<SEC-DOCUMENT>0000950123-00-001833-index.html : 20000307

<SEC-HEADER>0000950123-00-001833.hdr.sgml : 20000307

ACCESSION NUMBER:      0000950123-00-001833

CONFORMED SUBMISSION TYPE: S-4

PUBLIC DOCUMENT COUNT:     9

FILED AS OF DATE:      20000301

 

FILER:

 

     COMPANY DATA:

         COMPANY CONFORMED NAME:             LUCENT TECHNOLOGIES INC

         CENTRAL INDEX KEY:              0001006240

         STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813]

         IRS NUMBER:                223408857

         STATE OF INCORPORATION:             DE

         FISCAL YEAR END:           0930

 

     FILING VALUES:

         FORM TYPE:        S-4

         SEC ACT:     

         SEC FILE NUMBER:  333-31400

         FILM NUMBER:      558702

 

     BUSINESS ADDRESS:

         STREET 1:         600 MOUNTAIN AVE

         CITY:             MURRAY HILL

         STATE:            NJ

         ZIP:          07974

         BUSINESS PHONE:        9085828500

 

     MAIL ADDRESS:

         STREET 1:         600 MOUNTAIN AVE

         CITY:             MURRAY HILL

         STATE:            NJ

         ZIP:          07974

 

     FORMER COMPANY:  

         FORMER CONFORMED NAME: NS MPG INC

         DATE OF NAME CHANGE:   19960124

</SEC-HEADER>

<DOCUMENT>

<TYPE>S-4

<SEQUENCE>1

<DESCRIPTION>LUCENT TECHNOLOGIES INC.

<TEXT>

 

<PAGE>   1

     As filed with the Securities and Exchange Commission on March 1, 2000

                                                      Registration No. 333-

--------------------------------------------------------------------------------

 

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                             -----------------------

                                    FORM S-4

                             REGISTRATION STATEMENT

                                      UNDER

                           THE SECURITIES ACT OF 1933

                             -----------------------

                            LUCENT TECHNOLOGIES INC.

             (Exact name of registrant as specified in its charter)

 

<TABLE>

<CAPTION>

<S>                                   <C>                                   <C>

            DELAWARE                              3661                          22-3408857

(State or other jurisdiction of       (Primary Standard Industrial           (I.R.S. Employer

 incorporation or organization)       Classification Code Number)           Identification No.)

</TABLE>

 

                             -----------------------

                               600 MOUNTAIN AVENUE

                          MURRAY HILL, NEW JERSEY 07974

                                 (908) 582-8500

                        (Address, including zip code, and

                           telephone number, including

                           area code, of registrant's

                               principal executive

                                    offices)

 

                                PAMELA F. CRAVEN

                       VICE PRESIDENT - LAW AND SECRETARY

                            LUCENT TECHNOLOGIES INC.

                              600 MOUNTAIN AVENUE

                         MURRAY HILL, NEW JERSEY 07974

                                 (908) 582-8500

 (Name, address, including zip code, and telephone number, including area code,

                              of agent for service)

                            -----------------------

                                   Copies to:

     MICHAEL J. HOLLIDAY                             PATRICK T. SEAVER

   LUCENT TECHNOLOGIES INC.                          KEVIN B. ESPINOLA

     600 MOUNTAIN AVENUE                              LATHAM & WATKINS

MURRAY HILL, NEW JERSEY 07974                650 TOWN CENTER DRIVE, 20TH FLOOR

        (908) 582-8500                          COSTA MESA, CALIFORNIA 92626

                                                       (714) 540-1235

 

                                -----------------------

 

         APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon

consummation of the merger referred to herein.

 

         If the securities being registered on this form are to be offered in

connection with the formation of a holding company and there is compliance with

General Instruction G, check the following box. / /

         If this form is filed to register additional securities for an offering

pursuant to Rule 462(b) under the Securities Act, check the following box and

list the Securities Act registration number of the earlier effective

registration statement for the same offering. / /

         If this form is a post-effective amendment filed pursuant to Rule

462(d) under the Securities Act, check the following box and list the Securities

Act registration number of the earlier effective registration statement for the

same offering.  / /

 

                         CALCULATION OF REGISTRATION FEE

<PAGE>   2

<TABLE>

<CAPTION>

===============================================================================================================================

Title of each class of                                     Proposed maximum         Proposed maximum           Amount of

securities to be                      Amount to be         offering price per       aggregate offering         registration

registered                            registered(1)        share                    price(2)                   fee

-------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>                  <C>                      <C>                        <C>

Common Stock, $0.01 par

value per share, and related

preferred stock purchase

rights(3)                              54,519,127 shares     Not Applicable          $2,753,128,940.19          $726,826.04

===============================================================================================================================

</TABLE>

 

(1)      Based on the maximum number of shares to be issued in connection with

         the merger, calculated as the product obtained by multiplying (a) an

         exchange ratio of 3.1350 shares of the registrant's common stock for

         each share of Ortel common stock, par value $0.001 per share, by (b)

         17,390,471, the sum of (i) the aggregate number of shares of Ortel

         common stock outstanding on February 28, 2000 (other than shares owned

         by Solara Acquisition Inc., a wholly owned subsidiary of the

         registrant, or the registrant or any of its subsidiaries) and (ii) the

         aggregate number of shares of Ortel common stock issuable pursuant to

         outstanding options prior to the date the merger is expected to be

         consummated.

 

(2)      Estimated solely for the purpose of calculating the registration fee

         required by Section 6(b) of the Securities Act, and calculated pursuant

         to Rule 457(f) under the Securities Act. Pursuant to Rule 457(f)(1)

         under the Securities Act, the proposed maximum aggregate offering price

         of the registrant's common stock was calculated in accordance with Rule

         457(c) under the Securities Act as: (a) 158.3125, the average of the

         high and low prices per share of Ortel common stock on February 23,

         2000 as reported on The Nasdaq National Market, multiplied by

         (b) 17,390,471, the maximum number of shares of Ortel common stock

         computed as described in clause (b) of Note (1).

 

(3)      No separate consideration will be received for the rights, which

         initially will trade together with the common stock.

 

                         -------------------------------

 

         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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),

MAY DETERMINE.

<PAGE>   3

                                  [ORTEL LOGO]

 

                            2015 West Chestnut Street

                           Alhambra, California 91803

 

                                                                         , 2000

 

Dear Stockholder:

 

         You are cordially invited to attend our special meeting of stockholders

on         ,          2000, at    a.m., local time, at                       .

 

         At the special meeting, we will ask you to vote on the merger of Ortel

and Lucent Technologies Inc. In the merger, you will receive 3.1350 shares of

Lucent common stock in exchange for each share of Ortel common stock that you

own. Lucent common stock is listed on the New York Stock Exchange under the

trading symbol "LU" and on         , 2000, Lucent common stock closed at $

per share. You will receive cash for any fractional share of Lucent common stock

which you would otherwise receive in the merger.

 

         Your vote is very important. We cannot complete the merger unless

holders of a majority of the outstanding shares of Ortel common stock vote to

approve the merger agreement. Only stockholders who hold shares of Ortel common

stock at the close of business on         , 2000 will be entitled to vote at the

special meeting.

 

         THE ENCLOSED PROXY STATEMENT/PROSPECTUS GIVES YOU DETAILED INFORMATION

ABOUT THE PROPOSED MERGER AND INCLUDES THE MERGER AGREEMENT AS AN ANNEX. WE

ENCOURAGE YOU TO READ CAREFULLY THE PROXY STATEMENT/PROSPECTUS, INCLUDING ITS

ANNEXES. YOU SHOULD CONSIDER THE MATTERS DISCUSSED UNDER "RISK FACTORS RELATING

TO THE MERGER" ON PAGE 14 OF THE ENCLOSED PROXY STATEMENT/PROSPECTUS BEFORE

VOTING.

 

         AFTER CAREFUL CONSIDERATION, THE ORTEL BOARD OF DIRECTORS HAS

UNANIMOUSLY APPROVED THE MERGER AGREEMENT, HAS UNANIMOUSLY DETERMINED THAT THE

MERGER IS ADVISABLE AND FAIR TO YOU AND IN YOUR BEST INTERESTS AND UNANIMOUSLY

RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.

 

         Please complete, sign and return your proxy.

 

         Thank you for your cooperation.

 

                                       Sincerely,

 

 

 

 

                                       Stephen R. Rizzone

                                       President, Chief Executive Officer

                                       and Chairman of the Board

 

Neither the Securities and Exchange Commission nor any state securities

regulator has approved or disapproved the merger described in the proxy

statement/prospectus or the Lucent common stock to be issued in connection with

the merger, or determined if the proxy statement/prospectus is accurate or

adequate. Any representation to the contrary is a criminal offense.

 

                   THE PROXY STATEMENT/PROSPECTUS IS DATED         ,

      2000, AND IS FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT       , 2000.

<PAGE>   4

                      REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important business and financial

information about Lucent and Ortel from documents that are not included in or

delivered with this proxy statement/prospectus. This information is available to

you without charge upon your written or oral request. You can obtain documents

incorporated by reference in this proxy statement/prospectus by requesting them

in writing or by telephone from the appropriate company at the following

addresses and telephone numbers:

 

 

  Lucent Technologies Inc.                            Ortel Corporation

  c/o The Bank of New York                        2015 West Chestnut Street

    Church Street Station                         Alhambra, California 91803

       P.O. Box 11009                              Telephone: 626-281-3636

New York, New York 10286-1009                    Attention: Investor Relations

  Telephone: 1-888-LUCENT6

 

         If you would like to request documents, please do so by         , 2000

in order to receive them before the Ortel special meeting.

 

           See "Where You Can Find More Information" (page 63).

<PAGE>   5

                                  [ORTEL LOGO]

                    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

                              TO BE HELD ON         , 2000

 

To the Stockholders of Ortel Corporation:

 

         We will hold a special meeting of the stockholders of Ortel Corporation

on         , 2000, at          a.m., local time, at

 

for the following purpose:

 

                  To consider and vote upon a proposal to adopt the merger

                  agreement among Lucent Technologies Inc., Solara Acquisition

                  Inc., a wholly owned subsidiary of Lucent, and Ortel. Under

                  the merger agreement, each outstanding share of Ortel common

                  stock will be converted into the right to receive 3.1350

                  shares of Lucent common stock.

 

         We will transact no other business at the special meeting, except

business that may be properly brought before the special meeting or any

adjournment of it by the Ortel board of directors.

 

         Only holders of record of shares of Ortel common stock at the close of

business on         , 2000, the record date for the special meeting, are

entitled to notice of, and to vote at, the special meeting and any adjournments

or postponements of it.

 

         We cannot complete the merger unless holders of a majority of the

outstanding shares of Ortel common stock vote to adopt the merger agreement.

Holders of Ortel common stock will not have appraisal rights under Delaware law

in connection with the merger.

 

         FOR MORE INFORMATION ABOUT THE MERGER, PLEASE REVIEW THE ACCOMPANYING

PROXY STATEMENT/PROSPECTUS AND THE MERGER AGREEMENT ATTACHED AS ANNEX A.

 

         All Ortel stockholders are cordially invited to attend the special

meeting in person. However, whether or not you plan to attend the special

meeting, please complete, sign and date the enclosed proxy and return it

promptly in the enclosed postage-paid envelope. You may vote in person at the

special meeting, even if you have returned a proxy. If you do not vote by proxy

or in person at the special meeting, it will count as a vote against the merger

agreement. Executed proxies with no instructions will be voted "FOR" the

adoption of the merger agreement.

 

         PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. IF THE MERGER

IS COMPLETED, YOU WILL BE SENT INSTRUCTIONS REGARDING THE EXCHANGE OF YOUR

CERTIFICATES.

 

                                       By Order of the Board of Directors,

 

 

                                       Nadav Bar Chaim

                                       Secretary

 

Alhambra, California

        , 2000

<PAGE>   6

                                TABLE OF CONTENTS

 

<TABLE>

<CAPTION>

                                                                                                                      PAGE

                                                                                                                      ----

<S>                                                                                                                   <C>

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING.....................................................     i

 

SUMMARY............................................................................................................     1

         General...................................................................................................     1

         The Companies.............................................................................................     2

         The Special Meeting.......................................................................................     4

         The Merger................................................................................................     4

         Selected Historical Financial Data -- Lucent..............................................................    11

         Selected Historical Financial Data -- Ortel...............................................................    13

 

RISK FACTORS RELATING TO THE MERGER................................................................................    14

         The exchange ratio for Lucent common stock to be received in the merger is fixed and will

                  not be adjusted in the event of any change in stock price........................................    14

         The price of Lucent common stock may be affected by factors different from those affecting

                  the price of Ortel common stock..................................................................    14

 

THE COMPANIES......................................................................................................    15

         Ortel.....................................................................................................    15

         Lucent....................................................................................................    15

         Recent Developments.......................................................................................    15

         Material Contracts between Lucent and Ortel...............................................................    15

 

THE SPECIAL MEETING................................................................................................    16

         Date, Time and Place......................................................................................    16

         Purpose of Special Meeting................................................................................    16

         Record Date; Stock Entitled to Vote; Quorum...............................................................    16

         Votes Required............................................................................................    16

         Voting Agreement..........................................................................................    16

         Voting of Proxies.........................................................................................    17

         Revocability of Proxies...................................................................................    17

         Solicitation of Proxies...................................................................................    18

 

THE MERGER.........................................................................................................    19

         Background to the Merger..................................................................................    19

         Reasons for the Merger ...................................................................................    22

         Recommendation of the Ortel Board of Directors............................................................    25

         Fairness Opinion of SoundView Technology Group, Inc.......................................................    25

         Interests of Ortel's Directors and Management in the Merger...............................................    31

         Stock Options.............................................................................................    34

         Accounting Treatment......................................................................................    34

         Form of the Merger........................................................................................    34

         Merger Consideration......................................................................................    34

         Conversion of Shares; Procedures for Exchange of Certificates; Fractional Shares..........................    35

</TABLE>

<PAGE>   7

                                TABLE OF CONTENTS

 

                                   (CONTINUED)

 

<TABLE>

<CAPTION>

                                                                                                                      PAGE

                                                                                                                      ----

<S>                                                                                                                   <C>

         Effective Time of the Merger..............................................................................    36

         Stock Exchange Listing of Lucent Common Stock.............................................................    36

         Delisting and Deregistration of Ortel Common Stock........................................................    36

         Certain Material United States Federal Income Tax Consequences of the Merger..............................    36

         Regulatory Matters........................................................................................    38

         Appraisal Rights..........................................................................................    38

         Resale of Lucent Common Stock.............................................................................    38

 

THE MERGER AGREEMENT...............................................................................................    39

         Conditions to the Merger..................................................................................    39

         No Solicitation...........................................................................................    41

         Termination of the Merger Agreement.......................................................................    42

         Termination Fees..........................................................................................    43

         Conduct of Business Pending the Merger....................................................................    44

         Amendment; Extension and Waiver...........................................................................    46

         Expenses..................................................................................................    46

         Representations and Warranties............................................................................    47

         Indemnification and Insurance.............................................................................    48

         Amendments to Ortel's Certificate of Incorporation........................................................    48

         Amendments to the Ortel By-Laws...........................................................................    49

         Non-Competition and Non-Disclosure Agreements.............................................................    49

 

THE STOCK OPTION AGREEMENT.........................................................................................    49

         General...................................................................................................    49

         Exercise of the Option....................................................................................    49

         Adjustment to Number and Type of Shares...................................................................    50

         Limit on Total Profit of Lucent...........................................................................    51

         Registration Rights and Listing...........................................................................    51

         Assignability; Transfers..................................................................................    51

         Effect of Stock Option Agreement..........................................................................    52

 

COMPARATIVE STOCK PRICES AND DIVIDENDS.............................................................................    53

 

DESCRIPTION OF LUCENT CAPITAL STOCK................................................................................    54

 

COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND ORTEL....................................................    54

         Capitalization............................................................................................    54

         Voting Rights.............................................................................................    55

         Number, Election, Vacancy and Removal of Directors........................................................    55

         Amendments to Certificate of Incorporation................................................................    56

         Amendments to By-Laws.....................................................................................    56

         Stockholder Action........................................................................................    57

         Notice of Certain Stockholder Actions.....................................................................    57

</TABLE>

<PAGE>   8

                                TABLE OF CONTENTS

 

                                   (CONTINUED)

 

<TABLE>

<CAPTION>

                                                                                                                      PAGE

                                                                                                                      ----

<S>                                                                                                                   <C>

         Special Stockholder Meetings..............................................................................    58

         Limitation of Personal Liability of Directors and Indemnification.........................................    58

         Dividends.................................................................................................    59

         Conversion................................................................................................    59

         Rights Plan...............................................................................................    59

 

LEGAL MATTERS......................................................................................................    62

 

EXPERTS............................................................................................................    62

 

OTHER MATTERS......................................................................................................    63

 

WHERE YOU CAN FIND MORE INFORMATION................................................................................    63

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS..................................................................    66

</TABLE>

 

Annexes

 

         Annex A  Agreement and Plan of Merger

 

         Annex B  Stock Option Agreement

 

         Annex C  Opinion of SoundView Technology Group, Inc.

 

         Annex D  Voting Agreement

<PAGE>   9

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

 

Q:       WHY IS ORTEL MERGING?

 

A:       This is a unique opportunity for Ortel to join and become part of

         Lucent, one of the world's leading designers, developers and

         manufacturers of communications systems, software and products. By

         utilizing Lucent's international presence, sales, marketing and

         manufacturing infrastructure and expertise, Ortel management believes

         that the company will be able to accelerate the development and

         distribution of its products in the future and to offer its customers

         more complete end-to-end solutions.

 

Q:       WHY IS THE ORTEL BOARD OF DIRECTORS RECOMMENDING THAT I VOTE FOR

         ADOPTION OF THE MERGER AGREEMENT?

 

A:       In reaching its decision to approve the merger agreement and the merger

         and to recommend adoption of the merger agreement by Ortel

         stockholders, the Ortel board of directors consulted with Ortel

         management, as well as Ortel's financial and legal advisors, and

         considered the terms of the proposed merger agreement and the

         transactions contemplated by the merger agreement. In addition, the

         Ortel board of directors considered each of the items set forth on

         pages 22 to 25. Based on those consultations and considerations, the

         Ortel board of directors unanimously approved the merger agreement and

         the merger, and believes that the terms of the merger agreement and the

         merger are advisable and fair to, and in the best interests of, Ortel

         and its stockholders.

 

Q:       WHAT WILL I RECEIVE IN THE MERGER?

 

A:       If the merger is completed, you will receive 3.1350 shares of Lucent

         common stock for each share of Ortel common stock that you own.

 

Q:       WHAT IF THE MERGER IS NOT COMPLETED?

 

A:       If the merger is not completed, Ortel will continue to operate as an

         independent company. None of Lucent, Ortel or any third party is under

         any obligation to make or consider any alternative proposal regarding

         the purchase of your Ortel common stock. Ortel may be required to pay a

         termination fee under the merger agreement if the merger is not

         completed for certain reasons.

 

Q:       WHERE CAN I GET INFORMATION REGARDING LUCENT, ORTEL AND THE MERGER?

 

A:       We urge you to read and consider the information contained in this

         proxy statement/prospectus, including its annexes. You also may want to

         review the documents referenced under "Where You Can Find More

         Information."

 

                                       i

<PAGE>   10

Q:       WHO MAY VOTE AT THE SPECIAL MEETING?

 

A:       All stockholders of record as of the close of business on         ,

         2000 may vote. You are entitled to one vote per share of Ortel common

         stock that you own on the record date.

 

Q:       HOW DO I VOTE?

 

A:       After carefully reading and considering the information contained in

         this proxy statement/prospectus, please complete and sign your proxy

         and return it in the enclosed return envelope as soon as possible so

         that your shares may be represented at the special meeting. If you sign

         and send in your proxy and do not indicate how you want to vote, we

         will count your proxy as a vote in favor of adoption of the merger

         agreement. IF YOU ABSTAIN FROM VOTING OR DO NOT VOTE YOUR SHARES BY

         PROXY OR IN PERSON, IT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST

         ADOPTION OF THE MERGER AGREEMENT.

 

         The special meeting will take place on         , 2000 at      a.m.,

         local time, at                                                      .

         You may attend the special meeting and vote your shares in person,

         rather than signing and mailing your proxy.

 

Q:       IF MY SHARES ARE HELD IN A BROKERAGE ACCOUNT OR IN "STREET NAME" BY MY

         BROKER, HOW DO I VOTE?

 

A:       Your broker will vote your shares only if you provide instructions on

         how to vote. You should follow the directions provided by your broker

         regarding how to instruct your broker to vote your shares. If you do

         not instruct your broker, your shares will not be voted, which will

         have the same effect as a vote against the adoption of the merger

         agreement.

 

Q:       MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?

 

A:       Yes. You may change your vote in one of three ways at any time before

         your proxy is voted at the special meeting. First, you may send a

         written notice stating that you would like to revoke your proxy.

         Second, you may complete and submit a new, later dated proxy. Third,

         you may attend the special meeting and vote in person. If you

         choose either of the first two methods, you must submit your notice of

         revocation or your new proxy to the Secretary of Ortel Corporation at

         the following address: Ortel Corporation, 2015 West Chestnut Street,

         Alhambra, California 91803, Attention: Secretary.

 

Q:       SHOULD I SEND IN MY STOCK CERTIFICATES NOW?

 

A:       No. After the merger has been completed, you will receive written

         instructions for exchanging your stock certificates. Please do not send

         in your stock certificates with your proxy.

 

                                       ii

<PAGE>   11

Q:       WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?

 

A:       We are working to complete the merger as quickly as possible. We expect

         to complete the merger during the second calendar quarter of 2000.

 

Q:       WHO CAN HELP ANSWER MY QUESTIONS?

 

A:       If you have any questions about the merger or if you need additional

         copies of this proxy statement/prospectus or the enclosed proxy, you

         should contact:

 

                  MacKenzie Partners, Inc.

                  156 Fifth Avenue

                  New York, New York 10010

                  Telephone: 212-929-5500 or 1-800-322-2285

 

                                      iii

<PAGE>   12

                                     SUMMARY

 

         This summary highlights selected information from this proxy

statement/prospectus and does not contain all the information that is important

to you. For a more complete understanding of the merger, you should carefully

read this entire proxy statement/prospectus, the documents attached to the proxy

statement/prospectus as annexes and the other documents to which we refer you.

