As filed with the Securities and Exchange Commission on September 23, 2003
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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AGERE SYSTEMS INC.
(Exact name of registrant as specified in its charter)
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Delaware 1110 American Parkway NE 22-3746606
(State or other jurisdiction Allentown, Pennsylvania (I.R.S. Employer
of incorporation or 18109 Identification Number)
organization) (610) 712-1000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Jean F. Rankin, Esq.
Senior Vice President, General Counsel and Secretary
Agere Systems Inc.
1110 American Parkway NE
Allentown, Pennsylvania 18109
(610) 712-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans check the following box. |X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Title of Each Class Of Amount To Be Offering Aggregate Offering Registration
Securities To Be Registered Registered Price Per Share (1) Price (1) Fee
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Class A common stock, par
value $0.01 per share (2).... 9,108,125 Shares $3.24 $29,510,325 $2,387.39
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(1) Estimated in accordance with Rule 457(c) of the Securities Act
of 1933 solely for the purpose of calculating the registration fee
based upon the average of the high and low prices of the Class A
common stock reported on the New York Stock Exchange on September 22,
2003.
(2) Includes associated Class A rights to purchase Series A Junior
Participating Preferred Stock, which initially are attached to and
trade with the shares of Agere Class A common stock being registered
hereby. Value attributable to such Class A rights, if any, is
reflected in the market price of Agere Class A common stock.
Pursuant to Rule 416 under the Securities Act of 1933, to the extent
additional shares of Agere Class A common stock may be issued or issuable as a
result of a stock split or other distribution declared at any time by the
Board of Directors while this registration statement is in effect, this
registration statement is hereby deemed to cover all such additional Class A
common stock.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to completion dated September 23, 2003
AGERE SYSTEMS INC.
9,108,125 SHARES
CLASS A COMMON STOCK
The 9,108,125 shares of our Class A common stock offered by this
prospectus were originally issued by us in connection with our acquisition of
Massana Limited. All the shares of our Class A common stock offered by this
prospectus may be sold from time to time by or on behalf of certain Agere
stockholders. See "Selling Stockholders" and "Plan of Distribution." The
shares were originally issued in an offering exempt from the registration
requirements of the Securities Act of 1933. In connection with the acquisition
of Massana Limited, we agreed to register the shares of our Class A common
stock offered by this prospectus. We will not receive any of the proceeds from
the sale of the shares by the selling stockholders.
SEE "RISK FACTORS" BEGINNING ON PAGE 1 TO READ ABOUT RISKS YOU SHOULD
CONSIDER BEFORE BUYING OUR CLASS A COMMON STOCK.
Our Class A common stock, including the shares offered hereby, is
listed in the United States on the New York Stock Exchange under the symbol
AGR.A. The closing sale price of the Class A common stock on the New York
Stock Exchange on September 22, 2003 was $3.19 per share.
The selling stockholders may sell all or a portion of the shares
offered hereby from time to time through public or private transactions on or
off the New York Stock Exchange, in negotiated transactions or otherwise, and
at prevailing market prices or negotiated prices, all as more fully described
under "Plan of Distribution."
You should rely only on the information contained in this prospectus,
including the information in the documents incorporated by reference. We have
not, and no dealer or salesman has, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and no dealer
or salesman is, making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus
is accurate only as of the date on the front cover of this prospectus. Our
business, financial condition, results of operations and prospects may have
changed since that date.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is ______________.
TABLE OF CONTENTS
Page
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FORWARD-LOOKING STATEMENTS..................................................1
RISK FACTORS................................................................1
THE COMPANY.................................................................9
USE OF PROCEEDS.............................................................9
SELLING STOCKHOLDERS........................................................9
PLAN OF DISTRIBUTION.......................................................10
LEGAL MATTERS..............................................................12
EXPERTS....................................................................12
AVAILABLE INFORMATION......................................................12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................13
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are based on
current expectations, estimates, forecasts and projections about the industry
in which we operate and management's beliefs and assumptions. Words such as
"expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees
of future performance and involve risks, uncertainties and assumptions which
are difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. Except as required under the federal securities laws and the rules
and regulations of the Securities and Exchange Commission, we do not have any
intention or obligation to update publicly any forward-looking statements
after we distribute this prospectus, whether as a result of new information,
future events or otherwise.
RISK FACTORS
The purchase of our common stock involves investment risks. You
should carefully consider the following risk factors, as well as the
information under the heading "Forward-Looking Statements," together with the
other information in this prospectus, before purchasing any of the shares. If
any of the following risks actually occurs, our business, financial condition
or results of operations could be materially adversely affected.
RISKS RELATED TO OUR BUSINESS
IF WE FAIL TO KEEP PACE WITH TECHNOLOGICAL ADVANCES IN OUR INDUSTRY OR IF WE
PURSUE TECHNOLOGIES THAT DO NOT BECOME COMMERCIALLY ACCEPTED, CUSTOMERS MAY
NOT BUY OUR PRODUCTS AND OUR REVENUE MAY DECLINE.
The demand for our products can change quickly and in ways we may not
anticipate because our industry is generally characterized by:
o rapid, and sometimes disruptive, technological developments;
o evolving industry standards;
o changes in customer requirements;
o limited ability to accurately forecast future customer orders;
o frequent new product introductions and enhancements; and
o short product life cycles with declining prices over the life cycle
of the product.
If we fail to make sufficient investments in research and development
programs in order to develop new and enhanced products and solutions, or if we
focus on technologies that do not become widely adopted, new technologies
could render our current and planned products obsolete, resulting in the need
to change the focus of our research and development and product strategies and
disrupting our business significantly.
THE INTEGRATED CIRCUIT INDUSTRY IS INTENSELY COMPETITIVE, AND OUR FAILURE TO
COMPETE EFFECTIVELY COULD HURT OUR REVENUE.
The market for integrated circuits is intensely competitive and
subject to rapid and disruptive technological change. We expect the intensity
of competition to continue to increase as existing competitors enhance and
expand their product offerings and as new participants enter the market.
Increased competition may result in price reductions, reduced gross margins
and loss of market share. We may not be able to compete successfully against
existing or future competitors, which may hurt our revenue.
