any member of the
AT&T Services
Group of this Agreement or any of the Ancillary Agreements.
(b) NCR shall indemnify, defend and hold harmless each Lucent
Indemnitee from and against any and all Liabilities of the Lucent Indemnitees
relating to, arising out of or resulting from any of the following items
(without duplication): (i) the failure of NCR or any member of the NCR Group or
any other Person to pay, perform or otherwise promptly discharge any Exclusive
NCR Contingent Liability or any Shared NCR Percentage of any Shared Contingent
Liability, whether prior to or after the Closing Date or the date hereof; and
(ii) any breach by NCR or any member of the NCR Group of this Agreement or any
of the Ancillary Agreements, or any other agreement that is not contemplated to
be terminated as of the Closing Date pursuant to Section 2.4(b) (collectively,
the "NCR Covered Liabilities").
(c) NCR shall indemnify, defend and hold harmless each AT&T
Indemnitee from and against any and all Liabilities of the AT&T Indemnitees
relating to, arising out of or resulting from any NCR Covered
Liability.
5.4. INDEMNIFICATION OBLIGATIONS NET OF INSURANCE PROCEEDS AND
OTHER AMOUNTS. (a) The parties intend that any Liability subject to
indemnification or reimbursement pursuant to this Article V or Article VI will
be net of Insurance Proceeds and any amounts recovered pursuant to an RBOC
Agreement that actually reduce the amount of the Liability. Accordingly, the
amount which any party (an "Indemnifying Party") is required to pay to any
Person entitled to indemnification hereunder (an "Indemnitee") will be
reduced by any Insurance Proceeds theretofore actually recovered by or on behalf
of the Indemnitee in reduction of the related Liability and by any amount
actually theretofore recovered pursuant to an RBOC Agreement. If an Indemnitee
receives a payment (an "Indemnity Payment") required by this Agreement from an
Indemnifying Party in respect of any Liability and subsequently receives
Insurance Proceeds, or recovers any amount pursuant to an RBOC Agreement, then
the Indemnitee will pay to the Indemnifying Party an amount equal to the excess
of the Indemnity Payment received over the amount of the Indemnity Payment that
would have been due if the Insurance Proceeds and/or RBOC Agreement recovery had
been received, realized or recovered before the Indemnity Payment was made.
(b) In the case of any Shared Contingent Liability, any
Insurance Proceeds, or recoveries pursuant to any RBOC Agreement actually
received, realized or recovered by any party in respect of the Shared Contingent
Liability will be shared among the parties in such manner as may be necessary so
that the obligations of the parties for such Shared Contingent Liability, net of
such Insurance Proceeds or recovery pursuant to an RBOC Agreement, will remain
in proportion to their respective Shared Percentages, regardless of which party
or parties may actually receive, realize or recover such Insurance Proceeds or
amount pursuant to an RBOC Agreement.
(c) An insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provisions hereof, have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a "windfall" (i.e., a
benefit they would not be entitled to receive in the absence of the
indemnification provisions) by virtue of the indemnification provisions hereof.
Nothing contained in this Agreement or any Ancillary Agreement shall obligate
any member of any Group to seek to collect or recover any Insurance Proceeds.
5.5. PROCEDURES FOR INDEMNIFICATION OF THIRD PARTY CLAIMS. (a)
If an Indemnitee shall receive notice or otherwise learn of the assertion by a
Person (including any Governmental Authority) who is not a member of the AT&T
Services Group, the Lucent Group or the NCR Group of any claim or of the
commencement by any such Person of any Action (collectively, a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification to such Indemnitee pursuant to Section 5.2 or 5.3, or any other
Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give
such Indemnifying Party and, if AT&T is not the Indemnifying Party, AT&T written
notice thereof within 20 days after becoming aware of such Third Party Claim.
Any such notice shall describe the Third Party Claim in reasonable detail. If
any Person shall receive notice or otherwise learn of the assertion of a Third
Party Claim which may reasonably be determined to be a Shared Contingent
Liability, such Person (if other than AT&T) shall give AT&T and any other party
to this Agreement written notice thereof within 20 days after becoming aware of
such Third Party Claim. Any such notice shall describe the Third Party Claim in
reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee
or other Person to give notice as provided in this Section 5.5(a) shall not
relieve the related Indemnifying Party of its obligations under this Article V,
except to the extent that such Indemnifying Party is actually prejudiced by such
failure to give notice.
(b) If the Indemnitee, the party receiving any notice pursuant
to Section 5.5(a) or any other party to this Agreement believes that the Third
Party Claim is or may be a Shared Contingent Liability, such Indemnitee or other
party may make a Determination
Request at any time following any notice given by the Indemnitee to an
Indemnifying Party or given by any other Person to AT&T pursuant to Section
5.5(a). AT&T may make such a Determination Request at any time. Unless all
parties have acknowledged that the applicable Third Party Claim (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, AT&T shall be entitled (but not obligated) to assume the
defense of such Third Party Claim as if it were the Indemnifying Party
hereunder. In any such event, AT&T shall be entitled to reimbursement of all the
costs and expenses (including allocated costs of in-house counsel and other
personnel) of such defense once a final determination or acknowledgment is made
as to the status of the Third Party Claim from the applicable party or parties
that would have been required to pay such amounts if the status of the Third
Party Claim had been determined immediately; provided that, if such Third Party
Claim is determined to be a Shared Contingent Liability, such costs and expenses
shall be shared as provided in Section 5.5(c).
(c) AT&T shall assume the defense of, and may seek to settle
or compromise, any Third Party Claim that is a Shared Contingent Liability, and
the costs and expenses (including allocated costs of in-house counsel and other
personnel) thereof shall be included in the calculation of the amount of the
applicable Shared Contingent Liability in determining the reimbursement
obligations of the other parties with respect thereto pursuant to Section 6.4.
Any Indemnitee in respect of a Shared Contingent Liability shall have the right
to employ separate counsel and to participate in (but not control) the defense,
compromise, or settlement thereof, but all fees and expenses of such counsel
shall be the expense of such Indemnitee.
(d) Other than in the case of a Shared Contingent Liability,
an Indemnifying Party may elect to defend (and, unless the Indemnifying Party
has specified any reservations or exceptions, to seek to settle or compromise),
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, any Third Party Claim. Within 30 days after the receipt of notice from
an Indemnitee in accordance with Section 5.5(a) (or sooner, if the nature of
such Third Party Claim so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that (i) the
Third Party Claim is not a Shared Contingent Liability and (ii) the Indemnifying
Party has elected to assume the defense of the Third Party Claim but has
specified, and continues to assert, any reservations or exceptions in such
notice, then, in any such case, the reasonable fees and expenses of one separate
counsel for all Indemnitees shall be borne by the Indemnifying Party.
(e) Other than in the case of a Shared Contingent Liability,
if an Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 5.5(d), such Indemnitee may defend such Third Party Claim at the cost
and expense (including allocated costs of in-house counsel and other personnel)
of the Indemnifying Party.
(f) Unless the Indemnifying Party has failed to assume the
defense of the Third Party Claim in accordance with the terms of this Agreement,
no Indemnitee may
settle or compromise any Third Party Claim that is not a Shared Contingent
Liability without the consent of the Indemnifying Party. No Indemnitee may
settle or compromise any Third Party Claim that is a Shared Contingent Liability
without the consent of AT&T.
(g) In the case of a Third Party Claim that is not a Shared
Contingent Liability, no Indemnifying Party shall consent to entry of any
judgment or enter into any settlement of the Third Party Claim without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly, against any Indemnitee. In the case of a Third Party
Claim that is a Shared Contingent Liability, AT&T shall not consent to entry of
any judgment or enter into any settlement of the Third Party Claim without the
consent of the Indemnitee if the effect thereof is to permit any injunction,
declaratory judgment, other order or other nonmonetary relief to be entered,
directly or indirectly, against any Indemnitee.
(h) The provisions of Section 5.5 and Section 5.6 shall not
apply to Taxes (which are covered by the Tax Sharing Agreement).
5.6. ADDITIONAL MATTERS. (a) Any claim on account of a
Liability which does not result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related Indemnifying Party. Such
Indemnifying Party shall have a period of 30 days after the receipt of such
notice within which to respond thereto. If such Indemnifying Party does not
respond within such 30-day period, such Indemnifying Party shall be deemed to
have refused to accept responsibility to make payment. If such Indemnifying
Party does not respond within such 30-day period or rejects such claim in whole
or in part, such Indemnitee shall be free to pursue such remedies as may be
available to such party as contemplated by this Agreement and the Ancillary
Agreements.
(b) In the event of payment by or on behalf of any
Indemnifying Party to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense (including allocated
costs of in-house counsel and other personnel) of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim; provided, however, that AT&T
shall be entitled to control the prosecution of any such right, defense or claim
in respect of any Shared Contingent Liability.
(c) In the event of an Action in which the Indemnifying Party
is not a named defendant, if either the Indemnified Party or Indemnifying Party
shall so request, the parties shall endeavor to substitute the Indemnifying
Party for the named defendant or, in the case of a Shared Contingent Liability,
add the Indemnifying Party as a named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this Section and, subject to Section 6.4 with respect to Shared
Contingent Liabilities, the Indemnifying Party shall fully indemnify the named
defendant against all costs of defending the Action (including court costs,
sanctions imposed by a court, attorneys' fees, experts' fees and all other
external expenses, and the allocated costs of in-house counsel and other
personnel), the costs of any judgment or settlement, and the cost of any
interest or penalties relating to any judgment or settlement.
5.7. REMEDIES CUMULATIVE. The remedies provided in this
Article V shall be cumulative and, subject to the provisions of Article IX,
shall not preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying Party.
5.8. SURVIVAL OF INDEMNITIES. The rights and obligations of
each of AT&T, Lucent and NCR and their respective Indemnitees under this Article
V shall survive the sale or other transfer by any party of any Assets or
businesses or the assignment by it of any Liabilities.
5.9. RBOC AGREEMENT PROCEDURES. (a) With respect to the RBOC
Agreements, and except as otherwise provided in this Section 5.9 or as otherwise
agreed by the parties hereto, AT&T shall be the party to provide and receive
notices and all other information to and from the RBOCs, and otherwise to deal
with the RBOCs, in respect of all matters arising under the RBOC Agreements or
the RBOC Plan. Without limiting the foregoing, AT&T shall continue as the
representative of all Groups to the contingent liability oversight committee,
except as and to the extent AT&T and the other parties to the RBOC Agreements
may otherwise agree.
(b) After the date hereof, AT&T and Lucent will cooperate with
each other to take reasonable steps to transfer to Lucent the responsibilities
for providing and receiving notices and other information to and from, and for
otherwise dealing with, the RBOCs in respect of Lucent Liabilities and any
Nassau Metals Liabilities that may be subject to sharing with the RBOCs under
any RBOC Agreements (other than Shared Contingent Liabilities, which will be
controlled by AT&T in accordance with the provisions of Section 5.5(c)),
including the right to receive directly from the RBOCs any sharing payments that
may be due from the RBOCs under any RBOC Agreements in respect of Lucent
Liabilities or Nassau Metals Liabilities. Unless and until such responsibilities
are transferred to Lucent in accordance with the foregoing, the provisions of
the following paragraphs (c), (d) and (e) will apply.
(c) In the event that Lucent determines that any Lucent
Liability or any Nassau Metals Liability (other than a Shared Contingent
Liability) is or may be subject to sharing with the RBOCs pursuant to any RBOC
Agreement, and Lucent so requests, AT&T will promptly submit any notice, claim
or other information or material with respect thereto as may be required by such
RBOC Agreement and provided by Lucent to AT&T in accordance with the notice
provisions of Section 12.5 hereof. Upon receipt of any amounts from any RBOCs
with respect to their sharing obligation under an RBOC Agreement relating to an
Lucent Liability or any Nassau Metals Liability (other than a Shared Contingent
Liability), AT&T will promptly remit such amounts to Lucent. AT&T will also
forward to Lucent, in accordance with the notice provisions of Section 12.5
hereof, any notices, information or other materials that it may receive from the
RBOCs pursuant to such RBOC Agreement in respect of any Lucent Liability or any
Nassau Metals Liability. Notwithstanding the foregoing, in no event shall AT&T
have any liability for its failure or delay in submitting or forwarding any such
notice, claim, information or other material except to the extent Lucent is
prejudiced thereby. AT&T shall have no obligation to send, deliver or make any
such notice or claim, or take any other action under any RBOC Agreement in
respect of any Lucent Liability or any Nassau Metals Liability, unless Lucent
shall request that AT&T do so, and provide AT&T with any necessary notice, claim
or other information or material, as set forth above.
(d) In the event any member of the Lucent Group desires to
commence an arbitration or other proceeding to recover any amounts that may be
due under any RBOC Agreement in respect of an Lucent Liability or any Nassau
Metals Liability (other than a Shared Contingent Liability), AT&T will take such
action as such member of the Lucent Group may reasonably request to commence
such arbitration or other proceeding in accordance with such RBOC Agreement,
including consenting to be the named party in such arbitration or other
proceeding, but such arbitration or other proceeding will be managed and
controlled by such member of the Lucent Group and such member of the Lucent
Group will be responsible for the prosecution of such arbitration or other
proceeding and all decisions made with respect thereto.
(e) Lucent will, upon receipt of any invoice therefor,
promptly reimburse AT&T for all costs or expenses (including allocated costs of
in-house counsel and other personnel) incurred in taking any actions pursuant to
the foregoing paragraphs (c) and (d), and will defend, indemnify and hold
harmless AT&T and each other AT&T Indemnitee with respect to all matters taken
at the direction of or on behalf of any member of the Lucent Group in connection
with any RBOC Agreement.
