IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

INTERNATIONAL BUSINESS MACHINES
CORPORATION and WHITE ACQUISITION
CORP.,
          Plaintiffs,

-against-

LOTUS DEVELOPMENT CORPORATION and
JIM P. MANZI,
          Defendants.

Civil Action No. 95-328

COMPLAINT

International Business Machines Corporation
("IBM") and White Acquisition Corp. ("White"), as and for
their complaint, allege upon knowledge with respect to
themselves and their own acts, and upon information and
belief as to all other matters, as follows:

Nature of the Action

1. Plaintiffs bring this action for injunctive
and/or declaratory relief:

(a) to prevent the application of defendant Lotus
Development Corporation's ("Lotus") anti-takeover
devices and other defensive measures to White's tender
offer, proposed merger and consent solicitation, in
violation of fiduciary duties owed to Lotus's
stockholders;

(b) to prevent the application of certain
Massachusetts statutes to White's tender offer, in
violation of the Constitution of the United States; and

(c) to prevent Lotus from otherwise impeding
White's tender offer, proposed merger and consent
solicitation, which comply with all applicable laws,
obligations and agreements.

2. On June 5, 1995, White announced its intention
to commence an all cash tender offer for all outstanding
shares of common stock of Lotus, at a price of $60 per share
(the "Offer"). The Offer is conditioned on removal or
inapplicability of a number of Lotus's anti-takeover
devices. IBM intends, as soon as practicable following
consummation of the Offer, to have Lotus merge with White or
another IBM subsidiary (the "Proposed Merger"). At the same
time as it announced the Offer, White announced its
intention to commence a consent solicitation to replace
Lotus's current Board of Directors with other nominees and
to take certain other actions to facilitate consummation of
the Offer and Proposed Merger (the "Consent Solicitation").

3. The Offer is fully financed, non-coercive and
fair to Lotus stockholders. The Offer represents a
substantial premium over the market price for Lotus shares
prior to announcement of the Offer. The Offer, Proposed
Merger and Consent Solicitation do not pose any threat to
the interests of Lotus's stockholders or to Lotus's
corporate policy and effectiveness.

4. Lotus has previously expressed its opposition
to being acquired by IBM. Lotus has available various
defensive measures--including a "poison pill", the Delaware
Business Combinations Statute, 8 Del. C.  203
("Section 203"), the Massachusetts Control Share Acquisition
Statute, Mass. Gen. L. ch. 110E ("Chapter 110E") and the
Massachusetts Anti-Takeover Statute, Mass. Gen. L. ch. 110C
("Chapter 110C")--which may be used to block the Offer. In
light of its opposition to an acquisition, Lotus may also
take steps to block the Consent Solicitation.

5. Given the nature of the Offer and its
substantial value to Lotus's stockholders, the Lotus Board
should not be allowed to deprive the stockholders of the
opportunity to decide upon the merits of the Offer for
themselves. Use of Lotus's anti-takeover devices or other
defensive measures against the Offer, Proposed Merger or
Consent Solicitation represent an unreasonable response to
the Offer, Proposed Merger and Consent Solicitation, in
violation of fiduciary duties owed to Lotus's stockholders.

6. Chapters 110E and 110C are unconstitutional,
both on their face and as applied in this case, because they
violate the Commerce Clause of the United States
Constitution. These Massachusetts statutes purport to
regulate unsolicited takeovers with respect to a significant
number of foreign corporations throughout the United States,
which engage in interstate commerce, even though most or all
of these corporations' stockholders are not located in
Massachusetts. This extraterritorial reach here invades
Delaware's regulatory authority over its domestic
corporations, and subjects non-Massachusetts corporations to
inconsistent regulation. Moreover, each statute's
application to foreign stockholders creates a burden that is
excessive in relation to its purported local benefits.