The size and number of our competitors vary across our product areas,
as do the resources we have allocated to the segments we target. Therefore,
many of our competitors have greater financial, personnel,
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production capacity and other resources than we have in a particular market
segment or overall. Competitors with greater financial resources may be able
to offer lower prices, additional products or services or other incentives
that we cannot match or offer. These competitors may be in a stronger position
to respond quickly to new technologies and may be able to undertake more
extensive marketing campaigns. They also may adopt more aggressive pricing
policies and make more attractive offers to potential customers, employees and
strategic partners. These competitors may make strategic acquisitions or
establish cooperative relationships among themselves or with third parties to
increase their ability to gain market share.
Further, some of our competitors are currently selling commercial
quantities of products that we are sampling to our customers, that are still
in the initial stages of development or that we may develop in the future. By
being able to offer these products in commercial quantities before we do, our
competitors can establish significant market share, acquire design wins in
customer equipment programs and create a market position that we may be unable
to overcome once we have completed development and testing of that product.
JOINT VENTURES AND OTHER THIRD-PARTIES MANUFACTURE SOME OF OUR PRODUCTS FOR
US. IF THESE MANUFACTURERS ARE UNABLE TO FILL OUR ORDERS ON A TIMELY AND
RELIABLE BASIS, OUR REVENUE MAY BE ADVERSELY AFFECTED.
We currently manufacture our integrated circuits through a
combination of internal capability, joint ventures and external sourcing with
contract manufacturers. In the first three quarters of fiscal 2003,
approximately 44% of our revenue was derived from integrated circuits
manufactured at joint ventures or through other external sourcing
arrangements, and we expect this percentage to increase over time. To the
extent we rely on joint ventures and third-party manufacturing relationships,
we face the following risks:
o their inability to develop manufacturing methods appropriate for our
products;
o that manufacturing costs will be higher than planned;
o that reliability of our products will decline;
o their unwillingness to devote adequate capacity to produce our
products;
o their inability to maintain continuing relationships with our
suppliers; and
o the reduction of our control over delivery schedules and costs of our
products.
If any of these risks were to be realized, we could experience an
interruption in supply or an increase in costs, which could delay or decrease
our revenue or adversely affect our results of operations.
We are in the process of reducing our owned manufacturing capacity.
In the event of an increase in demand, failure to increase our manufacturing
volumes or obtain capabilities from third parties may result in our not being
able to meet customer demand for our products, which could hurt our
relationships with our customers and result in our recording lower revenues
than would be the case if we had greater manufacturing capacity.
A WIDESPREAD OUTBREAK OF AN ILLNESS SUCH AS SEVERE ACUTE RESPIRATORY SYNDROME,
OR SARS, COULD NEGATIVELY AFFECT OUR MANUFACTURING, ASSEMBLY AND TEST, DESIGN
OR OTHER OPERATIONS, MAKING IT MORE DIFFICULT AND EXPENSIVE TO MEET OUR
OBLIGATIONS TO OUR CUSTOMERS, AND COULD RESULT IN REDUCED DEMAND FROM OUR
CUSTOMERS.
A widespread outbreak of an illness could adversely affect our
operations as well as demand from our customers. A number of countries in the
Asia/Pacific region have experienced outbreaks of SARS. As a result of
outbreaks such as these, businesses can be shut down temporarily and
individuals can become ill or quarantined. We have manufacturing and
back-office operations in Singapore, assembly and test and back-office
operations in Thailand and design operations in China, countries where
outbreaks of SARS have occurred. If our operations are curtailed because of
SARS or other health issues, we may need to seek alternate sources of supply
for manufacturing or other services and alternate sources can be more
expensive. Alternate sources may not be available or may result in delays in
shipments to our customers, each of which would reduce our profitability. In
addition, a curtailment of
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our design operations could result in delays in the development of new
products. If our customers' businesses are affected by SARS, they might delay
or reduce purchases from us, which could reduce our revenues and profitability.
OUR REVENUE AND OPERATING RESULTS MAY FLUCTUATE BECAUSE WE EXPECT TO DERIVE
MOST OF OUR REVENUE FROM SEMICONDUCTOR DEVICES AND THE INTEGRATED CIRCUITS
INDUSTRY IS HIGHLY CYCLICAL, AND BECAUSE OF OTHER CHARACTERISTICS OF OUR
BUSINESS, AND THESE FLUCTUATIONS MAY CAUSE OUR STOCK PRICE TO FALL.
We expect to derive most of our revenue from the sale of integrated
circuits. Because the integrated circuits market segment is highly cyclical,
we may experience declines in our revenue that are primarily related to
industry conditions and not our products. This industry has experienced
significant downturns, often in connection with, or in anticipation of, excess
manufacturing capacity worldwide, maturing product cycles and declines in
general economic conditions.
We focus primarily on winning competitive selection processes to
develop products for use in our customers' equipment. These selection
processes can be lengthy. After winning and beginning a product design for a
customer, that customer may not begin volume production of their equipment for
a period of up to two years, if at all. Due to this lengthy design and
development cycle, we may experience delays from the time we begin incurring
expenses until the time we generate revenue from our products. We have no
assurances that our customers will ultimately market and sell their equipment
or that such efforts by our customers will be successful. Thus, we may never
generate any revenue from our products after incurring significant design and
development expenditures.
If we are not selected by a customer to provide a product, we may
experience significantly lower revenue later, as compared to prior periods
with more revenue from earlier design wins. In addition, sales of our products
for specific customer projects often begin and end abruptly, so revenue may
increase rapidly and later decrease just as quickly. The relative timing of
the beginning and end of our sales and design processes can make our revenues
less predictable.
Fluctuations in our revenue or operating results could cause our
stock price to decline, even if our results meet expectations. Further, stock
prices in our industry have recently been highly volatile for reasons that
sometimes are unrelated to the performance of the companies in the industry.
These broad fluctuations could adversely affect our stock price.
BECAUSE MANY OF OUR CURRENT AND PLANNED PRODUCTS ARE HIGHLY COMPLEX, THEY MAY
CONTAIN DEFECTS OR ERRORS THAT ARE DETECTED ONLY AFTER DEPLOYMENT IN
COMMERCIAL APPLICATIONS, AND IF THIS OCCURS, IT COULD HARM OUR REPUTATION AND
RESULT IN REDUCED REVENUES OR INCREASED EXPENSES.