In addition, we incorporate by reference important business and financial

information about Ortel and Lucent into this proxy statement/prospectus. You may

obtain the information incorporated by reference without charge by following the

instructions in the section "Where You Can Find More Information" on page 63. We

have included page references parenthetically to direct you to a more complete

description of the topics presented in this summary.

 

                                     GENERAL

 

WHAT YOU WILL RECEIVE IN THE MERGER

 

         In the merger, you will receive 3.1350 shares of Lucent common stock

for each share of Ortel common stock that you own. You will receive cash for any

fractional share of Lucent common stock that you would otherwise receive in the

merger.

 

OWNERSHIP OF LUCENT FOLLOWING THE MERGER

 

         Based on the number of outstanding shares of Ortel common stock on the

record date, we anticipate that Ortel stockholders will receive in the aggregate

approximately         shares of Lucent common stock in the merger. Based on that

number and on the number of outstanding shares of Lucent common stock on the

record date, following the merger former Ortel stockholders will own

approximately    % of the outstanding shares of Lucent common stock.

 

CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

(PAGE 36)

 

         The merger is intended to qualify as a reorganization within the

meaning of the Internal Revenue Code of 1986. It is a condition to the

completion of the merger that Ortel receive an opinion from its counsel, Latham

& Watkins, and that Lucent receive an opinion from its counsel, Sidley & Austin,

each stating that the merger will qualify for United States federal income tax

purposes as a reorganization within the meaning of the Internal Revenue Code. If

the merger qualifies, unless you are subject to special tax treatment under the

Internal Revenue Code, you will not recognize gain or loss for United States

federal income tax purposes as a result of the exchange of your Ortel common

stock for Lucent common stock in the merger, except for any cash received in

lieu of a fractional share of Lucent common stock.

 

         TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER

TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR

OWN TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER

TO YOU.

 

                                       1

<PAGE>   13

FAIRNESS OPINION OF SOUNDVIEW TECHNOLOGY GROUP, INC. (PAGE 25)

 

         In deciding to approve the merger, the Ortel board of directors

considered the opinion dated February 6, 2000 of its financial advisor,

SoundView Technology Group, Inc., as to the fairness to Ortel stockholders from

a financial point of view of the 3.1350 exchange ratio in the merger. The full

text of SoundView's opinion, including the assumptions made, procedures

followed, matters considered, and the scope of the review undertaken by

SoundView in connection with its opinion, is attached as Annex C to this proxy

statement/prospectus. WE ENCOURAGE YOU TO READ SOUNDVIEW'S OPINION CAREFULLY AND

IN ITS ENTIRETY.

 

RECOMMENDATION OF THE ORTEL BOARD OF DIRECTORS (PAGE 25)

 

         The Ortel board of directors believes that the terms of the merger and

the merger agreement are advisable and fair to, and in the best interests of,

Ortel and its stockholders and unanimously recommends that stockholders vote

"FOR" the adoption of the merger agreement.

 

         To review the background and reasons for the merger in greater detail,

as well as certain risks related to the merger, see pages 19 to 25 and page 14.

 

INTERESTS OF ORTEL'S DIRECTORS AND MANAGEMENT IN THE MERGER (PAGE 31)

 

         Ortel stockholders should note that a number of directors and officers

of Ortel have interests in the merger as directors or officers that are

different from, or in addition to, those of a stockholder. If the merger is

completed, certain indemnification arrangements for current directors and

officers of Ortel will be continued and it is expected that most of the current

executive officers of Ortel will be retained as employees of or consultants to

Lucent. Ortel also has agreed to pay up to $15 million to Stephen R. Rizzone and

up to $4.5 million to certain other Ortel employees if the merger is completed.

In addition, several of Ortel's officers may be entitled to severance payments

under existing employment agreements as a result of the merger. In addition,

directors and employees with stock options to acquire Ortel common stock will

have these options converted to stock options to acquire Lucent common stock,

and stock options held by directors and certain officers will become

or under certain circumstances may become fully vested as a result of the

merger.

 

APPRAISAL RIGHTS (PAGE 38)

 

         Ortel stockholders are not entitled to appraisal rights in connection

with the merger.

 

                             THE COMPANIES (PAGE 15)

 

ORTEL CORPORATION

 

         Ortel has been focused on developing fiber optic technology since the

founding of the company in 1980. Ortel designs, develops and manufactures

optoelectronic components used by communication system suppliers in the cable

television and telecommunications industries. Ortel's technology, expertise and

close working relationships with leading industry participants have allowed

Ortel to become a leading supplier of optoelectronic components in the cable

television industry and, more recently, have enabled Ortel to establish a

presence in the

 

                                       2

<PAGE>   14

telecommunications industry. Ortel's products include laser and photodiode

chips, packaged lasers, transmitters and receivers. Ortel's products allow

Ortel's customers to provide cable system operators and telecommunication

service providers with communication systems that enable the transmission of

optical signals over longer distances, with improved signal quality and higher

bandwidth capacity.

 

LUCENT TECHNOLOGIES INC.

 

         Lucent is one of the world's leading designers, developers and

manufacturers of communications systems, software and products. Lucent is a

global leader in the sale of public and private communications systems,

supplying systems and software to most of the world's largest network operators

and service providers. Lucent is also a global leader in the sale of business

communications systems and in the sale of microelectronic components for

communications applications to manufacturers of communications systems and

computers. Lucent's research and development activities are conducted through

Bell Laboratories, one of the world's foremost industrial research and

development organizations.

 

RECENT DEVELOPMENTS (PAGE 15)

 

         On March 1, 2000, Lucent announced a plan to spin off its PBX,

SYSTIMAX(R) structured cabling and LAN-based data businesses to its

stockholders, forming a separate company that will focus directly and

independently on the enterprise networking market. The spin-off is expected to

be accomplished through a tax-free distribution of shares to Lucent's

stockholders to be completed by the close of Lucent's fourth fiscal quarter of

2000, which ends on September 30. The new enterprise business will have

approximately 34,000 employees worldwide and will operate independently from

Lucent with its own brand, board of directors, management and research and

development organizations. For additional information, please see Lucent's

current report on Form 8-K filed March 1, 2000.

 

MARKET PRICE AND DIVIDEND INFORMATION  (PAGE 53)

 

         Shares of Lucent common stock are listed on the New York Stock

Exchange. Shares of Ortel common stock are listed on The Nasdaq National Market.

The following table presents as of February 4, 2000, the last full trading day

prior to the public announcement of the proposed merger, and as of       , 2000,

the last day for which information in the table could be calculated prior to the

date of this proxy statement/prospectus:

 

         -        the last reported sale price of one share of Lucent common

                  stock, as reported on the New York Stock Exchange Composite

                  Transactions Tape

 

         -        the last reported sale price of one share of Ortel common

                  stock, as reported on The Nasdaq National Market and

 

         -        the market value of one share of Ortel common stock on an

                  equivalent per share basis in each case as if the merger had

                  been completed on the relevant date. The equivalent price per

                  share data for Ortel common stock has been determined by

                  multiplying the last reported sale price of one share of

                  Lucent common stock on each of these dates by the exchange

                  ratio of 3.1350.

 

<TABLE>

<CAPTION>

                                                                                         EQUIVALENT

                               LUCENT                      ORTEL                       PRICE PER SHARE

                               COMMON                     COMMON                          OF ORTEL

DATE                           STOCK                       STOCK                        COMMON STOCK

----                           -----                       -----                        ------------

<S>                           <C>                        <C>                           <C>

February 4, 2000              $ 57.563                   $ 177.125                       $ 180.460

      , 2000                  $                          $                               $

</TABLE>

 

         Lucent has historically paid to its stockholders a regular quarterly

dividend, currently $0.02 per share. The payment of dividends by Lucent in the

future will depend on business conditions, its financial position, earnings and

other factors. Ortel has never paid dividends to its stockholders.

 

                                       3

<PAGE>   15

                          THE SPECIAL MEETING (PAGE 16)

 

         The special meeting of Ortel stockholders will be held at

 

                 at      a.m., local time, on           , 2000. At the special

meeting, all Ortel stockholders who held shares of Ortel common stock at the

close of business on         , 2000 will be asked to adopt the merger agreement.

 

RECORD DATE; VOTING POWER

 

         Ortel stockholders are entitled to vote at the special meeting if they

owned shares of Ortel common stock as of the close of business on      , 2000,

the record date.

 

         On the record date, there were       shares of Ortel common stock

entitled to vote at the special meeting. Stockholders will have one vote for

each share of Ortel common stock that they owned on the record date.

 

VOTE REQUIRED

 

         The affirmative vote of a majority of the shares of Ortel common stock

outstanding on the record date is required to adopt the merger agreement.

 

VOTING AGREEMENT

 

         On February 7, 2000, Sumitomo Osaka Cement Co., Ltd., which owned

approximately     % of the outstanding Ortel common stock as of the record date,

entered into a voting agreement with Lucent pursuant to which Sumitomo Osaka

Cement has agreed to vote the Ortel common stock it owns "FOR" adoption of the

merger agreement. The voting agreement is attached as Annex D. Sumitomo Osaka

Cement has also granted an irrevocable proxy and a power of attorney to Lucent

representatives to vote its shares of Ortel common stock "FOR" adoption of the

merger agreement.

 

         Each of the directors and executive officers of Ortel has advised Ortel

that he intends to vote all shares of Ortel common stock over which he has or

shares voting control "FOR" adoption of the merger agreement.

 

                               THE MERGER (PAGE 19)

 

         The merger agreement is attached as Annex A to this proxy

statement/prospectus. We encourage you to read the entire merger agreement

carefully. It is the principal document governing the merger.

 

CONDITIONS TO THE MERGER (PAGE 39)

 

         Lucent and Ortel will complete the merger only if they satisfy or, in

some cases, waive several conditions, including all the following:

 

                                       4

<PAGE>   16

         -        holders of a majority of the outstanding shares of Ortel

                  common stock must adopt the merger agreement

 

         -        the waiting period required under United States antitrust laws

                  must expire or be terminated

 

         -        no legal restraints or prohibitions are in effect, and no

                  suits, actions or proceedings by any governmental authority

                  are pending which prevent the consummation of the merger or

                  are reasonably likely to have a material adverse effect on

                  Lucent or Ortel

 

         -        the registration statement on Form S-4, of which this proxy

                  statement/prospectus forms a part, must have become effective

                  under the Securities Act and must not be the subject of any

                  stop order or proceedings seeking a stop order

 

         -        the Lucent common stock to be issued to Ortel stockholders

                  pursuant to the merger must be authorized for listing on the

                  New York Stock Exchange

 

         -        Ortel and Lucent must comply with their respective agreements

                  and conditions under the merger agreement in all material

                  respects

 

         -        the respective representations and warranties of Ortel and

                  Lucent contained in the merger agreement must be true and

                  correct, except where the failure of those representations and

                  warranties to be true and correct does not have, and could not

                  reasonably be expected to have, individually or in the

                  aggregate, a material adverse effect on Ortel and Lucent,

                  respectively

 

         -        in the case of Lucent, the rights issued pursuant to the Ortel

                  rights agreement may not have become nonredeemable,

                  exercisable, distributable or triggered and

 

         -        Ortel must receive from Latham & Watkins, and Lucent must

                  receive from Sidley & Austin, on the date on which the

                  registration statement is declared effective by the Securities

                  and Exchange Commission and on the date on which the merger is

                  to be completed an opinion, on the basis of certain facts,

                  representations and assumptions as set forth in the opinion,

                  stating that the merger will be treated for United States

                  federal income tax purposes as a reorganization within the

                  meaning of Section 368(a) of the Internal Revenue Code.

 

NO SOLICITATION (PAGE 41)

 

         The merger agreement provides that Ortel will not, and will not

authorize or permit any of its officers, directors, employees or other

representatives to solicit any takeover proposal or participate in any

discussion or negotiation regarding any takeover proposal. However, if at any

time prior to the date of the special meeting, the Ortel board of directors

determines in good faith, after consultation with outside counsel, that a

proposal by a third party, which was unsolicited and did not result from a

breach by Ortel of the merger agreement, is more favorable and superior to Ortel

stockholders than the terms of the merger with Lucent, Ortel may:

 

                                       5

<PAGE>   17

         -        furnish under a customary confidentiality agreement

                  information about Ortel to any person making the superior

                  proposal and

 

         -        participate in discussions or negotiations regarding the

                  superior proposal.

 

TERMINATION OF THE MERGER AGREEMENT (PAGE 42)

 

         The merger agreement may be terminated at any time prior to the

effective time of the merger, whether before or after adoption of the merger

agreement by the Ortel stockholders, as summarized below:

 

         -        Lucent and Ortel can mutually agree to terminate the merger

                  agreement at any time without completing the merger

 

         -        Lucent or Ortel can terminate the merger agreement if:

 

                  (1)      the merger is not completed by December 31, 2000,

                           provided that this right to terminate will not be

                           available to a party whose failure to perform any of

                           its obligations under the merger agreement has caused

                           or resulted in the failure of the merger to be

                           completed by that date

 

                  (2)      holders of a majority of the outstanding shares of

                           Ortel common stock do not adopt the merger agreement

 

                  (3)      a court, governmental authority or other legal action

                           permanently prohibits the completion of the merger or

 

                  (4)      any other party materially breaches any of its

                           obligations under the merger agreement and does not

                           cure the breach within 30 days of notice by the other

                           party

 

         -        Ortel can terminate the merger agreement before the special

                  meeting if the Ortel board of directors receives an

                  unsolicited proposal by a third party to acquire Ortel on

                  terms determined by the Ortel board of directors, based on the

                  advice of a financial advisor of nationally recognized

                  reputation, to be more favorable to Ortel stockholders than

                  the terms of the merger with Lucent or

 

         -        Lucent can terminate the merger agreement if Ortel or any of

                  its directors or officers participates in discussions or

                  negotiations with third parties regarding certain takeover

                  proposals or furnishes information to third parties in breach

                  of the merger agreement.

 

TERMINATION FEES (PAGE 43)

 

         Ortel must pay Lucent a termination fee of $90 million if:

 

         -        Ortel stockholders receive a takeover proposal, a takeover

                  proposal otherwise becomes publicly known or anyone publicly

                  announces its intention to make a takeover proposal, and

                  thereafter Lucent or Ortel terminates the merger agreement

 

                                       6

<PAGE>   18

                  because either (1) the merger is not completed by December 31,

                  2000 or (2) the Ortel stockholders have not adopted the merger

                  agreement at an Ortel stockholders meeting, and within nine

                  months of the termination Ortel or any of its subsidiaries

                  enters into any definitive agreement with respect to, or

                  consummates, any takeover proposal

 

         -        Ortel terminates the merger agreement because Ortel receives

                  before the special meeting an unsolicited proposal by a third

                  party to acquire Ortel on terms determined by the Ortel board

                  of directors to be more favorable to the Ortel stockholders

                  than the terms of the merger with Lucent or

 

         -        Lucent terminates the merger agreement because Ortel or any of

                  its directors or officers participates in discussions or

                  negotiations with third parties regarding certain takeover

                  proposals or furnishes information to third parties in breach

                  of the merger agreement.

 

STOCK OPTION AGREEMENT (PAGE 49)

 

         Ortel has granted an option to Lucent to purchase shares of Ortel

common stock equal to approximately 19.9% of the number of outstanding shares of

Ortel common stock at a price per share of $177.125 if certain events occur that

entitle Lucent to receive the termination fee under the merger agreement. The

option agreement limits to $105 million the total amount Lucent may receive from

(1) the stock option and (2) any termination fee payable by Ortel if the merger

agreement is terminated.

 

NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS (PAGE 49)

 

         As a condition to the merger, certain officers of Ortel must enter into

non-competition and non- disclosure agreements with Lucent and Ortel. Under

these agreements, each of these employees agrees with Lucent and Ortel that, for

a specified period, the employee will not, without the express written consent

of Lucent, compete with the activities currently conducted by Ortel.

 

REGULATORY MATTERS (PAGE 38)

 

         United States antitrust laws prohibit Lucent and Ortel from completing

the merger until after they have furnished certain information and materials to

the Antitrust Division of the Department of Justice and the Federal Trade

Commission and a required waiting period has ended. Lucent and Ortel each filed

the required notification and report forms with the Antitrust Division and the

Federal Trade Commission on February 25, 2000. Under the antitrust laws, the

merger may not be completed until after the expiration or early termination of

the applicable waiting period. The applicable waiting period expired on        ,

2000.

 

                                       7

<PAGE>   19

ACCOUNTING TREATMENT (PAGE 34)

 

         The merger will be accounted for under the "purchase" method of

accounting in accordance with generally accepted accounting principles. Lucent

expects a significant portion of the purchase price to be allocated to goodwill

and other intangible assets. The merger is also expected to result in a charge

against earnings for in-process research and development.

 

EXPENSES (PAGE 46)

 

         Lucent and Ortel will each pay its own expenses incidental to the

preparation of the merger agreement, the carrying out of the provisions of the

merger agreement and the completion of the merger whether or not the merger is

completed, except that Lucent and Ortel will share equally the costs of filing

with the Securities and Exchange Commission the registration statement of which

this proxy statement/prospectus is a part, printing and mailing this proxy

statement/prospectus and the filing fees incurred in connection with obtaining

regulatory approval for the merger.

 

                                       8

<PAGE>   20

COMPARATIVE PER SHARE INFORMATION

 

         We have summarized below the per common share information for each of

Lucent and Ortel on a historical basis, for Lucent on a pro forma basis and for

Ortel on a pro forma equivalent basis. On February 11, 2000, Lucent's historical

results were restated to include the results of International Network Services

and Excel Switching Corporation, which merged with Lucent in transactions that

were each accounted for as a pooling of interests. All per share data has been

restated to account for Lucent's two-for-one stock split effective on April 1,

1999. Lucent's fiscal year ends on September 30 and Ortel's fiscal year ends on

April 30.

 

         The unaudited "pro forma Lucent" and the unaudited "pro forma

equivalent -- Ortel" information assumes that the merger of Ortel and Lucent

will be accounted for as a purchase. The unaudited "pro forma Lucent"

information is derived from the historical financial information of Lucent at or

for the three months ended December 31, 1999 and at or for the year ended

September 30, 1999, and the financial information of Ortel at or for the three

months ended January 30, 2000 and at or for the twelve months ended October 31,

1999, respectively, and assumes the merger of Lucent and Ortel occurred at the

beginning of the earliest period presented. The Ortel financial information for

the twelve months ended October 31, 1999 is derived from the historical

financial information of Ortel for the year ended April 30, 1999 less the

six-month period ended October 31, 1998 plus the six-month period ended October

31, 1999.

 

         The unaudited "pro forma Lucent" net income includes pro forma

adjustments for the amortization of goodwill and other intangible assets. These

adjustments are based on preliminary estimates; the final amounts of these

adjustments may vary. Ortel's results for the nine-month period ended January

30, 2000 and Lucent's results for the three-month period ended December 31, 1999

may not be indicative of results for the full year.

 

         "Pro forma Lucent" basic earnings per common share was calculated using

the weighted average number of Lucent common shares outstanding and adding the

weighted average number of Ortel common shares outstanding, assuming all

Ortel common stock was converted to Lucent common stock at the 3.1350

exchange ratio.

 

         "Pro forma Lucent" diluted earnings per share was calculated by

dividing "pro forma Lucent" net income by the sum of the weighted average number

of "pro forma Lucent" common shares outstanding plus all additional "pro forma

Lucent" common shares that would have been outstanding if potentially dilutive

securities or common stock equivalents had been issued.

 

         "Pro forma Lucent" book value per share was calculated by dividing the

sum of Lucent historical book value and the purchase price of Ortel (fair value

of the net assets acquired plus goodwill) by the "pro forma Lucent" common

shares outstanding during the period.

 

         The unaudited "pro forma equivalent -- Ortel" information was

calculated by multiplying the corresponding "pro forma Lucent" data by the

3.1350 exchange ratio. This information shows how each share of Ortel common

stock would have participated in the net earnings, cash dividends and book value

of Lucent if the merger had been completed at the beginning of the

 

                                       9

<PAGE>   21

earliest period presented. However, these amounts do not necessarily reflect

future per share levels of net earnings, cash dividends or book value of Lucent.

 

         STOCKHOLDERS SHOULD READ THE INFORMATION IN THIS SECTION ALONG WITH

LUCENT'S AND ORTEL'S HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES

INCLUDED ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS OR IN THE DOCUMENTS

DESCRIBED UNDER "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 63.

 

 

<TABLE>

<CAPTION>

                                                       AT OR FOR THE THREE         AT OR FOR THE TWELVE

                                                          MONTHS ENDED                 MONTHS ENDED

                                                        DECEMBER 31, 1999           SEPTEMBER 30, 1999

                                                        -----------------           ------------------

<S>                                                    <C>                         <C>

LUCENT - HISTORICAL

     Basic earnings per common share                         $0.40                          $1.54

     Diluted earnings per common share                        0.38                           1.49

     Cash dividends declared per common share                 0.04                           0.08

     Book value per common share                              5.06                           4.43

</TABLE>

 

 

<TABLE>

<CAPTION>

                                                         AT OR FOR THE NINE              AT OR FOR THE TWELVE

                                                            MONTHS ENDED                     MONTHS ENDED

                                                          JANUARY 30, 2000                  APRIL 30, 1999

                                                          ----------------                  --------------

<S>                                                      <C>                             <C>

ORTEL - HISTORICAL

     Basic loss per common share                             $(0.53)                        $(0.51)

     Diluted loss per common share                            (0.53)                         (0.48)

     Cash dividends declared per common share                  N/A                            N/A

     Book value per common share                               6.39                           6.28

</TABLE>

 

<TABLE>

<CAPTION>

                                                         AT OR FOR THE THREE             AT OR FOR THE TWELVE

                                                            MONTHS ENDED                     MONTHS ENDED

                                                          DECEMBER 31, 1999               SEPTEMBER 30, 1999

                                                          -----------------               ------------------

<S>                                                      <C>                             <C>

PRO FORMA LUCENT

     Basic earnings per common share                          $0.36                           $1.38

     Diluted earnings per common share                         0.34                            1.33

     Cash dividends declared per common share                  0.04                            0.08

     Book value per common share                               5.91                            5.31

</TABLE>

 

 

<TABLE>

<CAPTION>

                                                         AT OR FOR THE THREE             AT OR FOR THE TWELVE

                                                            MONTHS ENDED                     MONTHS ENDED

                                                          DECEMBER 31, 1999               SEPTEMBER 30, 1999

                                                          -----------------               ------------------

<S>                                                      <C>                            <C>

PRO FORMA EQUIVALENT - ORTEL

     Basic earnings per common share                            $1.13                            $4.33

     Diluted earnings per common share                           1.07                             4.17

     Cash dividends declared per common share                    0.13                             0.25

     Book value per common share                                18.53                            16.65

N/A - not applicable

</TABLE>

 

                                       10

<PAGE>   22

                   SELECTED HISTORICAL FINANCIAL DATA--LUCENT

 

         Lucent was spun off from AT&T Corp. in 1996. On February 1, 1996, AT&T

began transferring to Lucent the assets and liabilities relating to Lucent's

operations. Lucent's historical financial data for periods prior to that date

reflect the results of operations and the financial position of the business

that was transferred to Lucent from AT&T in the separation as if Lucent had been

a stand-alone entity and have been prepared using the historical basis in the

assets and liabilities and historical results of operations related to the

Lucent business. Lucent's historical financial data for periods prior to that

date also include an allocation of certain AT&T corporate headquarters assets,

liabilities and expenses related to the Lucent business. The calculation of

earnings (loss) per common share on a historical basis includes the retroactive

recognition to January 1, 1995 of the 524,624,894 shares on a pre-split basis,

or 2,098,499,576 shares on a post-split basis, owned by AT&T on April 10, 1996.