7. Chapter 110C is also pre-empted by the
Williams Act and thus violates the Supremacy Clause of the
United States Constitution. The Williams Act establishes a
regime designed to provide even-handed regulation of tender
offers. Chapter 110C frustrates this objective by imposing
disclosure, hearing and adjudication provisions that are
inconsistent with the Williams Act and the regulations
thereunder, in violation of the Supremacy Clause.

8. The Offer, Proposed Merger and Consent
Solicitation comply or will comply with all applicable laws,
obligations and agreements, including, without limitation,
the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject, including any
contractual and common law obligations that may be owed by
plaintiffs to Lotus. Given the nature of the Offer and its
benefits, Lotus should assist plaintiffs in obtaining any
necessary regulatory approvals. In any event, Lotus should
not be permitted to attempt to delay consummation of the
Offer, Proposed Merger or Consent Solicitation by litigation
in other forums.

9. Lotus's use of defensive measures and
unconstitutional statutes to obstruct the Offer, Proposed
Merger and Consent Solicitation will deprive Lotus's
stockholders of the opportunity to decide upon their merits
for themselves and will cause plaintiffs irreparable injury
as a result of the loss of the unique opportunity to acquire
control of Lotus.

Jurisdiction and Venue

10. The Court has jurisdiction of the subject
matter of this action pursuant to 28 U.S.C.  1331,
1332(a), 1337(a), 1367(a) and 2201. The plaintiffs and
defendants are citizens of different states, and the matter
in controversy exceeds the sum of $50,000, exclusive of
interest and costs.

11. Venue is proper in this district pursuant to
28 U.S.C.  1391(b) and (c).

The Parties

12. Plaintiff IBM is a New York corporation with
its principal place of business in New York. IBM's business
activities (including research and development,
manufacturing, marketing and service) are primarily in the
field of information processing products and services. IBM
owns common stock of Lotus.

13. Plaintiff White is a New York corporation
with its principal place of business in New York. It is a
wholly owned.subsidiary of IBM and was incorporated for the
purpose of making the Offer and Consent Solicitation and
acquiring all the stock of Lotus. White owns common stock
of Lotus.

14. Defendant Lotus is a Delaware corporation
with its principal place of business in Massachusetts. It
is engaged in the business of developing, manufacturing,
marketing and supporting applications software and services.

15. Defendant Jim P. Manzi is a citizen of the
Commonwealth of Massachusetts. Since 1984, he has been
President of Lotus and since 1986 he has been Chairman of
the Board and Chief Executive Officer of Lotus.

The Offer, Proposed Merger and Consent Solicitation

16. On June 5, 1995, White announced its
intention to commence a tender offer for all outstanding
shares of Lotus common stock (together with the associated
preferred share purchase rights issued in connection with
Lotus's poison pill), at the price of $60 per share (and
associated right) net to the seller in cash. The Offer is
conditioned, inter alia, upon (a) valid tender of a majority
of the outstanding shares of Lotus's common stock;
(b) redemption, invalidation or inapplicability of the share
purchase rights; (c) approval of the acquisition of shares
pursuant to the Offer and the Proposed Merger under
Section 203, or inapplicability of Section 203; and
(d) elimination from Lotus's bylaws, invalidity or
inapplicability of Chapter 110E. The Offer is not subject
to any condition relating to plaintiffs' ability to finance
the Offer or the Proposed Merger.

17. IBM intends, as soon as practicable following
consummation of the Offer, to propose and seek to have Lotus
consummate a merger or similar business combination with
White or another direct or indirect wholly owned subsidiary
of IBM. The purpose of the Proposed Merger is to acquire
all shares not tendered and purchased pursuant to the Offer
or otherwise. Pursuant to the Proposed Merger, each such
share (other than those held by stockholders who perfect
appraisal rights) would be converted into the right to
receive an amount in cash equal to the price per share paid
pursuant to the Offer.