Our products are highly complex and may contain undetected defects,
errors or failures. These products can only be fully tested when deployed in
commercial applications and other equipment. Consequently, our customers may
discover errors after the products have been deployed. The occurrence of any
defects, errors or failures could result in:
o cancellation of orders;
o product returns, repairs or replacements;
o diversion of our resources;
o legal actions by our customers or our customers' end-users;
o increased insurance costs; and
o other losses to us or to our customers or end-users.
Any of these occurrences could also result in the loss of or delay in
market acceptance of our products and loss of sales, which would harm our
business and adversely affect our revenue and results of operations. We have
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from time to time experienced defects and expect to experience defects in the
future. Because the trend in our industry is moving toward even more complex
products in the future, this risk will intensify over time and may result in
increased expenses.
BECAUSE OUR SALES ARE CONCENTRATED ON A LIMITED NUMBER OF KEY CUSTOMERS, OUR
REVENUE MAY MATERIALLY DECLINE IF ONE OR MORE OF OUR KEY CUSTOMERS DO NOT
CONTINUE TO PURCHASE OUR EXISTING AND NEW PRODUCTS IN SIGNIFICANT QUANTITIES.
Our customer base is highly concentrated. Our top ten end-customers
accounted for 59% of our revenue in the first three quarters of fiscal 2003.
If any one of our key customers decides to purchase significantly less from us
or to terminate its relationship with us, our revenue may materially decline.
Because our strategy has generally been to develop long-term relationships
with a few key customers in the product areas in which we focus and we have a
long product design and development cycle for most of our products, we may be
unable to replace these customers quickly or at all. We could lose our key
customers or significant sales to our key customers because of factors beyond
our control, such as a significant disruption in our customers' businesses
generally or in a specific product line.
THE DEMAND FOR COMPONENTS IN THE COMMUNICATIONS EQUIPMENT INDUSTRY HAS
DECLINED IN RECENT YEARS, AND WE CANNOT PREDICT THE DURATION OR EXTENT OF THIS
TREND. OUR REVENUE WILL DEPEND IN PART ON DEMAND FOR THESE TYPES OF
COMPONENTS.
We derive, and expect to continue to derive, a significant portion of
our revenue from the sale of integrated circuits used in communications
networks. Since early 2001, communications equipment makers have significantly
reduced purchases of components for their products, including the components
we sell. If demand for these components declines further, our revenues may be
adversely affected.
IF WE FAIL TO ATTRACT, HIRE AND RETAIN QUALIFIED PERSONNEL, WE MAY NOT BE ABLE
TO DEVELOP, MARKET OR SELL OUR PRODUCTS OR SUCCESSFULLY MANAGE OUR BUSINESS.
In some of our fields of operation, there are only a limited number
of people in the job market who possess the requisite skills. In the past we
have experienced difficulty in identifying and hiring sufficient numbers of
qualified engineers in many areas of our business as well as in retaining our
current employees. The loss of the services of any key personnel or our
inability to hire new personnel with the requisite skills could restrict our
ability to develop new products or enhance existing products in a timely
manner, sell products to our customers or manage our business effectively.
BECAUSE WE ARE SUBJECT TO ORDER AND SHIPMENT UNCERTAINTIES, ANY SIGNIFICANT
CANCELLATIONS OR DEFERRALS COULD CAUSE OUR REVENUE TO DECLINE OR FLUCTUATE.
We generally sell products pursuant to purchase orders that customers
may cancel or defer on short notice without incurring a significant penalty.
Cancellations or deferrals could cause us to hold excess inventory, which
could adversely affect our results of operations and restrict our ability to
fund our operations. If a customer cancels or defers product shipments, we may
incur unanticipated reductions or delays in our revenue. If a customer refuses
to accept shipped products or does not pay for these products in a timely
manner, we could incur significant charges against our income, which could
materially and adversely affect our operating results.
IF WE DO NOT ACHIEVE ADEQUATE MANUFACTURING UTILIZATION, YIELDS, VOLUMES OR
SUFFICIENT PRODUCT RELIABILITY, OUR GROSS MARGINS WILL BE REDUCED.
Because the manufacturing costs at our owned and joint venture
manufacturing facilities are relatively fixed, efficient utilization of
manufacturing facilities and manufacturing yields are critical to our results
of operations. Some of our manufacturing facilities have been underutilized in
recent periods, which has reduced our gross margins. Lower than expected
manufacturing yields could impair our gross margins and delay product
shipments.
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The manufacture of our products involves highly complex and precise
processes, requiring production in highly controlled and clean environments.
Changes in our manufacturing processes or those of our suppliers or
contractors, or their inadvertent use of defective or contaminated materials,
could significantly reduce our manufacturing yields and product reliability.
WE HAVE RELATIVELY HIGH GROSS MARGIN ON THE REVENUE WE DERIVE FROM THE
LICENSING OF OUR INTELLECTUAL PROPERTY, AND A DECLINE IN THIS REVENUE WOULD
HAVE A GREATER IMPACT ON OUR NET INCOME THAN A DECLINE IN REVENUE FROM OUR
INTEGRATED CIRCUITS PRODUCTS.
The revenue we generate from the licensing of our intellectual
property has a higher gross margin compared to the revenue we generate from
the sale of our integrated circuits products. Although we have derived less
than 7% of our total revenue in recent years from the licensing of
intellectual property, a decline in this licensing revenue would have a
greater impact on our profitability than a similar decline in revenues from
the sale of our integrated circuits products.
IF OUR CUSTOMERS DO NOT QUALIFY OUR PRODUCTS OR MANUFACTURING LINES OR THE
MANUFACTURING LINES OF OUR THIRD-PARTY SUPPLIERS FOR VOLUME SHIPMENTS, OUR
REVENUE MAY BE DELAYED OR REDUCED.
Some customers will not purchase any of our products, other than
limited numbers of evaluation units, until they qualify the manufacturing line
for the product. We may not always be able to satisfy the qualifications.