(f) Each party hereto further agrees that it will from time to
time promptly provide AT&T with all such information, notices and other
materials (and shall make available the former, current and future directors,
officers, employees, other personnel and agents of the members of its respective
Group as witnesses and any books, records or other documents within its control
or which it otherwise has the ability to make available) as AT&T may determine
to be necessary or advisable to permit AT&T to pursue any rights or potential
rights under each such RBOC Agreement, to perform the obligations of any member
of the AT&T Group under each such RBOC Agreement in accordance with the
respective terms thereof and to defend itself, its Affiliates and any other
Person for which AT&T may have any indirect liability (through an
indemnification obligation or otherwise) from any claims or potential claims
thereunder.
5.10. ALLEGED INFRINGEMENT OR MISAPPROPRIATION. (a) The
provisions of this Section 5.10 shall apply notwithstanding any other provisions
of this Agreement or any Ancillary Agreement. In the event of any claim, action,
proceeding or suit by a third party against any member of the AT&T Group
alleging an infringement of any patent, copyright, trademark or misappropriation
of a trade secret with respect to any product, software or other material
provided by or ordered from the Lucent Business prior to the Closing Date (other
than any such product, software or other material provided under and ordered
pursuant to the AT&T General Purchase Agreement, or any supplemental or related
agreement thereto, with respect to which an infringement or misappropriation
indemnity is provided under such agreement) for use by the AT&T Services
Business or the NCR Business (whether used alone or in combination with any
product, software or other material provided by the Lucent Business or by a
third party), Lucent, at its expense, shall defend and hold harmless each such
member of the AT&T Group with respect to such claim, action, proceeding or suit,
subject to the conditions and exceptions stated in paragraphs (b), (c) and (d)
below. Lucent shall reimburse each such member of the AT&T Group for all costs,
expenses or attorneys' fees (including allocated costs of in-house counsel and
other personnel) incurred at Lucent's written request or authorization, and
shall indemnify each such member of the AT&T Group against any liability
assessed against it by final judgment, on account of such infringement or
misappropriation arising out of such use.
(b) If the use by any member of the AT&T Group of any such
product, software or other material referred to in Section 5.10(a) is enjoined
or in the opinion of
such member of the AT&T Group is likely to be enjoined, Lucent shall, at its
expense and at the sole option of such member of the AT&T Group, (i) replace the
enjoined product, software or materials with a substitute free of any
infringement; (ii) modify the enjoined product, software or materials so that
they will be free of the infringement; or (iii) procure for such member of the
AT&T Group a license or other right to use the enjoined product, software or
materials. In the alternative, such member of the AT&T Group, may at its option,
procure a license with a reasonable royalty rate payable to the third party
alleging infringement, and Lucent shall reimburse, indemnify and hold harmless
such member of the AT&T Group for all liability for payment of such reasonable
royalty.
(c) AT&T or another member of the AT&T Group shall give Lucent
prompt written notice of all such claims, actions, proceedings or suits alleging
infringement or misappropriation and Lucent shall have full and complete
authority to assume the sole defense thereof, including appeals, and to settle
the same; provided, however, that this does not limit any rights of any member
of the AT&T Group concerning injunctions addressed in Section 5.10(b). The
members of the AT&T Group shall, upon Lucent's request and at Lucent's expense,
furnish all information and assistance available to such members of the AT&T
Group and cooperate in every reasonable way to facilitate the defense and/or
settlement of any such claim, action, proceeding or suit.
(d) The foregoing indemnity will not apply to any alleged
infringement or misappropriation if and to the extent such alleged infringement
or misappropriation arises from (i) the use by any member of the AT&T Group of
any product, software or other material provided by the Lucent Business, in
combination with any product, software or other material provided after the
Closing Date by a third party (other than any third-party product, software,
other material or components furnished to such member of the AT&T Group by any
member of the Lucent Group), or (ii) any changes made by any member of the AT&T
Group after the Closing Date in any combination of any product, software or
other material provided by the Lucent Business, with any product, software or
other material provided by a third party (other than any third-party product,
software, other material or components furnished by the Lucent Group), except
for the addition of any product, software or other material provided by any
member of the Lucent Group after the Closing Date to any such combination in
place as of the Closing Date.
ARTICLE VI
CONTINGENT GAINS AND CONTINGENT LIABILITIES
6.1. DEFINITIONS RELATING TO CONTINGENT GAINS
AND CONTINGENT
LIABILITIES. For the purpose of this Agreement the following terms
shall have
the following meanings:
(a) CONTINGENT CLAIM COMMITTEE means a committee composed of
one representative designated from time to time by each of AT&T, NCR and Lucent
that shall be established in accordance with Section 6.6.
(b) CONTINGENT GAIN means any claim or other right of AT&T,
Lucent, NCR or any their respective Affiliates, whenever arising, against any
Person other than AT&T, Lucent, NCR or any of their respective Affiliates, if
and to the extent that (i) such claim or right has accrued as of the Closing
Date (based on then existing law) and (ii) the
existence or scope of the obligation of such other Person as of the Closing Date
was not acknowledged, fixed or determined in any material respect, due to a
dispute or other uncertainty as of the Closing Date or as a result of the
failure of such claim or other right to have been discovered or asserted as of
the Closing Date. A claim or right meeting the foregoing definition shall be
considered a Contingent Gain regardless of whether there was any Action pending,
threatened or contemplated as of the Closing Date with respect thereto. For
purposes of the foregoing, a claim or right shall be deemed to have accrued as
of the Closing Date if all the elements of the claim necessary for its assertion
shall have occurred on or prior to the Closing Date, such that the claim or
right, were it asserted in an Action on or prior to the Closing Date, would not
be dismissed by a court on ripeness or similar grounds. Notwithstanding the
foregoing, none of (i) any payment to any member of any Group pursuant to or in
respect of any of the RBOC Agreements, (ii) any Insurance Proceeds, (iii) any
Excluded Assets, (iv) any reversal of any litigation or other reserve, or (v)
any matters relating to Taxes (which are governed by the Tax Sharing Agreement)
shall deemed to be a Contingent Gain.
(c) CONTINGENT LIABILITY means any Liability, other than
Liabilities for Taxes (which are governed by the Tax Sharing Agreement), of
AT&T, Lucent, NCR or any of their respective Affiliates, whenever arising, to
any Person other than AT&T, Lucent, NCR or any of their respective Affiliates,
if and to the extent that (i) such Liability has accrued as of the Closing Date
(based on then existing law) and (ii) the existence or scope of the obligation
of AT&T, Lucent, NCR or any of their respective Affiliates as of the Closing
Date with respect to such Liability was not acknowledged, fixed or determined in
any material respect, due to a dispute or other uncertainty as of the Closing
Date or as a result of the failure of such Liability to have been discovered or
asserted as of the Closing Date (it being understood that the existence of a
litigation or other reserve with respect to any Liability shall not be
sufficient for such Liability to be considered acknowledged, fixed or
determined). In the case of any Liability a portion of which had accrued as of
the Closing Date and a portion of which accrues after the Closing Date, only
that portion that had accrued as of the Closing Date shall be considered a
Contingent Liability. For purposes of the foregoing, a Liability shall be deemed
to have accrued as of the Closing Date if all the elements necessary for the
assertion of a claim with respect to such Liability shall have occurred on or
prior to the Closing Date, such that the claim, were it asserted in an Action on
or prior to the Closing Date, would not be dismissed by a court on ripeness or
similar grounds. For purposes of clarification of the foregoing, the parties
agree that no Liability relating to, arising out of or resulting from any
obligation of any Person to perform the executory portion of any contract or
agreement existing as of the Closing Date, or to satisfy any obligation accrued
under any Plan (as defined in the Employee Benefits Agreement) as of the Closing
Date, shall deemed to be a Contingent Liability.
(d) EXCESS PORTION means that portion, if any, of the
aggregate Value of all amounts actually paid by AT&T, Lucent or NCR (in each
case, together with any members of its respective Group), in respect of any
single Exclusive Contingent Liability of such Group or any Related Exclusive
Contingent Liabilities of such Group that is in excess of $100 million.
(e) EXCLUSIVE AT&T CONTINGENT GAIN means any
Contingent Gain
if such Contingent Gain primarily relates to any AT&T
Services Business,
including the matters listed or described on Schedule 6.1(e) hereto, or if such
Contingent Gain is expressly assigned to AT&T pursuant to this Agreement or any
Ancillary Agreement.
(f) EXCLUSIVE LUCENT CONTINGENT GAIN means any Contingent Gain
if such Contingent Gain primarily relates to any Lucent Business, including the
matters listed or described on Schedule 6.1(f) hereto, or if such Contingent
Gain is expressly assigned to Lucent pursuant to this Agreement or any Ancillary
Agreement.
(g) EXCLUSIVE NCR CONTINGENT GAIN means any Contingent Gain if
such Contingent Gain primarily relates to any NCR Business, including the
matters listed or described on Schedule 6.1(g) hereto, or if such Contingent
Gain is expressly assigned to NCR pursuant to this Agreement or any Ancillary
Agreement.
(h) EXCLUSIVE AT&T CONTINGENT LIABILITY means any Contingent
Liability (other than an RBOC Liability) if such Contingent Liability primarily
relates to any AT&T Services Business, including the matters listed or described
on Schedule 6.1(e) hereto (as supplemented pursuant to Section 6.6(d)), or if
such Contingent Liability is expressly assigned to AT&T pursuant to this
Agreement or any Ancillary Agreement.
(i) EXCLUSIVE CONTINGENT LIABILITY means any Exclusive AT&T
Contingent Liability, Exclusive NCR Contingent Liability or Exclusive Lucent
Contingent Liability.
(j) EXCLUSIVE LUCENT CONTINGENT LIABILITY means any Contingent
Liability (other than an RBOC Liability) if (i) such Contingent Liability
primarily relates to any Lucent Business or to the matters listed or described
on Schedule 2.3(a)(v), including the matters listed or described on Schedule
6.1(f) (as supplemented pursuant to Section 6.6(d)) hereto, (ii) such Contingent
Liability relates to, arises out of or results from any Nassau Metals Liability,
or (iii) such Contingent Liability is expressly assigned to Lucent pursuant to
this Agreement or any Ancillary Agreement. The parties agree that the matters
specified on Schedule 6.1(f)(iv) shall be deemed Exclusive Lucent Contingent
Liabilities to the extent reflected thereon.
(k) EXCLUSIVE NCR CONTINGENT LIABILITY means any Contingent
Liability (other than an RBOC Liability) if such Contingent Liability primarily
relates to any NCR Business, including the matters listed or described on
Schedule 6.1(g) (as supplemented pursuant to Section 6.6(d)) hereto, or if such
Contingent Liability is expressly assigned to NCR pursuant to this Agreement or
any Ancillary Agreement.
(l) RELATED EXCLUSIVE CONTINGENT LIABILITIES of
any Group
means:
(i) in the case of any Exclusive Contingent
Liabilities of
such Group other than Environmental Liabilities, any
set or group of
Exclusive Contingent Liabilities of such Group (but not
including any
Exclusive Contingent Liabilities of any other Group) arising from:
(A) any single Action (including any
group of Actions
that are consolidated as a single Action and
any Action or
Actions certified as a class action);
(B) any Action that is brought or
threatened to be
brought as a class action and that is settled; or
(C) any group of Actions (other
than workers'
compensation Actions by or on behalf of
former or current
employees of any member of such Group)
asserting claims in
respect of repetitive stress injuries (RSIs) that
arise or are alleged to arise from the
manufacture or sale of
equipment, such as computer keyboards, to third
parties; and
(ii) in the case of any Exclusive Contingent
Liabilities of
such Group that are Environmental Liabilities:
(A) any and all Environmental
Liabilities of such
Group associated with a single site; and
(B) any and all Environmental
Liabilities of such
Group arising from separate sites but listed
on the National
Priorities List as a single site.
Exclusive Contingent
Liabilities of such Group that are
Environmental Liabilities
of such Group arising from sites listed
separately on the
National Priorities List shall not be deemed
to be Related
Exclusive Contingent Liabilities. Whether sites
not listed on
the National Priorities List shall be deemed
to be a "single
site" for purposes of clause (B) of this
definition shall be
determined by applying the definition of
"on-site" contained
in 40 C.F.R. Section 300.5 (as in effect an as
of the date of
this Agreement) which provides that "On-site
means the areal
extent of contamination and all suitable areas
in very close
proximity to the contamination necessary for
implementation of
the response action." Site identifications by a
state or local
Governmental Authority similar in import to
those authorized
by the definition of "on-site" in 40 C.F.R.
Section 300.5 (as
in effect as of the date of this Agreement)
shall similarly be
determinative of whether sites not listed on
the National
Priorities List shall be deemed to be a
"single site" for
purposes of this definition.
(m) SHARED AT&T PERCENTAGE means 75%.
(n) SHARED CONTINGENT GAIN means any Contingent Gain that is
not an Exclusive AT&T Contingent Gain, an Exclusive Lucent Contingent Gain or an
Exclusive NCR Contingent Gain, including any Contingent
Gain relating to,
arising out of or resulting from the matters set forth on Schedule
6.1(n).