18. On June 5, 1995, White announced its
intention to file preliminary consent solicitation materials
with the Securities and Exchange Commission (the "SEC") for
use in connection with the solicitation of written consents
from Lotus's stockholders to, inter alia, (i) remove all six
of the present members of the Board of Directors of Lotus,
(ii) replace them with other nominees (who intend to redeem
the poison pill or make it inapplicable to the Offer and
Proposed Merger, approve the Offer and Proposed Merger for
the purposes of Section 203, and take any other appropriate
action to facilitate consummation of the Offer and Proposed
Merger, or, if any other transaction offering more value to
Lotus's stockholders is proposed, take action to facilitate
such a transaction) and (iii) take certain other actions
designed to facilitate consummation of the Offer and
Proposed Merger, including the elimination from Lotus's
bylaws of the provision purporting to provide for the
application of Chapter 110E.

19. White's Offer is clearly in the best
interests of Lotus's stockholders. It is a fully financed,
all cash offer, available to all Lotus stockholders, for all
outstanding shares. It is not "front-end loaded" or
otherwise coercive in nature. Moreover, it provides Lotus's
stockholders with the opportunity to realize a substantial
premium over the market price of their shares prior to
announcement of the Offer. On the last Nasdaq National
Market trading day before announcement of the Offer, the
~closing price of Lotus shares was $32-1/2 per share. The
Offer price therefore represents a premium of $27-1/2-per
share (or 85%) over the market price of the shares
immediately prior to announcement of the Offer.

20. The Offer, Proposed Merger and Consent
Solicitation do not pose any threat to the interests of
Lotus's stockholders or to Lotus's corporate policy and
effectiveness.

21. The Offer, Proposed Merger and Consent
Solicitation comply or will comply with all applicable laws,
obligations and agreements, including, without limitation,
the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject, including any
contractual and common law obligations that may be owed by
plaintiffs to Lotus. The offering documents and preliminary
Consent Solicitation materials will be filed with the SEC
and NASD and delivered to Lotus upon commencement of the
Offer. The offering documents fairly disclose all
information material to the decision of Lotus's stockholders
whether to accept or reject the Offer, in compliance with
plaintiffs' obligations under the securities laws.
Plaintiffs will also make the filings required by the Hart-
Scott-Rodino Act. The Offer, Proposed Merger and Consent
Solicitation are lawful under the antitrust laws.

22. The Offer and Proposed Merger cannot be
completed successfully unless the Lotus Board agrees to
remove Lotus's anti-takeover devices or allows the Consent
Solicitation to proceed unhindered.

23. Lotus's Chairman, Mr. Manzi, has previously
expressed opposition to an acquisition by IBM. On January
31, 1995, John M. Thompson, the senior vice president in
charge of IBM's software development activities, inquired as
to Mr. Manzi's interest in having IBM acquire Lotus, but Mr.
Manzi indicated that Lotus (as opposed to only a part of its
business) was not for sale. On March 16, 1995, Mr. Thompson
met with Mr. Manzi to review the status of ongoing
discussions concerning marketing and development
collaboration between IBM and Lotus. One of the potential
business arrangements suggested by Mr. Thompson was an
acquisition by IBM of Lotus. Mr. Manzi stated that he would
not sell equity directly to IBM. On March 17, 1995, Mr.
Manzi informed Mr. Thompson that he would not discuss an
acquisition by IBM of Lotus.

Lotus's Defensive Measures

Poison Pill

24. On November 7, 1988, Lotus's Board adopted a
stockholder rights plan (the "Poison Pill"), which
effectively allows the Board unilaterally to block
acquisition offers, even those providing substantial
benefits to Lotus's stockholders. The Registration
Statement which was filed by Lotus with the SEC stated:

"The Rights have certain anti-takeover effects.
The Rights will cause substantial dilution to a
person or group that attempts to acquire the
Company on terms not approved by the Company's
Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights
being acquired."