 

         Beginning September 30, 1996, Lucent changed its fiscal year end from

December 31 to September 30 and reported results for the nine-month transition

period ended September 30, 1996. All per share data has been restated to account

for Lucent's two-for-one stock splits effective on April 1, 1999 and on April 1,

1998. Lucent's results were restated to include the results of International

Network Services and Excel Switching Corporation, which merged with Lucent in

transactions that were each accounted for as a pooling of interests.

 

         Effective October 1, 1998, Lucent changed its method of accounting for

calculating the market-related value of plan assets used in determining the

expected return-on-asset component of annual net pension and post-retirement

benefit costs. As a result, Lucent recorded a one-time, after-tax gain from the

cumulative effect of the accounting change of $1,308 million (net of tax of $842

million), or $0.41 per diluted common share, for the first fiscal quarter of

1999. This accounting change also resulted in a reduction in benefit costs in

the year ended September 30, 1999 that increased income by $427 million ($260

million after-tax, or $0.08 per basic and diluted share) as compared with the

previous accounting method.

 

         The following selected historical financial data of Lucent at September

30, 1999 and 1998, and for each of the three years in the period ended September

30, 1999 are derived from audited historical financial statements incorporated

by reference in this proxy statement/prospectus. The selected historical

financial data of Lucent at September 30, 1997 and 1996 and December 31, 1995

and for each of the years ended September 30, 1996 and December 31, 1995, and

for the nine-month period ended September 30, 1996, is derived from unaudited

financial statements not incorporated by reference in this proxy

statement/prospectus, and, in the opinion of Lucent's management, includes all

necessary adjustments for a fair presentation of that data in conformity with

generally accepted accounting principles.

 

         The selected historical financial data of Lucent at and for the three

months ended December 31, 1999 and December 31, 1998, is derived from unaudited

condensed financial statements incorporated by reference in this proxy

statement/prospectus and, in the opinion of Lucent's management, include all

necessary adjustments for a fair presentation of that data in

 

                                       11

<PAGE>   23

conformity with generally accepted accounting principles. Results for the

three-month period ended December 31, 1999 may not be indicative of the results

for the full year.

 

         THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH LUCENT'S

HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE

IN THIS PROXY STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON

PAGE 63.

 

<TABLE>

<CAPTION>

                                                              AT OR FOR THE                    AT OR FOR THE    AT OR FOR THE

                     AT OR FOR THE THREE                          TWELVE                        NINE MONTHS     TWELVE MONTHS

                           MONTHS                              MONTHS ENDED                        ENDED            ENDED

                      ENDED DECEMBER 31,                       SEPTEMBER 30,                   SEPTEMBER 30,     DECEMBER 31,

INCOME                 1999        1998       1999         1998       1997        1996             1996             1995

------                 ----        ----       ----         ----       ----        ----             ----             ----

<S>                 <C>         <C>         <C>         <C>         <C>         <C>            <C>              <C>

STATEMENT DATA:

Revenues            $  9,905    $  9,842    $ 38,774    $ 32,108    $ 27,802    $ 24,321         $ 16,726        $ 21,770

 

Operating income

(loss)                 1,699       1,966       5,444       2,680       1,632        (641)             747            (911)

 

Income (loss)

before

cumulative

effect of

accounting

change                 1,250       1,236       3,481       1,065         470        (596)             388            (808)

 

Net income

 (loss)                1,250       2,544       4,789       1,065         470        (596)             388            (808)

 

Basic earnings

(loss) per

common share            0.40        0.83        1.54        0.35        0.16       (0.22)            0.14           (0.33)

 

Diluted earnings

(loss) per

common share            0.38        0.80        1.49        0.34        0.16       (0.22)            0.14           (0.33)

 

Dividends

declared per

common share            0.04        0.04        0.08       0.078       0.056       0.038            0.038              --

 

BALANCE SHEET

DATA:

 

Total assets        $ 38,634    $ 34,636    $ 39,250    $ 29,711    $ 25,256    $ 23,632         $ 23,632        $ 20,250

 

Total debt             6,504       6,176       7,038       4,649       4,208       4,003            4,003           4,023

 

Shareowners'

equity                16,079      10,878      13,936       7,960       4,570       3,479            3,479           1,925

</TABLE>

 

Dollars in millions, except for per share amounts

 

                                       12

<PAGE>   24

                    SELECTED HISTORICAL FINANCIAL DATA--ORTEL

 

         The following selected historical consolidated financial information of

Ortel at and for the fiscal years ended April 30, 1999, 1998 and 1997 is derived

from audited historical financial statements incorporated by reference in this

proxy statement/prospectus.

 

         The selected historical financial data of Ortel at and for the twelve

months ended April 30, 1996 and 1995 is derived from audited financial

statements not incorporated by reference in this proxy statement/prospectus. The

selected financial data of Ortel at and for the nine-month periods ended January

30, 2000 and January 31, 1999 is derived from unaudited financial statements

incorporated by reference in this proxy statement/prospectus, which, in the

opinion of Ortel's management, includes all necessary adjustments for a fair

presentation of the data in conformity with generally accepted accounting

principles. However, results of operations for any interim period are not

necessarily indicative of results for the full year. For each of the fiscal

years ended April 30, 1999, 1998, 1997, 1996 and 1995 and for the nine months

ended January 31, 1999, Ortel has restated its financial statements for

discontinued operations.

 

         THE INFORMATION IN THIS SECTION SHOULD BE READ ALONG WITH ORTEL'S

HISTORICAL FINANCIAL STATEMENTS AND ACCOMPANYING NOTES INCORPORATED BY REFERENCE

IN THIS PROXY STATEMENT/PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON

PAGE 63.

 

<TABLE>

<CAPTION>

                                  AT OR FOR                                      AT OR FOR

                             THE NINE MONTHS ENDED                              THE TWELVE

                                                                               MONTHS ENDED

                                                                                 APRIL 30,

                            JANUARY 30,   JANUARY 31,

                                2000         1999         1999         1998         1997       1996        1995

                                ----         ----         ----         ----         ----       ----        ----

                                              (Dollars in millions, except per share amounts)

<S>                         <C>           <C>            <C>          <C>      <C>             <C>        <C>

INCOME STATEMENT DATA:

Revenues                         58           49           65            64          75          55          50

Operating income (loss)          (4)           1            0             7          18           5          11

Income from continuing

 operations                      (2)           1            2             7          14           4           7

Cumulative effect of

 accounting change               (1)           -            -             -           -           -           -

Loss from discontinued

 operations and disposal

 of discontinued

 operations, net of tax          (3)          (7)          (8)           (4)         (6)          (2)        (1)

 

Net income (loss)                (6)          (6)          (6)            3           8            2          6

 

Income (loss) per

 common share - basic:

  Income (loss) from

   continuing operations      (0.19)        0.12         0.17          0.56        1.24        0.36        0.74

  Cumulative effect of

   accounting change          (0.08)           -            -             -           -           -           -

  Discontinued operations     (0.26)       (0.59)       (0.68)         (0.32)     (0.51)       (0.15)     (0.12)

                               ----         ----         ----           ----       ----         ----       ----

  Net income (loss) per

   share                      (0.53)       (0.47)       (0.51)          0.24       0.73         0.21        0.62

 

Income (loss) per

 common share - diluted:

  Income (loss) from

   continuing operations      (0.19)        0.12         0.16          0.51        1.13        0.33        0.65

  Cumulative effect of

   accounting change          (0.08)           -            -             -           -           -           -

  Discontinued operations     (0.26)       (0.56)       (0.64)         (0.29)     (0.47)       (0.14)     (0.10)

                               ----         ----         ----           ----       ----         ----       ----

  Net income (loss) per

   share                      (0.53)       (0.44)       (0.48)          0.22       0.66         0.19        0.55

Dividends declared per

 common share                   N/A          N/A          N/A           N/A         N/A         N/A         N/A

 

BALANCE SHEET DATA:

Total assets                    100           88           89            90          91          77          74

Shareowners' equity              82           76           75            79          75          66          64

N/A -- Not applicable

 

 

 

</TABLE>

 

                                       13

 

<PAGE>   25

                       RISK FACTORS RELATING TO THE MERGER

 

         In addition to the other information included and incorporated by

reference in this proxy statement/prospectus, Ortel stockholders should consider

carefully the matters described below in determining whether to adopt the merger

agreement.

 

         -        THE EXCHANGE RATIO FOR LUCENT COMMON STOCK TO BE RECEIVED IN

                  THE MERGER IS FIXED AND WILL NOT BE ADJUSTED IN THE EVENT OF

                  ANY CHANGE IN STOCK PRICE. Under the merger agreement, each

                  share of Ortel common stock will be converted into the right

                  to receive 3.1350 shares of Lucent common stock. This exchange

                  ratio is fixed and will not be adjusted for any increase or

                  decrease in the price of Lucent common stock or Ortel common

                  stock. The prices of Lucent common stock and Ortel common

                  stock at the closing of the merger may vary from their

                  respective prices on the date of this proxy

                  statement/prospectus and on the date of the special meeting.

                  These prices may vary because of changes in the business,

                  operations or prospects of Lucent or Ortel, the timing of the

                  completion of the merger, the prospects of post-merger

                  operations, general market and economic conditions and other

                  factors. Because the date that the merger is completed may be

                  later than the date of the special meeting, the prices of

                  Lucent common stock and Ortel common stock on the date of the

                  special meeting may not be indicative of their respective

                  prices on the date the merger is completed. The Ortel board of

                  directors urges Ortel stockholders to obtain current market

                  quotations for Lucent common stock and Ortel common stock.

 

         -        THE PRICE OF LUCENT COMMON STOCK MAY BE AFFECTED BY FACTORS

                  DIFFERENT FROM THOSE AFFECTING THE PRICE OF ORTEL COMMON

                  STOCK. Upon completion of the merger, holders of Ortel common

                  stock will become holders of Lucent common stock. Lucent's

                  business differs from that of Ortel, and Lucent's results of

                  operations, as well as the price of Lucent common stock, may

                  be affected by factors different from those affecting Ortel's

                  results of operations and the price of Ortel common stock. For

                  a discussion of Lucent's and Ortel's businesses and certain

                  factors to consider in connection with these businesses, see

                  Lucent's Annual Report on Form 10-K for the fiscal year ended

                  September 30, 1999, as amended, Lucent's Quarterly Report on

                  Form 10-Q for the fiscal quarter ended December 31, 1999,

                  Lucent's Form 8-K, filed February 11, 2000 to restate

                  financial results for the merger of Lucent and INS and the

                  merger of Lucent and Excel, Lucent's Form 8-K filed March 1,

                  2000 and Ortel's Annual Report on Form 10-K for the fiscal

                  year ended April 30, 1999, which are incorporated by reference

                  in this proxy statement/prospectus.

 

                                       14

<PAGE>   26

                                  THE COMPANIES

 

ORTEL

 

         Ortel has been focused on developing fiber optic technology since the

founding of the company in 1980. Ortel designs, develops and manufactures

optoelectronic components used by communication system suppliers in the cable

television and telecommunications industries. Ortel's technology, expertise and

close working relationships with leading industry participants have allowed

Ortel to become a leading supplier of optoelectronic components in the cable

television industry and, more recently, have enabled Ortel to establish a

presence in the telecommunications industry. Ortel's products include laser and

photodiode chips, packaged lasers, transmitters and receivers. Ortel's products

allow Ortel's customers to provide cable system operators and telecommunication

service providers with communication systems that enable the transmission of

optical signals over longer distances, with improved signal quality and higher

bandwidth capacity.

 

         Ortel was incorporated in April 1980 under the laws of California and

was reincorporated in October 1994 under the laws of Delaware. Additional

information regarding Ortel is contained in Ortel's filings with the Securities

and Exchange Commission. See "Where You Can Find More Information" on page 63.

 

LUCENT

 

         Lucent is one of the world's leading designers, developers and

manufacturers of communications systems, software and products. Lucent is a

global leader in the sale of public and private communications systems,

supplying systems and software to most of the world's largest network operators

and service providers. Lucent is also a global leader in the sale of business

communications systems and in the sale of microelectronic components for

communications applications to manufacturers of communications systems and

computers. Lucent's research and development activities are conducted through

Bell Laboratories, one of the world's foremost industrial research and

development organizations.

 

         Lucent was incorporated in Delaware in November 1995. Lucent was a

wholly owned subsidiary of AT&T prior to its initial public offering of common

stock on April 10, 1996, and became completely separate from AT&T when the

remaining shares of Lucent common stock held by AT&T were distributed to AT&T's

stockholders on September 30, 1996. Additional information regarding Lucent is

contained in Lucent's filings with the Securities and Exchange Commission. See

"Where You Can Find More Information" on page 63.

 

RECENT DEVELOPMENTS

 

          On March 1, 2000, Lucent announced a plan to spin off its PBX,

SYSTIMAX(R) structured cabling and LAN-based data businesses to its

stockholders, forming a separate company that will focus directly and

independently on the enterprise networking market. The spin-off is expected to

be accomplished through a tax-free distribution of shares to Lucent's

stockholders to be completed by the close of Lucent's fourth fiscal quarter of

2000, which ends on September 30. The new enterprise business will have

approximately 34,000 employees worldwide and will operate independently from

Lucent with its own brand, board of directors, management and research and

development organizations. For additional information, please see Lucent's

current report on Form 8-K filed March 1, 2000.

 

MATERIAL CONTRACTS BETWEEN LUCENT AND ORTEL

 

         On December 9, 1999, Ortel and Lucent entered into a commercial

agreement. Under the terms of the agreement, Ortel will provide fully-qualified

uncooled 980 nanometer pump laser chips to Lucent's Microelectronics Group for

use in its Erbium doped fiber amplifier modules.

 

                                       15

<PAGE>   27

                               THE SPECIAL MEETING

 

         We are furnishing this proxy statement/prospectus to stockholders of

Ortel as part of the solicitation of proxies by the Ortel board of directors for

use at the special meeting.

 

DATE, TIME AND PLACE

 

         The special meeting will be held at                                   ,

at       a.m., local time, on                 , 2000.

 

PURPOSE OF SPECIAL MEETING

 

         At the special meeting, holders of Ortel common stock will be asked to

adopt the merger agreement. The Ortel board of directors has determined that the

merger is advisable and fair to, and in the best interests of, Ortel

stockholders, has unanimously approved the merger agreement and the merger, and

unanimously recommends that Ortel stockholders vote "FOR" adoption of the merger

agreement.

 

RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM

 

         Only holders of record of Ortel common stock at the close of business

on       , 2000, the record date, are entitled to notice of and to vote at the

special meeting. On the record date,         shares of Ortel common stock were

issued and outstanding and held by approximately       holders of record. A

quorum is present at the special meeting for purposes of the vote of the holders

of Ortel common stock if a majority of the shares of Ortel common stock which

are issued and outstanding and entitled to vote on the record date are

represented in person or by proxy. Shares of Ortel common stock represented at

the special meeting but not voting, including abstentions and broker non-votes,

will be treated as present at the special meeting for purposes of determining

the presence or absence of a quorum for the transaction of all business. If a

quorum is not present at the special meeting, it is expected that the meeting

will be adjourned or postponed to solicit additional proxies. Holders of record

of Ortel common stock on the record date are entitled to one vote per share of

common stock at the special meeting.

 

VOTES REQUIRED

 

         The affirmative vote of a majority of the shares of Ortel common stock

is required to adopt the merger agreement. IF YOU ABSTAIN FROM VOTING OR DO NOT

VOTE, EITHER IN PERSON OR BY PROXY, IT WILL HAVE THE EFFECT OF A VOTE AGAINST

ADOPTION OF THE MERGER AGREEMENT.

 

VOTING AGREEMENT

 

         On February 7, 2000, Sumitomo Osaka Cement entered into a voting

agreement with Lucent pursuant to which it has agreed to vote the Ortel common

stock it owns "FOR" adoption of the merger agreement. The voting agreement is

attached as Annex D. On the record date, Sumitomo Osaka Cement owned and was

entitled to vote approximately   % of the outstanding shares of Ortel common

stock.

 

                                       16

 

<PAGE>   28

         On the record date, directors and executive officers of Ortel

beneficially owned approximately    % of the outstanding shares of Ortel common

stock. Each of the directors and executive officers of Ortel has advised Ortel

that he intends to vote all shares of Ortel common stock over which he has or

shares voting control "FOR" adoption of the merger agreement.

 

VOTING OF PROXIES

 

         All shares represented by properly executed proxies received in time

for the special meeting will be voted at the special meeting in the manner

specified by the holders. PROPERLY EXECUTED PROXIES THAT DO NOT CONTAIN VOTING

INSTRUCTIONS WILL BE VOTED "FOR" ADOPTION OF THE MERGER AGREEMENT.

 

         Only shares voted for adoption of the merger agreement, including

properly executed proxies that do not contain voting instructions, will be

counted as favorable votes for the merger agreement. If you abstain from voting

or do not vote, either in person or by proxy, it will count as a vote against

adoption of the merger agreement. Brokers who hold shares of Ortel common stock

in street name for customers who are the beneficial owners of such shares may

not give a proxy to vote those customers' shares in the absence of specific

instructions from those customers. Those non-voted shares are referred to as

broker non-votes and count as votes against adoption of the merger agreement.

 

         Ortel does not expect that any matter other than the proposal to adopt

the merger agreement will be brought before the special meeting. If, however,

the Ortel board of directors properly presents other matters, the persons named

as proxies will vote on those other matters in accordance with their judgment.

In addition, the persons named as proxies may propose and vote for one or more

adjournments or postponements of the special meeting, including adjournments or

postponements to permit further solicitation of proxies. No proxy voted against

the proposal to adopt the merger agreement will be voted in favor of any

adjournment or postponement.

 

REVOCABILITY OF PROXIES

 

         The grant of a proxy on the enclosed form of proxy does not preclude

you from voting in person at the special meeting. You may revoke a proxy at any

time prior to its exercise by:

 

         -        filing with the secretary of Ortel, before the proxy is voted

                  at the special meeting, a duly executed written notice of

                  revocation of proxy which is dated later than the proxy

 

         -        before the proxy is voted at the special meeting, submitting a

                  duly executed later dated proxy to the secretary of Ortel or

 

         -        voting in person at the special meeting, although attendance

                  at the special meeting will not itself constitute revocation

                  of a proxy.

 

                                       17

<PAGE>   29

         Any written notice of revocation or subsequent proxy should be sent to

Ortel Corporation, 2015 West Chestnut Street, Alhambra, California 91803,

Attention: Secretary, or hand delivered to the Secretary of Ortel at or before

the taking of the vote at the special meeting.

 

 

 

SOLICITATION OF PROXIES

 

         Ortel will bear the cost of the solicitation of proxies from its

stockholders. In addition to solicitation by mail, the directors, officers and

employees of Ortel and its subsidiaries may solicit proxies from stockholders by

telephone or other electronic means or in person. Ortel has retained the

services of MacKenzie Partners to assist in the solicitation of proxies by

Ortel. Ortel will pay $6,000, plus reimbursement of some out-of-pocket expenses,

to MacKenzie Partners for its services. Ortel will cause brokerage houses and

other custodians, nominees and fiduciaries to forward solicitation materials to

the beneficial owners of stock held of record by those persons. Ortel will

reimburse any of these custodians, nominees and fiduciaries for their reasonable

out-of-pocket expenses in doing so.

 

         PLEASE DO NOT SEND STOCK CERTIFICATES WITH YOUR PROXY. A transmittal

form with instructions for the exchange of Ortel common stock certificates will

be mailed to you as soon as practicable after completion of the merger.

 

                                       18

<PAGE>   30

                                   THE MERGER

 

         The following discussion summarizes the material terms of the merger,

the merger agreement and the stock option agreement. We urge stockholders to

read carefully the merger agreement and the stock option agreement which are

attached as Annexes A and B to this proxy statement/prospectus.

 

BACKGROUND TO THE MERGER

 

         At the meeting of the Ortel board of directors in September 1999 and

again in December 1999, the board discussed the ongoing consolidation in the

optoelectronic components industry and the risks and opportunities that such

consolidation presented for Ortel. The board discussed the benefits and risks of

remaining independent in a consolidating industry and the risks and benefits of

combining with a strategic partner. While, from time to time, Ortel had received

inquiries of interest from various companies about possible business

combinations, none of the inquiries had ever resulted in substantive

discussions.

 

         On December 9, 1999, Lucent and Ortel entered into a commercial

agreement pursuant to which Ortel agreed to supply Lucent with components for

incorporation into one of Lucent's products. In connection with the negotiation

of the commercial agreement, the management of the two companies discussed other

potential business opportunities.

 

         In late December 1999, Lucent management began considering a possible

business combination with Ortel.