(o) SHARED CONTINGENT LIABILITY means, without
duplication:
(i) any Contingent Liability that is not an
Exclusive AT&T
Contingent Liability, an Exclusive Lucent Contingent
Liability or an
Exclusive NCR Contingent Liability;
(ii) any RBOC Liability;
(iii) any Liability (other than Taxes) relating
to, arising
out of or resulting from any Other Discontinued
Operation; and
(iv) any Liability (other than Taxes) relating
to, arising out
of or resulting from the matters set forth on Schedule
6.1(n).
(p) SHARED NCR PERCENTAGE means 3%.
(q) SHARED LUCENT PERCENTAGE means 22%.
(r) SHARED PERCENTAGE means the Shared AT&T
Percentage, the
Shared NCR Percentage or the Shared Lucent Percentage, as the case
may be.
(s) VALUE means the aggregate amount of all cash payments, the
fair market value of all non-cash payments and the incremental cost of providing
any goods or services made or provided in respect of any Exclusive Contingent
Liability or Related Exclusive Contingent Liabilities, whether in satisfaction
of any judgment, in settlement of any Action or threatened Action or otherwise
(including all costs and expenses (including allocated costs of in-house counsel
and other personnel), of defending or investigating any Action or threatened
Action), net of: (i) any Insurance Proceeds received or realized in respect of
the applicable Exclusive Contingent Liability or Related Exclusive Contingent
Liabilities (applied in reduction of the applicable Liability in the manner
contemplated by Section 5.4), (ii) any Tax benefits associated with such
payments or the provision of such goods or services (based on assumed effective
Tax rate equal to the effective Tax rate of the applicable party for the fiscal
year immediately preceding the year in which such payments are made or goods or
services provided (it being understood that the effective Tax rate for any party
whose earnings for such immediately preceding fiscal year are consolidated for
federal income tax purposes with another corporation shall be the effective Tax
rate of the corporation filing such federal income tax return for such
immediately preceding fiscal year)), (iii) any amounts received pursuant to any
RBOC Agreement in respect of the Exclusive Contingent Liability or Related
Exclusive Contingent Liabilities, (iv) any other amounts recovered (including by
way of set off) from a third party in connection with any such Action or
threatened Action and (v) the amount of any reserve, account payable or similar
accrual in respect of the Exclusive Contingent Liability or Related Exclusive
Contingent Liabilities, net of any offsetting receivables in respect of such
Exclusive Contingent Liability or Related Exclusive Contingent Liabilities, in
each case as reflected on the Lucent Balance Sheet or the audited consolidated
balance sheet of AT&T, including the notes thereto, as of December 31, 1995 (and
without giving effect to any subsequent adjustment of any such reserve, account
payable, accrual or offsetting receivable).
6.2. CONTINGENT GAINS. (a) Each of AT&T, Lucent and NCR shall
have sole and exclusive right to any benefit received with respect to any
Exclusive AT&T Contingent Gain, Exclusive Lucent Contingent Gain or Exclusive
NCR Contingent Gain, respectively. Each of AT&T, Lucent and NCR shall have sole
and exclusive authority to commence, prosecute, settle, manage, control,
conduct, waive, forego, release, discharge, forgive and otherwise determine all
matters whatsoever with respect to any Exclusive AT&T Contingent Gain, Exclusive
Lucent Contingent Gain or Exclusive NCR Contingent Gain, respectively.
(b) Any benefit that may be received from any Shared
Contingent Gain shall be shared among AT&T, Lucent and NCR in proportion to the
Shared AT&T Percentage, the Shared Lucent Percentage and the Shared NCR
Percentage, respectively, and shall be paid in accordance with Section 6.5.
Notwithstanding the foregoing, AT&T shall have sole and exclusive authority to
commence, prosecute, settle, manage, control, conduct, waive, forgo, release,
discharge, forgive and otherwise determine all matters whatsoever with respect
to any Shared Contingent Gain. Neither Lucent nor NCR shall take, or permit any
member of their respective Groups to take, any action (including commencing any
claim) that would interfere with such rights and powers of AT&T. AT&T shall use
its reasonable efforts to notify each of Lucent and NCR in the event that it
commences an Action with respect to a Shared Contingent Gain; provided that the
failure to provide such notice shall not give rise to any rights on the part of
Lucent or NCR against AT&T or affect any other provision of this Section 6.2.
Each of Lucent and NCR acknowledges that AT&T may
elect not to pursue any Shared Contingent Gain for any reason whatsoever
(including a different assessment of the merits of any Action, claim or right
than Lucent or NCR or any business reasons that are in the best interests of
AT&T or a member of the AT&T Services Group, without regard to the best
interests of any member of the Lucent Group or the NCR Group) and that no member
of the AT&T Group shall have any liability to any Person (including any member
of the Lucent Group or the NCR Group) as a result of any such determination.
(c) In the event of any dispute as to whether any claim or
right is a Contingent Gain or whether any Contingent Gain is a Shared Contingent
Gain, an Exclusive AT&T Contingent Gain, an Exclusive Lucent Contingent Gain or
an Exclusive NCR Contingent Gain, AT&T may, but shall not be obligated to,
commence prosecution or other assertion of such claim or right pending
resolution of such dispute. In the event that AT&T commences any such
prosecution or assertion and, upon resolution of the dispute, a party other than
AT&T is determined hereunder to have the exclusive right to such claim or right,
AT&T shall, promptly upon the request of such other party, discontinue the
prosecution or assertion of such right or claim and transfer the control thereof
to the party so determined to have the right thereto. In such event, the party
having the right to such claim or right will reimburse AT&T for all costs and
expenses (including allocated costs of in-house counsel and other personnel),
reasonably incurred prior to resolution of such dispute in the prosecution or
assertion of such claim or right.
6.3. EXCLUSIVE CONTINGENT LIABILITIES. (a) Except as otherwise
provided in this Section 6.3, each Exclusive Contingent Liability or Related
Exclusive Contingent Liability shall constitute a Liability for which
indemnification is provided by AT&T, Lucent or NCR, as the case may be, pursuant
to Article V hereof and shall be subject to the procedures set forth in Article
V with respect thereto.
(b) Notwithstanding anything to the contrary in this
Agreement, except as set forth in paragraph (f) of this Section 6.3, if the
aggregate Value of all amounts paid by AT&T, Lucent or NCR (in each case,
together with any members of its respective Group) in respect of any single
Exclusive Contingent Liability of such Group or any Related Exclusive Contingent
Liabilities of such Group is in excess of $100 million, each of AT&T, Lucent or
NCR, as the case may be, shall be entitled to reimbursement from each of the
others for a share of the Excess Portion in accordance with the following
percentages:
(i) in the case of Exclusive AT&T Contingent
Liabilities, AT&T
shall bear 75 percent of such Excess Portion, Lucent
shall bear 22
percent of such Excess Portion, and NCR shall bear 3
percent of such
Excess Portion;
(ii) in the case of Exclusive NCR Contingent
Liabilities, NCR
shall bear 50 percent of such Excess Portion, AT&T
shall bear 37
percent of such Excess Portion and Lucent shall bear 13
percent of such
Excess Portion; and
(iii) in the case of Exclusive Lucent
Contingent Liabilities,
Lucent shall bear 50 percent of such Excess Portion, AT&T shall bear 47
percent of such Excess Portion and NCR shall bear 3
percent of such
Excess Portion.
(c) In the event that after any payment is made by any party
to any other party in accordance with the allocation set forth in Section
6.3(b), any party or any member of such party's Group receives any Insurance
Proceeds, obtains any recovery pursuant to an RBOC Agreement or obtains any
other amounts that, in any such case, would reduce the
Value of all amounts paid by such party and the members of its Group in respect
of the applicable Exclusive Contingent Liability or Liabilities, such party will
promptly notify each other party of the receipt of such Insurance Proceeds or
recovery of such amount pursuant to an RBOC Agreement or otherwise and will
promptly reimburse each other party for the amount of any payment that such
first party would not have been entitled to receive if it had received such
Insurance Proceeds or obtained such recovery pursuant to an RBOC Agreement or
otherwise on or prior to the date it received a payment pursuant to this
Section. Each such repayment will be accompanied by interest accruing from the
date of receipt of the original payment pursuant to this Section to the date of
such repayment at a rate equal to the Prime Rate plus 2% per annum.
(d) Each party agrees to use its reasonable best efforts to
advise each other party if it becomes aware of one or more Exclusive Contingent
Liabilities that may result in a Value of $100 million or more; provided,
however, that no failure to give any such notice shall relieve any other party
of any obligation pursuant to this Agreement. In the event of any such notice,
or if any other party otherwise determines that any such risk may exist, the
other parties will be entitled at their own expense to monitor any such Action.
In any such event, the parties will enter into a mutually acceptable joint
defense agreement so as to maintain to the extent reasonably practicable the
attorney-client privilege with respect thereto.
(e) It shall not be a defense to any obligation by any party
to pay any amount in respect of any Excess Portion that such party was not
consulted in the defense thereof, that such party's views or opinions as to the
conduct of such defense were not accepted or adopted, that such party does not
approve of the quality or manner of the defense thereof or that such Excess
Portion was incurred by reason of a settlement rather than by a judgment or
other determination of liability (even if, subject to Section 5.5(g), such
settlement was effected without the consent or over the objection of such
party).
(f) Neither AT&T nor Lucent (nor any member of their
respective Groups) will be entitled to reimbursement pursuant to this Section
6.3 for a share of the Excess Portion in respect of any Exclusive Contingent
Liability or Related Exclusive Contingent Liabilities that would be subject to
sharing with the RBOCs pursuant to any RBOC Agreement, unless the applicable
party shall have pursued in good faith any recovery to which it or any member of
its Group may be entitled under such RBOC Agreement in respect of such Exclusive
Contingent Liability or Related Exclusive Contingent Liabilities.
6.4. SHARED CONTINGENT LIABILITIES. (a) As set forth in
Section 5.5(c), AT&T shall assume the defense of, and may seek to settle or
compromise, any Third Party Claim that is a Shared Contingent Liability, and the
costs and expenses (including allocated costs of in-house counsel and other
personnel) thereof shall be included in the calculation of the amount of the
applicable Shared Contingent Liability in determining the reimbursement
obligations of the other parties with respect thereto pursuant to this Section
6.4.
(b) Each of AT&T, Lucent and NCR shall be responsible for its
Shared Percentage of any Shared Contingent Liability. It shall not be a defense
to any obligation by any party to pay any amount in respect of any Shared
Contingent Liability that such party was not consulted in the defense thereof,
that such party's views or opinions as to the conduct of such defense were not
accepted or adopted, that such party does not approve of the
quality or manner of the defense thereof or that such Shared Contingent
Liability was incurred by reason of a settlement rather than by a judgment or
other determination of liability (even if, subject to Section 5.5(g), such
settlement was effected without the consent or over the objection of such
party).
6.5. PAYMENTS. (a) Any amount owed in respect of any Shared
Contingent Liabilities (including reimbursement for the cost or expense
(including allocated costs of in-house counsel and other personnel) of defense
of (i) any Third Party Claim that is a Shared Contingent Liability), (ii) any
Excess Portion of any Exclusive Contingent Liabilities or of any Related
Exclusive Contingent Liabilities or (iii) any Shared Contingent Gains pursuant
to this Article VI shall be remitted promptly after the party entitled to such
amount provides an invoice (including reasonable supporting information with
respect thereto) to the party owing such amount.
(b) In the case of any Shared Contingent Liability, AT&T shall
be entitled to reimbursement from Lucent and NCR in advance of a final
determination of any Action for amounts paid in respect of costs and expenses
(including allocated costs of in-house counsel and other personnel) related
thereto, from time to time as such costs and expenses are incurred. In the case
of any Shared Contingent Gain, AT&T shall be entitled to retain from the amount
of the Shared Contingent Gain otherwise payable to Lucent and NCR, Lucent's and
NCR's respective Shared Percentage of the costs and expenses (including
allocated costs of in-house counsel and other personnel) paid or incurred by or
on behalf of any member of the AT&T Services Group in connection with such
Shared Contingent Gain.
(c) Any amounts billed and properly payable in accordance with
this Article VI that are not paid within 30 days of such bill shall bear
interest at the Prime Rate plus 2% per annum.
6.6. PROCEDURES TO DETERMINE STATUS OF
CONTINGENT LIABILITY OR
CONTINGENT GAIN. (a) With respect to the Actions set forth on
Schedule 6.6, and
with respect to any other matters not set forth on Schedules
6.1(e), 6.1(f),
6.1(g) or 6.1(n) (regardless of whether such matters are currently pending but
not set forth on such Schedules or are asserted or filed hereafter), AT&T,
Lucent and NCR will form the Contingent Claim Committee for the purpose of
resolving whether:
(i) any claim or right is a Contingent Gain;
(ii) any Contingent Gain is a Shared Contingent
Gain, an
Exclusive AT&T Contingent Gain, an Exclusive Lucent
Contingent Gain or
an Exclusive NCR Contingent Gain;
(iii) any Liability is a Contingent Liability;
(iv) any Contingent Liability is a Shared
Contingent
Liability, an Exclusive AT&T Contingent Liability, an
Exclusive Lucent
Contingent Liability or an Exclusive NCR Contingent
Liability; or
(v) any Exclusive Contingent Liabilities
constitute Related
Exclusive Contingent Liabilities.