Delays in qualification may cause a customer to discontinue use of our
products and result in a significant loss of revenue.
WE CONDUCT A SIGNIFICANT AMOUNT OF OUR SALES ACTIVITY AND MANUFACTURING
EFFORTS OUTSIDE THE UNITED STATES, WHICH SUBJECTS US TO ADDITIONAL BUSINESS
RISKS AND MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS DUE TO INCREASED
COSTS.
In the first three quarters of fiscal 2003, we derived approximately
80% of our revenue from sales of our products shipped to locations outside the
United States. We also manufacture a significant portion of our products
outside the United States and are dependent on international suppliers for
many of our parts. We intend to continue to pursue growth opportunities in
both sales and manufacturing internationally. International operations are
subject to a number of risks and potential costs, which could adversely affect
our revenue and results of operations, including:
o our brand may not be locally recognized, which may cause us to spend
significant amounts of time and money to build a brand identity;
o unexpected changes in regulatory requirements;
o inadequate protection of intellectual property in some countries
outside of the United States;
o currency exchange rate fluctuations;
o political and economic instability; and
o disruptions in international air transport systems.
WE ARE SUBJECT TO ENVIRONMENTAL, HEALTH AND SAFETY LAWS, WHICH COULD INCREASE
OUR COSTS AND RESTRICT OUR OPERATIONS IN THE FUTURE.
We are subject to a variety of laws relating to the use, disposal,
clean-up of, and human exposure to, hazardous chemicals. Any failure by us to
comply with present and future environmental, health and safety requirements
could subject us to future liabilities or the suspension of production. In
addition, compliance with these or future laws could restrict our ability to
expand our facilities or require us to acquire costly pollution control
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equipment, incur other significant expenses or modify our manufacturing
processes. If additional contaminants are discovered or additional cleanup
obligations imposed at these or other sites, we could be adversely affected.
WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY LITIGATION AND INFRINGEMENT CLAIMS,
WHICH COULD CAUSE US TO INCUR SIGNIFICANT EXPENSES OR PREVENT US FROM SELLING
OUR PRODUCTS. IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS,
OUR BUSINESS AND PROSPECTS MAY BE HARMED.
Like other companies in the semiconductor industry, we are frequently
involved in litigation regarding patent and other intellectual property
rights. From time to time, we receive notices from third parties of potential
infringement and receive claims of potential infringement when we attempt to
license our intellectual property to others. Defending these claims could be
costly and time consuming and would divert the attention of management and key
personnel from other business issues. The complexity of the technology
involved and the uncertainty of intellectual property litigation increase
these risks. Claims of intellectual property infringement also might require
us to enter into costly royalty or license agreements. However, we may be
unable to obtain royalty or license agreements on terms acceptable to us or at
all. In addition, third parties may attempt to appropriate the confidential
information and proprietary technologies and processes used in our business,
which we may be unable to prevent and which would harm our business and
prospects.
WE BELIEVE THAT FINANCING HAS AT TIMES BEEN DIFFICULT TO OBTAIN FOR COMPANIES
IN OUR INDUSTRY AND IF WE NEED ADDITIONAL CASH TO FUND OUR OPERATIONS OR TO
FINANCE FUTURE STRATEGIC INITIATIVES, WE MAY NOT BE ABLE TO OBTAIN IT ON
ACCEPTABLE TERMS OR AT ALL.
We believe that lenders have at times been less willing to extend
credit to companies in the telecommunications and semiconductor industries,
making debt financing difficult to obtain. As described below under "Risks
Related to Our Separation from Lucent Technologies--we are limited in the
amount of stock that we can issue to raise capital because of potential
adverse tax consequences," in connection with our spin-off from Lucent
Technologies, we are restricted in our ability to issue stock in order to
raise capital.
If we are not able to obtain sufficient funds on acceptable terms, we
may not have sufficient funds to take advantage of market opportunities or to
finance future strategic initiatives, such as to fill any gaps which may arise
in our product portfolio.
We believe that our cash and cash equivalents will be sufficient to
fund our operations until such time as we are able to generate sufficient cash
internally to fund our operations. If, however, the market for our products is
worse than we expect, we may need additional funds, without which we will have
to reduce our expenditures, which may harm our business.
BECAUSE OF DIFFERENCES IN VOTING POWER AND LIQUIDITY BETWEEN THE CLASS A
COMMON STOCK AND THE CLASS B COMMON STOCK, THE MARKET PRICE OF THE CLASS A
COMMON STOCK MAY BE DIFFERENT FROM THE MARKET PRICE OF THE CLASS B COMMON
STOCK.
The Class B common stock has greater voting power per share for the
election and removal of directors than the Class A common stock, and, as a
result, some investors may prefer the Class B common stock as a means of
investing in our company. The greater potential voting power may cause the
Class B common stock to trade at a higher market price than the Class A common
stock. On the other hand, the Class A common stock has historically had a
higher daily trading volume than the Class B common stock. As a result, the
Class A common stock may be more liquid than the Class B common stock and more
attractive to investors, which may cause the price of the Class A common stock
to be higher than the price of the Class B common stock.
THE DEVELOPMENT AND EVOLUTION OF MARKETS FOR OUR INTEGRATED CIRCUITS ARE
DEPENDENT ON FACTORS OVER WHICH WE HAVE NO CONTROL. FOR EXAMPLE, IF OUR
CUSTOMERS ADOPT NEW OR COMPETING INDUSTRY STANDARDS WITH WHICH OUR PRODUCTS
ARE NOT COMPATIBLE OR FAIL TO ADOPT STANDARDS WITH WHICH OUR PRODUCTS ARE
COMPATIBLE, OUR EXISTING PRODUCTS WOULD BECOME LESS DESIRABLE TO OUR CUSTOMERS
AND OUR SALES WOULD SUFFER.
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The emergence of markets for our integrated circuits is affected by a
variety of factors beyond our control. In particular, our products are
designed to conform to current specific industry standards. Our customers may
not adopt or continue to follow these standards, which would make our products
less desirable to our customers and reduce our sales. Also, competing
standards may emerge that are preferred by our customers, which could also
reduce our sales and require us to make significant expenditures to develop
new products. To the extent that we are not able to effectively and
expeditiously adapt to new standards our business will suffer.