 

         On January 5, 2000, a meeting was held among Terence Bentley, Director

-- Corporate Development, Michael Bond, Business Development Vice President,

Ettore J. Coringrato, Manager of Optoelectronics, Microelectronics and

Communications Technologies, Daniel A. DiLeo, President of Optoelectronics,

Microelectronics and Communications Technologies, all of Lucent, and Stephen R.

Rizzone, Chairman of the Ortel board of directors, President and Chief Executive

Officer, George B. Holmes, Vice President -- Worldwide Sales and Jeffrey S.

Rittichier, Vice President -- Marketing, all of Ortel, to discuss a possible

business combination between the two companies.

 

         From January 7 through January 17, 2000, in a series of telephone

conferences, Mr. Bentley and Mr. Rizzone continued to discuss a possible

combination between the two companies, including a process for the exchange of

information about each company and the receipt of necessary internal approvals.

On January 10, 2000, Lucent and Ortel entered into a confidentiality agreement

for the exchange of information which contained customary terms and conditions.

 

         At a telephonic meeting of the Ortel board of directors on January 10,

2000, Mr. Rizzone informed the board of his conversations with the

representatives of Lucent as well as of his discussions with the representatives

of another company which had indicated an interest in a business combination

with Ortel. The board discussed in general the merits of a business combination

given the current business environment. The board also discussed whether it was

in

 

                                       19

<PAGE>   31

the best interests of Ortel for management to divert any of its attention from

executing Ortel's strategic plan to pursue discussions with Lucent or any other

company. After discussion, the board determined that it would be in Ortel's best

interests for management to continue its current discussions regarding the two

possible business combinations. In addition, the board authorized management to

engage SoundView Technology Group, Inc. as a financial advisor to Ortel (a) to

solicit indications of interest in a possible business combination from selected

other companies and (b) to assist Ortel in the current and any resulting

discussions or negotiations.

 

         Based in part on conversations with SoundView and earlier contacts he

had with other companies, on January 12, 2000, Mr. Rizzone traveled to northern

California for separate meetings with executives of three companies which had

indicated they potentially would be interested in a business combination with

Ortel. Later in the week, representatives of two of these companies contacted

Mr. Rizzone and indicated that they had no current interest in pursuing a

business combination. Representatives of the third company, which Ortel had

previously had conversations with, exchanged information with and continued

discussions with Ortel until early February when that company indicated that it

was not willing to pursue a business combination on terms that Ortel believed

were at least comparable to those being negotiated with Lucent.

 

         On January 13, 2000, Ortel formally retained SoundView to provide

financial advisory services in connection with Ortel's interest in pursuing a

business combination.

 

         From January 18 through January 21, 2000, Mr. Bentley discussed with

Mr. Rizzone and Roger Hay, Vice President -- Finance and Chief Financial Officer

of Ortel, the exchange of information between the two companies.

 

         On January 19, 2000, Lucent obtained preliminary approval from the

office of the Chief Executive Officer to continue discussions with Ortel.

 

         On January 20, 2000, Mr. Rizzone, Mr. Hay, Mr. Bentley and Mr. Bond had

a telephonic meeting. During the meeting, Mr. Bentley and Mr. Bond informed Mr.

Rizzone and Mr. Hay of Lucent's further interest in pursuing a business

combination of the two companies. During the discussion, Lucent proposed various

principal terms of such a transaction, including:

 

         -        Lucent's requirement that any transaction be an "at market"

                  transaction

 

         -        the anticipation that the transaction would be treated as a

                  tax-free reorganization

 

         -        Lucent's preference that the transaction be accounted for as a

                  purchase and

 

         -        Ortel's granting of a stock option to Lucent to acquire an

                  amount of Ortel common stock equal to 19.9% of the outstanding

                  common stock.

 

         On January 21, 2000, the Ortel board of directors held a telephonic

meeting at which Mr. Rizzone reviewed the progress of discussions since the

previous telephonic board meeting. After

 

                                       20

<PAGE>   32

discussion, the board authorized Ortel management to continue pursuing

discussions of a business combination with Lucent and to provide Lucent with

more detailed information about Ortel.

 

         From January 24 through January 28, 2000, Mr. Bentley and Mr. Rizzone

discussed certain material terms of a possible business combination, including

the vesting of stock options held by senior management, certain compensation

payable to Mr. Rizzone upon completion of the business combination and certain

non-competition and non-disclosure agreements for certain Ortel officers.

 

         On January 25 and 26, 2000, representatives of Lucent, including

Lucent's financial and legal advisors, conducted due diligence at the offices of

Latham & Watkins, counsel to Ortel, in Costa Mesa, California regarding the

businesses and operations of Ortel.

 

         On January 25, 2000, the Ortel board of directors held a telephonic

meeting to discuss the status of the ongoing discussions. During the meeting,

Mr. Rizzone updated the board concerning the due diligence process and the

discussions that Ortel management had had with Lucent regarding the principal

terms of a transaction.

 

         On January 27, 2000, Mr. Bentley and Mr. Hay discussed certain

accounting and financial information relating to Lucent and Ortel.

 

         On January 29, 2000, representatives of Lucent and Ortel discussed the

terms of the proposed transaction and the findings from the due diligence

conducted by Lucent.

 

         On January 31, 2000, the Ortel board of directors held another

telephonic meeting to discuss the status of the ongoing discussions. Mr. Rizzone

informed the board that Lucent had reiterated its interest in pursuing a

transaction at the market value of Ortel common stock, as Lucent management

indicated that it considered the current market price of Ortel common stock to

already reflect a premium. Paul Mejean of SoundView indicated to the board that

he believed that Lucent would submit a final proposal by the end of the week.

 

         Mr. Bond and Mr. Bentley of Lucent, Mr. Rizzone of Ortel and Mr. Mejean

of SoundView held numerous telephone conferences from January 31 through

February 5, 2000 to discuss the terms and conditions of a possible business

combination. On January 31, 2000, Lucent's legal advisors submitted a proposed

merger agreement to Ortel's legal counsel. From January 31 through February 6,

2000, Ortel management and their financial and legal advisors conducted due

diligence concerning Lucent.

 

         On February 2, 2000, the Ortel board of directors held a special

meeting in Pasadena, California. During the meeting, Mr. Rizzone described the

offer to acquire Ortel submitted by Lucent and Ortel's legal counsel described

the status of the negotiation of the merger agreement. The offer reflected

Lucent's intention to pursue an "at market" transaction. After much discussion,

the board authorized management to continue negotiations but directed that the

terms on which the board could accept an "at market" offer would have to be

consistent with the exercise of its fiduciary duties to Ortel stockholders.

 

                                       21

<PAGE>   33

         On February 4, 2000, the Ortel board of directors again held a

telephonic meeting to discuss the potential transaction with Lucent. At the

meeting, Mr. Rizzone updated the board concerning the negotiations with Lucent.

Ortel's legal counsel reported on the negotiation of the proposed merger

agreement.

 

         From February 4 through February 6, 2000, representatives of Lucent and

Ortel, together with their financial and legal advisors, held numerous

conference calls to discuss and negotiate the terms and conditions of the merger

agreement, the stock option agreement and other transaction related documents.

 

         On February 6, 2000 the Ortel board of directors held a special

meeting in Pasadena, California to discuss the final terms of Lucent's proposal

to acquire Ortel. Prior to the meeting, each board member received a draft copy

of the proposed merger agreement and certain publicly available financial

information about Lucent and the proposed merger. At the meeting, Ortel

management and legal and financial advisors of Ortel reviewed with the board:

 

         -        the strategic rationale for, and financial analyses relating

                  to, the proposed merger

 

         -        the potential benefits and risks of the transaction with

                  Lucent and

 

         -        the principal terms of the merger agreement and related

                  documents.

 

         In addition, at the meeting SoundView provided its opinion that the

exchange ratio was fair, from a financial point of view, to the Ortel

stockholders. Following lengthy discussion, the Ortel board of directors

determined that the proposed merger was advisable and unanimously approved the

merger agreement and stock option agreement, and unanimously resolved to

recommend that the Ortel stockholders adopt the merger agreement.

 

         On the morning of February 7, 2000, the Lucent board of directors met

by telephone conference call to consider the terms of the merger and the

definitive agreements, and, after deliberation, approved the merger agreement

and the stock option agreement with Ortel and the voting agreement with Sumitomo

Osaka Cement.

 

         The merger agreement, the stock option agreement, the voting agreement

between Lucent and Sumitomo Osaka Cement, and the letter agreement between

Lucent and Ortel regarding senior management were signed by the parties on the

morning of February 7, 2000, and prior to the commencement of trading, Lucent

and Ortel issued a joint press release announcing the execution of the merger

agreement.

 

REASONS FOR THE MERGER

 

         In reaching its decision to approve the merger agreement and the merger

and to recommend adoption of the merger agreement by Ortel stockholders, the

Ortel board of directors consulted with Ortel management, as well as its

financial and legal advisors, and independently considered the proposed merger

agreement and the transactions contemplated by the merger agreement. In

unanimously approving the merger agreement and the merger, the Ortel board of

directors considered a number of factors, including all the following:

 

                                       22

<PAGE>   34

         -        current industry, market and economic conditions

 

         -        the ongoing consolidation in the telecommunications equipment

                  sector generally

 

         -        the belief that a business combination with Lucent presents

                  improved business prospects as compared to remaining

                  independent

 

         -        the potential to expand Ortel's international presence and to

                  accelerate the development of relationships with communication

                  system suppliers in the data communications and

                  telecommunications industries through Lucent's established

                  relationships, sales and marketing resources and distribution

                  channels

 

         -        the potential to accelerate the development of Ortel's

                  products in the future and to offer its customers more

                  complete end-to-end solutions by leveraging Lucent's

                  technology, expertise and products

 

         -        the ability to expand Ortel's sales and marketing

                  infrastructure by leveraging Lucent's extensive sales and

                  marketing resources, which Ortel management believes will

                  provide Ortel with opportunities to develop relationships with

                  additional communication system suppliers

 

         -        the ability to expand Ortel's customer base and reduce Ortel's

                  reliance upon key customers

 

         -        the complementary nature of Ortel's and Lucent's product

                  offerings across a range of products

 

         -        Ortel's business, assets, management, competitive position,

                  operating performance, trading performance and prospects,

                  including Ortel's prospects if Ortel were to continue as an

                  independent company

 

         -        Lucent's business, financial conditions, results of

                  operations, assets, management, competitive position,

                  operating performance, trading performance and prospects and

 

         -        Lucent's financial condition after the transaction, including

                  its market capitalization, revenues, profits and earnings per

                  share.

 

         In the course of deliberations, the Ortel board of directors also

considered a number of additional factors relevant to the merger, including:

 

         -        the possibility of strategic alternatives to the merger for

                  enhancing long-term stockholder value, including soliciting

                  offers from other companies

 

         -        the exchange ratio

 

         -        the market price of Ortel common stock over the last several

                  years and the potential for an increase and decrease in the

                  market price of Ortel common stock in the future

 

                                       23

<PAGE>   35

         -        the market price of Lucent common stock over the last several

                  years and the anticipated relative stability of Lucent common

                  stock

 

         -        the potential for improved trading liquidity for Ortel

                  stockholders

 

         -        the opinion of SoundView that, as of the date of the merger

                  agreement and subject to the considerations set forth in the

                  opinion, the exchange ratio is fair to Ortel stockholders from

                  a financial point of view

 

         -        the terms and conditions of the merger agreement, including

                  termination fees, the grant of a stock option to Lucent and

                  closing conditions

 

         -        the expected qualification of the merger as a tax-free

                  reorganization under Section 368(a) of the Internal Revenue

                  Code

 

         -        the transaction being accounted for as a purchase rather than

                  as a pooling of interests which will result in Lucent

                  incurring substantial charges to earnings over the next

                  several years

 

         -        the impact of the merger on Ortel's customers, suppliers and

                  employees

 

         -        the likelihood of the merger being approved by the appropriate

                  regulatory authorities

 

         -        the likelihood that the merger would be completed and

 

         -        the effect of the public announcement of the merger on the

                  market price of Ortel common stock and Lucent common stock.

 

         The Ortel board of directors also identified and considered a number of

potentially negative factors in its deliberations concerning the merger,

including:

 

         -        the risk that, despite Ortel's and Lucent's efforts after the

                  merger, the combined company may lose key personnel

 

         -        the risk that a significant number of Ortel's customers and

                  suppliers might cease doing business with Ortel after the

                  merger

 

         -        the difficulty of managing operations in the different

                  geographic locations in which Ortel and Lucent operate and

 

         -        the risk that the potential benefits of the merger might not

                  be fully realized.

 

         The Ortel board of directors determined that these risks were unlikely

to occur, that Ortel and Lucent could avoid or mitigate these and other risks,

and that, overall, these risks were outweighed by the potential benefits of the

merger.

 

         The above discussion of the factors considered by the Ortel board of

directors in making its decision is not intended to be exhaustive. In view of

the variety of factors considered in

 

                                       24

<PAGE>   36

connection with its evaluation of the merger agreement and the merger, the Ortel

board of directors did not find it practicable to, and did not, quantify or

otherwise assign relative weight to the specific factors considered in reaching

its determination. In addition, individual members of the Ortel board of

directors may have given different weight to different factors.

 

RECOMMENDATION OF THE ORTEL BOARD OF DIRECTORS

 

         After careful consideration, the Ortel board of directors unanimously

determined that the terms of the merger agreement and the merger are advisable

and fair to, and in the best interests of, Ortel and its stockholders and has

unanimously approved the merger agreement and the merger. The Ortel board of

directors unanimously recommends that the Ortel stockholders vote "FOR" the

adoption of the merger agreement.

 

FAIRNESS OPINION OF SOUNDVIEW TECHNOLOGY GROUP, INC.

 

         SoundView Technology Group, Inc. was retained by the Ortel board of

directors to render an opinion as to whether the exchange ratio is fair, from a

financial point of view, to the holders of the outstanding shares of Ortel

common stock.

 

         At a meeting of the Ortel board of directors on February 6, 2000,

SoundView delivered its written opinion to the Ortel board of directors to the

effect that, as of such date, based upon the facts and circumstances as they

existed at that time, and subject to certain assumptions made, matters

considered and limits of review set forth therein, the exchange ratio was fair,

from a financial point of view, to the holders of the outstanding shares of

Ortel common stock.

 

         The full text of the written opinion of SoundView, dated February 6,

2000, including, among other things, the assumptions made, matters considered,

and the scope and limitations of the review undertaken and procedures followed

by SoundView in rendering its opinion, is included in Annex C to this proxy

statement/prospectus and is incorporated herein by reference. The summary of the

opinion of SoundView set forth below does not purport to be a complete

description of the analysis performed by SoundView in connection with rendering

the opinion and is qualified in its entirety by reference to the full text of

the opinion. Ortel stockholders are urged to read carefully the written opinion

of SoundView in its entirety.

 

         SoundView's opinion is directed only to the fairness of the exchange

ratio, from a financial point of view, to the holders of the outstanding shares

of Ortel common stock. SoundView's opinion was expressly intended for the

benefit and use of the Ortel board of directors in its consideration of the

merger and is not intended to be and does not constitute a recommendation to the

Ortel board of directors or any Ortel stockholder as to how such stockholder

should vote with respect to the proposed merger.

 

         In connection with rendering its opinion, SoundView, among other

things:

 

         -        reviewed the draft merger agreement and the specific terms of

                  the merger set forth therein, and assumed that the merger

                  agreement would not vary in any regard that is material to

                  SoundView's analysis

 

                                       25

<PAGE>   37

         -        reviewed Ortel's financial and operating information for the

                  three-year period ended April 30, 1999 and the six-month

                  period ended October 31, 1999

 

         -        reviewed Lucent's financial and operating information for the

                  three-year period ended December 31, 1999

 

         -        reviewed certain financial and operating information regarding

                  the businesses, operations and prospects of Ortel, including

                  forecasts and projections, provided to SoundView by Ortel

                  management

 

         -        reviewed certain financial and operating information regarding

                  the businesses, operations and prospects of Lucent, including

                  forecasts and projections, published and disseminated by stock

                  market research analysts who follow Lucent (internal financial

                  forecasts and projections prepared by Lucent were not made

                  available for SoundView's review)

 

         -        reviewed certain publicly available financial information

                  concerning certain other companies SoundView deemed to be

                  reasonably similar to Ortel and Lucent and the trading markets

                  for these companies' securities

 

         -        reviewed the financial terms of the merger and compared them

                  with the financial terms, to the extent publicly available, of

                  certain recent mergers and acquisitions that SoundView deemed

                  relevant and

 

         -        performed such other analyses, examinations and procedures,

                  reviewed such other agreements and documents, and considered

                  such other factors as SoundView deemed, in its sole judgment,

                  to be necessary, appropriate or relevant to render its

                  opinion.

 

         SoundView also took into account its assessment of general economic,

market and financial conditions and its experience in similar transactions, as

well as its experience in securities valuation in general. SoundView's opinion

is necessarily based on economic, market, financial and other conditions as in

effect on, and the information available to it as of February 6, 2000.

Subsequent developments may affect SoundView's opinion, and SoundView does not

have any obligation to update, revise or reaffirm its opinion.

 

         In arriving at its opinion, SoundView did not make, obtain or assume

any responsibility for any independent evaluation or appraisal of the properties

and facilities or of the assets and liabilities (contingent or otherwise) of

either Ortel or Lucent. SoundView relied upon the accuracy and completeness of

the financial and other information supplied to or otherwise used by it in

arriving at its opinion, and did not attempt independently to verify, or

undertake any obligation to verify, such information. SoundView also relied upon

the assurances of the management of Ortel that it was not aware of any facts

that would make such information inaccurate or misleading. In addition SoundView

assumed that the forecasts and projections provided to it by Ortel represented

the best currently available estimates and judgments of Ortel's management as to

the future financial condition and results of operations of Ortel and assumed

that such forecasts and projections were reasonably prepared based on such

currently

 

                                       26

<PAGE>   38

available estimates and judgments. SoundView assumed no responsibility for and

expressed no view as to such forecasts and projections or the assumptions on

which they were based.

 

         SoundView did not express any view as to the price at which Lucent

common stock will trade prior to or subsequent to the closing of the merger. Its

opinion did not constitute a recommendation of the merger over any other

alternative transactions which may have been available to Ortel and did not

address the underlying business decision of the Ortel board of directors to

proceed with or effect the merger.

 

         In accordance with customary investment banking practice, SoundView

employed generally accepted valuation methods in reaching its opinion. The

following is a summary of the material financial analyses utilized by SoundView

in connection with rendering its opinion.

 

         COMPARABLE PUBLICLY TRADED COMPANIES ANALYSES

 

         ORTEL. Using publicly available information, SoundView compared certain

financial, market and operating information of selected publicly traded

photonic component manufacturers that were, in SoundView's judgment,

similar to Ortel. The companies analyzed by SoundView in connection with this

analysis were:

 

         -        Finisar Corporation

 

         -        Harmonic, Inc.

 

         -        JDS Uniphase Corporation and

 

         -        SDL, Inc.

 

         For each of the selected companies, SoundView calculated a multiple of

market capitalization to projected calendar 2000 and 2001 revenues. SoundView

also calculated the 2000 and 2001 revenue growth rate for each of the selected

companies. The results of this analysis were as follows:

 

<TABLE>

<CAPTION>

                                                                              Ortel Comparable Companies

                                                             Ortel(1)     Low         Mean         Median           High

                                                             ------       ---         ----         ------           ----

<S>                                                          <C>         <C>          <C>          <C>              <C>

Market Capitalization / 2000 Revenue (Projected)             23.9 x      13.6 x       31.9 x        34.0 x          46.0 x

                 2000 Revenue Growth Rate                    48.0%       45.7%        66.5%         61.2%           97.7%

Market Capitalization / 2001 Revenue (Projected)             16.0 x      10.9 x       21.7 x        22.8 x          30.3 x

                 2001 Revenue Growth Rate                    49.4%       24.8%        43.8%         48.8%           53.0%

</TABLE>

 

(1) Market capitalization computed based on closing prices of the applicable

    companies' common stock on February 4, 2000.

 

 

                                       27

 

<PAGE>   39

         LUCENT. Using publicly available information, SoundView analyzed

certain financial, market and operating information of selected publicly traded

telecommunications companies that were, in SoundView's judgment, similar to

Lucent. The companies analyzed by SoundView in connection with this analysis

were:

 

-        Alcatel

 

-        Ciena Corporation

 

-        Cisco Systems, Inc.

 

-        Nortel Networks Corporation and

 

-        Tellabs, Inc.

 

         For each of the selected companies, SoundView calculated a multiple of

market capitalization to projected calendar 2000 and 2001 revenues. The results

of this analysis were as follows:

 

 

 

<TABLE>

<CAPTION>

                                                                             Lucent Comparable Companies

                                                                             ---------------------------

                                                                 Lucent(1)   Low      Mean      Median       High

                                                                 -------     ---      ----      ------       ----

<S>                                                              <C>         <C>      <C>       <C>          <C>

Market Capitalization / 2000 Revenue (Projected) (2)             4.1 x      1.8 x     10.0 x    8.0 x        20.1 x

 

Market Capitalization / 2001 Revenue (Projected) (2)             3.4 x      1.8 x      7.9 x     7.5 x       14.7 x

 

</TABLE>

 

 (1)  Revenues are for the calendar years ended December 31.

 (2)  Market capitalization computed based on closing prices of the applicable

      companies' common stock on February 4, 2000.

 

         COMPARABLE TRANSACTIONS ANALYSIS

 

         Using publicly available information, SoundView analyzed the purchase

prices and multiples paid in seven selected merger and acquisition transactions

announced between January 28, 1999 and January 17, 2000 involving photonic

component manufacturers that, in SoundView's judgment, were generally comparable

to the business of Ortel. The transactions analyzed by SoundView in connection

with this analysis were:

 

               Acquiror                                 Target

 

        JDS Uniphase Corporation                  E-TEK Dynamics, Inc.

 

          Corning Incorporated                    Oak Industries Inc.

 

        JDS Uniphase Corporation            Optical Coating Laboratory, Inc.

 

               SDL, Inc.                         IOC International plc

 

          Uniphase Corporation                       JDS Fitel Inc.