(b) Any of the parties may refer any potential Contingent
Gains or Contingent Liabilities to the Contingent Claim Committee for resolution
as described in Section
6.6(a) and the Contingent Claim Committee's determination (which shall be made
within 30 days of such referral), if unanimous, shall be binding on all of the
parties and their respective successors and assigns. In the event that the
Contingent Claim Committee cannot reach a unanimous determination as to the
nature or status of any such Contingent Liabilities or Contingent Gains within
30 days after such referral, the issue will be submitted for arbitration
pursuant to the procedures set forth in Article IX of this Agreement, subject to
Section 9.8. The outcome of the arbitration pursuant to Article IX (subject to
Section 9.8) shall be final and binding on all parties and their respective
successors and assigns.
(c) In resolving, with respect to any Action set forth on
Schedule 6.6 or any other matter not set forth in Schedules 6.1(e), 6.1(f),
6.1(g) and 6.1(n), whether (i) any Contingent Gain is a Shared Contingent Gain,
an Exclusive AT&T Contingent Gain, an Exclusive Lucent Contingent Gain or an
Exclusive NCR Contingent Gain or (ii) any Contingent Liability is a Shared
Contingent Liability, an Exclusive AT&T Contingent Liability, an Exclusive
Lucent Contingent Liability or an Exclusive NCR Contingent Liability, the
categorization of Contingent Claims and Contingent Liabilities reflected in
Schedules 6.1(e), 6.1(f), 6.1(g) and 6.1(n) shall be considered and used as a
precedential guide.
(d) At any time or from time to time prior to the Closing
Date, the Solicitor General of AT&T, following consultation with representatives
of each of Lucent and NCR, may amend or supplement any of
Schedules 6.1(e),
6.1(f), 6.1(g) and 6.1(n). Without limiting the foregoing, prior to the Closing
Date, the parties will continue to review Schedule 6.6 to determine whether any
matter set forth therein will be reassigned to one of Schedules
6.1(e), 6.1(f),
6.1(g) or 6.1(n).
6.7. CERTAIN CASE ALLOCATION MATTERS. (a) Lucent and NCR
acknowledge that Third Party Claims may be asserted in respect of alleged
repetitive stress injuries in a single Action (including a group of consolidated
Actions) that involve both computer keyboards or related equipment manufactured
in the conduct of the NCR Business (which would constitute an Exclusive NCR
Contingent Liability) and computer keyboards or related equipment manufactured
in the conduct of the discontinued computer operations of AT&T and its
Affiliates, other than any member of the NCR Group (which would constitute an
Exclusive Lucent Contingent Liability). Lucent and NCR agree to use their
reasonable best efforts to share responsibility (including for all costs and
expenses (including allocated costs of in-house counsel and other personnel))
for any such Third Party Claims or Actions, notwithstanding any allocation of
such Actions set forth in Schedules 6.1(e), 6.1(f), 6.1(g) and 6.1(n), so that,
to the maximum extent reasonably practicable, the parties will have the same
rights and obligations (including pursuant to Article V hereof) as would have
been applicable if such matters had been commenced as separate Actions. Third
Party Claims with respect to computer keyboards or related equipment
manufactured in the conduct of the NCR Business shall not be deemed to be
Related Exclusive Contingent Liabilities with Third Party Claims with respect to
any computer keyboards or related equipment manufactured in the conduct of the
discontinued computer operations of AT&T and its Affiliates (other than any
member of the NCR Group).
(b) The parties agree that if any Action not set forth on
Schedule 6.1(e), 6.1(f), 6.1(g) or 6.1(n) involves separate and distinct claims
that, if not joined in a single Action, would constitute separate Exclusive
Contingent Liabilities of two or more parties, they will use their reasonable
best efforts to segregate such separate and distinct claims so that the
Liabilities associated with each such claim (including all costs and expenses
(including allocated costs of in-house counsel and other personnel)) shall be
treated as Exclusive Contingent Liabilities of the appropriate party and so that
each party shall have the rights
and obligations with respect to each such claim (including pursuant to Article V
hereof) as would have been applicable had such claims been commenced as separate
Actions. Notwithstanding the foregoing provisions, this Section 6.7(b) shall not
apply to any separate and distinct claim that is de minimis or frivolous in
nature.
(c) The parties agree that notwithstanding anything in this
Agreement to the contrary, all Liabilities arising out of, resulting from or
relating to the Action commenced by Bell Atlantic Corporation and DSC
Communications Corporation against AT&T and Lucent in the United States District
Court for the Eastern District of Texas on February 14, 1996, (i) to the extent
relating to Caller ID services, shall be Exclusive AT&T Contingent Liabilities
and (ii) to the extent relating to telecommunications equipment, systems or
software, shall be Exclusive Lucent Contingent Liabilities; provided however
that each of the parties shall bear its own costs and expenses (including
allocated costs of in-house counsel and other personnel) of defending any such
claims, including any such costs and expenses of any related document
productions.
ARTICLE VII
INTERIM OPERATIONS AND CERTAIN OTHER MATTERS
7.1. INSURANCE MATTERS. (a) Lucent agrees that it will pay to
AT&T $1 million per month (prorated on a daily basis for any partial month) in
respect of the period from the date hereof until the Distribution Date, such
amount to be payable in arrears by the 10th day of the next succeeding month, in
respect of Insurance Policies under which Lucent will continue to have coverage
following the date hereof. AT&T and Lucent agree to cooperate in good faith to
provide for an orderly transition of insurance coverage from the date hereof
through the Distribution Date and for the treatment of any Insurance Policies
that will remain in effect following the Closing Date on a mutually agreeable
basis. In no event shall AT&T, any other member of the AT&T Group or any AT&T
Indemnitee or NCR Indemnitee have liability or obligation whatsoever to any
member of the Lucent Group in the event that any Insurance Policy or other
contract or policy of insurance shall be terminated or otherwise cease to be in
effect for any reason, shall be unavailable or inadequate to cover any Liability
of any member of the Lucent Group for any reason whatsoever or shall not be
renewed or extended beyond the current expiration date.
(b) As promptly as practicable, each party shall use its
reasonable best efforts to consummate the transactions set forth on Schedule
7.1(b) with respect to American Ridge and its Subsidiaries.
(c) (i) Except in the case of the Ridge Lucent Policies and
except as otherwise provided in any Ancillary Agreement, the parties intend by
this Agreement that Lucent and each other member of the Lucent Group be
successors-in-interest to all rights that any member of the Lucent Group may
have as of the Closing Date as a subsidiary, affiliate, division or department
of AT&T prior to the Closing Date under any policy of insurance issued to AT&T
by any insurance carrier unaffiliated with AT&T or under any agreements related
to such policies executed and delivered prior to the Closing Date, including any
rights such member of the Lucent Group may have, as an insured or additional
named insured, subsidiary, affiliate, division or department, to avail itself of
any such policy of insurance or any such agreements related to such policies as
in effect prior to the Closing Date. At the request of Lucent, AT&T shall take
all reasonable steps, including the execution and delivery of any instruments,
to effect the foregoing; provided however that AT&T
shall not be required to pay any amounts, waive any rights or
incur any
Liabilities in connection therewith.
(ii) Except in the case of the Ridge Lucent Policies and
except as otherwise contemplated by any Ancillary Agreement, after the Closing
Date, none of AT&T or Lucent or any member of their respective
Groups shall,
without the consent of the other, provide any such insurance carrier with a
release, or amend, modify or waive any rights under any such policy or
agreement, if such release, amendment, modification or waiver would adversely
affect any rights or potential rights of any member of the other Group
thereunder; provided however that the foregoing shall not (A) preclude any
member of any Group from presenting any claim or from exhausting any policy
limit, (B) require any member of any Group to pay any premium or other amount or
to incur any Liability, or (C) require any member of any Group to renew, extend
or continue any policy in force. Each of Lucent and AT&T will share such
information as is reasonably necessary in order to permit the other to manage
and conduct its insurance matters in an orderly fashion.
(d) This Agreement shall not be considered as an attempted
assignment of any policy of insurance or as a contract of insurance and shall
not be construed to waive any right or remedy of any member of the AT&T Group in
respect of any Insurance Policy or any other contract or policy of insurance.
(e) Lucent does hereby, for itself and each other member of
the Lucent Group, their respective Affiliates (other than any member of the AT&T
Group), successors and assigns, and all Persons who at any time have been
shareholders, directors, officers, agents or employees of any member of the
Lucent Group (in each case, in their respective capacities as such), agree that
all Ridge Lucent Policies will automatically be terminated in all respects as of
the Distribution Date (without any further action by any Person) and, as of such
date, remise, release and forever discharge each AT&T Indemnitee and each NCR
Indemnitee with respect thereto. Lucent agrees to indemnify, defend and hold
harmless each member of the AT&T Group and each AT&T Indemnitee and NCR
Indemnitee if any Person shall claim that it is entitled to any payment from any
of the foregoing in respect of any Ridge Lucent Policy. At the request of AT&T,
Lucent will take, or cause to be taken, all action necessary to terminate any
Ridge Lucent Policies and all Liabilities of any member of the AT&T Group
thereunder, effective as of the Distribution Date.
(f) Lucent does hereby, for itself and each other member of
the Lucent Group, agree that no member of the AT&T Group or any AT&T Indemnitee
or NCR Indemnitee shall have any Liability whatsoever as a result of the
insurance policies and practices of AT&T and its Affiliates as in effect at any
time prior to the Closing Date, including as a result of the level or scope of
any such insurance, the creditworthiness of any insurance carrier, the terms and
conditions of any policy, the adequacy or timeliness of any notice to any
insurance carrier with respect to any claim or potential claim or otherwise.
(g) Nothing in this Agreement shall be deemed to restrict any
member of the Lucent Group from acquiring at its own expense any other insurance
policy in respect of any Liabilities or covering any period.
7.2. COLLECTION OF ACCOUNTS RECEIVABLE. (a) Lucent
acknowledges on behalf of itself and each other member of the Lucent Group that
it is aware that the Retained Receivables are Excluded Assets and that certain
Persons that are account debtors with respect to accounts receivables included
in the Lucent Assets (or that in the future may otherwise become payable to a
member of the Lucent Group) are also account debtors with
respect to the Retained Receivables. Lucent agrees that from and after the date
hereof and prior to December 31, 1997, unless otherwise specifically directed by
AT&T, Lucent, as agent for AT&T, will take all commercially reasonable steps
consistent with the Lucent Business's current practices to service and collect
the Retained Receivables. AT&T and Lucent will cooperate to establish as
promptly as practicable mutually acceptable operational procedures. In addition,
Lucent will use all reasonable best efforts to satisfy any conditions to the
payment of any Retained Receivables and to fulfill all obligations to the
applicable account debtors related to such Retained Receivables; provided,
however that if, in order to collect any Retained Receivables, Lucent is
required to engage a collection agency or to institute legal proceedings or any
other Action it shall be entitled to be reimbursed for its reasonable
out-of-pocket costs and expenses incurred in connection therewith. After
December 31, 1997, the parties will negotiate in good faith with respect to the
final disposition of any then outstanding Retained Receivables.
(b) Any payment made by an account debtor to Lucent or any
member of the Lucent Group with respect to an account receivable shall be
applied to the Retained Receivables (and paid over to AT&T in accordance with
this Section 7.2) before they are applied to any other account receivable
whenever arising for such account debtor (regardless of the respective dates of
such accounts receivable or of any specific notation to the contrary by the
applicable account debtor), unless the applicable account debtor specifies that
such payment shall be applied to another account payable of such account debtor
that (i) arose from an order placed after the date of this Agreement and (ii) is
both due and paid prior to the first due date of any Retained Receivable or any
other account receivable of such account debtor.
(c) Each of AT&T and Lucent shall deliver to the other such
schedules and other information with respect to the Retained Receivables and the
accounts receivables included in the Lucent Assets as each shall reasonably
request from time to time in order to permit such parties to reconcile their
respective records and to monitor the collection of all accounts receivable
(whether Lucent Assets or Retained Receivables). Each of Lucent and AT&T shall
afford the other reasonable access to its books and records relating to any
accounts receivable. Without limiting the foregoing, Lucent shall at all times
maintain the ability to provide to AT&T promptly upon request a true and
complete schedule of all Retained Receivables due and owing as of the end of the
prior month.
(d) By the 15th day of each month (or if such day is not a
business day, by the next business day), Lucent hereby irrevocably agrees to pay
over, or cause to be paid over, in immediately available funds to AT&T, at no
cost or charge to AT&T or any of its Affiliates (other than any member of the
Lucent Group), any and all amounts which were received (or deemed received in
accordance with Section 7.2(b)) during the immediately preceding month by any
member of the Lucent Group in respect of the Retained Receivables. Any such
amounts not paid over to AT&T by the date specified in the first sentence of
this Section 7.2(d) shall bear interest at the Prime Rate plus 2% per annum.
(e) Nothing in this Agreement or any Ancillary Agreement shall
be construed to grant to any member of the Lucent Group any right, title or
interest in any Retained Receivable and no member of the Lucent Group shall have
any right or power to, and no member of the Lucent Group shall, grant or suffer
to exist any right of set off, lien or any other Security Interest in any
Retained Receivables or proceeds thereof. Lucent will not, and it will not
permit any member of the Lucent Group to, extend or otherwise change the amount
or other terms of payment of any Retained Receivable, unless Lucent shall have
paid to AT&T an amount equal to the full amount of such Retained Receivable.
Lucent
hereby irrevocably and unconditionally agrees that it shall not assert (and it
shall not permit any member of the Lucent Group to assert) any offsets, claims,
counterclaims or defenses in respect of the Retained Receivables or its
obligations to pay over any such Retained Receivables to AT&T hereunder (whether
existing on the date hereof or arising hereafter and whether or not relating to
the transactions contemplated by this Agreement, any Ancillary Agreement or
otherwise).