CLASS ACTION LITIGATION DUE TO STOCK PRICE VOLATILITY OR OTHER FACTORS COULD
CAUSE US TO INCUR SUBSTANTIAL COSTS AND DIVERT OUR MANAGEMENT'S ATTENTION AND
RESOURCES.
In the past, securities class action litigation often has been
brought against a company following periods of volatility in the market price
of its securities. Companies in the integrated circuit industry and other
technology industries are particularly vulnerable to this kind of litigation
due to the high volatility of their stock prices. Accordingly, we may in the
future be the target of securities litigation. Any securities litigation could
result in substantial costs and could divert the attention and resources of
our management.
WE MAY EFFECT A REVERSE STOCK SPLIT AND IF WE DO SO, OUR STOCK PRICE MAY
DECLINE AFTER THE REVERSE STOCK SPLIT.
Our stockholders authorized a reverse stock split at our annual
meeting in February 2003. If we effect a reverse stock split, we would reduce
the number of outstanding shares of both our Class A and Class B common stock.
With fewer shares outstanding, we would expect our stock price to increase. A
higher stock price may make our common stock more attractive to institutional
investors and may enhance the liquidity of our common stock. However, share
prices of companies effecting reverse stock splits often decline and we cannot
assure you that our stock price would not decline after a reverse stock split.
RISKS RELATED TO OUR SEPARATION FROM LUCENT TECHNOLOGIES
WE ARE LIMITED IN THE AMOUNT OF STOCK THAT WE CAN ISSUE TO RAISE CAPITAL
BECAUSE OF POTENTIAL ADVERSE TAX CONSEQUENCES.
In June 2002, Lucent Technologies completed our spin-off by
distributing to its stockholders all of our common stock it then owned. Under
Section 355(e) of the Internal Revenue Code, Lucent will recognize a taxable
gain on that distribution if there are one or more acquisitions of our stock
representing 50% or more of our stock (by vote or value) and the stock
acquisitions are part of a plan or series of related transactions that
includes the spin-off. Any shares of our stock acquired within two years
before or after the spin-off are presumed to be part of such a plan unless we
can rebut that presumption. If an issuance of our stock causes the
distribution to be taxable to Lucent under Section 355(e), we would be
required to indemnify Lucent against that tax under our tax sharing agreement
with Lucent.
The shares of our Class A common stock issued in our initial public
offering are considered to be part of a plan that includes the spin-off, and
the shares of our Class A common stock that may be issued upon the conversion
of our 6.5% convertible subordinated notes may also be considered to be part
of a plan that includes the spin-off. Assuming that all of the convertible
notes were converted, approximately 45% of our outstanding shares may be
treated as acquired as part of such a plan.
Treasury Regulations issued in April 2002 provide safe harbors that
may be used to rebut the presumption that shares issued less than two years
after the spin-off are part of a plan that includes the spin-off. However, the
application of the safe harbors is not clear in many respects, and they might
not be available to us for future share issuances. As a result, Section 355(e)
limits our ability to issue shares to raise capital for at least two years
after the spin-off. However, the safe harbors in these new Treasury
Regulations generally provide that issuances of our stock pursuant to ordinary
course employee compensation arrangements (such as employee stock purchase
plans) will not be treated as acquisitions of our stock pursuant to a plan
that includes the spin-off.
7
OUR HISTORICAL FINANCIAL INFORMATION PRIOR TO THE FEBRUARY 1, 2001
CONTRIBUTION TO US OF OUR BUSINESS FROM LUCENT MAY NOT BE REPRESENTATIVE OF
OUR RESULTS AS A STAND-ALONE COMPANY AND, THEREFORE, MAY NOT BE RELIABLE AS AN
INDICATOR OF OUR HISTORICAL OR FUTURE RESULTS.
Our historical financial statements covering periods prior to
February 1, 2001, may not be indicative of our performance as a stand-alone
company. This is primarily a result of the three factors described below.
o First, those financial statements reflect allocations, primarily with
respect to general corporate expenses, research expense and interest
expense, which may be less than the expenses we incur as a
stand-alone company.
o Second, those financial statements do not reflect significant changes
that have occurred as a result of our separation from Lucent,
including changes in how we fund our operations, conduct research and
handle tax and employee matters.
o Third, those financial statements include substantial revenue from
sales to Lucent. This revenue may not reflect the pricing, volume or
percentage of our sales we would have derived from Lucent if we had
been a stand-alone company.
WE COULD INCUR SIGNIFICANT TAX LIABILITIES AND PAYMENT OBLIGATIONS IF LUCENT
FAILS TO PAY THE TAX LIABILITIES ATTRIBUTABLE TO LUCENT UNDER OUR TAX SHARING
AGREEMENT.
We have entered into a tax sharing agreement with Lucent that
allocates responsibility for tax liabilities between them and us. Under U.S.
federal income tax laws, Lucent and we are jointly and severally liable for
Lucent's federal income taxes attributable to periods prior to and including
Lucent's taxable year ended September 30, 2001. This means that if Lucent were
to fail to pay the taxes attributable to it under the tax sharing agreement
for those periods, we may be liable for all or any part of these liabilities.
BECAUSE THE DIVISION OF ENFORCEMENT OF THE SECURITIES AND EXCHANGE COMMISSION
IS INVESTIGATING MATTERS BROUGHT TO ITS ATTENTION BY LUCENT, OUR BUSINESS MAY
BE AFFECTED IN A MANNER WE CANNOT FORESEE AT THIS TIME.
In late 2000, Lucent brought to the attention of the staff of the
Securities and Exchange Commission matters relating to its recognition of
revenue. Although Lucent has informed us that it has no reason to believe that
the investigation by the Division of Enforcement of the Securities and
Exchange Commission into these matters concerns our business and we are not
aware of any reason why the investigation would affect us, it is possible that
the results of the investigation may have an impact on us. Although the
investigation could result in no action being taken by the Securities and
Exchange Commission, if an action were taken and the investigation were found
to concern our business, the action could result in monetary fines or changes
in some of our financial and other practices and procedures that we are unable
to foresee at this time. On February 27, 2003, Lucent announced that it had
reached a tentative settlement with the Securities and Exchange Commission
regarding these revenue recognition issues. To date, a final settlement
agreement has not been executed, and there can be no assurances that a final
settlement will be reached.
8
THE COMPANY
We provide advanced integrated circuit solutions for wireless data,
high-density storage and multi-service networking applications. These
solutions form the building blocks for a broad range of communications and
computing applications. Integrated circuits are made using semiconductor
wafers imprinted with a network of electronic components. They are designed to
perform various functions such as processing electronic signals, controlling
electronic system functions and processing and storing data.
Our business operations are organized into two market-focused groups,
Client Systems and Infrastructure Systems, that target the consumer
communications and network equipment markets respectively. Each of these two
groups is a reportable operating segment. The segments each include revenue
from the licensing of intellectual property assigned to that segment. The
Client Systems segment provides integrated circuit solutions for a variety of
end-user applications such as hard disk drives and modems for computers,
Internet-enabled cellular terminals and wireless local area networking. The
Infrastructure Systems segment provides integrated circuit solutions to makers
of high-speed communications systems. In addition, the Infrastructure Systems
segment formerly provided optoelectronic components; however, we have sold
these operations and have reflected them in our financial statements as
discontinued operations.
We were incorporated under the laws of the state of Delaware on
August 1, 2000, as a wholly owned subsidiary of Lucent Technologies Inc. and
became fully independent from Lucent on June 1, 2002. Our principal executive
offices are located at 1110 American Parkway NE, Allentown, Pennsylvania
18109, and our telephone number at that location is (610) 712-1000.
USE OF PROCEEDS
Agere will not receive any of the proceeds from the sale of shares by
the selling stockholders. See "Plan of Distribution."
SELLING STOCKHOLDERS
The following table sets forth (1) the number of shares of our Class
A common stock owned by each of the selling stockholders as of September 15,
2003, which in each case represents beneficial ownership of less than 1% of
the shares of our Class A common stock outstanding on that date; and (2) the
number of shares of our Class A common stock registered for sale hereby. No
estimate can be given as to the amount of shares that will be held by the
selling stockholders after completion of this offering because the selling
stockholders may offer all or some of the shares and because, to our
knowledge, there currently are no agreements, arrangements or understandings
with respect to the sale of any of the shares. The shares offered by this
prospectus may be offered from time to time by the selling stockholders named
below.
SHARES BENEFICIALLY NUMBER OF SHARES REGISTERED FOR
SELLING STOCKHOLDER (1) OWNED (2) SALE HEREBY(2)(3)
------------------------------------------------------ ------------------------ -------------------------------
ACT Enterprise Limited Partnership 965,379 965,379
ACT 1999 Private Equity Limited Partnership 1,879,040 1,879,040
BancBoston Investments, Inc. 496,187 496,187
Paul Costigan 340,805 340,303
Philip Curran 340,303 340,303
Vision Capital L.P. 787,472 787,472
Vision Extension L.P. 1,837,434 1,837,434
Dresdner Kleinwort Wasserstein Limited 849,897 849,897
Brian Murray 340,303 340,303
Powerscourt Nominees Limited 13,009 13,009
Skerries Nominees Limited 340,094 340,094
Street Capital Partners Limited Partnership 644,030 644,030
Brendan O'Flaherty 170,941 170,941
Other former Massana Limited stockholders (4) 103,733 103,733
9
(1) The selling stockholders have sole voting and investment power
with respect to all shares of our Class A common stock shown as
beneficially owned by them, subject to community property laws, where
applicable.
(2) 1,768,034 shares issued to the selling stockholders, other
than those identified in the table as the Other former Massana
Limited stockholders, in connection with the acquisition of Massana
Limited are being held in escrow to satisfy certain obligations in
case of any claims by Agere for breach of certain warranties provided
in the purchase agreement. All or a portion of the shares held in
escrow may be sold to satisfy any obligations at the direction of the
representative of these selling stockholders, which would reduce the
beneficial ownership of each of these selling stockholders by his or
her pro rata interest in the shares held in escrow that are sold.
The shares held in escrow are included in the amounts shown in the
table.
(3) This registration statement also covers any additional shares
of Class A common stock that become issuable in connection with the
shares registered for sale hereby by reason of any stock dividend,
stock split, recapitalization or other similar transaction effected
without the receipt of consideration that results in an increase in
the number of outstanding shares of our Class A common stock.
(4) These stockholders, individually and in the aggregate, own less than
0.1% of Agere's outstanding Class A common stock.
Each of the selling stockholders was a stockholder of Massana Limited
immediately prior to Agere's acquisition of Massana Limited. Except as
described in the next two sentences, none of the selling stockholders were
officers or directors of Massana Limited prior to Agere's acquisition of
Massana Limited. Brian Murray and Paul Costigan were directors of Massana
Limited, and, together with Philip Curran, were directors of Massana
International Limited, Massana Design Limited, Massana Research Limited and
Massana Inc. Paul Costigan and Brendan O'Flaherty were
administrators/directors of Massana Technologies S.L., and Brendan O'Flaherty
was the secretary of Massana Inc. In addition, Elaine Robertson, John Flynn
and Brendan Richardson served as directors of Massana Limited on behalf of
Dresdner Kleinwort Wasserstein Limited, the ACT entities listed in the table
above and the Vision entities listed in the table above, respectively. None of
the selling stockholders are officers or directors of Agere.
Dresdner Bank AG, an affiliate of Dresdner Kleinwort Wasserstein
Limited, acts as an agent and a lender under a revolving credit facility with
a wholly-owned, fully consolidated special purpose subsidiary of Agere. The
credit facility is part of a securitization arrangement pursuant to which
Agere and certain of its subsidiaries transfer accounts receivable to the
special purpose subsidiary, and these accounts receivable secure the revolving
credit loans to the special purpose subsidiary from certain financial
institutions. Dresdner Bank AG and one other financial institution have
commitments under the revolving credit facility pursuant to which they will
lend ratably to the special purpose subsidiary up to $200 million should the
primary lenders fail to make loans requested by the subsidiary. As of June 30,
2003, $146 million was outstanding under the revolving credit facility, which
is scheduled to expire on November 11, 2003.
Except as otherwise noted above, none of the selling stockholders has
had a material relationship with Agere within the past three years other than
as a result of the ownership of the shares or other securities of Agere.
PLAN OF DISTRIBUTION
RESALES BY SELLING STOCKHOLDERS
Agere is registering the shares on behalf of the selling
stockholders. Any or all of the selling stockholders may offer the shares from
time to time, either in increments or in a single transaction. The selling
stockholders may also decide not to sell all the shares they are allowed to
sell under this prospectus. The selling stockholders will act independently of
Agere in making decisions with respect to the timing, manner and size of each
sale.
COSTS AND COMMISSIONS
Agere will pay all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will pay all brokerage
commissions, discounts and other expenses, if any, relating to the sale of
shares.
10
TYPES OF SALE TRANSACTIONS
The selling stockholders will act independently of Agere in making
decisions with respect to the timing, manner and size of each sale.
The selling stockholders may sell the shares described in this
prospectus directly to purchasers or to or through broker-dealers, which may
act as agents or principals. Such broker-dealers may receive compensation in
the form of discounts, concessions, or commissions from the selling
stockholders and/or the purchasers of shares for whom such broker-dealers may
act as agents or to whom they sell as principal, or both (which compensation
as to a particular broker-dealer might be in excess of customary commissions).
The selling stockholders may also transfer, devise or gift these shares by
other means not described in this prospectus. As a result, pledgees, donees,
transferees or other successors-in-interest that receive such shares as a
gift, partnership distribution or other transfer may offer shares covered by
this prospectus. In addition, if any shares covered by this prospectus qualify
for sale pursuant to Rule 144 under the Securities Act, the selling
stockholders may sell such shares under Rule 144 rather than pursuant to this
prospectus.
The selling stockholders may sell the shares from time to time in one
or more transactions:
o at fixed prices that may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
The selling stockholders may offer the shares in one or more of the
following transactions (which may include block trades and crosses):
o on any national securities exchange or quotation service on which
the Class A common stock may be listed or quoted at the time of
sale, including the New York Stock Exchange;
o in the over-the-counter market;
o in privately negotiated transactions;
o through put or call options;
o by pledge to secure debts and other obligations;
o by a combination of the above methods of sale; or
o to cover short sales.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate in the
resales. The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions, and in connection with those
transactions, broker-dealers or other financial institutions may engage in
short sales of our Class A common stock. The selling stockholders also may
sell shares short and deliver the shares to close out such short positions;
provided that the short sale is made after the registration statement has been
declared effective and a copy of this prospectus is delivered in connection
with the short sale. The selling stockholders also may enter into option or
other transactions with broker-dealers or other financial institutions that
require the delivery to the broker-dealer or other financial institution of
the shares, which the broker-dealer or other financial institution may resell
pursuant to this prospectus. The selling stockholders also
11
may loan or pledge the shares to a broker, dealer or other financial
institution, and upon a default, the broker, dealer or other financial
institution may effect sales of the loans or pledged shares pursuant to this
prospectus.
The selling stockholders and any underwriters, broker-dealers or
agents that act in connection with the sale of the shares may be deemed
"underwriters" within the meaning of the Securities Act. As underwriters, any
profits on the resale of the shares sold by them while acting as principals
and any compensation to be received by an underwriter, broker-dealer or agent
could be deemed underwriting discounts or commissions under the Securities
Act.
To our knowledge, the selling stockholders have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares, nor is there an underwriter
or coordinating broker acting in connection with the proposed sale of shares
by the selling stockholders.
INDEMNIFICATION
The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of shares
against certain liabilities, including liabilities arising under the
Securities Act.
PROSPECTUS DELIVERY REQUIREMENTS
Because a selling stockholder may be deemed an underwriter, the
selling stockholder must deliver this prospectus and any supplements to this
prospectus in the manner required by the Securities Act. This might include
delivery through the facilities of the New York Stock Exchange in accordance
with Rule 153 under the Securities Act.
ARRANGEMENTS WITH BROKER-DEALERS
Upon our being notified by the selling stockholders that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker-dealer, a supplement to this prospectus
will be filed, if required, under Rule 424(b) under the Securities Act,
disclosing relevant information regarding such arrangement.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for us
by Jean F. Rankin, Senior Vice President, General Counsel and Secretary of
Agere. As of September 16, 2003, Ms. Rankin owned 56,475 shares of Class A
common stock and restricted stock units and 2,034 shares of Class B common
stock and had options to acquire 1,648,879 additional shares of Class A common
stock.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended September 30, 2002 have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
AVAILABLE INFORMATION
The prospectus constitutes a part of the registration statement on
Form S-3, which we have filed with the Securities and Exchange Commission with
respect to the Class A common stock offered hereby. This prospectus does not
contain all of the information in the registration statement. For further
information about us and our securities, see the registration statement and
its exhibits. The registration statement and the exhibits to the registration
statement, as well as the annual (containing audited financial statements),
quarterly and current reports, proxy statements and other information we file
with the Securities and Exchange Commission, may be read and copied at the
Securities and Exchange Commission's Public Reference Room at 450 Fifth
Street, N.W., Room 1024,
12
Washington, DC 20549. You can get information about the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains
a Web site which provides online access to periodic reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission at the address
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" the information that we file with the
Securities and Exchange Commission, which means that we are disclosing
important information to you in those documents. The information incorporated
by reference is an important part of this prospectus, and information that we
subsequently file with the Securities and Exchange Commission will
automatically update and supercede information in this prospectus and in our
other filings with the Securities and Exchange Commission. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
document to the extent that a statement contained herein or in any
subsequently filed document or report that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this document. We incorporate
by reference the documents listed below, which we have already filed with the
Securities and Exchange Commission, and any future filings that we make with
the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 (other than information furnished
pursuant to Item 9 or Item 12 of any Current Report on Form 8-K):
(a) Our Annual Report on Form 10-K for the fiscal year ended
September 30, 2002, filed with the Securities and Exchange Commission on
December 12, 2002.
(b) Our Quarterly Report on Form 10-Q for the quarter ended December
31, 2002, filed with the Securities and Exchange Commission on February 10,
2003.
(c) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2003, filed with the Securities and Exchange Commission on May 8, 2003.
(d) Our Quarterly Report on Form 10-Q for the quarter ended June 30,
2003, filed with the Securities and Exchange Commission on August 7, 2003.
(e) Our Current Reports on Form 8-K, filed with the Securities and
Exchange Commission on May 21, 2003, January 31, 2003, January 17, 2003 and
November 5, 2002.
(f) The description of our Class A common stock contained in our
registration statement on Form 8-A, filed on March 16, 2001, including any
amendment or reports filed for the purpose of updating that description.
You may request a copy of these filings and any exhibits specifically
incorporated by reference in these filings at no cost by writing or
telephoning us at the following address:
Investor Relations
Agere Systems Inc.
c/o The Bank of New York
P.O. Box 11082
Church Street Station
New York, New York 10286-1082
(866) 243-7347
13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee.............................................. $ 2,387
New York Stock Exchange listing fee............................... $ 17,305
Accounting fees and expenses...................................... $ 11,500
Legal fees and expenses........................................... $ 20,000
Miscellaneous expenses............................................ $ 808
-----------
Total ......................................................... $ 52,000
All of the amounts shown are estimates except the SEC registration
fee and the New York Stock Exchange listing fee. Agere will pay all expenses
of registration, issuance and distribution of the shares being sold by the
selling stockholders, excluding fees and expenses of counsel to the selling
stockholders and any brokerage commissions, discounts and fees and other
expenses relating to the sale of the shares, which shall be borne by the
selling stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify directors and officers as well as
other employees and individuals against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement in connection with various
actions, suits or proceedings, whether civil, criminal, administrative or
investigative other than an action by or in the right of the corporation, a
derivative action, if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, if they had no
reasonable cause to believe their conduct was unlawful.
A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses including attorneys' fees
incurred in connection with the defense or settlement of such actions, and the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation.
The statute provides that it is not exclusive of other indemnification that
may be granted by a corporation's by-laws, disinterested director vote,
stockholder vote, agreement or otherwise. Our certificate of incorporation
provides that each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person, or a person of whom such person is the legal representative, is
or was a director or officer of us or is or was serving at our request as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is the
alleged action of such person in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a director,
officer, employee or agent, will be indemnified and held harmless by us to the
fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended against all expense,
liability and loss reasonably incurred or suffered by such person in
connection therewith.
Our certificate of incorporation also provides that we will pay the
expenses incurred in defending any such proceeding in advance of its final
disposition, subject to the provisions of the General Corporation Law of the
State of Delaware. Such rights are not exclusive of any other right which any
person may have or thereafter acquire under any statute, provision of the
certificate, by-law, agreement, vote of stockholders or disinterested
directors or otherwise. No repeal or modification of such provision will in
any way diminish or adversely affect the rights of any director, officer,
employee or agent of us thereunder in respect of any occurrence or matter
arising prior to any such repeal or modification.
Our certificate of incorporation also specifically authorizes us to
maintain insurance and to grant similar indemnification rights to our
employees or agents.
II-1
The General Corporation Law of the State of Delaware permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for:
o any breach of the director's duty of loyalty to the corporation or
its stockholders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o payments of unlawful dividends or unlawful stock repurchases or
redemptions; or
o any transaction from which the director derived an improper personal
benefit.
Our certificate of incorporation provides that none of our directors
will be personally liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by the General
Corporation Law of the State of Delaware as amended from time to time, for
liability:
o for any breach of the director's duty of loyalty to us or our
stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the General Corporation Law of the State of
Delaware, which concerns unlawful payments of dividends, stock
purchases or redemptions; or
o for any transaction from which the director derived an improper
personal benefit.
Neither the amendment nor repeal of such provision will eliminate or
reduce the effect of such provision in respect of any matter occurring, or any
cause of action, suit or claim that, but for such provision, would accrue or
arise prior to such amendment or repeal.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
2 Agreement for the Sale and Purchase of the Entire Issued
Share Capital in Massana Limited, dated August 22, 2003, between
Agere, Massana Limited and the persons named therein.
4.1 Certificate of Incorporation (incorporated by reference to Exhibit 4.1
to Registration Statement (No. 333-58324) on Form S-8).
4.2 By-laws (incorporated by reference to Exhibit 3.2 to Registration
Statement (No. 333-51594) on Form S-1).
4.3 Rights Agreement between the registrant and The Bank of New
York, as rights agent, dated as of March 26, 2001 (incorporated by
reference to Exhibit 4.2 to Registration Statement (No. 333-58324) on
Form S-8).
4.4 Specimen Class A common stock certificate (incorporated by reference
to Exhibit 4.1 to Registration Statement (No. 333-51594) on Form S-1).
5.1 Opinion of Jean F. Rankin, Senior Vice President, General Counsel and
Secretary of the registrant, as to the legality of the securities to
be issued.
23.1 Consent of Independent Accountants.
23.2 Consent of Jean F. Rankin is contained in the opinion of counsel
filed as Exhibit 5.1.
II-2
24 Power of Attorney.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during the period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Allentown, Pennsylvania
on September 23, 2003.
By: /s/ John W. Gamble, Jr.
-----------------------------
John W. Gamble, Jr.
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities indicated on September 23, 2003.
Signature Title
--------- ------
President, Chief Executive Officer and Director
/s/ John T. Dickson
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John T. Dickson
Executive Vice President and Chief Financial Officer
/s/ John W. Gamble, Jr. (principal financial officer and principal
---------------------------------------------- accounting officer)
John W. Gamble, Jr.
* Director
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Richard L. Clemmer
* Director
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Rajiv L. Gupta
* Director
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Richard S. Hill
* Director
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Krish Prabhu
* Director
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Thomas P. Salice
* Director
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Rae F. Sedel
* Director
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Harold A. Wagner
* Director
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John A. Young
II-4
* By: /s/ John W. Gamble, Jr.
-------------------------
John W. Gamble, Jr.
Attorney-in-fact
II-5