25. The Board declared a dividend of one
preferred share purchase right per share of common stock (a
"Right"), payable to each of Lotus's stockholders of record
as of November 23, 1988. Each Right entitles the holder to
purchase a unit of a new issue of Lotus's preferred stock,
amounting to one one-hundredth of a share of such stock, at
a price of $75 per unit. If the Rights are "triggered"--
inter alia, by an acquisition of 15% or more of Lotus's
common stock--each holder of a Right will be able to
exercise the Right to receive common stock (or in certain
circumstances, cash, assets or other securities of Lotus)
having a market value of twice the then current exercise
price of such Right. Under a "sterilizing" provision of the
Poison Pill, in the event of an unsolicited takeover, any
Rights held by the acquiror will be null and void.

26. Lotus's Board can redeem the Rights at a
redemption price of $.01 per Right, or alternatively, can
amend the Poison Pill to make the Rights inapplicable to the
Offer and the Proposed Merger. Although the Rights may be
redeemed pursuant to a stockholder vote at a special meeting
called to vote upon a tender offer which complies with
certain specified conditions, this meeting need not be
called by the Board until up to 120 days after the later of
(1) the date the offer is received and (2) the date of any
meeting of stockholders already scheduled as of the offer
date.

27. The Poison Pill, at a minimum (and aside from
the prohibitively expensive effect of its triggering),
enables the Lotus Board to stall any tender offer for a
period of at least 4 months from the date of the offer,
regardless of the interests of Lotus's stockholders. This
potential delay is especially unjustified in this case,
given the non-coercive nature of White's Offer and the
substantial benefits it would generate. Given the nature
and value of the Offer, the Lotus Board should redeem the
Rights, or amend the Poison Pill to make the Rights
inapplicable to the Offer and Proposed Merger, to enable
stockholders to decide upon the merits of the Offer for
themselves.

Delaware Business Combination Statute, Section 203

28. Section 203, entitled "Business Combinations
with Interested Stockholders", applies to any Delaware
corporation that has not opted out of the statute's
coverage. Lotus has not opted out of the statute's
coverage.

29. Section 203 was designed to impede coercive
and inadequate tender offers. Section 203 provides that if
a person acquires 15% or more of a corporation's voting
stock (thereby becoming an "interested stockholder"), such
interested stockholder may not engage in a "business
combination" with the corporation (defined to include a
merger or consolidation) for three years after the
interested stockholder becomes such, unless: (i) prior to
the 15% acquisition, the Board of Directors has approved
either the acquisition or the business combination, (ii) the
interested stockholder acquires 85% of the corporation's
voting stock in the same transaction in which it crosses the
15% threshold, or (iii) on or subsequent to the date of the
15% acquisition, the business combination is approved by the
Board of Directors and authorized at an annual or special
meeting of stockholders (and not by written consent) by the
affirmative vote of at least 66-2/3% of the outstanding
voting stock which is not owned by the interested
stockholder.

30. Because the Lotus Board should approve
White's Offer, Section 203 should not be applicable.
Section 203 should not be used by the Lotus Board to
obstruct the Offer, which is non-coercive, offers Lotus's
stockholders a substantial premium for their shares, and
poses no threat to the interests of Lotus's stockholders or
to Lotus's corporate policy and effectiveness.

Massachusetts Control Share Acquisition Statute
Chapter 110E

31. Chapter 110E, entitled "Regulation of Control
Share Acquisitions of Foreign Corporations", purports to
apply to any foreign corporation ("issuing public
corporation") whose bylaws provide for its application and
which meets the following jurisdictional requirements:
(i) two hundred or more stockholders; (ii) its principal
executive office within the Commonwealth of Massachusetts
and more of its employees or assets, including employees or
assets of its majority owned subsidiaries, employed or
located in the Commonwealth than in any other state as of
the end of any of its four fiscal quarters immediately
preceding the control share acquisition or the date on which
the control share acquisition statement is delivered; and
(iii) either more than 10% of its stockholders residing
within the Commonwealth or more than 10% of the issued and
outstanding shares owned of record by residents of the
Commonwealth. By virtue of this definition, the provisions
of Chapter 110E purport to apply to acquisitions of shares
in foreign corporations where up to 90% of the shareholders
or ownership of up to 90% of the shares are located outside
of Massachusetts.