(f) AT&T shall retain the right to collect or seek to collect
in such manner as it may in its sole discretion determine all or any portion of
the Retained Receivables.
(g) Lucent hereby represents and warrants to AT&T that each
Retained Receivable constitutes a legal, valid and binding obligation of the
applicable account debtor enforceable against such account debtor in accordance
with its respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally, and is not subject to any Security
Interest or any other lien, claim, defense or right of set-off.
(h) On or prior to February 15, 1996, Lucent shall deliver to
AT&T a true and correct list of each of the Retained Receivables in such form as
AT&T shall reasonably request. Such list shall specify the face amount of each
Retained Receivable and a summary of the total Retained Receivables, including
the allocations thereof among the Lucent business units, the applicable credit
loss reserve thereon and such other information as AT&T shall reasonably
request.
7.3. OPERATING FINANCIAL LIABILITIES. (a) As between Lucent
and AT&T, Lucent hereby irrevocably assumes and agrees to pay, perform, satisfy
and discharge all liabilities, obligations, contingencies and other Liabilities
under, or otherwise relating to, arising out of or resulting from, all Lucent
OFL's. For purposes of this Agreement, the term "Lucent OFL" means the OFL's
listed or described on Schedule 7.3(a) and any other OFL's that are primarily
related to, arise out of or result from any Lucent Asset, Lucent Liability
(including any Lucent Contract) or Lucent Business or that were otherwise
entered into in connection with the conduct of the Lucent Business. The parties
hereto acknowledge that there may be OFL's that are Lucent OFL's that are not
set forth or described on such Schedule 7.3(a), either because such OFL's are
entered into after the date hereof or because such OFL's were inadvertently
excluded from such Schedule. As a result, the parties agree to cooperate in good
faith to supplement Schedule 7.3(a) as any additional Lucent OFL's are
identified. In the event that any OFL is so added to such Schedule 7.3(a), AT&T
will retroactively bill Lucent in accordance with this Section 7.3 for any
amount payable by any member of the AT&T Group on or after the date hereof, and
AT&T will retroactively credit Lucent in accordance with this Section 7.3 for
any amount paid to any member of the AT&T Group on or after the date hereof,
together in each case with interest thereon from the date of payment by or to
any such member of the AT&T Group, as the case may be, to the date of settlement
of such bill or credit, at the AT&T CP Rate that would have been applicable if
such Lucent OFL had originally been included on Schedule 7.3(a), subject to
increase pursuant to Section 7.3(c)(ii).
(b) (i) AT&T may, from time to time, set forth on Schedule
7.3(a) whether any Lucent OFL's are to be paid, performed, satisfied and
discharged directly by Lucent. AT&T may at any time or from time to time on at
least 30 days' written notice to Lucent, modify such Schedule 7.3(a) to change
whether any Lucent OFL shall thereafter be paid, performed, satisfied and
discharged directly by Lucent or by AT&T. AT&T shall, in the absence of any
default by Lucent under this Section 7.3, pay, or cause to be paid, all other
Lucent OFL's, and Lucent agrees to reimburse AT&T for such payments in
accordance with the terms of this Section 7.3. If Lucent is in default of any of
its obligations under this Section 7.3, AT&T shall no longer be required to pay,
or cause to be paid, any Lucent OFL's and Lucent shall be required directly to
pay, perform, satisfy and discharge such Lucent OFL's.
(ii) In the event that payments are made by a third party
under any Lucent OFL, if Lucent is not in default of any of its obligations
under this Section 7.3, (A) if any such payment is made to any member of the
Lucent Group, such member of the Lucent Group will be entitled to retain any
such payments received by it, and (B) if any such payment is made to any member
of the AT&T Group, such member of the AT&T Group shall, at AT&T's election,
either remit any such amounts it receives to Lucent or net such amounts against
payments AT&T is then required to make under any other Lucent OFL or against
payments then owed (whether or not then due) to AT&T by Lucent hereunder.
(iii) In the event that payments are made by a third party
under any Lucent OFL, if Lucent is in default of any of its obligations under
this Section 7.3, (A) if any such payment is made to any member of the Lucent
Group, Lucent shall promptly remit any such payments to AT&T, and (B) if any
such payment is made to any member of the AT&T Group, AT&T shall be entitled
(but not required) to apply any such payments to satisfy, any such breach by
Lucent, either, at AT&T's option, by netting amounts then owed (whether or not
then due) to AT&T by Lucent hereunder or by paying over such monies in order to
satisfy any obligation in respect of any Lucent OFL.
(iv) In the event that payment or receipt of commodities or
other property is called for under any Lucent OFL, the parties will mutually
agree upon reasonable then current market-based valuations to convert such
payment or receipt into dollars, unless Lucent determines to make delivery or
take receipt under the Lucent OFL in commodities or property.
(c) (i) AT&T shall issue a statement to Lucent for the
payments due from or payable to Lucent pursuant to this Section 7.3 in respect
of any month by the tenth business day of the following month. Each such
statement shall set forth the AT&T CP Rate for the immediately preceding month.
Interest will accrue and be payable by Lucent on all amounts due pursuant to
this Section 7.3 in respect of Lucent OFL's at the AT&T CP Rate in effect for
the month immediately preceding the month in which the statement is issued from
the date of payment of any such amount by any member of the AT&T Group under any
Lucent OFL to the date of payment therefor to AT&T by Lucent. In the event
payments are due by AT&T to Lucent under this Section 7.3, AT&T will pay
interest at the AT&T CP Rate in effect for the month immediately preceding the
month in which the statement is issued from the date of receipt by AT&T under an
Lucent OFL to the date of payment by AT&T. All payments under this Section 7.3
shall be in same day funds.
(ii) Lucent agrees to pay AT&T any amounts due (including in
respect of interest) within 10 days of receipt of each statement. AT&T will
remit to Lucent any payments (including in respect of interest) received by any
member of the AT&T Group under any Lucent OFL (to the extent not netted in
accordance with Section 7.3(b)) within 10 days of the date of statement. Any
amounts not paid when due shall bear interest at the Prime Rate plus 2% per
annum in lieu of the AT&T CP Rate.
(d) (i) Lucent may prepay (or effect the early termination) of
any Lucent OFL's provided that no additional Liability is thereby created for
any member of the AT&T
Group other than any Liabilities that are fully discharged and satisfied by
Lucent simultaneously with such prepayment or early termination.
(ii) Without AT&T's written consent, Lucent will not enter
into or permit any amendment, modification or waiver of any provision of any
Lucent OFL; provided that AT&T agrees that it will consent to any such
amendments, modifications or waivers that do not create additional obligations
or Liabilities for any member of the AT&T Group or otherwise adversely affect
any member of the AT&T Group.
(iii) Each party will give prompt notice to the other party of
any default by it or, if it becomes aware thereof, by any third party under any
Lucent OFL.
(iv) In the event that Lucent makes any payment in respect of
an Lucent OFL, Lucent will be subrogated to all rights of AT&T or any member of
the AT&T Group with respect to such Lucent OFL, including with respect to
collateral, to the extent of such payment.
7.4. CERTAIN BUSINESS MATTERS. (a) No member of any Group
shall have any duty to refrain from (i) engaging in the same or similar
activities or lines of business as any member of any other Group, (ii) doing
business with any potential or actual supplier or customer of any member of any
other Group, or (iii) engaging in, or refraining from, any other activities
whatsoever relating to any of the potential or actual suppliers or customers of
any member of any other Group.
(b) Each of AT&T, Lucent and NCR is aware that from time to
time certain business opportunities may arise which more than one Group may be
financially able to undertake, and which are, from their nature, in the line of
more than one Group's business and are of practical advantage to more than one
Group. In connection therewith, the parties agree that if prior to (but not
following) the Distribution Date, any of AT&T, Lucent or NCR acquires knowledge
of an opportunity that meets the foregoing standard with respect to more than
one Group, none of AT&T, Lucent or NCR shall have any duty to communicate or
offer such opportunity to any of the others and may pursue or acquire such
opportunity for itself, or direct such opportunity to any other Person, unless
(i) such opportunity relates primarily to the AT&T Services Business, the Lucent
Business or the NCR Business, in which case the party that acquires knowledge of
such opportunity shall use its reasonable best efforts to communicate and offer
such opportunity to AT&T, Lucent or NCR, respectively, or (ii) such opportunity
relates both to the AT&T Services Business and the Lucent Business but not
primarily to either one, in which case such party shall use its reasonable best
efforts to communicate and offer such opportunity to Lucent. Notwithstanding the
foregoing, no party shall be required to so communicate or offer any such
opportunity if it would result in the breach of any contract or agreement or
violate any applicable law, rule or regulation of any Governmental Authority, no
party shall have any obligation to finance (or provide any other assistance
whatsoever) to any other party in connection with any such opportunity. In the
event the foregoing clause (i) or (ii) is applicable, no party, other than the
party to whom the opportunity must be offered in accordance with such clauses,
shall pursue or acquire such opportunity for itself, or direct such opportunity
to any other Person, unless the party to whom the opportunity is required to be
offered does not within a reasonable period of time begin to pursue, or does not
thereafter continue to pursue, such opportunity diligently and in good faith.
7.5. LATE PAYMENTS. Except as expressly provided
to the
contrary in this Agreement or in any Ancillary Agreement, any
amount not paid
when due pursuant to this
Agreement or any Ancillary Agreement (and any amounts billed or otherwise
invoiced or demanded and properly payable that are not paid within 30 days of
such bill, invoice or other demand) shall accrue interest at a rate per annum
equal to the Prime Rate plus 2%.
7.6. TRANSITIONAL BELL LABS SERVICES. Prior to, on, and after
the Closing Date, AT&T and each member of the AT&T Group, shall have the right,
to obtain from Lucent or any member of the Lucent Group, the Identified Bell
Labs Services, and such other services that are provided by Lucent Bell
Laboratories that AT&T may from time to time reasonably determine are necessary
to assure a smooth and orderly transition of the businesses, in each case on a
commercially reasonable basis. Each of the parties shall use their reasonable
best efforts to identify and document any such additional services on or prior
to the Closing Date; provided, however, that whether or not identified prior to
the Closing Date, prior to, on, and after the Closing Date, each member of the
AT&T Group shall continue to have the right to obtain such services, on
commercially reasonable terms, as contemplated by this Section 7.6.
ARTICLE VIII
EXCHANGE OF INFORMATION; CONFIDENTIALITY
8.1. AGREEMENT FOR EXCHANGE OF INFORMATION; ARCHIVES. (a) Each
of AT&T, Lucent and NCR, on behalf of its respective Group, agrees to provide,
or cause to be provided, to each other Group, at any time before or after the
Distribution Date, as soon as reasonably practicable after written request
therefor, any Information in the possession or under the control of such
respective Group which the requesting party reasonably needs (i) to comply with
reporting, disclosure, filing or other requirements imposed on the requesting
party (including under applicable securities or tax laws) by a Governmental
Authority having jurisdiction over the requesting party, (ii) for use in any
other judicial, regulatory, administrative, tax or other proceeding or in order
to satisfy audit, accounting, claims, regulatory, litigation, tax or other
similar requirements, or (iii) to comply with its obligations under this
Agreement, any Ancillary Agreement or any Lucent OFL; provided, however, that in
the event that any party determines that any such provision of Information could
be commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(b) After the Closing Date, Lucent shall have access during
regular business hours (as in effect from time to time) to the documents and
objects of historic significance that relate to the Lucent Business that are
located in the AT&T Archives located at 5 Reineman Road, Warren, New Jersey.
Lucent may obtain copies (but not originals) of documents for bona fide business
purposes and may obtain objects for exhibition purposes for commercially
reasonable periods of time if required for bona fide business purposes, provided
that Lucent shall cause any such objects to be returned promptly in the same
condition in which they were delivered to Lucent and Lucent shall comply with
any rules, procedures or other requirements, and shall be subject to any
restrictions (including prohibitions on removal of specified objects), that are
then applicable to AT&T. Lucent shall pay $125 per hour for archives research
services (subject to increase from time to time to reflect rates then in effect
for AT&T generally). Nothing herein shall be deemed to restrict the access of
any member of the AT&T Group or the NCR Group to any such documents or objects
or to impose any liability on any member of the AT&T Group if any such documents
or objects are not maintained or preserved by AT&T.
(c) After the date hereof, (i) Lucent shall maintain in effect
at its own cost and expense adequate systems and controls to the extent
necessary to enable the members of the AT&T Group to satisfy their respective
reporting, accounting, audit and other obligations, and (ii) Lucent shall
provide, or cause to be provided, to AT&T in such form as AT&T shall request, at
no charge to AT&T, all financial and other data and information as AT&T
determines necessary or advisable in order to prepare AT&T financial statements
and reports or filings with any Governmental Authority.
8.2. OWNERSHIP OF INFORMATION. Any Information owned by one
Group that is provided to a requesting party pursuant to Section 8.1 shall be
deemed to remain the property of the providing party. Unless specifically set
forth herein, nothing contained in this Agreement shall be construed as granting
or conferring rights of license or otherwise in any such Information.
8.3. COMPENSATION FOR PROVIDING INFORMATION. The party
requesting such Information agrees to reimburse the other party for the
reasonable costs, if any, of creating, gathering and copying such Information,
to the extent that such costs are incurred for the benefit of the requesting
party. Except as may be otherwise specifically provided elsewhere in this
Agreement or in any other agreement between the parties, such costs shall be
computed in accordance with the providing party's standard methodology and
procedures.