 

                                       28

<PAGE>   40

         For each of the target companies in the selected transactions,

SoundView calculated a multiple of equity value to last twelve months, or LTM,

revenue and LTM net income, respectively, and a multiple of equity value to

one-year forward revenues and net income, respectively, as of the date the

transaction was announced. The results of this analysis were as follows:

 

<TABLE>

<CAPTION>

                                                               Comparable Transactions

                                                               -----------------------

                                               Ortel        Low           Mean         Median        High

                                               -----        ---           ----         ------        ----

<S>                                            <C>         <C>           <C>          <C>           <C>

Equity Value (1) / LTM Revenue                 35.4 x      3.5 x         18.3 x       8.3 x         63.9 x

 

Equity Value (1) / LTM Net Income              NM          38.8 x        141.6 x      91.6 x        344.5 x

 

Equity Value (1) / One-Year Revenue (2)        23.9 x      2.9 x         13.0 x       5.9 x         37.4 x

 

Equity Value (1) / One-Year Net Income (3)     338.8 x     27.5 x        102.1 x      56.5 x        267.8 x

</TABLE>

 

  (1) Equity value for this transaction was computed based on the closing price

      of Ortel common stock on February 4, 2000 and the average price of Lucent

      common stock during the three-trading day period preceding February 4,

      2000. Equity value for each of the comparable transactions was computed

      based on the price per share consideration paid in the applicable

      transaction and the applicable target company's outstanding number of

      fully-diluted shares at the announcement date calculated using the

      treasury stock method.

 

  (2) Equity value divided by projected revenue for the one-year period after

      the applicable announcement date.

 

  (3) Equity value divided by projected net income for the one-year period after

      the applicable announcement date.

 

                  SoundView noted that no company or transaction used in the

foregoing analysis is directly comparable to Ortel or the merger. SoundView also

noted that none of these transactions took place under market conditions or

competitive conditions or circumstances that, as of the date of SoundView's

opinion, were directly comparable to the merger. Accordingly, SoundView did not

rely solely on the mathematical results of the analysis, but also made

qualitative judgments concerning the differences in financial and operating

characteristics of these companies and transactions and other factors and issues

that could affect the value of the companies or transactions to which Ortel or

the merger are being compared.

 

         CONTRIBUTION ANALYSIS

 

         SoundView analyzed Ortel's contribution to the projected operating

performance of Lucent. SoundView calculated the percentage of Ortel's

contribution to Lucent's pro forma projected 2000 and 2001 revenue, operating

income and net income, respectively. The results of this analysis were as

follows:

 

                                       29

<PAGE>   41

<TABLE>

<CAPTION>

                           Pro Forma Calendar Year 2000E               Pro Forma Calendar Year 2001E

                           -----------------------------               -----------------------------

                                         Operating      Net                     Operating        Net

                           Revenue       Income         Income      Revenue      Income         Income

                           -------       ------         ------      -------      ------         ------

 

<S>                        <C>           <C>            <C>            <C>          <C>            <C>

Ortel Contribution         0.2%          0.1%           0.2%           0.3%         0.3%           0.3%

</TABLE>

 

 

                  Based on the exchange ratio and the number of outstanding

shares of Lucent common stock on a fully-diluted basis as of February 4, 2000,

the holders of the shares of Ortel common stock will, upon consummation of the

merger, own approximately 1.4% of the outstanding shares of Lucent common stock

on a fully-diluted basis giving effect to the merger.

 

         IMPLIED EXCHANGE RATIO ANALYSIS

 

         SoundView calculated implied exchange ratios using an implied market

capitalization of Ortel. SoundView applied the multiples of projected 2000

revenue and net income, respectively, from the comparable transactions analysis

to Ortel's projected 2000 revenue and net income. SoundView also applied the

multiples of projected 2000 revenue and net income, respectively, from the

comparable companies analysis for Ortel. SoundView then adjusted the multiples

of projected 2000 revenue and net income, respectively, from the comparable

companies analysis for Ortel's 2000 revenue growth rate. SoundView calculated a

range of implied exchange ratios based on the average closing price of Lucent

common stock during the three trading days preceding February 4, 2000. Based on

calendar 2000 revenue multiples, the analysis implied an exchange ratio range of

1.67 to 4.11. Based on calendar 2000 net income multiples, the analysis implied

an exchange ratio range of 0.93 to 2.07.

 

         The preparation of a fairness opinion is a complex process and is not

necessarily susceptible to partial analysis or summary description. While the

foregoing summary describes all material analyses and factors considered by

SoundView in rendering its opinion, the summary does not purport to be a

complete description of SoundView's analyses. SoundView believes that its

analyses and summaries should be considered as a whole, and that selecting

portions of the analyses or of the summary set forth above, without considering

the analyses as a whole, could create an incomplete view of the processes

underlying SoundView's opinion. In arriving at its fairness determination,

SoundView considered the results of all of its analyses as a whole and did not

attribute particular weight to any analysis or factor. As noted above, no

company or transaction used in any of the foregoing analyses as a comparison is

directly comparable to Ortel or Lucent or the contemplated transaction.

 

         These analyses were prepared solely for purposes of SoundView's

providing its opinion to the Ortel board of directors as to the fairness from a

financial point of view of the exchange ratio to the holders of the outstanding

shares of Ortel common stock and do not purport to be appraisals or necessarily

reflect the prices at which businesses or securities actually may be sold.

Analyses based upon forecasts of future results are not necessarily indicative

of actual future results, which may be significantly more or less favorable than

suggested by such analyses. Because such analyses are inherently subject to

uncertainty, being based upon numerous factors or events beyond the control of

the parties or their respective advisors, none of Ortel, Lucent, SoundView nor

any other person assumes responsibility if future results are materially

different

 

 

                                       30

<PAGE>   42

from those forecast. As described above, SoundView's opinion to the Ortel board

of directors was one of many factors taken into consideration by the board of

directors of Ortel in making its determination to approve the merger agreement.

 

         SoundView is a nationally recognized investment banking firm. As part

of its investment banking services, SoundView is frequently engaged in the

valuation of businesses and their securities in connection with mergers and

acquisitions, negotiated underwritings, competitive biddings, secondary

distributions of securities, private placements and valuations for corporate and

other purposes. SoundView was retained by the Ortel board of directors to act as

its financial advisor in connection with the merger based upon SoundView's

experience as a financial advisor in mergers and acquisitions, as well as

SoundView's familiarity with the photonic component and telecommunications

industries.

 

         Except as described above, SoundView has not rendered material

financial advisory or investment banking services to Ortel or to Lucent during

the last three years. In the ordinary course of its business, SoundView may

actively trade the securities of Lucent or Ortel for its own account and for the

accounts of its customers and, accordingly, may at any time hold a long or short

position in such securities.

 

         Pursuant to a letter agreement dated January 13, 2000, as amended,

Ortel engaged SoundView to render its opinion in connection with the merger.

Pursuant to the terms of the letter agreement, Ortel has agreed to pay SoundView

a fee equal to $3 million. Ortel has also agreed to reimburse SoundView for its

reasonable out-of-pocket expenses, including the fees and disbursements of its

counsel, and to indemnify SoundView against certain liabilities, including

liabilities under the federal securities laws. The Securities and Exchange

Commission has taken the position that such indemnification under the federal

securities laws may not be enforceable if it is found to be against public

policy.

 

INTERESTS OF ORTEL'S DIRECTORS AND MANAGEMENT IN THE MERGER

 

         In considering the recommendation of the Ortel board of directors in

favor of the merger, you should be aware that certain directors and executive

officers of Ortel have interests in the merger that are different from, or in

addition to, the interests of Ortel stockholders. These interests relate to or

arise from, among other things:

 

         -    the continued indemnification of current directors and officers of

              Ortel pursuant to the merger agreement

 

         -    the retention of certain officers of Ortel as employees or

              consultants of Lucent

 

         -    directors and employees with stock options to acquire Ortel common

              stock will have these options converted to stock options to

              acquire Lucent common stock pursuant to the merger agreement and

              options held by Ortel's directors and certain executive officers

              will become or under certain circumstances may become fully vested

              as a result of the merger

 

 

                                       31

<PAGE>   43

         -    certain officers are parties to employment agreements that provide

              for severance payments and the acceleration of stock options if

              they are terminated by Ortel or resign for "good reason"

              (including a substantial reduction in responsibilities) following

              a "change in control," such as the merger, and

 

         -    a letter agreement among Ortel, Lucent and Stephen R. Rizzone

              relating to special payments to Mr. Rizzone and other Ortel

              employees upon completion of the merger.

 

         These interests are described below, and except as described below

those persons have, to the knowledge of Lucent and Ortel, no material interest

in the merger apart from those of stockholders generally. The Ortel board of

directors was aware of, and considered the interests of, its directors and

executive officers in approving the merger agreement and the merger.

 

         INDEMNIFICATION AND INSURANCE

 

         The merger agreement provides that all rights of indemnification from

liabilities existing in favor of the current and former directors or officers of

Ortel and its subsidiaries as provided in Ortel's respective certificate of

incorporation and by-laws and certain indemnification agreements of Ortel will

be assumed by the surviving corporation in the merger, and will continue in full

force and effect in accordance with their terms after the merger. Lucent will

maintain for six years after the merger directors' and officers' liability

insurance for acts or omissions which occur prior to the merger for those

directors and officers who were, as of the date of the merger agreement, covered

by Ortel's directors' and officers' liability insurance policy, on terms no less

advantageous than those in effect on the date of the merger agreement. Lucent's

obligation to provide this insurance coverage is subject to a cap of 200% of the

current annual premium paid by Ortel for its existing insurance coverage. If

Lucent cannot maintain the existing or equivalent insurance coverage without

exceeding the 200% cap, Lucent is required to maintain only that amount of

insurance coverage which can be obtained by paying an annual premium equal to

the 200% cap.

 

         ORTEL EXECUTIVE OFFICERS

 

         Most of Ortel's current executive officers are expected to be retained

as employees of or consultants to Lucent after the merger.

 

         The merger agreement provides that all stock options to acquire Ortel

common stock will be assumed by Lucent. As a result, each stock option to

acquire Ortel common stock held by Ortel's directors and executive officers will

be converted to a stock option to acquire Lucent common stock. In addition, each

of the stock options held by Ortel's directors, including Mr. Rizzone, will

become fully vested and exercisable upon completion of the merger. In the

aggregate, options covering     shares of Ortel common stock held by Ortel's

directors and executive officers will become fully vested and exercisable as a

result of the merger. In addition, the stock options held by some of Ortel's

other officers will also become fully vested and exercisable under certain

circumstances as a result of the merger as set forth in agreements they have

with Ortel.

 

                                       32

<PAGE>   44

         Some of Ortel's executive officers may also be entitled to severance

payments if they are terminated by Ortel or resign for "good reason" following a

"change in control," such as the merger.

 

         EMPLOYEE BENEFITS

 

         Lucent has agreed to provide employee benefit plans, programs and

arrangements to those individuals who will continue to be employees of Ortel

after the merger that are the same as those made generally available to

non-represented employees of Lucent hired after December 31, 1999. These

benefits will be made available as soon as practicable after the merger. Until

these benefits are made available, Lucent has agreed that it will provide the

same benefits that were provided to employees of Ortel on February 7, 2000.

 

         With respect to each Lucent benefit in which Ortel employees

subsequently participate, for purposes of determining vesting and entitlement to

benefits, including for severance benefits and vacation entitlement (but not for

accrual of pension benefits), service with Ortel will be treated as service with

Lucent. This service will also apply for purposes of satisfying any waiting

periods, evidence of insurability requirements, or the application of any

pre-existing condition limitations. Each Lucent benefit plan will waive

pre-existing condition limitations to the extent waived under the applicable

Ortel benefit plan. Ortel's employees will receive credit under each Lucent

benefit plan for amounts paid under a corresponding Ortel benefit plan during

the same benefit period for purposes of applying deductibles, co-payments and

out-of-pocket maximums.

 

         SPECIAL PAYMENTS

 

         Ortel has agreed to pay Mr. Rizzone up to $15 million if the merger is

completed. Of this amount, Ortel will pay up to $9 million to Mr. Rizzone upon

completion of the merger as consideration for Mr. Rizzone entering into a

non-competition and non-disclosure agreement having a term of five years and $6

million pursuant to an agreement having a term of three years related to Mr.

Rizzone's continued employment with Lucent and, if such employment is

terminated, for Mr. Rizzone's consulting services.

 

         In addition, Ortel has agreed to pay an aggregate of $4.5 million upon

the completion of the merger to employees of Ortel designated by Mr. Rizzone.

Ortel management anticipates entering into separate letter agreements with some

of these employees before the closing of the merger. The letter agreement also

provides that in the event Nadav Bar-Chaim, Hank Blauvelt, Sandra Caraveo, John

Dessel, George Holmes, George Pontiakos, Jeff Rittichier or Jeff Schlageter

(each of whom is currently an officer of Ortel) are terminated by Ortel other

than for cause within one year of the completion of the merger, all unvested

options held by the terminated employee at that time will become fully

exercisable.

 

 

 

 

 

                                       33

<PAGE>   45

STOCK OPTIONS

 

         Under the merger agreement, at the effective time of the merger, Lucent

will assume each stock option plan of Ortel and all stock options and agreements

granted under those plans and agreements to acquire shares of Ortel common

stock. Each stock option outstanding at the effective time will be converted

into a stock option to acquire Lucent common stock on the same terms and

conditions. The number of shares of Lucent common stock to be subject to any

option will be equal to the number of shares of Ortel common stock subject to

that Ortel option multiplied by the 3.1350 exchange ratio and rounded down to

the nearest whole share. The exercise price per share of Lucent common stock

under any option will be equal to the exercise price per share of Ortel common

stock subject to that Ortel option divided by the 3.1350 exchange ratio, rounded

to the nearest one hundredth of a cent. As of February 7, 2000, the number of

shares of Ortel common stock reserved for issuance pursuant to outstanding Ortel

stock options under the plans was 4,203,226.

 

         In the case of any assumed stock option that is an incentive stock

option under Section 422 of the Internal Revenue Code, the option price and the

number of shares of Lucent common stock purchasable pursuant to that option will

be further adjusted, if necessary, to preserve the status of the option as an

incentive stock option. Prior to the merger, Lucent will take all necessary

actions to assume the Ortel stock option plans and agreements, and list the

shares issuable under those stock options on the New York Stock Exchange. As

soon as practicable following the effective time of the merger, Lucent will

prepare and file with the Securities and Exchange Commission an appropriate

registration statement registering the shares of Lucent common stock subject to

the assumed Ortel stock options. The registration statement will be kept

effective (and the current status of the prospectus or prospectuses required by

that registration statement shall be maintained) for so long as any assumed

Ortel options remain outstanding.

 

ACCOUNTING TREATMENT

 

         The merger will be accounted for under the "purchase" method of

accounting in accordance with generally accepted accounting principles. Lucent

expects a significant portion of the purchase price to be allocated to goodwill

and other intangible assets. The merger is also expected to result in a charge

against Lucent's earnings for in-process research and development.

 

FORM OF THE MERGER

 

         Subject to the terms and conditions of the merger agreement and in

accordance with Delaware law, at the effective time of the merger, Solara

Acquisition Inc., a wholly owned subsidiary of Lucent, will merge with and into

Ortel. Ortel will survive the merger and become a wholly owned subsidiary of

Lucent. Ortel will continue operations under the name "Ortel Corporation."

 

MERGER CONSIDERATION

 

         At the effective time of the merger, each outstanding share of Ortel

common stock will be converted into the right to receive 3.1350 shares of Lucent

common stock, except that treasury stock and stock held by Solara Acquisition or

Lucent will be canceled. Stockholders will receive

 

 

                                       34

<PAGE>   46

cash for any fractional share that they would otherwise receive in the merger.

As of the effective time of the merger, all shares of Ortel common stock will no

longer be outstanding and will automatically be canceled. At that time, each

holder of a certificate representing shares of Ortel common stock will cease to

have any rights as a stockholder except the right to receive Lucent common stock

and the right to receive cash for any fractional share of Lucent common stock.

The exchange ratio was determined through arm's-length negotiations between

Lucent and Ortel.

 

         Based on the number of outstanding shares of Lucent common stock and

Ortel common stock as of the record date, the holders of Ortel common stock

immediately prior to the merger would own approximately    % of the outstanding

shares of Lucent common stock immediately after the merger. After the merger,

each outstanding option to purchase Ortel common stock will be converted into an

option to purchase shares of Lucent common stock.

 

CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES

 

         The conversion of Ortel common stock into the right to receive Lucent

common stock will occur automatically at the effective time of the merger. As

soon as practicable after the merger, The Bank of New York, the exchange agent,

will send a transmittal letter to each former Ortel stockholder. The transmittal

letter will contain instructions for obtaining shares of Lucent common stock in

exchange for shares of Ortel common stock. PLEASE DO NOT SEND STOCK CERTIFICATES

WITH THE ENCLOSED PROXY.

 

         After the merger, each certificate that previously represented shares

of Ortel common stock will represent only the right to receive the Lucent common

stock into which those shares were converted in the merger and the right to

receive cash for any fractional share of Lucent common stock as described below.

 

         Until holders of certificates previously representing Ortel common

stock have surrendered those certificates to the exchange agent for exchange,

holders will not receive dividends or distributions on the Lucent common stock

into which those shares have been converted with a record date after the merger,

and will not receive cash for any fractional share of Lucent common stock. When

holders surrender those certificates, they will receive any unpaid dividends and

any cash for any fractional share of Lucent common stock without interest.

 

         In the event of a transfer of ownership of Ortel common stock which is

not registered in the records of Ortel's transfer agent, a certificate

representing the proper number of shares of Lucent common stock may be issued to

a person other than the person in whose name the certificate so surrendered is

registered if:

 

         -    that certificate is properly endorsed and otherwise is in proper

              form for transfer and

 

         -    the person requesting the issuance (1) pays to the exchange agent

              any transfer or other taxes resulting from the issuance of shares

              of Lucent common stock in a name other than that on the

              surrendered certificate, or (2) establishes to the satisfaction of

              the exchange agent that any tax has been paid or is not

              applicable.

 

 

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<PAGE>   47

         All shares of Lucent common stock issued upon conversion of shares of

Ortel common stock, including any cash paid for any fractional share of Lucent

common stock, will be issued in full satisfaction of all rights relating to

those shares of Ortel common stock.

 

         No fractional share of Lucent common stock will be issued to any Ortel

stockholder upon surrender for exchange of certificates previously representing

Ortel common stock. In lieu of any fractional share, the stockholder will

receive cash equal to the product obtained by multiplying (1) the closing price

for a share of Lucent common stock on the New York Stock Exchange Composite

Transactions Tape on the date immediately preceding the date on which the merger

is completed by (2) the fractional share to which the stockholder would

otherwise be entitled.

 

EFFECTIVE TIME OF THE MERGER

 

         The merger will become effective upon the filing of a certificate of

merger with the Secretary of State of the State of Delaware, or at such later

time as stated in the certificate of merger or agreed upon by Lucent and Ortel.

The filing of the certificate of merger will occur at the time of the closing of

the merger.

 

STOCK EXCHANGE LISTING OF LUCENT COMMON STOCK

 

         It is a condition to the completion of the merger that Lucent common

stock issued to Ortel stockholders in the merger be authorized for listing on

the New York Stock Exchange, subject to official notice of issuance.

 

DELISTING AND DEREGISTRATION OF ORTEL COMMON STOCK

 

         If the merger is completed, Ortel common stock will be delisted from

The Nasdaq National Market and will be deregistered under the Securities

Exchange Act of 1934.

 

CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

 

         The following summary of the material United States federal income tax

consequences of the merger to the holders of Ortel common stock who hold their

Ortel common stock as a capital asset is based upon current provisions of the

Internal Revenue Code of 1986, as amended, currently applicable Treasury

regulations and judicial and administrative rulings and decisions as of the date

hereof. The following summary is not binding on the Internal Revenue Service, or

the IRS, and no rulings have been or will be sought from the IRS regarding any

matters relating to the merger. In addition, legislative, judicial or

administrative changes may be forthcoming that could alter or modify the

statements set forth herein, possibly on a retroactive basis. The summary does

not purport to deal with all aspects of the federal income taxation that may be

relevant to particular holders of Ortel common stock in light of their

individual circumstances, nor with certain types of holders who are subject to

special treatment under the federal income tax laws (e.g., tax-exempt

organizations; insurance companies; financial institutions; broker-dealers;

persons who hold such stock as part of a hedge, appreciated financial position,

straddle or conversion transaction; holders whose functional currency is not the

U.S. dollar; holders who acquired their stock pursuant to the exercise of

employee stock options or otherwise as compensation; and holders who are neither

citizens nor residents of the United States, or that are

 

 

                                       36

<PAGE>   48

foreign corporations, foreign partnerships or foreign estates or trusts for

United States federal income tax purposes). Also, the summary assumes that each

holder holds his or her shares of Ortel common stock as capital assets. Finally,

no foreign, state or local tax considerations are addressed herein.

CONSEQUENTLY, EACH HOLDER OF ORTEL COMMON STOCK IS STRONGLY URGED TO CONSULT HIS

OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES OF THE MERGER IN LIGHT OF

EACH SUCH HOLDER'S PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND

EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.

 

         Completion of the merger is conditioned upon, among other things, the

receipt by Ortel and Lucent of tax opinions of Latham & Watkins and Sidley &

Austin, respectively, each dated as of the closing date, to the effect that the

merger will qualify for United States federal income tax purposes as a

reorganization within the meaning of Section 368(a) of the Internal Revenue

Code. These opinions will be based on customary assumptions and representations

made by Ortel, the acquisition subsidiary, and Lucent. An opinion of counsel

represents counsel's best legal judgment and is not binding on the IRS or any

court.

 

         CONSEQUENCES OF THE MERGER

 

         Provided that the merger qualifies as a reorganization, and based on

the above assumptions and qualifications, the merger will generally result in

the following federal income tax consequences:

 

         -    no gain or loss will be recognized by Ortel or Lucent solely as a

              result of the merger

 

         -    no gain or loss will be recognized by Ortel's stockholders who

              exchange their Ortel common stock solely for Lucent common stock

              (except to the extent of cash received in lieu of fractional

              shares)

 

         -    the holding period of Lucent common stock received will include

              the holding period of shares of Ortel common stock surrendered in

              the merger

 

         -    the aggregate tax basis of Lucent common stock received by Ortel

              stockholders who exchange all of their Ortel common stock for

              Lucent common stock in the merger will be the same as the

              aggregate tax basis of Ortel common stock surrendered in the

              merger (reduced by any portion of such tax basis allocable to a

              fractional share of Lucent common stock for which cash is

              received) and

 

         -    cash payments received by Ortel stockholders in lieu of a

              fractional share of Lucent common stock will be treated as capital

              gain or loss measured by the difference, if any, between the cash

              payment received and the portion of the tax basis in the shares of

              Ortel common stock allocable to the fractional share; this gain or

              loss will be long-term capital gain or loss if the holder's

              holding period in the Ortel common stock exchanged for the

              fractional share of Lucent common stock is more than one year at

              the time the merger is completed.