32. Section 5 of Chapter 110E provides that
shares in an issuing public corporation which are acquired
in a control share acquisition shall have voting rights only
to the extent authorized by a majority of stockholders other
than holders of interested shares (defined to include shares
which are beneficially owned by any person who has made or
proposes to make a control share acquisition). A control
share acquisition is defined as the acquisition of
beneficial ownership of shares with (i) one-fifth or more
but less than one-third of all voting power; (ii) one-third
or more but less than a majority of all voting power; or
(iii) a majority or more of all voting power. It does not
include an acquisition pursuant to a tender offer, merger or
consolidation which is made pursuant to an agreement of
merger or consolidation to which the issuing public
corporation is a party.

33. The effect of Chapter 110E is, therefore,
that shares acquired in an unsolicited tender offer shall
only carry voting rights to the extent authorized by holders
of shares other than those already acquired in the tender
offer. Moreover, the shareholder vote on the resolution
regarding the voting rights to be accorded the acquiror's
control shares is not required to be taken until the next
scheduled special or annual meeting of stockholders unless
the person delivering the control share acquisition
statement makes a contemporaneous written demand on the
target corporation for a special meeting of stockholders for
this specific purpose. In that event, the directors of the
corporation may wait for up to 50 days after receipt of the
demand by the corporation before holding such a meeting.

34. In short, the purpose and effect of
Massachusetts' Chapter 110E is to deter and prevent
takeovers of foreign corporations, such as Lotus, with up to
90% foreign stockholders, by depriving any person who seeks
to acquire control of such a company, without Board
approval, of many of the substantial benefits and incentives
of such an acquisition.

35. Given the nature and value to Lotus's
stockholders of White's Offer, Lotus's Board should not take
any steps to apply or enforce the provisions of Chapter 110E
and should permit the Offer to proceed unhindered so that
Lotus's stockholders can decide upon its merits for
themselves.

Massachusetts Anti-Takeover Statute, Chapter 110C

36. Chapter 110C, entitled "Regulation of Take-
Over Bids in the Acquisition of Corporations", purports to
apply, inter alia, to takeover bids for any corporation that
has its principal place of business in Massachusetts.
Accordingly, it purports to apply even to takeover bids for
foreign corporations where all of the corporation's
shareholders or ownership of all of the corporation's shares
are located outside Massachusetts.

37. Section 2 of Chapter 110C provides that no
offeror will make a "takeover bid"--defined to exclude any
takeover bid to which the target Board consents--unless,
among other things, the offeror publicly announces the terms
of the proposed takeover bid and files with the Secretary of
State of Massachusetts and the target, on the date of the
commencement of the bid, copies of all information required
by Section 4. Section 2 further provides that the Secretary
of State~ may, on his own initiative or at the request of the
target or an offeree, order a hearing to consider whether
the bid complies with the provisions of the chapter.
Pursuant to Section 6, the Secretary has up to 45 days to
render a decision.

38. Chapter 110C therefore requires a tender
offeror to comply with onerous requirements--in addition to
the disclosure obligations under the Williams Act--and to
wait for up to 45 days before consummating the offer, unless
the offeror is prepared to run the risk that the Secretary
of State may deem the disclosures inadequate in some respect
and that stockholders who have already accepted the offer
may then seek to rescind and recover their securities.

39. Given the nature and value to Lotus
stockholders of White's Offer, Lotus's Board should not take
any steps to apply or enforce the provisions of Chapter 110C
and should permit the Offer to proceed unhindered so that
Lotus's stockholders can decide upon its merits for
themselves.