8.4. RECORD RETENTION. To facilitate the possible exchange of
Information pursuant to this Article VIII and other provisions of this Agreement
after the Distribution Date, the parties agree to use their reasonable best
efforts to retain all Information in their respective possession or control on
the Distribution Date in accordance with the policies of AT&T as in effect on
the Closing Date. No party will destroy, or permit any of its Subsidiaries to
destroy, any Information which the other party may have the right to obtain
pursuant to this Agreement prior to the third anniversary of the date hereof
without first using its reasonable best efforts to notify the other party of the
proposed destruction and giving the other party the opportunity to take
possession of such information prior to such destruction; provided, however,
that in the case of any Information relating to Taxes or to Environmental
Liabilities, such period shall be extended to the expiration of the applicable
statute of limitations (giving effect to any extensions thereof).
8.5. LIMITATION OF LIABILITY. No party shall have any
liability to any other party in the event that any Information exchanged or
provided pursuant to this Agreement which is an estimate or forecast, or which
is based on an estimate or forecast, is found to be inaccurate, in the absence
of willful misconduct by the party providing such Information. No party shall
have any liability to any other party if any Information is destroyed after
reasonable best efforts by such party to comply with the provisions of Section
8.4.
8.6. OTHER AGREEMENTS PROVIDING FOR EXCHANGE OF INFORMATION.
The rights and obligations granted under this Article VIII are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in any Ancillary
Agreement.
8.7. PRODUCTION OF WITNESSES; RECORDS; COOPERATION. (a) After
the Closing Date, except in the case of an adversarial Action by one party
against another party (which shall be governed by such discovery rules as may be
applicable under Article IX or otherwise), each party hereto shall use its
reasonable best efforts to make available to each other party, upon written
request, the former, current and future directors, officers, employees, other
personnel and agents of the members of its respective Group as witnesses and
any books, records or other documents within its control or which it otherwise
has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with any Action in which the requesting party may from
time to time be involved, regardless of whether such Action is a matter with
respect to which indemnification may be sought hereunder. The requesting party
shall bear all costs and expenses (including allocated costs of in-house counsel
and other personnel) in connection therewith.
(b) If an Indemnifying Party or AT&T chooses to defend or to
seek to compromise or settle any Third Party Claim, or if any party chooses to
prosecute or otherwise evaluate or to pursue any Contingent Gain or any recovery
in respect of any RBOC Agreement, the other parties shall make available to such
Indemnifying Party, AT&T or such other party, as the case may be, upon written
request, the former, current and future directors, officers, employees, other
personnel and agents of the members of its respective Group as witnesses and any
books, records or other documents within its control or which it otherwise has
the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other
personnel and agents) or books, records or other documents may reasonably be
required in connection with such defense, settlement or compromise, or such
prosecution, evaluation or pursuit, as the case may be, and shall otherwise
cooperate in such defense, settlement or compromise, or such prosecution,
evaluation or pursuit, as the case may be.
(c) Without limiting the foregoing, the parties shall
cooperate and consult to the extent reasonably necessary with respect to any
Actions, Contingent Liabilities and Contingent Gains.
(d) Without limiting any provision of this Section, each of
the parties agrees to cooperate, and to cause each member of its respective
Group to cooperate, with each other in the defense of any infringement or
similar claim with respect any intellectual property and shall not claim to
acknowledge, or permit any member of its respective Group to claim to
acknowledge, the validity or infringing use of any intellectual property of a
third Person in a manner that would hamper or undermine the defense of such
infringement or similar claim.
(e) The obligation of the parties to provide witnesses
pursuant to this Section 8.7 is intended to be interpreted in a manner so as to
facilitate cooperation and shall include the obligation to provide as witnesses
inventors and other officers without regard to whether the witness or the
employer of the witness could assert a possible business conflict (subject to
the exception set forth in the first sentence of Section 8.7(a)).
(f) In connection with any matter contemplated by this Section
8.7, the parties will enter into a mutually acceptable joint defense agreement
so as to maintain to the extent practicable any applicable attorney-client
privilege or work product immunity of any member of any Group.
8.8. CONFIDENTIALITY. (a) Subject to Section 8.9, each of
AT&T, Lucent and NCR, on behalf of itself and each member of its respective
Group, agrees to hold, and to cause its respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives
to hold, in strict confidence, with at least the same degree of care that
applies to AT&T's confidential and proprietary information pursuant to policies
in effect as of the Closing Date, all Information concerning each such other
Group that is
either in its possession (including Information in its possession prior to any
of the date hereof, the Closing Date or the Distribution Date) or furnished by
any such other Group or its respective directors, officers, employees, agents,
accountants, counsel and other advisors and representatives at any time pursuant
to this Agreement, any Ancillary Agreement or otherwise, and shall not use any
such Information other than for such purposes as shall be expressly permitted
hereunder or thereunder, except, in each case, to the extent that such
Information has been (i) in the public domain through no fault of such party or
any member of such Group or any of their respective directors, officers,
employees, agents, accountants, counsel and other advisors and representatives,
(ii) later lawfully acquired from other sources by such party (or any member of
such party's Group) which sources are not themselves bound by a confidentiality
obligation), or (iii) independently generated without reference to any
proprietary or confidential Information of the other party.
(b) Each party agrees not to release or disclose, or permit to
be released or disclosed, any such Information to any other Person, except its
directors, officers, employees, agents, accountants, counsel and other advisors
and representatives who need to know such Information (who shall be advised of
their obligations hereunder with respect to such Information), except in
compliance with Section 8.9. Without limiting the foregoing, when any
Information is no longer needed for the purposes contemplated by this Agreement
or any Ancillary Agreement, each party will promptly after request of the other
party either return to the other party all Information in a tangible form
(including all copies thereof and all notes, extracts or summaries based
thereon) or certify to the other party that it has destroyed such Information
(and such copies thereof and such notes, extracts or summaries based thereon).
8.9. PROTECTIVE ARRANGEMENTS. In the event that any party or
any member of its Group either determines on the advice of its counsel that it
is required to disclose any Information pursuant to applicable law or receives
any demand under lawful process or from any Governmental Authority to disclose
or provide Information of any other party (or any member of any other party's
Group) that is subject to the confidentiality provisions hereof, such party
shall notify the other party prior to disclosing or providing such Information
and shall cooperate at the expense of the requesting party in seeking any
reasonable protective arrangements requested by such other party. Subject to the
foregoing, the Person that received such request may thereafter disclose or
provide Information to the extent required by such law (as so advised by
counsel) or by lawful process or such Governmental Authority.
ARTICLE IX
ARBITRATION; DISPUTE RESOLUTION
9.1. AGREEMENT TO ARBITRATE. Except as otherwise specifically
provided in any Ancillary Agreement, the procedures for discussion, negotiation
and arbitration set forth in this Article IX shall apply to all disputes,
controversies or claims (whether sounding in contract, tort or otherwise) that
may arise out of or relate to, or arise under or in connection with this
Agreement or any Ancillary Agreement, or the transactions contemplated hereby or
thereby (including all actions taken in furtherance of the transactions
contemplated hereby or thereby on or prior to the date hereof), or the
commercial or economic relationship of the parties relating hereto or thereto,
between or among any member of the AT&T Services Group, the Lucent Group and the
NCR Group. Each party agrees on behalf of itself and each member of its
respective Group that the procedures set forth in this
Article IX shall be the sole and exclusive remedy in connection with any
dispute, controversy or claim relating to any of the foregoing matters and
irrevocably waives any right to commence any Action in or before any
Governmental Authority, except as expressly provided in Sections 9.7(b) and 9.8
and except to the extent provided under the Arbitration Act in the case of
judicial review of arbitration results or awards. Each party on behalf of itself
and each member of its respective Group irrevocably waives any right to any
trial by jury with respect to any claim, controversy or dispute set forth in the
first sentence of this Section 9.1.
9.2. ESCALATION. (a) It is the intent of the parties to use
their respective reasonable best efforts to resolve expeditiously any dispute,
controversy or claim between or among them with respect to the matters covered
hereby that may arise from time to time on a mutually acceptable negotiated
basis. In furtherance of the foregoing, any party involved in a dispute,
controversy or claim may deliver a notice (an "Escalation Notice") demanding an
in person meeting involving representatives of the parties at a senior level of
management of the parties (or if the parties agree, of the appropriate strategic
business unit or division within such entity). A copy of any such Escalation
Notice shall be given to the General Counsel, or like officer or official, of
each party involved in the dispute, controversy or claim (which copy shall state
that it is an Escalation Notice pursuant to this Agreement). Any agenda,
location or procedures for such discussions or negotiations between the parties
may be established by the parties from time to time; provided, however, that the
parties shall use their reasonable best efforts to meet within 30 days of the
Escalation Notice.
(b) The parties may, by mutual consent, retain a mediator to
aid the parties in their discussions and negotiations by informally providing
advice to the parties. Any opinion expressed by the mediator shall be strictly
advisory and shall not be binding on the parties, nor shall any opinion
expressed by the mediator be admissible in any arbitration proceedings. The
mediator may be chosen from a list of mediators previously selected by the
parties or by other agreement of the parties. Costs of the mediation shall be
borne equally by the parties involved in the matter, except that each party
shall be responsible for its own expenses. Mediation is not a prerequisite to a
demand for arbitration under Section 9.3.
9.3. DEMAND FOR ARBITRATION. (a) At any time after the first
to occur of (i) the date of the meeting actually held pursuant to the applicable
Escalation Notice or (ii) 45 days after the delivery of an Escalation Notice (as
applicable, the "Arbitration Demand Date"), any party involved in the dispute,
controversy or claim (regardless of whether such party delivered the Escalation
Notice) may, unless the Applicable Deadline has occurred, make a written demand
(the "Arbitration Demand Notice") that the dispute be resolved by binding
arbitration, which Arbitration Demand Notice shall be given to the parties to
the dispute, controversy or claim in the manner set forth in Section 12.5. In
the event that any party shall deliver an Arbitration Demand Notice to another
party, such other party may itself deliver an Arbitration Demand Notice to such
first party with respect to any related dispute, controversy or claim with
respect to which the Applicable Deadline has not passed without the requirement
of delivering an Escalation Notice. No party may assert that the failure to
resolve any matter during any discussions or negotiations, the course of conduct
during the discussions or negotiations or the failure to agree on a mutually
acceptable time, agenda, location or procedures for the meeting, in each case,
as contemplated by Section 9.2, is a prerequisite to a demand for arbitration
under Section 9.3. In the event that any party delivers an Arbitration Demand
Notice with respect to any dispute, controversy or
claim that is the subject of any then pending arbitration proceeding or of a
previously delivered Arbitration Demand Notice, all such disputes, controversies
and claims shall be resolved in the arbitration proceeding for which an
Arbitration Demand Notice was first delivered unless the arbitrator in his or
her sole discretion determines that it is impracticable or otherwise inadvisable
to do so.
(b) Except as may be expressly provided in any Ancillary
Agreement, any Arbitration Demand Notice may be given until one year and 45 days
after the later of the occurrence of the act or event giving rise to the
underlying claim or the date on which such act or event was, or should have
been, in the exercise of reasonable due diligence, discovered by the party
asserting the claim (as applicable and as it may in a particular case be
specifically extended by the parties in writing, the "Applicable Deadline"). Any
discussions, negotiations or mediations between the parties pursuant to this
Agreement or otherwise will not toll the Applicable Deadline unless expressly
agreed in writing by the parties. Each of the parties agrees on behalf of itself
and each member of its Group that if an Arbitration Demand Notice with respect
to a dispute, controversy or claim is not given prior to the expiration of the
Applicable Deadline, as between or among the parties and the members of their
Groups, such dispute, controversy or claim will be barred. Subject to Sections
9.7(d) and 9.8, upon delivery of an Arbitration Demand Notice pursuant to
Section 9.3(a) prior to the Applicable Deadline, the dispute, controversy or
claim shall be decided by a sole arbitrator in accordance with the rules set
forth in this Article IX.
9.4. ARBITRATORS. (a) Within 15 days after a
valid Arbitration
Demand Notice is given, the parties involved in the dispute,
controversy or
claim referenced therein shall attempt to select a sole arbitrator
satisfactory
to all such parties.
(b) In the event that such parties are not able jointly to
select a sole arbitrator within such 15-day period, such parties shall each
appoint an arbitrator (who need not be disinterested as to the parties or the
matter) within 30 days after delivery of the Arbitration Demand Notice. If one
party appoints an arbitrator within such time period and the other party or
parties fail to appoint an arbitrator within such time period, the arbitrator
appointed by the one party shall be the sole arbitrator of the matter.
(c) In the event that a sole arbitrator is not selected
pursuant to paragraph (a) or (b) above and, instead, two or three arbitrators
are selected pursuant to paragraph (b) above, the two or three arbitrators will,
within 30 days after the appointment of the later of them to be appointed,
select an additional arbitrator who shall act as the sole arbitrator of the
dispute. After selection of such sole arbitrator, the initial arbitrators shall
have no further role with respect to the dispute. In the event that the
arbitrators so appointed do not, within 30 days after the appointment of the
later of them to be appointed, agree on the selection of the sole arbitrator,
any party involved in such dispute may apply to CPR, New York, New York to
select the sole arbitrator, which selection shall be made by such organization
within 30 days after such application. Any arbitrator selected pursuant to this
paragraph (c) shall be disinterested with respect to any of the parties and the
matter and shall be reasonably competent in the applicable subject matter.