 

                                       37

<PAGE>   49

         BACKUP WITHHOLDING

 

         Backup withholding at the rate of 31% may apply with respect to certain

cash payments received by an Ortel stockholder in connection with the merger

unless either:

 

         -    the recipient is a corporation or comes within certain other

              exempt categories and, when required, demonstrates this fact or

 

         -    the recipient provides a correct taxpayer identification number,

              certifies as to no loss of exemption from backup withholding and

              otherwise complies with applicable requirements of the backup

              withholding rules.

 

         An Ortel stockholder who does not provide Lucent with his correct

taxpayer identification number may be subject to penalties imposed by the IRS.

Any amounts withheld under the backup withholding rules may be allowed as a

refund or a credit against the holder's federal income tax liability, provided

that the required information is furnished to the IRS.

 

REGULATORY MATTERS

 

         Under the Hart-Scott-Rodino Antitrust Improvements Act and related

rules, certain transactions, including the merger, may not be completed unless

certain waiting period requirements have been satisfied. Lucent and Ortel each

filed a Notification and Report Form with the Antitrust Division of the

Department of Justice and the Federal Trade Commission on February 25, 2000. The

applicable waiting period expired on         , 2000. At any time before or after

the effective time of the merger, the Antitrust Division, the Federal Trade

Commission or others could take action under the antitrust laws, including

seeking to prevent the merger, to rescind the merger or to conditionally approve

the merger upon the divestiture of substantial assets of Lucent or Ortel. There

can be no assurance that a challenge to the merger on antitrust grounds will not

be made or, if made, that it would not be successful.

 

APPRAISAL RIGHTS

 

         Under Delaware corporate law, holders of Ortel common stock are not

entitled to appraisal rights in connection with the merger because, on the

record date, Ortel common stock was designated and quoted for trading on The

Nasdaq National Market and will be converted into shares of Lucent common stock,

which at the effective time of the merger will be listed on the New York Stock

Exchange.

 

RESALE OF LUCENT COMMON STOCK

 

         Lucent common stock issued in the merger will not be subject to any

restrictions on transfer arising under the Securities Act of 1933, except for

shares issued to any Ortel stockholder who may be deemed to be an "affiliate" of

Ortel for purposes of paragraphs (c) and (d) of Rule 145 under the Securities

Act. An affiliate of Ortel is any individual or entity that directly or

indirectly through one or more intermediaries controls, is controlled by or is

under common control with, Ortel or Lucent. It is expected that each affiliate

will agree not to transfer any Lucent common stock received in the merger unless

(1) the disposition is made in conformity with the provisions of Rule 145 under

the Securities Act, (2) the disposition has been

 

 

                                       38

<PAGE>   50

registered under the Securities Act, or (3) in the opinion of counsel reasonably

acceptable to Lucent, the disposition is otherwise exempt from registration

under the Securities Act. The merger agreement requires Ortel to use its

reasonable best efforts to cause its affiliates to enter into these agreements

and conditions Lucent's obligation to effect the merger on the receipt of these

agreements. This proxy statement/prospectus does not cover resales of Lucent

common stock received by any person upon completion of the merger, and no person

is authorized to make any use of this proxy statement/prospectus in connection

with any resale.

 

                              THE MERGER AGREEMENT

 

         The following description summarizes the material provisions of the

merger agreement. We urge stockholders to read carefully the merger agreement,

which is attached as Annex A to this proxy statement/prospectus.

 

CONDITIONS TO THE MERGER

 

         Each party's obligation to complete the merger is subject to the

satisfaction or waiver of various conditions which include, in addition to other

customary closing conditions, all the following:

 

         -    holders of a majority of the outstanding shares of Ortel common

              stock must adopt the merger agreement

 

         -    the waiting period and any extension thereof applicable to the

              merger under United States antitrust laws must expire or be

              terminated

 

         -    no judgment, order, decree, statute, law, ordinance, rule or

              regulation entered, enacted, enforced, promulgated or issued by

              any court or other governmental entity of competent jurisdiction

              or other legal restraint or prohibition being in effect, and no

              suit, action or proceeding by any governmental entity being

              pending that (1) would prevent the consummation of the merger or

              (2) otherwise would be reasonably likely to have a material

              adverse effect, as described below, on Lucent or Ortel; provided,

              that each of the parties will have used its reasonable best

              efforts (i) to prevent the entry of any legal restraint or

              prohibition and (ii) to appeal as promptly as possible any legal

              restraint or prohibition that may be entered

 

         -    Lucent's registration statement on Form S-4, of which this proxy

              statement/prospectus forms a part, must have become effective

              under the Securities Act and must not be the subject of any stop

              order or proceedings seeking a stop order

 

         -    the shares of Lucent common stock issuable to Ortel in the merger

              must be authorized for listing on the New York Stock Exchange,

              subject to official notice of issuance

 

         -    each of Ortel and Lucent must have, in all material respects,

              performed the various obligations and complied with the various

              conditions required by the merger agreement

 

 

                                       39

<PAGE>   51

         -    the representations and warranties of each party set forth in the

              merger agreement must be true and correct as of the date of the

              merger agreement and as of the date on which the merger is to be

              completed as if made at and as of the date on which the merger is

              to be completed, except to the extent expressly made as of an

              earlier date, in which case as of such date, except where the

              failure of such representations and warranties to be true and

              correct, without giving effect to any included limitation as to

              "materially" or "material adverse effect," does not have, and

              could not reasonably be expected to have, individually or in the

              aggregate, a material adverse effect on the party

 

         -    in the case of Lucent only, the rights issued pursuant to Ortel's

              rights agreement may not have become nonredeemable, exercisable,

              distributable or triggered

 

         -    Ortel must receive from Latham & Watkins, and Lucent must receive

              from Sidley & Austin, on the date on which the registration

              statement is declared effective by the Securities and Exchange

              Commission and on the date on which the merger is to be completed

              an opinion in each case dated as of those dates, to the effect

              that on the basis of certain facts, representations and

              assumptions set forth in the opinions, the merger will be treated

              for United States federal income tax purposes as a reorganization

              with the meaning of Section 368(a) of the Internal Revenue Code

 

         -    officers of Lucent and Ortel each signing and delivering

              representation letters relating to certain tax matters and

 

         -    in the case of Lucent only, certain officers of Ortel must enter

              into non-competition and non-disclosure agreements with Ortel and

              Lucent, and those agreements must be in full force and effect.

 

         The merger agreement defines a "material adverse effect" when used in

connection with Lucent or Ortel as any condition or event that:

 

         -    has a material adverse effect on the assets, business, financial

              condition or results of operations of Lucent or Ortel, as

              applicable, in each case, taken as a whole with its subsidiaries,

              other than any condition or event

 

                  (1)      relating to the economy in general

 

                  (2)      relating to the industries in which that party

                           operates in general

 

                  (3)      arising out of or resulting from actions contemplated

                           by the parties in connection with, or attributable

                           to, the announcement of the merger agreement and the

                           transactions contemplated by the merger agreement or

 

                  (4)      in the case of Ortel, litigation commenced or

                           threatened against Ortel or any member of its board

                           of directors in respect of the merger agreement

 

 

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<PAGE>   52

         -    materially impairs the ability of Lucent or Ortel to perform its

              obligations under the merger agreement or the stock option

              agreement or

 

         -    prevents or materially delays the consummation of the transactions

              contemplated by the merger agreement.

 

NO SOLICITATION

 

         The merger agreement provides that Ortel will not, and will not

authorize or permit any of its directors, officers or employees, or any

investment banker, financial advisor, attorney, accountant or other

representative retained by it or any of its subsidiaries to, directly or

indirectly through another person:

 

         -    solicit, initiate or encourage, including by way of furnishing

              information, or take any other action to facilitate, any inquiries

              or the making of any proposal that is or may reasonably be

              expected to lead to a takeover proposal, as described below, or

 

         -    participate in any discussions or negotiations regarding any

              takeover proposal;

 

provided that if, at any time prior to the date of the special meeting, the

Ortel board of directors determines in good faith, after consultation with

outside counsel, that it is necessary to do so in order to comply with its

fiduciary duties to Ortel stockholders under applicable law, Ortel and its

representatives, in response to a superior proposal, as described below, which

was not solicited by Ortel or which did not otherwise result from a breach of

the merger agreement, subject to Ortel (1) providing Lucent with prior written

notice of Ortel's decision to enter into the negotiations, and (2) orally and in

writing promptly advising Lucent of the material terms and conditions of the

takeover proposal and the identity of the person making the takeover proposal,

Ortel may:

 

         -    furnish under a customary confidentiality agreement information

              about Ortel and its subsidiaries to any person making a superior

              proposal and

 

         -    participate in discussions or negotiations regarding that superior

              proposal.

 

         The merger agreement provides that:

 

         -    the term "takeover proposal" means any inquiry, proposal or offer

              from any person relating to any direct or indirect acquisition or

              purchase of 15% or more of the assets of Ortel and its

              subsidiaries, taken as a whole, or 15% or more of any class or

              series of equity securities of Ortel or any of its subsidiaries,

              any tender offer or exchange offer that if completed would result

              in any person beneficially owning 15% or more of any class or

              series of equity securities of Ortel or any of its subsidiaries,

              or any merger, consolidation, business combination,

              recapitalization, liquidation, dissolution or similar transaction

              involving Ortel or any of its subsidiaries and

 

         -    the term "superior proposal" means any proposal made by a third

              party to acquire, directly or indirectly, for consideration

              consisting of cash and/or securities, more than

 

 

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<PAGE>   53

              50% of the combined voting power of the shares of Ortel common

              stock then outstanding or all or substantially all the assets of

              Ortel on terms that the Ortel board of directors determines in its

              good faith judgment, based on the advice of a financial advisor of

              nationally recognized reputation, to be more favorable to the

              Ortel stockholders than the merger and for which financing, to the

              extent required, is then committed or which, in the good faith

              judgment of the Ortel board of directors, is reasonably capable of

              being obtained.

 

         Neither the Ortel board of directors nor any committee of the board of

directors will:

 

         -    withdraw or modify, or propose publicly to withdraw or modify, in

              a manner adverse to Lucent, the approval or recommendation by the

              Ortel board of directors or such committee of the merger or the

              merger agreement

 

         -    approve or recommend, or propose publicly to approve or recommend,

              any takeover proposal or

 

         -    approve or recommend, or propose to approve or recommend, or

              execute or enter into any letter of intent, agreement in

              principle, acquisition agreement, option agreement or other

              similar agreement related to any takeover proposal, other than any

              such agreement entered into concurrently with a termination as

              described in the next sentence in order to facilitate such action.

 

Notwithstanding the foregoing, in response to a superior proposal received prior

to the date of the special meeting which was not solicited by Ortel and which

did not otherwise result from a breach of the provisions of the merger agreement

described above, if the Ortel board of directors determines in good faith, after

consultation with outside counsel, that it is necessary to do so in order to

comply with its fiduciary duties to the Ortel stockholders under applicable law,

the Ortel board of directors may terminate the merger agreement and enter into a

definitive agreement regarding the superior proposal, but only at a time prior

to the special meeting and that is after the tenth business day following

Lucent's receipt of written notice advising Lucent that the board of directors

is prepared to accept a superior proposal. Ortel must pay a fee in the amount of

$90 million to Lucent upon termination. See " -- Termination of

the Merger Agreement" and " -- Termination Fees."

 

TERMINATION OF THE MERGER AGREEMENT

 

         The merger agreement may be terminated at any time before the effective

time of the merger, whether before or after adoption of the merger agreement by

the Ortel stockholders:

 

         -    by mutual agreement of Lucent and Ortel

 

         -    by Lucent or Ortel, if the merger has not been completed by

              December 31, 2000; provided, that this right to terminate the

              merger agreement will not be available to a party whose failure to

              perform any of its obligations under the merger agreement has been

              the cause of, or resulted in, the failure of the merger to be

              completed by that date

 

 

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<PAGE>   54

         -    by Lucent or Ortel, if any court of competent jurisdiction in the

              United States or other United States governmental authority issues

              an order, decree, ruling or takes any other action restraining,

              enjoining or otherwise prohibiting the merger and that order,

              decree, ruling or other action has become final and nonappealable

 

         -    by Lucent or Ortel if holders of a majority of the shares of Ortel

              common stock do not adopt the merger agreement at an Ortel

              stockholders meeting or any adjournment or postponement of that

              meeting

 

         -    by Lucent, if Ortel has materially breached its obligations under

              the merger agreement, unless the breach is cured within 30

              calendar days after notice to Ortel

 

         -    by Ortel, if Lucent has materially breached its obligations under

              the merger agreement, unless the breach is cured within 30

              calendar days after notice to Lucent

 

         -    by Ortel, at any time prior to the date of the special meeting of

              stockholders, in response to a superior proposal which was not

              solicited by Ortel and which did not otherwise result from a

              breach of the provisions of the merger agreement, if Ortel has

              complied with certain notice requirements and paid the termination

              fee or

 

         -    by Lucent, if Ortel or any of its directors or officers

              participated in discussions or negotiations with third parties

              regarding certain takeover proposals or furnished information to

              third parties in breach of the merger agreement.

 

TERMINATION FEES

 

         Under certain circumstances, if the merger agreement is terminated,

Ortel must pay Lucent a termination fee of $90 million. Ortel must pay Lucent

the termination fee if:

 

         -    Ortel stockholders receive a takeover proposal, a takeover

              proposal otherwise becomes publicly known or anyone publicly

              announces its intention to make a takeover proposal, and

              thereafter Lucent or Ortel terminates the merger agreement because

              either (1) the merger is not completed by December 31, 2000 or (2)

              the Ortel stockholders have not adopted the merger agreement at an

              Ortel stockholders meeting, and within nine months of the

              termination Ortel or any of its subsidiaries enters into any

              definitive agreement with respect to, or consummates, any takeover

              proposal

 

         -    Ortel terminates the merger agreement because before the date of

              the special meeting Ortel receives an unsolicited proposal by a

              third party to acquire Ortel on terms determined by the Ortel

              board of directors to be more favorable to the Ortel stockholders

              than the terms of the merger with Lucent or

 

         -    Lucent terminates the merger agreement because Ortel or any of its

              directors or officers participates in discussions or negotiations

              with third parties regarding certain

 

 

                                       43

<PAGE>   55

              takeover proposals or furnishes information to third parties in

              breach of the merger agreement.

 

         The merger agreement further provides that if Ortel fails to pay the

termination fee when due and, in order to obtain payment of the fee, Lucent

commences a suit which results in a judgment against Ortel for the fee, Ortel

must pay the costs and expenses, including attorneys' fees and expenses, in

connection with any action taken to collect payment, together with interest on

the amount of the fee.

 

CONDUCT OF BUSINESS PENDING THE MERGER

 

         Pursuant to the merger agreement, Ortel has agreed that, until the

closing of the merger, it will, and cause its subsidiaries to:

 

         -    maintain its existence in good standing

 

         -    maintain the general character of its business and properties and

              conduct its business in the ordinary and usual manner consistent

              with past practices, except as expressly permitted by the merger

              agreement

 

         -    maintain business and accounting records consistent with past

              practices and

 

         -    use its reasonable best efforts to preserve its business intact,

              to keep available to Ortel the services of its present officers

              and employees and to preserve for Ortel and each of its

              subsidiaries the goodwill of its suppliers, customers and others

              having material business relations with Ortel or the subsidiary.

 

         In addition, Ortel has agreed that, subject to certain exceptions

provided in the merger agreement or approved by Lucent in writing, it will not,

and will not permit any of its subsidiaries to:

 

         -    amend or otherwise change its certificate of incorporation or

              by-laws

 

         -    issue or sell or authorize for issuance or sale, or grant any

              options or make any other agreements with respect to, any shares

              of its capital stock or any other of its securities other than (1)

              any issuance of Ortel common stock upon the exercise of any

              outstanding option or warrant to purchase Ortel common stock which

              option or warrant was issued prior to the date of the merger

              agreement in accordance with the terms of the relevant stock

              option or warrant agreement, (2) the issuance of shares of Ortel

              common stock pursuant to the stock option agreement with Lucent or

              (3) the issuance of stock options to new employee hires consistent

              with past practice

 

         -    declare, set aside, make or pay any dividend or other distribution

              payable in cash, stock, property or otherwise with respect to any

              of its capital stock

 

         -    reclassify, combine, split, subdivide or redeem, purchase or

              otherwise acquire, directly or indirectly, any of its capital

              stock

 

 

                                       44

<PAGE>   56

         -    incur any indebtedness for borrowed money or issue any debt

              securities or assume, guarantee or endorse, or otherwise as an

              accommodation become responsible for, the obligations of any

              person, or make any loans or advances, or amend any agreement for

              indebtedness except (1) short-term borrowings incurred in the

              ordinary course of business or to refinance existing or maturing

              indebtedness and (2) intercompany indebtedness between Ortel and

              any of its subsidiaries or between subsidiaries

 

         -    acquire any corporation, partnership, other business organization

              or any division thereof or any material amount of assets

 

         -    enter into any contract or agreement other than in the ordinary

              course of business and consistent with past practice

 

         -    authorize any capital commitment which is in excess of $500,000 or

              capital expenditures which are, in the aggregate, in excess of $2

              million

 

         -    mortgage, pledge or subject to lien, any of its assets or

              properties or agree to do so except for certain permitted liens

 

         -    sell, lease, license, mortgage or encumber or otherwise encumber

              or subject to any lien or otherwise dispose of any of its

              properties or assets (including securitizations) other than sales

              or licenses of finished goods in the ordinary course of business

              consistent with past practice

 

         -    assume, guarantee or otherwise become responsible for the

              obligations of any other person or agree to so do

 

         -    enter into or agree to enter into any employment agreement

 

         -    take any action, other than in the ordinary course of business and

              consistent with past practice, with respect to accounting policies

              or procedures

 

         -    make any material tax election or settle or compromise any

              material federal, state, local or foreign income tax liability

 

         -    settle or compromise any pending or threatened suit, action or

              claim which is material or which relates to any of the

              transactions contemplated by the merger agreement

 

         -    pay, discharge or satisfy any claim, liability or obligation,

              other than the payment, discharge or satisfaction, in the ordinary

              course of business or in accordance with their terms, of

              liabilities reflected or reserved against in the most recently

              audited balance sheet (and notes thereto) filed by Ortel with the

              Securities and Exchange Commission or subsequently incurred in the

              ordinary course of business and consistent with past practice

 

         -    except in connection with the sale or licensing of Ortel's

              products in the ordinary course of business and consistent with

              past practice, sell, assign, transfer, license,

 

 

                                       45

<PAGE>   57

              sublicense, pledge or otherwise encumber any of the intellectual

              property rights of Ortel or its subsidiaries

 

         -    except as required by law or contemplated in the merger agreement

              and except for labor agreements negotiated in the ordinary course,

              enter into, adopt or amend in any material respect or terminate

              any Ortel benefit plan or any other agreement, plan or policy

              involving Ortel or its subsidiaries, and one or more of its

              directors, officers or employees, or materially change any

              actuarial or other assumption used to calculate funding

              obligations with respect to any pension plan, or change the manner

              in which contributions to any pension plan are made or the basis

              on which those contributions are determined

 

         -    except for normal increases in the ordinary course of business

              consistent with past practice that, in the aggregate, do not

              materially increase the benefits or compensation expenses of Ortel

              or its subsidiaries, or as contemplated in the merger agreement or

              by the terms of any employment agreement in existence on the date

              of the merger agreement, increase the cash compensation of any

              director, executive officer or other key employee or pay any

              benefit or amount not required by a plan or arrangement as in

              effect on the date of the merger agreement to any of those

              persons, except 1999 bonuses that have been earned under Ortel's

              incentive bonus plans in accordance with the terms of those plans

              as in effect on the date of the merger agreement consistent with

              past practice or

 

         -    announce an intention, commit or agree to do any of the foregoing.

 

AMENDMENT; EXTENSION AND WAIVER

 

         Subject to applicable law:

 

         -    the merger agreement may be amended by the parties in writing at

              any time, except that after the merger agreement has been adopted

              by the Ortel stockholders, no amendment may be entered into which

              by law requires further approval by Ortel stockholders unless that

              further approval is obtained and

 

         -    at any time before the effective time of the merger, a party may,

              by written instrument signed on behalf of that party, (1) extend

              the time for performance of any of the obligations or other acts

              of any other party to the merger agreement, (2) waive any

              inaccuracies in representations and warranties of any other party

              contained in the merger agreement or in any document delivered

              pursuant to the merger agreement, or (3) except as provided in the

              merger agreement, waive compliance by any other party with any

              agreements or conditions in the merger agreement.

 

EXPENSES

 

         Whether or not the merger is consummated, all fees and expenses

incurred in connection with the merger, the merger agreement and the stock

option agreement will be paid by the party incurring those fees or expenses,

except that Lucent and Ortel will share equally (1) the costs and

 

 

                                       46

<PAGE>   58

expenses incurred in connection with filing, printing and mailing this proxy

statement/prospectus and the registration statement of which it is a part

including Securities and Exchange Commission filing fees and (2) the filing fees

for the pre-merger notification and report forms under the Hart-Scott-Rodino

Antitrust Improvements Act.