Irreparable Injury

40. Plaintiffs have no adequate remedy at law.
Only through the exercise of the Court's equitable powers
will plaintiffs and Lotus's other stockholders be protected
from immediate and irreparable injury. Unless the Court
enjoins the application of Lotus's anti-takeover devices to
White's Offer and enjoins Lotus from impeding the Offer,
Proposed Merger and Consent Solicitation by any other
measures, including litigation in other forums, Lotus
stockholders will be deprived of the opportunity to decide
for themselves whether or not to accept the Offer.
Moreover, White will be precluded from consummating the
Offer, which is conditioned on removal or inapplicability of
Lotus's anti-takeover devices, will be denied any meaningful
access to or control over the assets of Lotus, and will be
hindered in or prevented from exercising its fundamental
stockholder rights under Delaware law. Should that occur,
plaintiffs will have lost the unique opportunity to acquire
Lotus, and other Lotus stockholders will have lost the
opportunity to sell their shares for a substantial premium.

COUNT ONE

41. Plaintiffs repeat, reaver and incorporate
each averment contained in Paragraphs 1 through 40 of this
Complaint as if fully set forth herein.

42. White's Offer is fully financed; it is non-
coercive and non-discriminatory; it is fair to Lotus
stockholders; and it represents a substantial premium over
the market price of Lotus shares prior to announcement of
the Offer. The Offer, Proposed Merger and Consent
Solicitation comply with all applicable laws, obligations
and agreements--including, without limitation, the
securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject, including any
contractual and common law obligations that may be owed by
plaintiffs to Lotus--and pose no threat to the interests of
Lotus's stockholders or to Lotus's corporate policy or
effectiveness. Use of Lotus's anti-takeover devices or any
other defensive measures to prevent Lotus stockholders from
deciding for themselves whether or not to accept the Offer
or Consent Solicitation is not proportionate to any threat
posed, nor within the range of reasonable responses to the
Offer, Proposed Merger or Consent Solicitation, in breach of
the Board's fiduciary duties to Lotus stockholders.
Plaintiffs seek injunctive relief against such breaches of
fiduciary duties.

43. Plaintiffs have no adequate remedy at law.

COUNT TWO

44. Plaintiffs repeat and reaver as if fully set
forth herein each averment in Paragraphs 1 through 40 of
this Complaint.

45. This cause of action arises under the
Commerce and Supremacy Clauses of the United States
Constitution, U.S. Const. art. 1,  8, cl. 3, and art. 6,
2, respectively.

46. The Offer constitutes a substantial
securities transaction in interstate commerce, employing
interstate instrumentalities and facilities in the
communication of the Offer, and in transactions for the
purchase and sale of Lotus's securities occurring across
state lines.

47. The extraterritorial application of
Chapters 110E and 110C here invades Delaware's regulatory
authority over its domestic corporations, and subjects non-
Massachusetts corporations to inconsistent regulation.
Massachusetts is but one of numerous states with which Lotus
has significant contacts. To allow Massachusetts to
regulate an acquisition of a Delaware corporation with
significant contacts in states other than Massachusetts is
to guarantee inconsistent regulation, in violation of the
Commerce Clause.

48. Chapters 110E and 110C also violate the
Commerce Clause because they impose direct, substantial and
adverse burdens on interstate commerce that are excessive in
relation to local interests served by the statutes. Among
other things, Chapters 110E and 110C inhibit the making and
consummation of nationwide control share acquisitions and
takeover bids involving purely out of state shares and share
transactions. Chapter 110E deters out of state control
share acquisitions because of the risk or actuality that an
acquiror will not gain voting rights in the corporation even
if the acquisition is otherwise successful and because of
the delay necessary to consummate the acquisition. Chapter
110C deters out of state takeover bids by imposing
substantial filing and disclosure burdens on bidders and by
delaying consummation of bids or creating uncertainty with
respect to the status of share transactions entered into
pursuant to such bids.

49. Chapters 110E and 110C do not serve any
legitimate local interests sufficient to justify the burdens
they impose on interstate commerce. Massachusetts has no
legitimate interest in the purely out of state sales and
purchases of shares in a Delaware corporation acquired
pursuant to a tender offer or in the voting rights attendant
upon these shares to weigh in its balance against the
substantial burdens that Chapters 110E and 110C place on
interstate commerce. Massachusetts also has no interest in
protecting nonresident shareholders of nonresident
corporations. There are no local benefits that arise from
the statutes' application to such persons.