(d) The sole arbitrator selected pursuant to paragraph (a),
(b) or (c) above will set a time for the hearing of the matter which will
commence no later than 90 days after the date of appointment of the sole
arbitrator pursuant to paragraph (a), (b) or (c) above and which hearing will be
no longer than 30 days (unless in the judgment of the arbitrator the matter is
unusually complex and sophisticated and thereby requires a longer time, in which
event such hearing shall be no longer than 90 days). The final decision of
such arbitrator will be rendered in writing to the parties not later than 60
days after the last hearing date, unless otherwise agreed by the parties in
writing.
(e) The place of any arbitration hereunder will be New York,
New York, unless otherwise agreed by the parties.
9.5. HEARINGS. Within the time period specified in Section
9.4(d), the matter shall be presented to the arbitrator at a hearing by means of
written submissions of memoranda and verified witness statements, filed
simultaneously, and responses, if necessary in the judgment of the arbitrator or
both the parties. If the arbitrator deems it to be essential to a fair
resolution of the dispute, live cross-examination or direct examination may be
permitted, but is not generally contemplated to be necessary. The arbitrator
shall actively manage the arbitration with a view to achieving a just, speedy
and cost-effective resolution of the dispute, claim or controversy. The
arbitrator may, in his or her discretion, set time and other limits on the
presentation of each party's case, its memoranda or other submissions, and
refuse to receive any proffered evidence, which the arbitrator, in his or her
discretion, finds to be cumulative, unnecessary, irrelevant or of low probative
nature. Except as otherwise set forth herein, any arbitration hereunder will be
conducted in accordance with the CPR Rules for Non-Administered Arbitration of
Business Disputes then prevailing (except that the fee schedule of CPR will not
apply). Except as expressly set forth in Section 9.8(b), the decision of the
arbitrator will be final and binding on the parties, and judgment thereon may be
had and will be enforceable in any court having jurisdiction over the parties.
Arbitration awards will bear interest at an annual rate of the Prime Rate plus
2% per annum. To the extent that the provisions of this Agreement and the
prevailing rules of the CPR conflict, the provisions of this Agreement shall
govern.
9.6. DISCOVERY AND CERTAIN OTHER MATTERS. (a) Any party
involved in the applicable dispute may request limited document production from
the other party or parties of specific and expressly relevant documents, with
the reasonable expenses of the producing party incurred in such production paid
by the requesting party. Any such discovery (which rights to documents shall be
substantially less than document discovery rights prevailing under the Federal
Rules of Civil Procedure) shall be conducted expeditiously and shall not cause
the hearing provided for in Section 9.5 to be adjourned except upon consent of
all parties involved in the applicable dispute or upon an extraordinary showing
of cause demonstrating that such adjournment is necessary to permit discovery
essential to a party to the proceeding. Depositions, interrogatories or other
forms of discovery (other than the document production set forth above) shall
not occur except by consent of the parties involved in the applicable dispute.
Disputes concerning the scope of document production and enforcement of the
document production requests will be determined by written agreement of the
parties involved in the applicable dispute or, failing such agreement, will be
referred to the arbitrator for resolution. All discovery requests will be
subject to the parties' rights to claim any applicable privilege. The arbitrator
will adopt procedures to protect the proprietary rights of the parties and to
maintain the confidential treatment of the arbitration proceedings (except as
may be required by law). Subject to the foregoing, the arbitrator shall have the
power to issue subpoenas to compel the production of documents relevant to the
dispute, controversy or claim.
(b) The arbitrator shall have full power and authority to
determine issues of arbitrability but shall otherwise be limited to interpreting
or construing the applicable provisions of this Agreement or any Ancillary
Agreement, and will have no authority or power to limit, expand, alter, amend,
modify, revoke or suspend any condition or provision of this Agreement or any
Ancillary Agreement; it being understood, however, that the arbitrator
will have full authority to implement the provisions of this Agreement or any
Ancillary Agreement, and to fashion appropriate remedies for breaches of this
Agreement (including interim or permanent injunctive relief); provided that the
arbitrator shall not have (i) any authority in excess of the authority a court
having jurisdiction over the parties and the controversy or dispute would have
absent these arbitration provisions or (ii) any right or power to award punitive
or treble damages. It is the intention of the parties that in rendering a
decision the arbitrator give effect to the applicable provisions of this
Agreement and the Ancillary Agreements and follow applicable law (it being
understood and agreed that this sentence shall not give rise to a right of
judicial review of the arbitrator's award).
(c) If a party fails or refuses to appear at and participate
in an arbitration hearing after due notice, the arbitrator may hear and
determine the controversy upon evidence produced by the appearing party.
(d) Arbitration costs will be borne equally by each party
involved in the matter, except that each party will be responsible for its own
attorney's fees and other costs and expenses, including the costs of witnesses
selected by such party.
9.7. CERTAIN ADDITIONAL MATTERS. (a) Any arbitration award
shall be a bare award limited to a holding for or against a party and shall be
without findings as to facts, issues or conclusions of law (including with
respect to any matters relating to the validity or infringement of patents or
patent applications) and shall be without a statement of the reasoning on which
the award rests, but must be in adequate form so that a judgment of a court may
be entered thereupon. Judgment upon any arbitration award hereunder may be
entered in any court having jurisdiction thereof.
(b) Prior to the time at which an arbitrator is appointed
pursuant to Section 9.4, any party may seek one or more temporary restraining
orders in a court of competent jurisdiction if necessary in order to preserve
and protect the status quo. Neither the request for, or grant or denial of, any
such temporary restraining order shall be deemed a waiver of the obligation to
arbitrate as set forth herein and the arbitrator may dissolve, continue or
modify any such order. Any such temporary restraining order shall remain in
effect until the first to occur of the expiration of the order in accordance
with its terms or the dissolution thereof by the arbitrator.
(c) Except as required by law, the parties shall hold, and
shall cause their respective officers, directors, employees, agents and other
representatives to hold, the existence, content and result of mediation or
arbitration in confidence in accordance with the provisions of Article VIII and
except as may be required in order to enforce any award. Each of the parties
shall request that any mediator or arbitrator comply with such confidentiality
requirement.
(d) In the event that at any time the sole arbitrator shall
fail to serve as an arbitrator for any reason, the parties shall select a new
arbitrator who shall be disinterested as to the parties and the matter in
accordance with the procedures set forth herein for the selection of the initial
arbitrator. The extent, if any, to which testimony previously given shall be
repeated or as to which the replacement arbitrator elects to rely on the
stenographic record (if there is one) of such testimony shall be determined by
the replacement arbitrator.
9.8. LIMITED COURT ACTIONS. (a) Notwithstanding
anything
herein to the contrary, in the event that any party reasonably
determines the
amount in controversy in any dispute, controversy or claim (or any
series of
related disputes, controversies or claims)
under this Agreement or any Ancillary Agreement is, or is reasonably likely to
be, in excess of $100 million and if such party desires to commence an Action in
lieu of complying with the arbitration provisions of this Article, such party
shall so state in its Arbitration Demand Notice or by notice given to the other
parties within 20 days after receipt of an Arbitration Demand Notice with
respect thereto. If the other parties to the arbitration do not agree that the
amount in controversy in such dispute, controversy or claim (or such series of
related disputes, controversies or claims) is, or is reasonably likely to be, in
excess of $100 million, the arbitrator selected pursuant to Section 9.4 hereof
shall decide whether the amount in controversy in such dispute, controversy or
claim (or such series of related disputes, controversies or claims) is, or is
reasonably likely to be, in excess of $100 million. The arbitrator shall set a
date that is no later than ten days after the date of his or her appointment for
submissions by the parties with respect to such issue. There shall not be any
discovery in connection with such issue. The arbitrator shall render his or her
decision on such issue within five days of such date so set by the arbitrator.
In the event that the arbitrator determines that the amount in controversy in
such dispute, controversy or claim (or such series of related disputes,
controversies or claims) is or is reasonably likely to be in excess of $100
million, the provisions of Sections 9.4(d) and (e), 9.5, 9.6, 9.7 and 9.10
hereof shall not apply and on or before (but, except as expressly set forth in
Section 9.8(b), not after) the tenth business day after the date of such
decision, any party to the arbitration may elect, in lieu of arbitration, to
commence an Action with respect to such dispute, controversy or claim (or such
series of related disputes, controversies or claims) in any court of competent
jurisdiction. If the arbitrator does not so determine, the provisions of this
Article (including with respect to time periods) shall apply as if no
determinations were sought or made pursuant to this Section 9.8(a).
(b) In the event that an arbitration award in excess of $100
million is issued in any arbitration proceeding commenced hereunder, any party
may, within 60 days after the date of such award, submit the dispute,
controversy or claim (or series of related disputes, controversies or claims)
giving rise thereto to a court of competent jurisdiction, regardless of whether
such party or any other party sought to commence an Action in lieu of proceeding
with arbitration in accordance with Section 9.8(a). In such event, the
applicable court may elect to rely on the record developed in the arbitration
or, if it determines that it would be advisable in connection with the matter,
allow the parties to seek additional discovery or to present additional
evidence. Each party shall be entitled to present arguments to the court with
respect to whether any such additional discovery or evidence shall be permitted
and with respect to all other matters relating to the applicable dispute,
controversy or claim (or series of related disputes, controversies or claims).
(c) No party shall raise as a defense the statute of
limitations if the applicable Arbitration Demand Notice was delivered on or
prior to the Applicable Deadline and, if applicable, if the matter is submitted
to a court of competent jurisdiction within the 60-day period specified in
Section 9.8(b).
9.9. CONTINUITY OF SERVICE AND PERFORMANCE. Unless otherwise
agreed in writing, the parties will continue to provide service and honor all
other commitments under this Agreement and each Ancillary Agreement during the
course of dispute resolution pursuant to the provisions of this Article IX with
respect to all matters not subject to such dispute, controversy or claim.
9.10. LAW GOVERNING ARBITRATION PROCEDURES. The
interpretation
of the provisions of this Article IX, only insofar as they relate
to the
agreement to arbitrate and
any procedures pursuant thereto, shall be governed by the Arbitration Act and
other applicable federal law. In all other respects, the interpretation of this
Agreement shall be governed as set forth in Section 12.2.
ARTICLE X
FURTHER ASSURANCES AND ADDITIONAL COVENANTS
10.1. FURTHER ASSURANCES. (a) In addition to the actions
specifically provided for elsewhere in this Agreement, each of the parties
hereto shall use its reasonable best efforts, prior to, on and after the Closing
Date, to take, or cause to be taken, all actions, and to do, or cause to be
done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements.
(b) Without limiting the foregoing, prior to, on and after the
Closing Date, each party hereto shall cooperate with the other parties, and
without any further consideration, but at the expense of the requesting party,
to execute and deliver, or use its reasonable best efforts to cause to be
executed and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any Governmental Authority or any
other Person under any permit, license, agreement, indenture or other instrument
(including any Consents or Governmental Approvals), and to take all such other
actions as such party may reasonably be requested to take by any other party
hereto from time to time, consistent with the terms of this Agreement and the
Ancillary Agreements, in order to effectuate the provisions and purposes of this
Agreement and the Ancillary Agreements and the transfers of the Lucent Assets
and the assignment and assumption of the Lucent Liabilities and the other
transactions contemplated hereby and thereby. Without limiting the foregoing,
each party will, at the reasonable request, cost and expense of any other party,
take such other actions as may be reasonably necessary to vest in such other
party good and marketable title, free and clear of any Security Interest, if and
to the extent it is practicable to do so.
(c) On or prior to the Closing Date, AT&T, Lucent and NCR in
their respective capacities as direct and indirect stockholders of their
respective Subsidiaries, shall each ratify any actions which are reasonably
necessary or desirable to be taken by AT&T, Lucent, NCR or any other Subsidiary
of AT&T, as the case may be, to effectuate the transactions contemplated by this
Agreement. On or prior to the Closing Date, AT&T and Lucent shall take all
actions as may be necessary to approve the stock-based employee benefit plans of
Lucent in order to satisfy the requirement of Rule 16b-3 under the Exchange Act
and Section 162(m) of the Code.
(d) The parties hereto agree to take any reasonable actions
necessary in order for the Distribution to qualify as a tax-free distribution
pursuant to Section 355 of the Code.
(e) AT&T, Lucent and NCR, and each of the members of their
respective Groups, waive (and agree not to assert against any of the others) any
claim or demand that any of them may have against any of the others for any
Liabilities or other claims relating to or arising out of: (i) the failure of
Lucent or any member of the Lucent Group, on the one hand, or of AT&T, NCR or
any member of the AT&T Services Group or the NCR Group, on the other hand, to
provide any notification or disclosure required under any state
Environmental Law in connection with the Separation or the other transactions
contemplated by this Agreement, including the transfer by any member of any
Group to any member of any other Group of ownership or operational control of
any Assets not previously owned or operated by such transferee; or (ii) any
inadequate, incorrect or incomplete notification or disclosure under any such
state Environmental Law by the applicable transferor. To the extent any
Liability to any Governmental Authority or any third Person arises out of any
action or inaction described in clause (i) or (ii) above, the transferee of the
applicable Asset hereby assumes and agrees to pay any such Liability.
(f) Prior to the Closing Date, if one or more of the parties
identifies any commercial or other service that is needed to assure a smooth and
orderly transition of the businesses in connection with the consummation of the
transactions contemplated hereby, and that is not otherwise governed by the
provisions of this Agreement or any Ancillary Agreement, the parties will
cooperate in determining whether there is a mutually acceptable arm's-length
basis on which one or more of the other parties will provide such service.