 

REPRESENTATIONS AND WARRANTIES

 

         The merger agreement contains customary representations and warranties

relating to, among other things:

 

         -    corporate organization and similar corporate matters of Lucent and

              Ortel

 

         -    subsidiaries of Ortel

 

         -    the capital structure of Lucent and Ortel

 

         -    authorization, execution, delivery, performance and enforceability

              of, and required consents, approvals, orders and authorizations of

              governmental authorities relating to, the merger agreement and

              related matters of Lucent, Solara Acquisition and Ortel

 

         -    documents filed by each of Lucent and Ortel with the Securities

              and Exchange Commission, the accuracy of information contained in

              those documents and the absence of undisclosed liabilities of each

              of Lucent and Ortel

 

         -    the accuracy of information supplied by each of Lucent and Ortel

              in connection with this proxy statement/prospectus and the

              registration statement of which it is a part

 

         -    absence of material changes or events concerning Lucent and Ortel

 

         -    compliance with applicable laws by Ortel

 

         -    matters relating to the benefit plans of Ortel

 

         -    matters relating to Ortel's compliance the Employee Retirement

              Income Security Act

 

         -    filing of tax returns and payment of taxes by Ortel

 

         -    required stockholder vote of Ortel regarding the adoption of the

              merger agreement

 

         -    approval of the merger agreement and recommendation for the merger

              by the Ortel board of directors

 

         -    matters relating to the Ortel rights agreement

 

         -    satisfaction of certain state takeover statutes' requirements by

              Ortel

 

 

                                       47

<PAGE>   59

         -    absence of actions by Lucent or Ortel that would prevent the

              merger from qualifying as a reorganization within the meaning of

              Section 368(a) of the Internal Revenue Code

 

         -    engagement and payment of fees of brokers, investment bankers and

              financial advisors by each of Lucent and Ortel

 

         -    receipt of fairness opinion by Ortel from SoundView

 

         -    intellectual property and year 2000 matters of Ortel

 

         -    outstanding and pending material litigation of each of Lucent and

              Ortel

 

         -    good and valid title to property of Ortel

 

         -    certain leases and contracts entered into by Ortel and absence of

              default by Ortel under those leases and contracts

 

         -    bank accounts, letters of credit and power of attorneys of Ortel

 

         -    certain employment matters regarding Ortel

 

         -    liability of Ortel under environmental laws and

 

         -    interim operations of Solara Acquisition.

 

INDEMNIFICATION AND INSURANCE

 

         The merger agreement provides that all rights of indemnification from

liabilities existing in favor of the current and former directors or officers of

Ortel and its subsidiaries as provided in Ortel's certificate of incorporation

and by-laws and in certain indemnification agreements of Ortel will be assumed

by the surviving corporation in the merger and will continue in full force and

effect in accordance with their terms after the merger. Lucent must maintain for

six years after the merger the directors' and officers' liability insurance for

acts or omissions which occur prior to the effective time of the merger for

those directors and officers who were, as of the date of the merger agreement,

covered by Ortel's directors' and officers' liability insurance policy, on terms

no less advantageous than those in effect on the date of the merger agreement.

Lucent's obligation to provide this insurance coverage is subject to a cap of

200% of the current annual premium paid by Ortel for its existing insurance

coverage. If Lucent cannot maintain the existing or equivalent insurance

coverage without exceeding the 200% cap, Lucent is required to obtain only that

amount of insurance coverage which can be obtained by paying an annual premium

equal to the 200% cap.

 

AMENDMENTS TO ORTEL'S CERTIFICATE OF INCORPORATION

 

         As of the effective time of the merger, the Ortel certificate of

incorporation will be amended to be substantially identical to the certificate

of incorporation of Solara Acquisition immediately prior to the merger. For a

summary of certain provisions of the current Ortel

 

 

                                       48

<PAGE>   60

certificate of incorporation and the associated rights of Ortel stockholders,

see "Comparison of Rights of Common Stockholders of Lucent and Ortel" on

page 54.

 

AMENDMENTS TO THE ORTEL BY-LAWS

 

         The merger agreement provides that the by-laws of Solara Acquisition,

as in effect immediately prior to the merger, will be the by-laws of the

surviving corporation following the merger. For a summary of certain provisions

of the current Ortel by-laws and the associated rights of Ortel stockholders,

see "Comparison of Rights of Common Stockholders of Lucent and Ortel" on

page 54.

 

NON-COMPETITION AND NON-DISCLOSURE AGREEMENTS

 

         As a condition to the merger, each of Stephen R. Rizzone, George M.

Pontiakos, Nadav Bar-Chaim, Jeffrey S. Rittichier and George B. Holmes must

enter into non-competition and non-disclosure agreements with Ortel. Each of

these officers has agreed with Lucent and Ortel that, for a specified period,

the employee will not directly or indirectly, compete with the activities

currently conducted by Ortel without the express written consent of Lucent. The

non-competition period for each stockholder generally will end two years from

the date of the merger, with the exception of Stephen R. Rizzone, whose period

will end five years from the date of the non-competition and non-disclosure

agreement.

 

 

                           THE STOCK OPTION AGREEMENT

 

         The following description summarizes the material provisions of the

stock option agreement. We urge stockholders to read carefully the stock option

agreement, which is attached as Annex B to this proxy statement/prospectus.

 

GENERAL

 

         Immediately following the execution and delivery of the merger

agreement, Lucent and Ortel entered into a stock option agreement under which

Ortel granted Lucent an option to purchase up to 2,550,041 shares of Ortel

common stock, or that number of shares of Ortel common stock equal to 19.9% of

the then outstanding shares of Ortel common stock, in each case, without giving

effect to shares of Ortel common stock subject to or issued under the option, at

a purchase price of $177.125 per share.

 

EXERCISE OF THE OPTION

 

         Except as described below, Lucent may exercise the option with respect

to any or all the option shares at any time or times after the occurrence of any

event unconditionally entitling Lucent to receive the termination fee under the

merger agreement. The right to purchase shares under the stock option agreement

will expire at earlier to occur of the effective time of the merger and 15

months after the occurrence of the event entitling Lucent to receive the

termination fee.

 

 

                                       49

<PAGE>   61

         Lucent may exercise the option with respect to all or a portion of the

option shares by delivering to Ortel an exercise notice specifying the number of

shares Lucent wishes to purchase, the denominations of certificates for those

shares and the closing date. Any purchase of the option shares is subject to

applicable laws and regulations, including approval under the Hart-Scott-Rodino

Antitrust Improvements Act and obtaining any other necessary regulatory

approvals.

 

         If Lucent receives notice that a regulatory approval will not be

granted or has not been obtained within six months of the date of the exercise

notice, Lucent may exercise its right to cancel the option with respect to a

certain number of option shares (up to the number of option shares for which

regulatory approval will not be granted or has not been obtained) in exchange

for cash. The amount of cash will be equal to that number of shares of Ortel

common stock multiplied by the difference between:

 

         -    the average closing price on The Nasdaq National Market (or, if

              not listed on The Nasdaq National Market, as reported on any other

              national securities exchange or national securities quotation

              system on which Ortel common stock is listed or quoted, as

              reported in The Wall Street Journal (Northeast edition), or, if

              not reported thereby, any other authoritative source) of shares of

              Ortel common stock for the 10 trading days commencing on the 12th

              trading day immediately preceding the option closing date and

 

         -    the purchase price per share.

 

ADJUSTMENT TO NUMBER AND TYPE OF SHARES

 

         The number and type of securities subject to the option and the

purchase price will be adjusted for any change in Ortel common stock by reason

of a stock dividend, split-up, merger, recapitalization, combination, exchange

of shares or similar transaction, so that Lucent will receive, upon exercise of

the option, the number and type of securities that Lucent would have received if

the option had been exercised immediately prior to the occurrence of that event,

or the record date of that event. The number of shares of Ortel common stock

subject to the option will also be adjusted in the event Ortel issues additional

shares of common stock, so that, after that issuance, the number of shares of

Ortel common stock subject to the option represents 19.9% of the shares of Ortel

common stock then issued and outstanding, without giving effect to shares

subject to or issued under the option.

 

         If Ortel enters into an agreement:

 

         -    to consolidate with or merge into any person other than Lucent or

              one of its subsidiaries and Ortel will not be the surviving

              corporation

 

         -    to permit any person other than Lucent or one of its subsidiaries

              to merge into Ortel and Ortel will be the surviving corporation,

              but the shares of Ortel common stock outstanding immediately

              before the merger will be exchanged for other securities or

              property, or the shares of Ortel common stock outstanding

              immediately prior to the merger will, after the merger, represent

              less than 50% of the outstanding voting securities of the merged

              entity or

 

 

                                       50

<PAGE>   62

         -    to sell or otherwise transfer all or substantially all its assets

              to any person other than Lucent or one of its subsidiaries

 

then that agreement will provide that the option will, upon the completion of

that transaction, be converted into, or exchanged for, an option with identical

terms appropriately adjusted to acquire the number and class of shares or other

securities or property Lucent would have received for Ortel common stock if the

option had been exercised immediately prior to that consolidation, merger, sale

or transfer, or the record date of that event.

 

LIMIT ON TOTAL PROFIT OF LUCENT

 

         The stock option agreement provides that in no event will Lucent's

total profit from the option plus any termination fee paid to Lucent under the

merger agreement exceed $105 million and, if Lucent's total profit would

otherwise exceed that amount, Lucent, at its discretion, is required to do one

or any combination of the following:

 

         -    reduce the number of shares of Ortel common stock subject to the

              option

 

         -    deliver to Ortel for cancellation shares of Ortel common stock

              previously purchased by Lucent or

 

         -    pay cash to Ortel

 

so that Lucent's total profit from the option plus the termination fee pursuant

to the merger agreement so paid to Lucent does not exceed $105 million after

taking into account the foregoing actions.

 

         In addition, the stock option agreement provides that the option may

not be exercised by Lucent for a number of option shares that would result in a

"notional total profit" which, together with the termination fee payable to

Lucent pursuant to the merger agreement, would exceed $105 million. The stock

option agreement defines "notional total profit" as total profit from the option

assuming that the option shares were sold for cash at the closing market price

on The Nasdaq National Market (or, if not listed on The Nasdaq National Market,

as reported on any other national securities exchange or national securities

quotation system on which Ortel common stock is listed or quoted) for Ortel

common stock as of the close of business on the preceding trading day, less

customary brokerage commissions.

 

REGISTRATION RIGHTS AND LISTING

 

         Lucent has certain rights to require registration under the securities

laws by Ortel of any shares purchased under the option if necessary for Lucent

to be able to sell those shares and to require the listing of those shares on

The Nasdaq National Market or other national securities exchange.

 

ASSIGNABILITY; TRANSFERS

 

         The stock option agreement may not be assigned or delegated by Lucent

or Ortel without the prior written consent of the other. The shares subject to

the option may not be sold, assigned,

 

 

                                       51

<PAGE>   63

transferred or otherwise disposed of except in an underwritten public offering

or to a purchaser or transferee who would not, immediately after that sale,

assignment, transfer or disposal, beneficially own more than 3.0% of the

outstanding voting power of Ortel. However, Lucent may sell any of the shares it

receives upon exercise of the option if the sale is made in connection with a

tender or exchange offer that has been approved or recommended by a majority of

the Ortel board of directors, which majority includes a majority of directors

who were directors as of the date of the stock option agreement.

 

EFFECT OF STOCK OPTION AGREEMENT

 

         The stock option agreement is intended to increase the likelihood that

the merger will be completed on the terms set forth in the merger agreement.

Consequently, certain aspects of the stock option agreement may discourage

persons who might now or prior to the merger be interested in acquiring all of

or a significant interest in Ortel from considering or proposing an acquisition,

even if those persons were prepared to offer higher consideration per share for

Ortel common stock than that implicit in the 3.1350 exchange ratio or a higher

price per share for Ortel common stock than the market price.

 

 

 

                                       52

<PAGE>   64

                     COMPARATIVE STOCK PRICES AND DIVIDENDS

 

         Lucent common stock is listed for trading on the New York Stock

Exchange under the trading symbol "LU" and Ortel common stock is quoted on The

Nasdaq National Market under the trading symbol "ORTL." The following table sets

forth, for the periods indicated, dividends and the high and low sales prices

per share of Lucent common stock on the New York Stock Exchange Composite

Transactions Tape and of Ortel common stock on The Nasdaq National Market.

Lucent's per share data has been restated to account for Lucent's two-for-one

stock splits effective on April 1, 1999, and on April 1, 1998. For current price

information, stockholders are urged to consult publicly available sources.

 

<TABLE>

<CAPTION>

                                            LUCENT                                          ORTEL

                                         COMMON STOCK                                   COMMON STOCK

                                ----------------------------------          -------------------------------------------

                                                         DIVIDENDS                                            DIVIDENDS

CALENDAR PERIOD                  HIGH          LOW       DECLARED           HIGH             LOW              DECLARED

---------------                  ----          ---       --------           ----             ---              --------

<S>                            <C>          <C>          <C>               <C>            <C>                 <C>

1997

     First Quarter             15  5/32     11  3/16       0.000           25 5/8           10 7/8             N/A

     Second Quarter            18 35/64     12 15/32       0.019           19 1/4           11 3/8             N/A

     Third Quarter             22 11/16     18  3/64       0.019               25           16 5/8             N/A

     Fourth Quarter            22 35/64     18  3/32       0.038               24               14             N/A

 

1998

     First Quarter             32  1/16     18 23/64       0.000           16 1/4         10 11/16             N/A

     Second Quarter            41 27/32     32             0.020               17           12 1/2             N/A

     Third Quarter             54   1/4     34  3/16       0.020           20 1/4           10 5/8             N/A

     Fourth Quarter            56 15/16     26 23/32       0.040           15 7/8            7 1/4             N/A

 

1999

     First Quarter                   60           47       0.000           12 1/8            6 1/2             N/A

     Second Quarter            68 11/16       51 7/8       0.020           13 7/8                6             N/A

     Third Quarter               79 3/4           60       0.020           19 3/4           10 1/4             N/A

     Fourth Quarter             84 3/16      55 1/16       0.040              120           13 7/8             N/A

 

2000

     First Quarter

       (through       , 2000)

</TABLE>

 

  N/A -- Not applicable

 

         The following table sets forth the high and low sales prices per share

of Lucent common stock on the New York Stock Exchange Composite Transactions

Tape and of Ortel common stock on The Nasdaq National Market on February 4,

2000, the last trading day before the public announcement of the merger

agreement, and on        , 2000, the last trading day before the date of this

proxy statement/prospectus:

 

<TABLE>

<CAPTION>

                                   LUCENT                                ORTEL

                                 COMMON STOCK                         COMMON STOCK

                                 ------------                         ------------

                                HIGH          LOW                   HIGH         LOW

                                ----          ---                   ----         ---

<S>                         <C>           <C>                      <C>           <C>

February 4, 2000            $58 1/4       $56 7/8                  $189 1/2      $170 1/16

          , 2000

</TABLE>

 

 

 

                                       53

<PAGE>   65

                       DESCRIPTION OF LUCENT CAPITAL STOCK

 

         The following summary of the capital stock of Lucent is subject in all

respects to applicable Delaware law, Lucent's certificate of incorporation and

by-laws and Lucent's rights agreement. See "Comparison of Rights of Common

Stockholders of Lucent and Ortel" on page 54.

 

         The total authorized shares of capital stock of Lucent consist of (1)

10 billion shares of common stock, $.01 par value per share, and (2) 250 million

shares of preferred stock, $1.00 par value per share. At the close of business

on January 31, 2000, approximately 3.2 billion shares of Lucent common stock

were issued and outstanding and no shares of Lucent preferred stock were issued

and outstanding.

 

         The Lucent board of directors is authorized to provide for the issuance

from time to time of Lucent preferred stock in series and, as to each series, to

fix the designation, the dividend rate and the preferences, if any, which

dividends on each series will have compared to any other class or series of

capital stock of Lucent, the voting rights, if any, the voluntary and

involuntary liquidation prices, the conversion or exchange privileges, if any,

applicable to each series and the redemption price or prices and the other terms

of redemption, if any, applicable to each series. Cumulative dividends, dividend

preferences and conversion, exchange and redemption provisions, to the extent

that some or all of these features may be present when shares of Lucent

preferred stock are issued, could have an adverse effect on the availability of

earnings for distribution to the holders of Lucent common stock or for other

corporate purposes.

 

        COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF LUCENT AND ORTEL

 

         The rights of Lucent and Ortel stockholders are currently governed by

the Delaware General Corporation Law, and the respective certificates of

incorporation and by-laws of Lucent and Ortel. Upon completion of the merger,

the rights of Ortel stockholders who become stockholders of Lucent in the merger

will be governed by the Delaware General Corporation Law, Lucent's certificate

of incorporation and Lucent's by-laws.

 

         The following description summarizes the material differences that may

affect the rights of stockholders of Lucent and Ortel but does not purport to be

a complete statement of all those differences, or a complete description of the

specific provisions referred to in this summary. The identification of specific

differences is not intended to indicate that other equally or more significant

differences do not exist. Stockholders should read carefully the relevant

provisions of the Delaware General Corporation Law, Lucent's certificate of

incorporation and by-laws and Ortel's certificate of incorporation and by-laws.

 

CAPITALIZATION

 

         LUCENT. Lucent's authorized capital stock is described above under

"Description of Lucent Capital Stock."

 

         ORTEL. The total authorized shares of capital stock of Ortel consist of

(1) 25,000,000 shares of common stock, $.001 par value per share, and (2)

5,000,000 shares of preferred stock,

 

 

                                       54

<PAGE>   66

$.001 par value per share. On the record date, there were      shares of Ortel

common stock outstanding and no shares of Ortel preferred stock were issued and

outstanding.

 

         The Ortel board of directors is authorized to issue up to 5,000,000

shares of undesignated preferred stock, to determine the powers, preferences and

rights and the qualifications, limitations or restrictions granted to or imposed

upon any unissued series of undesignated preferred stock and to fix the number

of shares constituting any series and the designation of such series, without

any further vote or action by the Ortel stockholders. The Ortel board of

directors can issue preferred stock with voting, liquidation, dividend and other

rights superior to the rights of the Ortel common stock. Furthermore, such Ortel

preferred stock may have other rights, including economic rights, senior to the

Ortel common stock, and as a result, the issuance of such preferred stock could

cause a decrease in the market value of the Ortel common stock.

 

VOTING RIGHTS

 

         LUCENT. Each holder of Lucent common stock is entitled to one vote for

each share held of record and may not cumulate votes for the election of

directors.

 

         ORTEL. Each holder of Ortel common stock is entitled to one vote for

each share held of record and may not cumulate votes for the election of

directors.

 

NUMBER, ELECTION, VACANCY AND REMOVAL OF DIRECTORS

 

         LUCENT. Lucent's board of directors has seven members. Lucent's

certificate of incorporation provides that the Lucent board of directors will

consist of at least three directors and that the number of directors may be

changed from time to time by a resolution adopted by a majority of the total

number of directors which Lucent would have if there were no vacancies. As

permitted under the Delaware General Corporation Law, Lucent's certificate of

incorporation also provides that the Lucent board of directors consists of three

classes of directors. The directors in each class serve on the Lucent board of

directors for approximately three years each. Due to the retirement of two

directors from the Lucent board, one class of directors currently consists of a

single director.

 

         Lucent's certificate of incorporation and by-laws provide that if there

is a vacancy on the Lucent board of directors or if the number of directors is

increased, those vacancies will be filled by the affirmative vote of a majority

of the remaining directors then in office, even though less than a quorum, and

not by the stockholders. A director elected to fill a vacancy or newly created

directorship will serve until the next succeeding annual meeting of stockholders

following his election by the directors, and if elected by the stockholders at

such meeting, will serve for the remainder of the full term of the class of

directors in which the vacancy occurred or the new directorship was created and

until that director's successor will have been duly elected and qualified. No

decrease in the number of directors will shorten the term of any incumbent

director.

 

         Under Lucent's certificate of incorporation, any director may be

removed from office only for cause by the affirmative vote of the holders of at

least a majority of the voting power of all shares of Lucent common stock

entitled to vote generally in the election of directors then outstanding, voting

together as a single class.

 

 

                                       55

<PAGE>   67

         ORTEL. The Ortel board of directors has eight members. Ortel's

certificate of incorporation provides that the number of directors shall be

fixed from time to time by or pursuant to Ortel's by-laws. Ortel's by-laws

provide that the Ortel board of directors consists of at least seven and no more

than eleven directors and that the exact number of directors be determined by

resolution of the board of directors. As permitted under the Delaware General

Corporation Law, Ortel's certificate of incorporation also provides that the

Ortel board of directors consists of three classes of directors, with the

directors in each class serving on the Ortel board of directors for

approximately three years each and the term of office of one class expiring each

year.

 

         Ortel's certificate of incorporation and by-laws provide that vacancies

and newly created directorships resulting from an increase in the authorized

number of directors will be filled solely by the affirmative vote of a majority

of the directors then in office, even though less than a quorum, or by a sole

remaining director, and the directors so chosen hold office for the remainder of

the full term of the new directorship created or the directorship in which the

vacancy occurred and until their successors are duly elected and qualified. No

decrease in the number of directors will shorten the term of any incumbent

director.

 

         Under Ortel's certificate of incorporation, any or all of the directors

may be removed from office only for cause by the affirmative vote of at least

two-thirds of the outstanding shares of Ortel common stock.

 

AMENDMENTS TO CERTIFICATE OF INCORPORATION

 

         LUCENT. Lucent's certificate of incorporation provides that the

affirmative vote of the holders of at least 80% of the voting stock then

outstanding, voting together as a single class, will be required to alter,

amend, adopt any provision inconsistent with or repeal Articles V, VII and VIII

of Lucent's certificate of incorporation, which relate to stockholder action,

the Lucent board of directors and Lucent's by-laws, respectively.

 

         ORTEL. Ortel's certificate of incorporation provides that the

affirmative vote of at least two-thirds of the outstanding shares of Ortel

common stock will be required to amend, repeal or adopt any provision

inconsistent with Articles Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,

Eleventh, Twelfth, Thirteenth or Fourteenth, which relate to the Ortel board of

directors, stockholder action, amendment of Ortel's by-laws, indemnification by

Ortel and limitation on personal liability of directors of Ortel.

 

AMENDMENTS TO BY-LAWS

 

         LUCENT. Lucent's certificate of incorporation and by-laws provide that

Lucent's by-laws may be altered or repealed and new by-laws may be adopted:

 

         -    at any annual or special meeting of stockholders, by the

              affirmative vote of holders of a majority of the voting power of

              the stock issued and outstanding and entitled to vote at that

              meeting, provided that, any proposed alteration or repeal of, or

              the adoption of, any by-law inconsistent with Section 2.2, 2.7 or

              2.10 of Article II of Lucent's by-laws, which relate to special

              meetings of stockholders, notice of stockholder

 

 

                                       56

<PAGE>   68

              business and nominations and actions by written consent of

              stockholders, respectively, or with Section 3.2, 3.9 or 3.11 of

              Article III of Lucent's by-laws, which relate to the number and

              tenure of the directors, vacancies on the Lucent board of

              directors and removal of directors, respectively, by the

              stockholders requires the affirmative vote of the holders of at

              least 80% of the voting stock then outstanding, voting together as

              a single class

 

         -    by a majority of the total number of directors Lucent would have

              if there were no vacancies.

 

         ORTEL. Ortel's certificate of incorporation authorizes the adoption,

amendment or repeal of any of Ortel's by-laws:

 

         -    by its board of directors with the approval of a majority of the

              total number of authorized directors, whether or not there exist

              any vacancies in previously authorized directorships at the time

              any resolution providing for adoption, amendment or repeal is

              presented to the board and

 

         -    by the Ortel stockholders with the affirmative vote of the holders

              of at least two-thirds of the outstanding shares of Ortel common

              stock.

 

STOCKHOLDER ACTION

 

         LUCENT. Lucent's certificate of incorporation provides that any action

required or permitted to be taken by the Lucent stockholders must be effected at

a duly called annual or special meeting and may not be effected by written

consent.

 

         ORTEL. Ortel's certificate of incorporation provides that any action

required or permitted to be taken by the Ortel stockholders may be taken only

upon the vote of the Ortel stockholders at an annual or special meeting duly

called and may not be effected by written consent.

 

NOTICE OF CERTAIN STOCKHOLDER ACTIONS

 

         LUCENT. Lucent's certificate of incorporation provides that a

stockholder must give advance written notice of nominations for election of

directors and to properly bring business before an annual meeting of

stockholders. Under Lucent's by-laws, a stockholder's written notice must

generally be delivered to the Secretary of Lucent not later than 45 days nor

earlier than the 75 days prior to the first anniversary of the record date for

determining stockholders entitled to vote at the preceding year's annual

meeting.

 

         In the event that Lucent calls a special meeting of stockholders for

the purpose of electing one or more directors to the Lucent board of directors,

any stockholder may nominate a director or directors, provided that written

notice must be delivered not earlier than 120 days prior to the special meeting

and not later than (1) 90 days prior to that special meeting or (2) 10 days

following the day on which public announcement is first made of the date of the

special meeting and of the nominees proposed by the Lucent board of directors to

be elected at that meeting.

 

 

                                       57

<PAGE>   69

         ORTEL. Ortel's certificate of incorporation and by-laws provide that a

stockholder must give advance written notice of nominations for election of

directors and to properly bring business or proposals before an annual meeting

of stockholders. Under Ortel's certificate of incorporation and by-laws, a

stockholder's notice must be delivered to, or mailed and received at, the

principal executive offices of Ortel not less than 60 days prior to the

scheduled annual meeting, regardless of any postponements, deferrals or

adjournments of that meeting to a later date; provided, however, that if less

than 70 days' notice or prior public disclosure of the date of the scheduled

annual meeting is given or made, notice by the stockholder, to be timely, must

be so delivered or received not later than the close of business on the tenth

day following the earlier of the day on which such notice of the date of the

scheduled annual meeting was mailed or the day on which such public disclosure

was made.

 

SPECIAL STOCKHOLDER MEETINGS

 

         LUCENT. Lucent's certificate of incorporation and by-laws provide that

a special meeting of Lucent's stockholders may be called only by the Lucent

board of directors by a resolution stating the purposes of the special meeting

and approved by a majority of the total number of directors Lucent would have if

there were no vacancies or by the chairman of the Lucent board of directors. Any

power of the stockholders to call a special meeting is specifically denied in

Lucent's certificate of incorporation.

 

         ORTEL. Ortel's certificate of incorporation and by-laws provide that a

special meeting of the Ortel stockholders may be called at any time only by the

board of directors, the chairman of the board of directors or the president.

Ortel's certificate of incorporation and by-laws provide that no other person

may call a special meeting of the Ortel stockholders.

 

LIMITATION OF PERSONAL LIABILITY OF DIRECTORS AND INDEMNIFICATION

 

         LUCENT. Lucent's certificate of incorporation provides that a director

will not be personally liable to Lucent or to its stockholders for monetary

damages for breach of fiduciary duty as a director, except, if required by law,

for liability:

 

         -    for any breach of the director's duty of loyalty to Lucent or its

              stockholders

 

         -    for acts or omissions not in good faith or which involve

              intentional misconduct or a knowing violation of law

 

         -    under Section 174 of the Delaware General Corporation Law

              regarding unlawful payment of dividends or unlawful stock

              purchases or redemptions or

 

         -    for any transaction from which the director derived an improper

              personal benefit.

 

         Lucent's certificate of incorporation provides a right to

indemnification to directors and officers of Lucent subject to the limitations

under the Delaware General Corporation Law.

 

         In addition, Lucent must indemnify any present or former director or

officer of a corporation who has been successful on the merits or otherwise in

the defense of any claim or proceeding for expenses (including attorneys' fees)

actually and reasonably incurred.

 

 

                                       58

<PAGE>   70

         ORTEL. Ortel's certificate of incorporation provides that a director

will not be personally liable to Ortel or to its stockholders for monetary

damages for breach of fiduciary duty as a director, except, if required by law,

for liability:

 

         -    for any breach of the director's duty of loyalty to Ortel or its

              stockholders

 

         -    for acts or omissions not in good faith or which involve

              intentional misconduct or a knowing violation of law

 

         -    under Section 174 of the Delaware General Corporation Law

              regarding unlawful payment of dividends or unlawful stock

              purchases or redemptions or

 

         -    for any transaction from which the director derived an improper

              personal benefit.

 

         Ortel's certificate of incorporation provides a right to

indemnification to directors and officers of Ortel subject to the limitations

under the Delaware General Corporation Law.

 

         In addition, Ortel must indemnify any present or former director or

officer of a corporation who has been successful on the merits or otherwise in

the defense of any claim or proceeding for expenses (including attorneys' fees)

actually and reasonably incurred.

 

DIVIDENDS

 

         LUCENT. Lucent's by-laws provide that the Lucent board of directors may

from time to time declare, and Lucent may pay, dividends on its outstanding

shares in the manner and upon the terms and conditions provided by law and in

Lucent's certificate of incorporation.

 

         ORTEL. Ortel's by-laws provide that dividends may be declared by the

Ortel board of directors at any regular or special meeting in any manner

pursuant to law, and subject to Ortel's certificate of incorporation.

 

CONVERSION

 

         LUCENT. Holders of Lucent common stock have no rights to convert their

shares into any other securities.

 

         ORTEL. Holders of Ortel common stock have no rights to convert their

shares into any other securities.

 

RIGHTS PLAN

 

         LUCENT. Lucent has a rights agreement with The Bank of New York as

rights agent. The following description of the rights agreement is qualified in

its entirety by reference to the terms and conditions of the rights agreement.

Stockholders should read carefully the rights agreement. See "Where You Can Find

More Information" on page 63.

 

         Under the rights agreement, rights attach to each share of Lucent

common stock outstanding and, when exercisable, entitle the registered holder to

purchase from Lucent one

 

 

                                       59

<PAGE>   71

four-hundredth of a share of junior preferred stock, par value $1.00 per share,

at a purchase price of $22.50 per one four-hundredth of a share, subject to

customary anti-dilution adjustments.

 

         The rights will not be exercisable until the earlier of:

 

         -    10 days following a public announcement that a person or group has

              acquired beneficial ownership of 10% or more of the outstanding

              shares of Lucent common stock or

 

         -    10 business days, or that later date as may be determined by the

              Lucent board of directors, following the commencement of, or

              announcement of an intention to make, a tender offer or exchange

              offer, the consummation of which would result in a person or group

              acquiring beneficial ownership of 10% or more of the outstanding

              shares of Lucent common stock.

 

The rights will expire on March 31, 2006, unless that date is extended or unless

the rights are earlier redeemed or exchanged by Lucent, in each case as

summarized below.

 

         In the event that a person or group acquires beneficial ownership of

10% or more of the outstanding shares of Lucent common stock, each holder of a

right, other than rights beneficially owned by that person or group, which

become void, will have the right to receive upon exercise that number of shares

of Lucent common stock having a market value of two times the purchase price

provided for in the right. In the event that Lucent is acquired in a merger or

other business combination transaction or 50% or more of its consolidated assets

or earning power are sold after a person or group acquires beneficial ownership

of 10% or more of the outstanding shares of Lucent common stock, each holder of

a right will have the right to receive upon exercise that number of shares of

common stock of the acquiring company which at the time of that transaction will

have a market value of two times the purchase price provided for in the right.

 

         At any time after a person or group acquires beneficial ownership of

10% or more of the outstanding shares of Lucent common stock and prior to the

acquisition by that person or group of 50% or more of the then outstanding

shares of Lucent common stock, the Lucent board of directors may exchange the

rights, other than rights owned by that person or group which have become void,

in whole or in part, for Lucent common stock or junior preferred stock.

 

         At any time prior to a person or group acquiring beneficial ownership

of 10% or more of the outstanding shares of Lucent common stock, the Lucent

board of directors may redeem the rights in whole, but not in part, at a

redemption price of $0.0025 per right, subject to customary anti-dilution

provisions, or may amend the terms of the rights, in each case, without the

consent of the holders of the rights, at the time, on the basis and upon the

conditions that the Lucent board of directors may establish.

 

         Junior preferred shares purchasable upon exercise of the rights will

not be redeemable. The junior preferred shares have dividend, voting and

liquidation rights that are intended to result in the value of the one

four-hundredth interest in a junior preferred share purchasable upon exercise of

each right approximating the value of one share of Lucent common stock.

 

 

                                       60

<PAGE>   72

         The rights may have antitakeover effects. The rights will cause

substantial dilution to a person or group of persons that attempts to acquire

Lucent on terms not approved by the Lucent board of directors. The rights should

not interfere with any merger or other business combination approved by the

Lucent board of directors prior to the time that a person or group has acquired

such 10% beneficial ownership since the rights may be redeemed or amended by

Lucent until such time.

 

         ORTEL. Ortel has a stockholders rights agreement with American Stock

Transfer and Trust Company as rights agent. The following description of the

rights agreement is qualified in its entirety by reference to the terms and

conditions of the rights agreement. Stockholders should read carefully the

rights agreement. See "Where You Can Find More Information" on page 63.

 

         Under the rights agreement, a right is attached to each share of Ortel

common stock outstanding and, when exercisable, entitles the registered holder

to purchase from Ortel one one-hundredth of a share of junior preferred stock,

par value $1.00 per share, at a purchase price of $140 per one one-hundredth of

a share, subject to customary anti-dilution adjustments.

 

         The rights will not be exercisable until the earlier of:

 

         -    the tenth day following a public announcement that a person or

              group has acquired beneficial ownership of 15% or more of the

              outstanding shares of Ortel common stock or

 

         -    the tenth day following the commencement of, or announcement of an

              intention to make, a tender or exchange offer by a person or

              group, the consummation of such offer would result in a person or

              group acquiring beneficial ownership of 15% or more of the

              outstanding shares of Ortel common stock.

 

The rights will expire on March 2, 2005, unless that date is extended or unless

the rights are earlier redeemed or exchanged by Ortel, or are terminated by the

consummation of an acquisition agreement with a third party if such agreement

has been approved by the Ortel board of directors prior to such consummation, in

each case as summarized below.

 

         In the event that a person or group acquires beneficial ownership of

15% or more of the outstanding shares of Ortel common stock or merges, or

otherwise combines with, Ortel and the Ortel common stock remains outstanding,

each holder of a right, other than rights beneficially owned by that person or

group or its transferees, which become void, will have the right to receive upon

exercise that number of shares of Ortel common stock equal to the result

obtained by multiplying $140 by the number of one one-hundredths of a share of

junior preferred stock for which a right is exercisable and dividing that

product by 50% of the current per share market price of Ortel common stock.

 

         At any time prior to the tenth day following a public announcement that

a person or group has acquired beneficial ownership of 15% or more of the

outstanding shares of Ortel common stock, the Ortel board of directors may

redeem the rights in whole, but not in part, at a redemption price of $0.01 per

right, subject to customary anti-dilution provisions.

 

 

                                       61

<PAGE>   73

         Prior to the earlier of the tenth day following a public announcement

that a person or group has acquired beneficial ownership of 15% or more of the

outstanding shares of Ortel common stock or the commencement of, or announcement

of an intention to make, a tender or exchange offer by a person or group, the

consummation of such offer would result in a person or group acquiring

beneficial ownership of 15% or more of the outstanding shares of Ortel common

stock, Ortel may amend the terms of the rights without the consent of the

holders of the rights and otherwise subject to the terms of the stockholders

rights agreement.

 

         At any time after a person or group acquires beneficial ownership of

15% or more of the outstanding shares of Ortel common stock and prior to the

acquisition by that person or group of 50% or more of the then outstanding

shares of Ortel common stock, the Ortel board of directors may exchange the

rights, other than rights owned by that person or group which have become void,

in whole or in part, for Ortel common stock.

 

         The rights are not intended to prevent a takeover of Ortel. They are

designed to deal with the possibility of unilateral actions by hostile acquirers

that could deprive the Ortel board of directors and the Ortel stockholders of

their ability to determine Ortel's destiny and obtain the highest price for the

Ortel common stock. The rights should not interfere with any merger or other

business combination approved by the Ortel board of directors prior to the time

that a person or group has acquired such 15% beneficial ownership since the

rights by its terms terminate in that event.

 

                                  LEGAL MATTERS

 

         The legality of Lucent common stock offered by this proxy

statement/prospectus will be passed upon for Lucent by Pamela F. Craven, Vice

President -- Law and Secretary of Lucent. As of February 29, 2000, Pamela F.

Craven owned 1,096 shares of Lucent common stock and options and stock units for

507,150 shares of Lucent common stock.

 

         Certain United States federal income tax consequences of the merger

will be passed upon for Ortel by its counsel Latham & Watkins. Certain

United States federal income tax consequences will be passed upon for Lucent by

its special counsel Sidley & Austin.

 

                                     EXPERTS

 

         The consolidated financial statements of Lucent incorporated in this

proxy statement/prospectus by reference in Exhibit 99.1 to Lucent's Current

Report on Form 8-K dated February 10, 2000 for the year ended September 30, 1999

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.

 

         The consolidated financial statements and schedule of Ortel as of April

30, 1999 and 1998, and for each of the years ended in the three-year period

ended April 30, 1999, have been incorporated by reference in this proxy

statement/prospectus and in the registration statement in reliance upon the

report of KPMG LLP, independent certified public accountants, incorporated by

reference herein, and upon the authority of said firm as experts in accounting

and auditing.

 

 

                                       62

<PAGE>   74

         Representatives of KPMG LLP are not expected to be present at the

special meeting.

 

                                  OTHER MATTERS

 

         As of the date of this proxy statement/prospectus, the Ortel board of

directors knows of no matters that will be presented for consideration at the

special meeting of stockholders other than as described in this proxy

statement/prospectus.

 

                       WHERE YOU CAN FIND MORE INFORMATION

 

         Lucent and Ortel file annual, quarterly and special reports, proxy

statements and other information with the Securities and Exchange Commission.

You may read and copy any reports, statements or other information that Lucent

and Ortel file with the Securities and Exchange Commission at the Securities and

Exchange Commission's public reference rooms at the following locations:

 

Public Reference Room      New York Regional Office     Chicago Regional Office

450 Fifth Street, N.W.       7 World Trade Center           Citicorp Center

      Room 1024                   Suite 1300            500 West Madison Street

Washington, D.C. 20549        New York, NY 10048              Suite 1400

                                                        Chicago, IL 60661-2511

 

         Please call the Securities and Exchange Commission at 1-800-SEC-0330

for further information on the public reference rooms. These Securities and

Exchange Commission filings are also available to the public from commercial

document retrieval services and at the Internet world wide web site maintained

by the Securities and Exchange Commission at "http://www.sec.gov." Reports,

proxy statements and other information concerning Lucent may also be inspected

at the offices of the New York Stock Exchange at 20 Broad Street, New York, New

York 10005.

 

         Lucent filed a registration statement on Form S-4 on February 29, 2000

to register with the Securities and Exchange Commission the Lucent common stock

to be issued to Ortel stockholders in the merger. This proxy

statement/prospectus is a part of that registration statement. As allowed by

Securities and Exchange Commission rules, this proxy statement/prospectus does

not contain all the information you can find in Lucent's registration statement

or the exhibits to the registration statement.

 

         The Securities and Exchange Commission allows Lucent to "incorporate by

reference" information into this proxy statement/prospectus, which means that

the companies can disclose important information to you by referring you to

other documents filed separately with the Securities and Exchange Commission.

The information incorporated by reference is considered part of this proxy

statement/prospectus, except for any information superseded by information

contained directly in this proxy statement/prospectus or in later filed

documents incorporated by reference in this proxy statement/prospectus.

 

         This proxy statement/prospectus incorporates by reference the documents

set forth below that Lucent and Ortel previously filed with the Securities and

Exchange Commission. These

 

 

                                       63

<PAGE>   75

documents contain important business and financial information about Lucent that

is not included in or delivered with this proxy statement/prospectus.

 

<TABLE>

<CAPTION>

LUCENT FILINGS

(FILE NO. 001-11639)                                            PERIOD

--------------------                                            ------

<S>                                                  <C>

Annual Report on Form 10-K                           Fiscal Year ended September 30, 1999, as amended by Form 8-K filed

                                                     on February 11, 2000

 

Quarterly Report on Form 10-Q                        Quarter ended December 31, 1999

 

Current Reports on Form 8-K                          Filed October 29, 1999, November 19, 1999, January 7, 2000,

                                                     February 11, 2000 and March 1, 2000

 

Proxy Statement                                      Filed December 21, 1999

 

The description of Lucent common stock               Filed under Section 12 of the Exchange Act on February 26,

and Lucent rights to acquire junior                  1996, as amended by Amendment No. 1 thereto filed on Form 10/A

preferred stock set forth in the                     on March 12, 1996, Amendment No. 2 thereto filed on Form 10/A

Lucent Registration Statement on Form 10             on March 22, 1996 and Amendment No. 3 thereto filed on Form

                                                     10/A on April 1, 1996, including any amendments or reports filed

                                                     for the purpose of updating such descriptions

</TABLE>

 

 

                                       64

<PAGE>   76

<TABLE>

<CAPTION>

ORTEL FILINGS

(FILE NO. 0-22528)                                               PERIOD

------------------                                               ------

<S>                                                  <C>

Annual Report on Form 10-K                           Fiscal Year ended April 30, 1999

 

Quarterly Reports on Form 10-Q                       Quarters ended August 1, 1999 and October 31, 1999

 

Current Reports on Form 8-K                          Filed February 9, 2000

 

Proxy Statement                                      Filed August 20, 1999

 

The description of Ortel common stock                Filed October 6, 1994

set forth in the Ortel Registration

Statement on Form 8-A

</TABLE>

 

 

         Lucent and Ortel also incorporate by reference additional documents

that may be filed with the Securities and Exchange Commission under Sections

13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy

statement/prospectus and the date of the special meeting. These include periodic

reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and

Current Reports on Form 8-K, as well as proxy statements.

 

         Lucent has supplied all information contained or incorporated by

reference in this proxy statement/prospectus relating to Lucent and Ortel has

supplied all such information relating to Ortel.

 

         Ortel stockholders should not send in their Ortel certificates until

they receive the transmittal materials from the exchange agent. Ortel

stockholders of record who have further questions about their share certificates

or the exchange of their Ortel common stock for Lucent common stock should call

the exchange agent.

 

         If you are a stockholder, we may have sent you some of the documents

incorporated by reference, but you can obtain any of them through the companies,

the Securities and Exchange Commission or the Securities and Exchange

Commission's Internet web site as described above. Documents incorporated by

reference are available from the companies without charge, excluding all

exhibits, except that if Lucent has specifically incorporated by reference an

exhibit in this proxy statement/prospectus, the exhibit will also be provided

without charge. Stockholders may obtain documents incorporated by reference in

this proxy statement/prospectus by requesting them in writing or by telephone

from the Lucent at the following address:

 

 

        Lucent Technologies Inc.                   Ortel Corporation

        c/o The Bank of New York               2015 West Chestnut Street

          Church Street Station                Alhambra, California 91803

              P.O. Box 11009                     Telephone: 626-281-3636

      New York, New York 10286-1009           Attention: Investor Relations

        Telephone: 1-888-LUCENT6

 

 

                                       65

<PAGE>   77

 You should rely only on the information contained or incorporated by reference

in this proxy statement/prospectus. Neither Lucent nor Ortel has authorized

anyone to provide you with information that is different from what is contained

in this proxy statement/prospectus. This proxy statement/prospectus is dated

                 . You should not assume that the information contained in this

proxy statement/prospectus is accurate as of any date other than that date.

Neither the mailing of this proxy statement/prospectus to stockholders nor the

issuance of Lucent common stock in the merger creates any implication to the

contrary.

 

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

         This proxy statement/prospectus contains certain forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of

1995 with respect to the financial condition, results of operations, business

strategies, operating efficiencies or synergies, competitive positions, growth

opportunities for existing products, plans and objectives of management, markets

for stock of Lucent and Ortel and other matters. Statements in this proxy

statement/prospectus that are not historical facts are hereby identified as

"forward-looking statements" for the purpose of the safe harbor provided by

Section 21E of the Exchange Act and Section 27A of the Securities Act. These

forward-looking statements, including, without limitation, those relating to the

future business prospects, revenues and income, in each case relating to Lucent

and Ortel, wherever they occur in this proxy statement/prospectus, are

necessarily estimates reflecting the best judgment of the senior management of

Lucent and Ortel and involve a number of risks and uncertainties that could

cause actual results to differ materially from those suggested by the

forward-looking statements. These forward-looking statements should, therefore,

be considered in light of various important factors, including those set forth

in this proxy statement/prospectus. Important factors that could cause actual

results to differ materially from estimates or projections contained in the

forward-looking statements include without limitation:

 

         -    the ability to integrate the operations of Lucent and Ortel,

              including their respective product lines and

 

         -    the effects of vigorous competition in the markets in which Lucent

              and Ortel operate.

 

         Words such as "estimate," "project," "plan," "intend," "expect,"