50. Chapters 110E and 110C are unconstitutional
and null and void on their face under the Commerce Clause.
In addition, Chapters 110E and 110C are unconstitutional and
null and void under the Commerce Clause in their application
under the circumstances of this case. Lotus is a foreign
corporation with numerous foreign shareholders to which
these statutes purport to apply, and plaintiffs are both
foreign corporations. Accordingly, the risk of inconsistent
regulation and the undue burden on interstate commerce that
are created by these statutes have a direct and substantial
impact in this case.

51. Chapter 110C also violates the Supremacy
Clause of the United States Constitution. The Offer is
subject to the federal laws and regulations governing tender
offers, including the Williams Act amendments to the
Securities Exchange Act, 15 U.S.C.  78m and 78n, and the
rules and regulations promulgated thereunder. The Williams
Act is intended to establish even-handed regulation of
tender offers which favors neither the offeror nor incumbent
management of the target but leaves the decision concerning
the merits of the offer to the target's stockholders.

52. The provisions of Chapter 110C conflict with
the provisions of the Williams Act and the regulations
thereunder, inter alia, by imposing additional disclosure
requirements on the tender offeror which are not required by
the Williams Act, by providing for a hearing at the instance
of the Massachusetts Secretary of State or any offeree, and
by allowing the Secretary of State to pass on the
substantive fairness of the offer. These provisions impose
substantial and unnecessary burdens on the offeror,
introduce extended delay into the offer process, interfere
with the freedom of the target's stockholders to make their
own decisions concerning the merits of the offer, and upset
the balance struck by Congress in enacting the Williams Act
by favoring target management at the expense of
stockholders.

53. The provisions of Chapter 110C are
unconstitutional and null and void on their face under the
Supremacy Clause because they conflict with and stand as an
obstacle to the accomplishment and execution of the full
purposes and objectives of the Williams Act. Moreover,
because Lotus is a corporation to which Chapter 110C
purports to apply, the unconstitutional burdens imposed by
Chapter 110C have a direct and substantial impact in this
case. Accordingly, Chapter 110C is also unconstitutional
and null and void in its application under the circumstances
of this case under the Supremacy Clause.

54. Plaintiffs seek declaratory relief with
respect to the unconstitutionality of Chapters 110E and
110C, pursuant to the Federal Declaratory Judgments Act, 28
U.S.C.  2201, and injunctive relief against the application
and enforcement of these unconstitutional statutes.

55. Plaintiffs have no adequate remedy at law.

COUNT THREE

56. Plaintiffs repeat and reaver as if fully set
forth herein each averment in Paragraphs 1 through 40 of
this Complaint.

57. The Offer, Proposed Merger and Consent
Solicitation comply or will comply with all applicable laws,
obligations and agreements, including, without limitation,
the securities laws, the antitrust laws, and all other legal
obligations to which plaintiffs are subject, including any
contractual and common law obligations that may be owed by
plaintiffs to Lotus. Given the nature of the Offer and its
benefits, Lotus should assist plaintiffs in obtaining any
necessary regulatory approvals. In any event, Lotus should
not be permitted to attempt to delay consummation of the
~Offer, Proposed Merger or Consent Solicitation by litigation
in other forums. To prevent any unnecessary impediment to
consummation of the Offer, Proposed Merger and Consent
Solicitation, plaintiffs seek a declaratory judgment with
respect to their validity and declaratory and injunctive
relief against Lotus's commencement of proceedings in any
forum other than this Court which would impede their
commencement, continuation or consummation.

58. Plaintiffs have no adequate remedy at law.

WHEREFORE, plaintiffs respectfully request that this Court
enter an order:

(a) enjoining Lotus, its directors, officers,
successors, agents, servants, subsidiaries, employees
and attorneys, and all persons acting in concert or
participating with them, from taking any steps to
impede or frustrate the ability of Lotus's stockholders
to consider and make their own determination as to
whether to accept the terms of the Offer or give or
withhold consent to the terms of the Consent
Solicitation, or taking any other action to thwart or
interfere with the Offer, Proposed Merger or Consent
Solicitation;

(b) compelling Lotus's Board of Directors to
redeem the Rights associated with the Poison Pill or to
amend the Poison Pill so as to make the Rights
inapplicable to the Offer and the Proposed Merger, and
enjoining Lotus, its directors, officers, successors,
agents, servants, subsidiaries, employees and
attorneys, and all persons acting in concert or
participating with them, from taking any action to
implement, distribute or recognize any rights or powers
with respect to said Rights (other than to redeem the
Rights), and from taking any actions pursuant to the
Poison Pill that would dilute or interfere with White's
voting rights or in any other way discriminate against
White in the exercise of its rights with respect to its
Lotus stock;

(c) compelling Lotus's Board of Directors to
approve the Offer and the Proposed Merger for the
purposes of Section 203, and enjoining Lotus, its
directors, officers, successors, agents, servants,
subsidiaries, employees and attorneys, and all persons
acting in concert or participation with them, from
taking any actions to enforce or apply Section 203 that
would interfere with the commencement, continuation or
consummation of White's Offer;

(d) declaring and adjudging that Chapter 110E
violates the Constitution of the United States and that
it is null and void on its face and as applied in this
case, and enjoining Lotus, its directors, officers,
successors, agents, servants, subsidiaries, employees
and attorneys, and all persons acting in concert or
participation with them, from taking any actions to
enforce or apply Chapter 110E that would interfere with
the commencement, continuation or consummation of
White's Offer;

(e) declaring and adjudging that Chapter 110C
violates the Constitution of the United States and that
it is null and void on its face and as applied in this
case, and enjoining Lotus, its directors, officers,
successors, agents, servants, subsidiaries, employees
and attorneys, and all persons acting in concert or
participation with them, from taking any actions to
enforce or apply Chapter 110C that would interfere with
the commencement, continuation or consummation of
White's Offer;

(f) declaring and adjudging that the Offer,
Proposed Merger and Consent Solicitation comply with
all applicable laws, obligations and agreements,
including, without limitation, the securities laws, the
antitrust laws, and all other legal obligations to
which plaintiffs are subject, including any contractual
and common law obligations that may be owed by
plaintiffs to Lotus;

(g) declaring and adjudging that Lotus, its
directors, officers, successors, agents, servants,
subsidiaries, employees and attorneys, and all persons
acting in concert or participation with them, may not
commence, and enjoining them from commencing, in any
forum other than this Court, any judicial proceedings
that would require litigation, by way of claim, defense
or counterclaim, of any of the claims, defenses or
counterclaims which may be asserted in this lawsuit and
that would delay or impede commencement, continuation
or consummation of the Offer, Proposed Merger or
Consent Solicitation, including, without limitation,
any proceedings challenging the Offer, Proposed Merger
or Consent Solicitation or seeking to enforce or apply
any of Lotus's anti-takeover devices;

(h) awarding plaintiffs their costs and
disbursements in this action, including reasonable
attorneys' fees; and

(i) granting such other and further relief as to
the Court seems just and proper.

June 5, 1995

R. Franklin Balotti (I.D. No. 679)
Jesse A. Finkelstein (I.D. No. 1090)
Anne C. Foster (I.D. No. 2513)

RICHARDS, LAYTON & FINGER
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
(302) 658-6541

Attorneys for Plaintiffs

of Counsel:

Lawrence R. Ricciardi
Senior Vice President and
General Counsel
INTERNATIONAL BUSINESS MACHINES
CORPORATION
Old Orchard Road
Armonk, NY 10504
(914) 765-1900

CRAVATH, SWAINE & MOORE
825 Eighth Avenue
New York, NY 10019
(212) 474-1000