10.2. QUALIFICATION AS TAX-FREE DISTRIBUTION. After the
Closing Date, none of AT&T, Lucent or NCR shall take, or permit any member of
its respective Group to take, any action which could reasonably be expected to
prevent the Distribution from qualifying as a tax-free distribution within the
meaning of Section 355 of the Code or any other transaction contemplated by this
Agreement or any Ancillary Agreement which is intended by the parties to be
tax-free from failing so to qualify. Without limiting the foregoing, after the
Closing Date and on or prior to the Distribution Date, Lucent shall not issue or
grant, and shall not permit any member of the Lucent Group to issue or grant,
directly or indirectly, any shares of Lucent Common Stock or any rights,
warrants, options or other securities to purchase or acquire (whether upon
conversion, exchange or otherwise) any shares of Lucent Common Stock (whether or
not then exercisable, convertible or exchangeable).
ARTICLE XI
TERMINATION
11.1. TERMINATION BY MUTUAL CONSENT. This
Agreement may be
terminated at any time prior to the Distribution Date by the
mutual consent of
AT&T, Lucent and NCR.
11.2. OTHER TERMINATION. This Agreement may be terminated by
AT&T at any time prior to the Closing Date. The obligations of the parties under
Article IV (including the obligation to pursue or effect the Distribution) may
be terminated by AT&T if the Distribution Date shall not have occurred on or
prior to December 31, 1997.
11.3. EFFECT OF TERMINATION. (a) In the event of
any
termination of this Agreement prior to the Closing Date, no party
to this
Agreement (or any of its directors or officers) shall have any
Liability or
further obligation to any other party.
(b) In the event of any termination of this Agreement on or
after the Closing Date, only the provisions of Article IV will terminate and the
other provisions of this Agreement and each Ancillary Agreement shall remain in
full force and effect.
ARTICLE XII
MISCELLANEOUS
12.1. COUNTERPARTS; ENTIRE AGREEMENT; CORPORATE
POWER. (a)
This Agreement and each Ancillary Agreement may be executed in one
or more
counterparts, all of which shall be considered one and the same
agreement, and
shall become effective when one or more counterparts have been
signed by each of
the parties and delivered to the other party.
(b) This Agreement, and the Ancillary Agreements and the
Exhibits, Schedules and Appendices hereto and thereto contain the entire
agreement between the parties with respect to the subject matter hereof,
supersede all previous agreements, negotiations, discussions, writings,
understandings, commitments and conversations with respect to such subject
matter and there are no agreements or understandings between the parties other
than those set forth or referred to herein or therein.
(c) AT&T represents on behalf of itself and each other member
of the AT&T Services Group, Lucent represents on behalf of itself and each other
member of the Lucent Group and NCR represents on behalf of itself and each other
member of the NCR Group as follows:
(i) each such Person has the requisite
corporate or other
power and authority and has taken all corporate or
other action
necessary in order to execute, deliver and
perform each of this
Agreement and each other Ancillary Agreements to which
it is a party
and to consummate the transactions contemplated hereby
and thereby; and
(ii) this Agreement and each Ancillary
Agreement to which it
is a party has been duly executed and delivered by it and
constitutes a
valid and binding agreement of it enforceable in
accordance with the
terms thereof.
(d) Each party hereto acknowledges that it and each other
party hereto is executing certain of the Ancillary Agreements by facsimile,
stamp or mechanical signature. Each party hereto expressly adopts and confirms
each such facsimile, stamp or mechanical signature made in its respective name
as if it were a manual signature, agrees that it will not assert that any such
signature is not adequate to bind such party to the same extent as if it were
signed manually and agrees that at the reasonable request of any other party
hereto at any time it will as promptly as reasonably practicable cause each such
Ancillary Agreement to be manually executed (any such execution to be as of the
date of the initial date thereof).
(e) Notwithstanding any provision of this Agreement or any
Ancillary Agreement, neither AT&T, Lucent nor NCR shall be required to take or
omit to take any act that would violate its fiduciary duties to any minority
stockholders of AT&T Capital Corporation or any other non-wholly owned
Subsidiary of AT&T, Lucent or NCR, as the case may be (it being understood that
directors' qualifying shares or similar interests will be disregarded for
purposes of determining whether a Subsidiary is wholly owned).
12.2. GOVERNING LAW. Except as set forth in
Section 9.10, this
Agreement and, unless expressly provided therein, each
Ancillary Agreement,
shall be governed by and construed and interpreted in accordance with the laws
of the State of New York (other than as to its laws of arbitration which shall
be governed under the Arbitration Act or other
applicable federal law pursuant to Section 9.10), irrespective of the choice of
laws principles of the State of New York, as to all matters, including matters
of validity, construction, effect, enforceability, performance and remedies.
12.3. ASSIGNABILITY. (a) Except as set forth in any Ancillary
Agreement, this Agreement and each Ancillary Agreement shall be binding upon and
inure to the benefit of the parties hereto and thereto, respectively, and their
respective successors and assigns; provided, however, that no party hereto or
thereto may assign its respective rights or delegate its respective obligations
under this Agreement or any Ancillary Agreement without the express prior
written consent of the other parties hereto or thereto.
(b) Lucent agrees and acknowledges on behalf of itself and
each other member of the Lucent Group that (i) AT&T and NCR may enter into a
separation and distribution agreement and other agreements and instruments in
connection with the NCR Distribution or otherwise providing for certain
arrangements between AT&T and NCR and that no consent of any member of the
Lucent Group will be required in connection therewith, (ii) certain transfers of
Assets and Liabilities may occur after the date hereof between members of the
AT&T Services Group and the NCR Group and that no consent of any member of the
Lucent Group will be required in connection therewith, (iii) AT&T shall have no
obligation to proceed with the NCR Distribution, and (iv) except as set forth
below, all of the rights and obligations of the NCR Group shall continue
regardless of whether NCR is an Affiliate of AT&T. Lucent agrees that if any
technical or other nonmaterial amendments to this Agreement or any Ancillary
Agreement are advisable in connection with the NCR Distribution or the
separation of the NCR Business from the AT&T Services Business, Lucent will
reasonably cooperate with AT&T and NCR in connection therewith for no additional
consideration. Without limiting the foregoing, effective immediately on notice
to Lucent, without any further action required by any member of the Lucent
Group, AT&T may assume any Asset or Liability of any member of the NCR Group
hereunder or under any Ancillary Agreement (and any rights of any member of the
NCR Group in connection therewith) and all members of the NCR Group shall
thereupon automatically be released therefrom.
12.4. THIRD PARTY BENEFICIARIES. Except for the
indemnification rights under this Agreement of any AT&T Indemnitee, Lucent
Indemnitee or NCR Indemnitee in their respective capacities as such, (a) the
provisions of this Agreement and each Ancillary Agreement are solely for the
benefit of the parties and are not intended to confer upon any Person except the
parties any rights or remedies hereunder, and (b) there are no third party
beneficiaries of this Agreement or any Ancillary Agreement and neither this
Agreement nor any Ancillary Agreement shall provide any third person with any
remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement or any Ancillary
Agreement. No party hereto shall have any right, remedy or claim with respect to
any provision of this Agreement or any Ancillary Agreement to the extent such
provision relates solely to the other two parties hereto or the members of such
other two parties' respective Groups. No party shall be required to deliver any
notice under this Agreement or under any Ancillary Agreement to any other party
with respect to any matter in which such other party has no right, remedy or
claim.
12.5. NOTICES. All notices or other communications under this
Agreement or any Ancillary Agreement shall be in writing and shall be deemed to
be duly given when (a) delivered in person or (b) deposited in the United States
mail or private express mail, postage prepaid, addressed as follows:
If to AT&T, to: AT&T Corp.
131 Morristown Road
Basking Ridge, NJ 07920
Attn: Vice President-Law and
Corporate Secretary
If to Lucent, to: Lucent Technologies Inc.
600 Mountain Avenue
Murray Hill, New Jersey 07974
Attn: General Counsel
If to NCR, to: NCR Corporation
1700 S. Patterson Blvd.
Dayton, Ohio 45479
Attn: Chief Financial Officer
with a copy to: NCR Corporation
1700 S. Patterson Blvd.
Dayton, Ohio 45479
Attn: General Counsel
Any party may, by notice to the other party, change the address to which such
notices are to be given.
12.6. SEVERABILITY. If any provision of this Agreement or any
Ancillary Agreement or the application thereof to any Person or circumstance is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof or thereof, or the application of
such provision to Persons or circumstances or in jurisdictions other than those
as to which it has been held invalid or unenforceable, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated
thereby, so long as the economic or legal substance of the transactions
contemplated hereby or thereby, as the case may be, is not affected in any
manner adverse to any party. Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon such a suitable and equitable
provision to effect the original intent of the parties.
12.7. FORCE MAJEURE. No party shall be deemed in default of
this Agreement or any Ancillary Agreement to the extent that any delay or
failure in the performance of its obligations under this Agreement or any
Ancillary Agreement results from any cause beyond its reasonable control and
without its fault or negligence, such as acts of God, acts of civil or military
authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, labor problems or
unavailability of parts, or, in the case of computer systems, any failure in
electrical or air conditioning equipment. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time
lost by reason of the delay.
12.8. PUBLICITY. Prior to the Distribution, each of Lucent,
NCR and AT&T shall consult with each other prior to issuing any press releases
or otherwise making public statements with respect to the IPO, the Distribution
or any of the other transactions contemplated hereby and prior to making any
filings with any Governmental Authority with respect thereto.
12.9. EXPENSES. Except as expressly set
forth in this
Agreement (including Section 3.1(h) hereof) or in any
Ancillary Agreement,
whether or not the IPO or the Distribution is consummated, all third party fees,
costs and expenses paid or incurred in connection with the Distribution will be
paid by AT&T.
12.10. HEADINGS. The article, section and
paragraph headings
contained in this Agreement and in the Ancillary Agreements are
for reference
purposes only and shall not affect in any way the meaning or
interpretation of
this Agreement or any Ancillary Agreement.
12.11. SURVIVAL OF COVENANTS. Except as expressly set forth in
any Ancillary Agreement, the covenants, representations and warranties contained
in this Agreement and each Ancillary Agreement, and liability for the breach of
any obligations contained herein, shall survive each of the Separation, the IPO
and the Distribution and shall remain in full force and effect regardless of
whether AT&T shall consummate, delay, modify or abandon the NCR Distribution.
12.12. WAIVERS OF DEFAULT. Waiver by any party
of any default
by the other party of any provision of this Agreement or any
Ancillary Agreement
shall not be deemed a waiver by the waiving party of any
subsequent or other
default, nor shall it prejudice the rights of the other party.
12.13. SPECIFIC PERFORMANCE. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Agreement or any Ancillary Agreement, the party or parties who are or
are to be thereby aggrieved shall have the right to specific performance and
injunctive or other equitable relief of its rights under this Agreement or such
Ancillary Agreement, in addition to any and all other rights and remedies at law
or in equity, and all such rights and remedies shall be cumulative. The parties
agree that the remedies at law for any breach or threatened breach, including
monetary damages, are inadequate compensation for any loss and that any defense
in any action for specific performance that a remedy at law would be adequate is
waived. Any requirements for the securing or posting of any bond with such
remedy are waived.
12.14. AMENDMENTS. (a) No provisions of this Agreement or any
Ancillary Agreement shall be deemed waived, amended, supplemented or modified by
any party, unless such waiver, amendment, supplement or modification is in
writing and signed by the authorized representative of the party against whom it
is sought to enforce such waiver, amendment, supplement or modification. Without
limiting the foregoing, the parties agree that any waiver, amendment, supplement
or modification of this Agreement or any Ancillary Agreement that solely relates
to and affects only two of the three parties hereto shall not require the
consent of the third party hereto.
(b) Without limiting the foregoing, the parties anticipate
that, prior to the Closing Date, some or all of the Schedules to this Agreement
may be amended or supplemented and, in such event, such amended or supplemented
Schedules shall be attached hereto in lieu of the original Schedules.
12.15. INTERPRETATION. Words in the singular
shall be held to
include the plural and vice versa and words of one gender shall be
held to
include the other genders as the context requires. The terms
"hereof," "herein,"
and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
(or the applicable Ancillary Agreement) as a whole (including all of the
Schedules, Exhibits and Appendices hereto and thereto) and not to any particular
provision of this Agreement (or such Ancillary Agreement).
Article, Section,
Exhibit, Schedule and Appendix references are to the Articles, Sections,
Exhibits, Schedules and Appendices to this Agreement (or the applicable
Ancillary Agreement) unless otherwise specified. The word "including" and words
of similar import when used in this Agreement (or the applicable Ancillary
Agreement) shall mean "including, without limitation," unless the context
otherwise requires or unless otherwise specified. The word "or" shall not be
exclusive. For all purposes of this Agreement, "allocated costs of in-house
counsel and other personnel" shall be determined in accordance with the
principles set forth in Schedule 12.15. Unless expressly stated to the contrary
in this Agreement or in any Ancillary Agreement, all references to "the date
hereof," "the date of this Agreement," "hereby" and "hereupon" and words of
similar import shall all be references to February 1, 1996, regardless of any
amendment or restatement hereof.
IN WITNESS WHEREOF, the parties have caused this Separation
and Distribution Agreement to be executed by their duly authorized
representatives.
AT&T CORP.
By: /s/
- ------------------------
Name:
Title:
LUCENT TECHNOLOGIES
INC.
By: /s/
- ------------------------
Name:
Title:
NCR CORPORATION
By: /s/
- ------------------------
Name:
Title: