<PAGE> 1
As filed with the Securities and Exchange Commission on April 9, 1999
Registration No. 333-39917
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
POST-EFFECTIVE AMENDMENT NO. 3 TO FORM S-3
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
<TABLE>
<S> <C>
ALCATEL USA, INC. ALCATEL
(formerly DSC COMMUNICATIONS CORPORATION) (Exact name of registrant
(Exact name of registrant on Form S-3 as specified in its charter) on Form F-3 as specified in its charter)
</TABLE>
<TABLE>
<S> <C> <C> <C>
DELAWARE 54-1025763 REPUBLIC OF FRANCE INAPPLICABLE
(State or other jurisdiction of (I.R.S. Employer (State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number) incorporation or organization) Identification Number)
</TABLE>
<TABLE>
<S> <C>
1000 COIT ROAD 54, RUE LA BOETIE
PLANO, TEXAS, 75075 75008 PARIS
(972) 519-3000 FRANCE
011-331-40-76-10-10
</TABLE>
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------
GEORGE B. BRUNT, ESQ.
ALCATEL USA, INC.
1000 COIT ROAD
PLANO, TEXAS 75075
(972) 519-3000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
<TABLE>
<S> <C> <C>
With copies to:
DANIEL W. RABUN SERGE TCHURUK HUBERTUS V. SULKOWSKI
BAKER & MCKENZIE CHAIRMAN OF THE BOARD AND CHIEF SHEARMAN & STERLING
2001 ROSS AVENUE, SUITE 4500 EXECUTIVE OFFICER 114, AVE. DES CHAMPS-ELYSEES
DALLAS, TEXAS 75201 ALCATEL 75008 PARIS
(214) 978-3000 54, RUE LA BOETIE FRANCE
75008 PARIS, FRANCE 011-331-53-89-70-00
011-331-40-76-10-10
</TABLE>
------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____________________________________
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Amount Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Shares to be Aggregate Aggregate Offering Registration
to be Registered Registered Price Per Security (1) (2) Price (1) Fee
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
7% Convertible Subordinated
Notes of Alcatel USA, Inc. $400,000,000 100% $400,000,000 $118,000 (3)
- - ------------------------------------------------------------------------------------------------------------------------------------
Guaranty by Alcatel of the 7%
Convertible Subordinated
Notes (4) (--) (--) (--) None
- - ------------------------------------------------------------------------------------------------------------------------------------
Ordinary shares of Alcatel, nominal
value Euros 10 per share (5) 1,311,208 (6) Not Applicable Not Applicable Not Applicable (7)
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457 (i).
(2) Exclusive of accrued interest, if any.
(3) Of this fee $97,228 was paid in connection with the original filing of
the Registration Statement on Form S-3, $10,546 was paid in connection
with Amendment No. 1 to such Registration Statement and $10,227 was paid
in connection with Amendment No. 2 to such Registration Statement.
Therefore, no amount of this registration fee remains to be paid.
(4) No separate consideration will be received for the Guaranty.
(5) American Depositary Receipts evidencing American Depositary Shares
delivered upon conversion of the Notes and representing ordinary shares of
Alcatel registered hereby have been registered pursuant to a separate
Registration Statement on Form F-6. Each American Depositary Share
represents one-fifth of an ordinary share of Alcatel.
(6) Such number represents the number of ordinary shares of Alcatel reflected
by American Depositary Shares initially deliverable upon conversion of the
Notes registered hereby and, pursuant to Rule 416 under the Securities Act
of 1933, as amended, such indeterminate number of ordinary shares of
Alcatel as may be reflected by American Depositary Shares delivered from
time to time upon conversion of the Notes by reason of adjustment of the
conversion price under certain circumstances outlined in the Prospectus.
(7) The registration fee for the ordinary shares of Alcatel to be delivered
(in the form of American Depositary Shares) upon conversion of the Notes
was included in the registration fee paid by Alcatel upon filing a
Registration Statement on Form F-4 (Registration No. 333-59985) on July 28,
1998, in connection with its tender offer for the outstanding common
stock of DSC Communications Corporation.
<PAGE> 2
PROSPECTUS
$400,000,000 7% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2004
---------------------
ALCATEL USA, INC.
(FORMERLY DSC COMMUNICATIONS CORPORATION)
ALCATEL
---------------------
The Notes are being OFFERED by: Certain holders of the Notes. The selling
Noteholders will set the OFFERING PRICE for a
particular offer at the time of sale.
The Notes were ISSUED by: Alcatel USA, Inc. (formerly, DSC
Communications Corporation) ("Alcatel USA"
or the "Company"). The Company originally
issued and sold the Notes in August 1997
in private transactions.
The Notes are GUARANTEED by: Alcatel, a French corporation. Alcatel owns
all the outstanding common stock of the
Company.
The Notes are CONVERTIBLE into: American Depositary Shares ("ADSs"). Each
ADS represents one-fifth of an ordinary share
of Alcatel. The ADSs are listed on the New
York Stock Exchange under the symbol "ALA".
Alcatel's shares are listed on the Paris
Stock Exchange.
at a CONVERSION RATE of: 16.3901 ADSs per $1,000 principal amount of
Notes. The conversion rate represents a
conversion price of $61.012 per ADS. On
April 7, 1999, the last reported sale
price on the New York Stock Exchange was
$24.0 per ADS.
The selling Noteholders may sell the Notes, or the ADSs delivered upon
conversion, from time to time. The selling Noteholders may make such sales
either directly or through dealers or underwriters. The Company and Alcatel will
not receive any of the proceeds from the sale of the Notes.
The Notes are not listed on any national securities exchange or the Nasdaq
Stock Market.
BEFORE YOU DECIDE TO PURCHASE THE NOTES, CAREFULLY READ THIS PROSPECTUS,
ESPECIALLY THE RISK FACTORS BEGINNING ON PAGE 7.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is April 9, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Forward-Looking Statements.................................................. 3
U.S. Dollar/French Franc Exchange Rates..................................... 3
Prospectus Summary.......................................................... 4
The Companies ......................................................... 4
Certain Information Relating to the Notes, the Guarantee and the ADSs... 5
Ratio of Earnings to Fixed Charges...................................... 6
Risk Factors................................................................ 7
Risk Factors Related to Alcatel......................................... 7
Risk Factors Related to Alcatel USA .................................... 7
Use of Proceeds............................................................. 9
Selected Historical Unaudited Interim Financial Data for Alcatel............ 10
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 11
Description of Business..................................................... 18
Where You Can Find More Information......................................18
Enforceability of Civil Liabilities Against Foreign Persons............. 19
Description of Notes........................................................ 20
General; Guarantee...................................................... 20
Conversion Rights....................................................... 21
Subordination........................................................... 22
Redemption.............................................................. 24
Payment and Conversion.................................................. 24
Repurchase at Option of Holders upon a Change in Control................ 25
Mergers and Sales of Assets by the Company.............................. 26
Events of Default....................................................... 27
Meetings, Modification and Waiver....................................... 27
Registration Rights..................................................... 28
Transfer and Exchange................................................... 29
Purchase and Cancellation............................................... 29
Title................................................................... 29
Notices................................................................. 30
Replacement of Notes.................................................... 30
Payment of Stamp and Other Taxes........................................ 30
Governing Law........................................................... 30
The Trustee............................................................. 30
Taxation.................................................................... 31
Description of Registration Rights Agreement................................ 35
Selling Securityholders..................................................... 36
Plan of Distribution........................................................ 38
Legal Matters............................................................... 38
Experts..................................................................... 39
Index to Unaudited Interim Consolidated Financial Statements for Alcatel.... F-1
</TABLE>
________________________
CONTENT OF PROSPECTUS
You should rely only on the information contained in this document or in
documents we filed with the Securities and Exchange Commission (the
"Commission") that we have referred you to. We have not authorized anyone to
provide you with different information. You should not assume that the
information in the Prospectus is accurate as of any date other than the date on
the front of this document.
LIMITATIONS ON OFFERS OR SOLICITATIONS
We do not intend this document to be an offer or solicitation:
(1) if used in a jurisdiction in which such offer or solicitation is
not authorized;
(2) if the person making such offer or solicitation is not qualified
to do so; or
(3) if such offer or solicitation is made to anyone to whom it is
unlawful to make such offer or solicitation.
2
<PAGE> 4
FORWARD-LOOKING STATEMENTS
This Prospectus includes forward-looking statements, including statements
regarding anticipated savings in research and development expenses and growth in
Alcatel's worldwide satellite business. We have based these forward-looking
statements largely on our expectations. Forward-looking statements are subject
to a number of risks and uncertainties, certain of which are beyond our control.
Actual results could differ materially from those anticipated as a result of the
factors described in "Risk Factors."
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this offering memorandum might not transpire.
U.S. DOLLAR/FRENCH FRANC EXCHANGE RATES
We have presented all financial information in this prospectus in U.S.
dollars or French francs, except where we have noted otherwise. For your
convenience, unless otherwise indicated, we have translated certain French franc
amounts into U.S. dollars. For such translations, we used the noon buying rate
in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate") on April 7, 1999, of 6.0827 francs per dollar. Since January 1, 1999, the
franc is a subunit of the euro, and this Noon Buying Rate has been calculated by
applying the fixed exchange rate of FF 6.55957 per euro to the Noon Buying Rate
for euros. See "Management's Discussion and Analysis of Financial Conditions and
Results of Operations -- Introduction of the Euro."
Fluctuations in the exchange rate between the dollar and the euro will
affect the dollar equivalent of the euro price of shares of Alcatel. As a
result, such fluctuations will also affect the market price of the ADSs. In
addition, such fluctuations will affect the dollar amounts of dividends received
by holders of ADSs, because such dividends are converted into dollars by the
depositary for the ADSs.
The following table sets forth the average, high, low and period-end Noon
Buying Rates for dollars expressed in francs per dollar from 1994 through
April 7, 1999, and in euros per dollar from January through April 7, 1999.
<TABLE>
<CAPTION>
French Franc Euros
----------------------------------------- -------------------------------------------
Year/period Average Year/period Average
end rate Rate(1) High Low end rate Rate(1) High Low
----------- -------- ---- --- ----------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994............................ 5.34 5.51 5.98 5.11 ---- ---- -- --
1995............................ 4.90 4.96 5.39 4.78 ---- ---- -- --
1996............................ 5.19 5.12 5.29 4.90 ---- ---- -- --
1997............................ 6.02 5.85 6.35 5.19 ---- ---- -- --
1998............................ 5.59 5.90 6.21 5.38 ---- ---- -- --
1999 (through April 7)(2)....... 6.08 5.97 6.13 5.55 0.93 0.91 0.93 0.85
</TABLE>
__________________
(1) The average of the Noon Buying Rates on the last business day of each month
(or portion thereof) during the relevant period. On April 7, 1999, the Noon
Buying Rate was $1 = 0.9273 euros ($1.08 per euro).
(2) The Federal Reserve Bank of New York stopped publishing Noon Buying
Rates for the French franc on January 15, 1999. Noon buying Rates for
French francs for periods subsequent to January 15, 1999 have been
calculated by applying the fixed exchange rate of FF 6.55957 per euro to
the Noon buying Rate for euros.
3
<PAGE> 5
PROSPECTUS SUMMARY
This summary highlights selected information from this Prospectus and
may not contain all of the information that is important to you. To understand
the terms of the securities, you should carefully read "Description of Notes" in
this Prospectus. You should also read the documents we have referred you to in
"Where You Can Find More Information" on page 18 for information on the Company
and Alcatel and our financial statements.
See "Risk Factors" for a discussion of certain risks you should
consider before investing in the Securities.
THE COMPANIES
Alcatel
Alcatel, together with its consolidated subsidiaries and associated
companies, is a world leader in providing telecommunications equipment and
systems. In 1997, Alcatel had consolidated net sales of FF 185.9 billion
(approximately $31 billion). While Alcatel has operations in over 100 countries,
it has a particularly strong market base in Europe, where it generated
approximately two-thirds of its 1997 consolidated net sales. Alcatel was founded
in France in 1898 and is headquartered in Paris.
Alcatel's operations are currently organized by product lines into two
principal segments: (1) Telecom and (2) Cables and Components. Each segment acts
as a separate worldwide profit center with responsibility for strategy, research
and development, manufacturing and marketing. The Telecom segment designs,
produces, sells and services telecommunications equipment and systems for public
network, business and residential use. The Cables and Components segment
manufactures cables for telecommunications and power transmission applications,
and batteries for telecommunications, industrial and advanced technology
applications. Alcatel also owns approximately 44% of Framatome, which
manufactures equipment for nuclear power stations and specialized electronic
connectors. French state-owned entities hold a majority interest in Framatome.
Alcatel's current organization reflects three major transactions
carried out in 1998:
- - -- May 1998: Alcatel sold substantially all of the business of Cegelec,
the principal operations of its former Engineering and
Systems segment, to ALSTOM. ALSTOM is a 50/50 joint venture
between Alcatel and the General Electric Company, plc
("GEC"). The Engineering and Systems segment accounted for
14.1% of Alcatel's consolidated net sales in 1997;
- - -- June 1998: Alcatel and GEC each sold a 26% interest in ALSTOM. ALSTOM
conducted the operations of Alcatel's Energy and Transport
segment and accounted for 18.4% of Alcatel's consolidated
net sales in 1997. As a result of the sale, Alcatel
currently owns approximately 24% of ALSTOM; and
- - -- September 1998: Alcatel acquired the Company, as described below under
Alcatel USA, Inc. (the "Merger").
Thomson-CSF. Alcatel has agreed with the French government to transfer
its military telecommunications activities to Thomson-CSF, a military defense
contractor owned by the French government. Alcatel's military telecommunications
activities represented approximately FF 2.8 billion in Telecom sales in 1997. In
exchange for the transfer, Alcatel would receive a portion of Thomson-CSF's
equity capital. As part of the agreement, Alcatel and Thomson-CSF will share
research and development efforts in the area of telecommunications and
electronics. Management believes that such shared efforts should result in
savings in Alcatel's research and development expenses in future years. Alcatel
would also transfer its satellite activities to a new company formed with
Thomson-CSF, with the new company being 51% owned by Alcatel. Alcatel's
satellite activities represented approximately FF 5.0 billion in sales in 1997.
The new company would combine the satellite platform products of Alcatel with
the satellite launching products of Thomson-CSF. Management believes that the
new company will provide Alcatel with sufficient size and a sufficiently broad
product portfolio to compete in the worldwide satellite business.
Alcatel USA, Inc. (formerly, DSC Communications Corporation)
In September 1998, Alcatel acquired all the outstanding shares of
common stock (the "Common Stock") of DSC Communications Corporation, a Delaware
corporation, which was renamed Alcatel USA, Inc. ("Alcatel USA"). Alcatel USA
develops, manufactures and markets digital switching, excess transport and
private network system products for the worldwide telecommunications
marketplace. Alcatel USA's products allow telecommunication service providers to
build and upgrade their networks to support a wide range of voice, data and
video services. Alcatel USA offers a comprehensive product line including
digital switching systems, intelligent network products, cellular switching
systems, digital loop carrier products, digital cross-connect products and
optical transmission systems and related advanced network management systems. In
1997, Alcatel USA had revenues of approximately $1.6 billion. The acquisition of
Alcatel USA makes the United States Alcatel's largest national telecom market.
________________________
Alcatel USA, Inc.'s principal executive offices are located at 1000 Coit
Road, Plano, Texas 75075, and its telephone number is (972) 519-3000. Alcatel's
principal executive offices are located at 54, rue La Boetie, 75008 Paris,
France, and its telephone number is (33-1) 40-76-10-10.
4
<PAGE> 6
CERTAIN INFORMATION RELATING TO THE NOTES, THE GUARANTY AND THE ADSs
<TABLE>
<S> <C>
Amount of Notes Outstanding . . . . As of April 9, 1999, $400,000,000
principal amount of Notes was
outstanding.
Interest Payment Dates. . . . . . . . Interest is paid on February 1 and
August 1 of each year.
Issued by Alcatel USA, Inc. . . . . . Alcatel USA, Inc. (formerly, DSC
Communications Corporation), a Delaware
corporation, issued the Notes. Since
September 4, 1998, Alcatel owns all the
outstanding common stock of Alcatel
USA, Inc.
Guaranteed by Alcatel . . . . . . . . Alcatel, a limited liability corporation
organized under the laws of France, has
fully and unconditionally guaranteed the
Notes (the "Guaranty"). See
"Description of Notes -- General;
Guaranty."
Convertible into Alcatel ADSs . . . . You can convert the Notes into ADSs at
any time prior to the close of business
on August 1, 2004. Each ADS represents
one-fifth of an ordinary share of
Alcatel (an "Alcatel Share").
If the Company calls the Notes for
redemption (see "Optional Redemption by
the Company" below), you can convert
them through, but not after, the close
of business on the fifth Trading Day (as
defined under "Description of Notes--
General; Guaranty") preceding the
redemption date.
If you deliver your Notes for repurchase
by the Company (see "Repurchase by the
Company at Option of Holders Upon a
Change in Control"), you can convert
them until the close of business on the
second Trading Day preceding the
repurchase date.
For more information on how and when you
can convert the Notes, see "Description
of Notes--Conversion Rights." The
Company will acquire the ADSs to be
delivered upon conversion of the Notes
through open-market purchases.
Conversion Price . . . . . . . . . . . $61.012 per ADS, each ADS representing
one-fifth of an ordinary share of
Alcatel. The conversion price reflects a
conversion rate of 16.3901 ADSs per
$1,000 principal amount of Notes. The
conversion price is subject to
adjustment under certain circumstances.
See "Description of Notes -- Conversion
Rights."
Tax Upon Conversion . . . . . . . . . The conversion of a Note will be treated
as a taxable exchange. When you convert
a Note, you will therefore recognize a
taxable gain or loss equal to the
difference between the fair market value
of the ADSs you receive and your tax
basis in the Notes. See "Taxation --
Taxation of U.S. Holders -- Notes --
Sale, Exchange or Redemption of Notes
or Conversion of Notes for ADSs."
Optional Redemption by the Company . . The Company may redeem the Notes, on or
after August 1, 2000, at the prices set
forth in this Prospectus, plus accrued
interest to the redemption date. See
"Description of Notes--Redemption."
Repurchase by the Company
at the Option of Holders
Upon a Change in Control . . . . . . Upon a Change in Control (as defined
under "Repurchase at Option of Holders
Upon a Change in Control"), you will
have the right, subject to certain
conditions and restrictions, to require
the Company to repurchase the Notes. The
repurchase price will be 100% of the
principal amount, plus accrued interest
to the repurchase date. The Company may
pay for the Notes in cash or ADSs
(valued at 95% of the average closing
prices of the ADSs for the five Trading
Days ending on and including the third
Trading Day preceding the repurchase
date). See "Description of
Notes--Repurchase at Option of Holders
Upon a Change in Control."
</TABLE>
5
<PAGE> 7
<TABLE>
<C> <S>
Notes are Subordinated. . . . . . . The Notes are unsecured obligations of the
Company, and they are subordinated in right
of payment to all existing and future
Senior Indebtedness (as defined under
"Description of Notes--Subordination") of
the Company. The Notes are also effectively
subordinated in right of payment to all
indebtedness and other liabilities of the
subsidiaries of the Company. As of June
30, 1998, the aggregate amount of
outstanding Senior Indebtedness of the
Company was approximately $353.92 million.
Such indebtedness includes indebtedness of
the subsidiaries of the Company which has
been guaranteed by the Company. The Company
may incur additional Senior Indebtedness or
other indebtedness, and the subsidiaries of
the Company may incur additional
indebtedness or other liabilities. See
"Description of Notes--Subordination."
Events of Default . . . . . . . . . Events of default include:
(1) failure to pay principal or premium, on
any Note when due;
(2) failure to pay any interest on any
Note when due, continuing for 30 days;
(3) failure to perform, or the breach of,
any other covenant of the Company in the
Indenture, continuing for 60 days after
written notice;
(4) default by the Company in respect of
any indebtedness for money borrowed in
excess of $20,000,000, if such default
constitutes a failure to pay such
indebtedness at maturity or results in
acceleration of such indebtedness. If such
indebtedness is discharged, or such
acceleration is rescinded or annulled,
within 30 days after written notice, there
will be no event of default; and
(5) certain events of bankruptcy,
insolvency or reorganization.
See "Description of Notes--Events of
Default."
Registration Rights . . . . . . . . Pursuant to the Registration Rights
Agreement, the Company agreed to file a
Shelf Registration Statement (of which this
Prospectus constitutes a part) in respect
of the Notes and the ADSs deliverable upon
conversion of the Notes. If the Company
fails to comply with certain of its
obligations under the Registration Rights
Agreement, additional interest will be
payable on the Notes. See "Description of
Notes--Registration Rights" and
"Description of Registration Rights
Agreement."
Listing of Notes and ADSs . . . . . The Notes are not listed on any national
securities exchange or the Nasdaq Stock
Market. The Notes are designated for
trading on the PORTAL System of the
National Association of Securities Dealers,
Inc.
The ADSs are listed for trading on the NYSE
under the symbol "ALA." The Alcatel Shares
represented by the ADSs are listed on the
Paris Stock Exchange.
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for each of the Company
and Alcatel for the periods indicated was:
<TABLE>
<CAPTION>
Year Ended December 31, Six Months
------------------------------------------ Ended
1993 1994 1995 1996 1997 June 30, 1998
------ ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
The Company: 9.0 19.6 10.3 * 4.2 **
Alcatel: 2.63 1.93 *** 1.41 1.93 8.59
</TABLE>
* Earnings were not sufficient to cover total fixed charges for the year
ended December 31, 1996 by approximately $14.7 million.
** Earnings were not sufficient to cover fixed charges for the six-months
ended June 30, 1998 by approximately $56.9 million.
*** Earnings were not sufficient to cover fixed charges for the year ended
December 31, 1995 by approximately FF25.7 billion.
For purposes of the ratio, "earnings" means the sum of:
- - -- pre-tax income,
- - -- the pre-tax income of majority-owned subsidiaries, whether or not
consolidated,
- - -- the proportionate share of the income of any fifty-percent-owned companies,
- - -- any income received from less-than-fifty-percent-owned companies, and
- - -- fixed charges.
"Fixed charges" means the sum of:
- - -- the interest paid on borrowed funds,
- - -- the preferred stock dividend requirements of our consolidated subsidiaries
and trusts,
- - -- the amount amortized for debt discount, premium and issuance expense, and
- - -- the proportion of all rental expenses deemed representative of the interest
factor.
6
<PAGE> 8
RISK FACTORS
You should carefully consider the following factors and other
information in this Prospectus, including the information incorporated by
reference, before deciding to invest in the Notes.
RISK FACTORS RELATED TO ALCATEL
NEED FOR SUCCESSFUL INTEGRATION OF THE COMPANY
Alcatel expects that the merger with the Company will result in certain
benefits to Alcatel. In order to achieve the benefits of the merger, Alcatel
must integrate efficiently the businesses of the Company with Alcatel's existing
businesses, including Alcatel Network Systems, Inc., Alcatel's major North
American subsidiary. This integration will require substantial attention from,
and pose challenges to, management. The integration process could interrupt or
disrupt the companies' businesses. If management fails to integrate the Company
successfully, Alcatel may not realize some or any of the anticipated benefits.
RAPID TECHNOLOGICAL CHANGE IN THE TELECOMMUNICATIONS INDUSTRY; IMPACT OF
REGULATION
The telecommunications industry experiences rapid and significant
changes in technology. Alcatel does not believe that these changes will
materially affect its ability to acquire necessary technologies. However,
Alcatel cannot predict with certainty the effect on its business of
technological changes. In order to be successful in marketing its products to
business and government customers, Alcatel must provide superior technological
reliability, capacity and security. If Alcatel's products do not keep pace with
significant technological advances, Alcatel's business would be materially
adversely affected. In addition, Alcatel cannot predict the effect of the
on-going concentration of the telecommunications industry on technological
development.
Alcatel derives substantial revenues by providing international
telecommunications equipment and other services to customers in the United
States and around the world. Changes in government regulations and
telecommunications standards, licensing requirements and tariffs, taxes and
other trade barriers can significantly affect the financial results of such
operations. In addition, changes in the laws or administrative practices
relating to Alcatel's business in the countries where it operates could have a
material adverse effect on Alcatel's financial condition and results of
operations.
COMPETITION; INDUSTRY CONSOLIDATION
Alcatel operates in a market which is highly competitive. Alcatel's
competitors include other manufacturers and distributors as well as a large
number of suppliers that develop their own products for sale directly to
customers. Some of these competitors are larger and may have greater resources
than Alcatel. Alcatel's arrangements with large customers generally do not
provide Alcatel with guarantees that customer purchases will be maintained. In
addition, certain of Alcatel's customers attempt to develop their own products
and certain competitors manufacture products similar to those of Alcatel. These
trends, together with further consolidations in the telecommunications industry
involving Alcatel's customers, could lead such customers to reduce or end their
use of Alcatel's products and services.
YEAR 2000 RISKS
Until recently, most computer programs contained coding that
identified years using two digits instead of four (for example "98" rather than
"1998"). This coding may prevent many of these programs from distinguishing the
year 2000 from 1900. Computer systems which may be affected by this "Year 2000
issue" include, but are not limited to, computer systems embedded in production
equipment, products containing computer systems, business data processing
systems, production management and planning systems and personal computers.
Systems that do not properly recognize such information could generate erroneous
data or fail. The Year 2000 issue could have a material adverse impact on
Alcatel's daily commercial activities and financial performance if not
adequately addressed by Alcatel and significant customers and suppliers. For a
discussion of our response to the Year 2000 issue, see "Management's Discussion
and Analysis -- Year 2000 Readiness Disclosure."
RISKS OF INTERNATIONAL OPERATIONS
Alcatel conducts international operations in North and South America,
Europe, the Far East, the Middle East and Africa. Alcatel may also expand into
other international markets. In addition to the regulatory and competitive risks
described above, international operations may be exposed to other risks. Such
other risks include lack of complete operating control of independent local
agents, lack of local business experience, difficulty in enforcing intellectual
property rights and political and economic instability.
EFFECT OF EXCHANGE RATE FLUCTUATIONS
Alcatel earns revenues and incurs expenses in several international
currencies. Alcatel's financial statements have been denominated in French
francs and will be denominated in euros. Consequently, fluctuations in currency
exchange rates could have an adverse effect on Alcatel's reported results.
RISK FACTORS RELATED TO ALCATEL USA
CUSTOMER CONCENTRATION
The Company has a diversified customer base. However, a large portion
of the Company's revenue is concentrated among several of the Company's larger
customers. A material reduction in the purchases of the Company's products by
any of the Company's significant customers could have a material adverse effect
on the Company.
PRODUCT OBSOLESCENCE AND IMPORTANCE OF NEW PRODUCTS
The industry in which the Company operates is characterized by rapidly
changing technological and market conditions. Such changes may shorten product
life cycles. If the Company is unable to develop and produce new products to
meet industry demands, or if substantial delays in the availability of new
products occur, the Company may be materially adversely affected.
TIMELY AND ADEQUATE SUPPLY OF MATERIALS
The Company generally uses standard parts and components for its
products. The Company believes that, in most cases, there are a number of
alternative, qualified suppliers for most of those parts and components. The
Company also purchases certain custom components and products from single
suppliers. The Company believes that the manufacturers of the particular custom
components and products should be able to meet expected future demands. However,
an unanticipated interruption of the supply of adequate components could have a
material adverse effect on the Company's revenues. In addition, certain of the
Company's products contain a number of subsystems or components acquired from
other manufacturers. These products are often available only from a limited
number of manufacturers. In the event that such a product was no longer
available from a current vendor, the Company would be required to find
alternative sources, which could delay customer deliveries. Such delays could
have a material adverse effect on the Company's revenues.
COMPETITION
The Company currently faces significant competition in its markets. The
Company expects that the level of price and product competition will increase.
In addition, as a result of both the trend toward global expansion by foreign
and domestic competitors and technological and public policy changes, the
Company anticipates that new and different competitors will enter its markets.
Many of the Company's foreign and domestic competitors have more extensive
engineering, manufacturing, marketing, financial and personnel resources than
the Company. As a result, the Company's competitors pose a constant challenge to
its ability to maintain or increase market share and profitability.
7
<PAGE> 9
KEY PERSONNEL
The Company is dependent upon the continued services and management
experience of certain of its senior management personnel. If the Company were
to lose the services of such senior management personnel, it could have a
material adverse effect on the Company.
8
<PAGE> 10
MULTI-YEAR AGREEMENTS
As part of its ongoing operations, the Company periodically enters into
multi-year agreements with customers. Certain of these agreements include
requirements to develop new technologies, including hardware and software.
Certain agreements also include requirements to provide installation of
infrastructure systems, and some agreements contain performance criteria. If the
company fails to fulfill its obligations under these agreements, it could be
subject to substantial penalties, damages or non-payment, or such agreements
could be terminated by the other party.
NO PUBLIC MARKET FOR RESALE OF THE NOTES
The Notes are not listed on any national securities exchange or the Nasdaq
Stock Market, and the Company does not intend to apply for such a listing.
Therefore, there is no public market for resale of the Notes. As a result, it
is not clear that you will be able to resell the Notes, or at what price.
Changes in prevailing interest rates, the market for securities similar to the
Notes and the operating results of the Company and Alcatel will affect the
price at which the Notes may be sold.
USE OF PROCEEDS
The Notes and ADSs (together, the "Securities") offered under this
Prospectus are being offered by the holders of the Securities. The Company and
Alcatel will therefore not receive any of the proceeds from the sale of the
Securities.
9
<PAGE> 11
SELECTED HISTORICAL UNAUDITED INTERIM FINANCIAL DATA FOR ALCATEL
The following selected historical unaudited interim financial data for
the six-month periods ending June 30, 1997 and 1998 are derived from the
unaudited interim consolidated financial statements of Alcatel included
elsewhere in this Prospectus. You should read the selected interim financial
information together with such financial statements and the notes thereto. In
management's opinion, such interim financial statements reflect all adjustments
necessary for a fair presentation of the financial position and results of
operations for these periods. However, such interim financial position does not
necessarily reflect the results which will be achieved for the full year.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS FOR THE YEAR
ENDED JUNE 30, ENDED DECEMBER 31,
------------------------ --------------------------------------------------------
1998(1) 1998(2) 1997 1997(1) 1997 1996 1995 1994 1993
------- ------- ---- ------- ---- ---- ---- ---- ----
U.S.$ FF FF U.S.$ FF FF FF FF FF
(RESTATED)(3)
(IN MILLIONS, EXCEPT PER SHARE AND PER ADS DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
AMOUNTS IN ACCORDANCE
WITH FRENCH GAAP
Net sales ......................... 10,128 61,604 60,073 30,557 185,868 162,102 160,416 167,643 156,334
Income from operations ............ 378 2,302 1,986 1,315 8,000 2,903 634 8,042 11,559
Restructuring costs ............... (9) (55) (259) (200) (1,218) (466) (13,422) (2,898) (2,488)
Amortization of goodwill .......... (163) (993) (418) (365) (2,222) (13,464) (2,557) (2,053)
Other revenue (expense)(4) ........ 2,330 14,171 1,102 326 1,980 3,190 1,757 759 874
Gains on disposal of Alcatel
Shares Owned by group
subsidiaries (after tax) .......... -- -- -- 39 238 -- -- 5 75
Net income ........................ 2,500 15,205 1,489 767 4,665 2,725 (25,583) 3,620 7,062
EARNINGS PER SHARE:
Net income--Basic(5) .............. 15.73 95.68 9.52 4.89 29.73 17.48 (177.79) 25.74 49.61
Net income--Diluted(6) ............ 14.51 88.23 9.42 4.79 29.13 17.45 (177.79) 25.74 48.88
Dividends per Share(7) ............ -- -- -- 1.89 11.50 10.00 8.00 15.00 15.00
Dividends per ADS(7) (8) .......... -- -- -- 0.38 2.30 2.00 1.60 3.00 3.00
APPROXIMATE AMOUNTS IN ACCORDANCE
WITH U.S. GAAP (9):
Net sales ......................... 10,128 61,604 60,073 30,557 185,868 162,636 160,525 167,496 156,307
Net income ........................ 3,030 18,431 1,809 481 2,924 (1,198) (21,352) 4,751 7,796
Basic earnings per Share:
Income before extraordinary items 19.07 115.98 11.56 3.06 18.63 (7.68) (148.39) 35.54 49.15
Net income ...................... 19.07 115.98 11.56 3.06 18.63 (7.68) (148.39) 33.78 54.76
Diluted earnings per Share(6)
Income before extraordinary items 17.57 106.86 11.44 3.03 18.42 -- -- 35.04 48.46
Net income ...................... 17.57 106.86 11.44 3.03 18.42 -- -- 33.42 53.75
Basic earnings per ADS(8):
Income before extraordinary items 3.81 23.20 2.31 0.61 3.73 (1.54) (29.68) 7.11 9.83
Net income ...................... 3.81 23.20 2.31 0.61 3.73 (1.54) (29.68) 6.76 10.95
Diluted earnings per ADS (8):
Income before extraordinary items 3.51 21.37 2.28 0.60 3.68 -- -- 7.01 9.69
Net income ...................... 3.51 21.37 2.28 0.60 3.68 -- -- 6.68 10.75
BALANCE SHEET DATA (AT
PERIOD END):(10)
AMOUNTS IN ACCORDANCE
WITH FRENCH GAAP
Total assets ...................... 31,040 188,810 244,103 41,391 251,772 248,265 255,675 273,942 260,071
Short-term investments and cash and
cash equivalents ................ 4,620 28,105 22,701 4,573 27,819 29,331 34,940 39,558 41,782
Short-term debt ................... n.a. n.a. n.a. 2,927 17,805 19,055 26,804 20,294 24,218
Long-term debt .................... n.a. n.a. n.a. 3,603 21,916 23,422 28,125 31,377 24,813
Minority interests ................ 489 2,972 2,068 292 1,777 1,488 3,213 5,860 5,116
Shareholders' equity .............. 10,735 65,295 41,450 7,226 43,954 39,170 32,993 59,784 57,884
AMOUNTS IN ACCORDANCE
WITH U.S. GAAP(9)
Shareholders' equity .............. n.a. n.a. n.a. 9,110 55,413 51,788 49,525 72,712 68,653
Total assets(11) .................. n.a. n.a. n.a. 43,822 266,559 269,482 274,889 293,002 273,421
Long-term debt .................... n.a. n.a. n.a. 3,631 22,084 24,500 28,264 31,518 24,939
</TABLE>
- - -----------------
(1) Translated solely for convenience into dollars at the Noon Buying Rate of
FF 6.0827 on April 7, 1999, calculated by applying the fixed exchange
rate of FF 6.55957 per euro to the Noon Buying Rate for euros on April 7,
1999. See "U.S. Dollar/French Franc Exchange Rates."
(2) In preparing its June 30, 1998 data, Alcatel treats the disposals of
Cegelec and ALSTOM as if they had occurred on January 1, 1998. Prior to
the sales, Cegelec was fully consolidated and GEC ALSTHOM was
consolidated on a proportional basis. Alcatel now accounts for its
remaining interest in ALSTOM under the equity method.
(3) In order to make comparisons easier, June 30, 1997 data has been restated
to account for the "Engineering and Systems" and "Energy and Transport"
sectors as equity affiliates. This restatement is explained in
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(4) Other revenue (expense) mainly includes net capital gains on disposal of
previously consolidated and unconsolidated companies.
(5) Based on the weighted average number of Shares issued after deduction of
the weighted average number of Shares owned by consolidated subsidiaries,
without adjustment for any share equivalent: 158,921,794 at June 30,
1998, 156,428,156 at June 30, 1997, 156,937,952 in 1997, 155,902,458 in
1996, 143,890,505 in 1995, 140,665,635 in 1994 and 142,357,809 in 1993.
(6) Diluted earnings per share take into account share equivalents having a
dilutive effect after deduction of the weighted average number of share
equivalents owned by group subsidiaries. Net income is adjusted for
after-tax interest expense of related convertible bonds. The dilutive
effect of stock option plans is calculated using the treasury stock
method. The number of shares taken into account is as follows:
French GAAP: 173,122,559 at June 30, 1998, 158,852,572 at June 30, 1997,
171,489,939 in 1997, 157,431,310 in 1996, 143,890,505 in 1995,
140,665,635 in 1994 and 151,046,630 in 1993. US GAAP: 173,122,559 at June
30, 1998, 158,852,572 at June 30, 1997, 159,244,088 in 1997, 153,152,678
in 1994 and 151,046,630 in 1993. Not applicable in 1996 and 1995 due to
loss position.
(7) Year to which dividend relates. Under French company law, payment of
annual dividends must be made within nine months following the end of the
fiscal year to which they relate.
(8) Adjusted for the one-to-five ratio of Shares to ADSs. The Company first
issued Shares represented by ADSs in 1990.
(9) For information concerning the differences between French GAAP and U.S.
GAAP, see Note 4 to the unaudited condensed consolidated interim
financial statements included elsewhere herein and Notes 30 and 31 of the
Notes to Consolidated Financial Statements included in Alcatel's Annual
Report for 1997.
(10) June 30, 1998 and June 30, 1997 data are presented before appropriation
of dividends.
(11) Advance payments received from customers are not deducted from the amount
of total assets. See Note 30(k) of the Notes to Consolidated Financial
Statements included in Alcatel's Annual Report for 1997.
10
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We have based this discussion of Alcatel's financial condition and
results of operations on Alcatel's unaudited interim financial statements for
the six month periods ended June 30, 1998 and June 30, 1997, which are included
at the end of this Prospectus. You should read the financial statements and the
Notes to the financial statements for a more detailed description of Alcatel's
financial results. The financial statements have been prepared in accordance
with accounting principles generally accepted in France ("French GAAP"), which
differ in certain significant ways from accounting principles generally accepted
in the United States ("U.S. GAAP"). The most significant differences which
affect the presentation of Alcatel's financial results relate to:
(1) accounting for restructuring costs;
(2) amortization of acquisition goodwill;
(3) accounting for direct costs incidental to acquisitions and incurred
by acquiring companies; and
(4) accounting for gains on the sale of treasury stock. Note 4 to the
unaudited interim financial statements quantifies these differences,
and presents Alcatel's net income, earnings per share and
shareholder's equity as if Alcatel's financial statements had been
prepared in accordance with U.S. GAAP.
You will find audited consolidated financial statements and discussions
and analyses of the Company's and Alcatel's financial condition and results of
operations for 1997 and 1996 in their Annual Reports for 1997. Those discussions
present important historical information about both companies. In particular,
the Management's Discussion and Analysis section of Alcatel's Annual Report for
1997 discusses in detail a Recovery Plan which Alcatel announced in September
1995. The Recovery Plan included efforts to reduce costs, in particular through
accelerating earlier restructuring programs, revaluation of certain assets and
divestiture of non-strategic assets, and measures aimed at positioning Alcatel
in key growing markets, particularly in the Telecom segment. The Recovery Plan
was completed at the end of 1998. The Alcatel Annual Report for 1997 also
contains a detailed description of Alcatel's accounting policies.
SIGNIFICANT REORGANIZATION
In the first half of 1998, Alcatel significantly reorganized its
businesses through (1) the sale to GEC ALSTHOM of Cegelec, which had conducted
Alcatel's former Engineering and Systems segment, and (2) the subsequent public
offering of approximately half of Alcatel's interest in GEC ALSTHOM (now called
"ALSTOM"), which had conducted Alcatel's former Energy and Transport segment
activities. These transactions and other significant 1998 transactions are
described in the Prospectus Summary. For accounting purposes, Alcatel treats
both of these sales as if they had occurred on January 1, 1998. Prior to the
sales, Cegelec was fully consolidated and GEC ALSTHOM was consolidated on a
proportional basis. Alcatel now accounts for its remaining interest in ALSTOM
under the equity method.
In order to make it easier for you to compare Alcatel's financial results
for the first half of 1998 with the first half of 1997, Alcatel has restated its
June 30, 1997 financial information to account for the Engineering and Systems
segment and the Energy and Transport segment under the equity method. The
financial information in "Results of Operations for the Six Months Ended June
30, 1998 and 1997" is presented on this restated basis.
Where indicated, some information is also presented on a comparable
basis. To calculate its results of operations on a comparable basis, Alcatel has
excluded from its results of operations for the six months ended June 30, 1997
the effect of assets which were disposed of during the two years ended June 30,
1998. The principal exclusion affecting the six-month periods ended June 30,
1998 and 1997 reflects the deconsolidation of a South African subsidiary of
Alcatel following the reduction of Alcatel's ownership below 50 percent. Alcatel
has also included in its "comparable" results of operations for the six months
ended June 30, 1997 the effect of previously unconsolidated assets which were
newly consolidated during the two years ended June 30, 1998.
Where indicated, some information is also presented on the basis of
constant copper prices. Alcatel has prepared its information on this basis by
recalculating financial data for the first six months of 1997 by using copper
prices in effect during the first six months of 1998. Changes in the price of
copper affect the cost of sales and sales price of products sold by the Cables
and Components segment. Alcatel's sales contracts pass these price changes
11
<PAGE> 13
on to customers. The average price of copper used by Alcatel in calculating its
financial results during the first half of 1998 fell approximately 27% compared
to the first half of 1997.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
Alcatel's total net sales for the six months ended June 30, 1998 were FF
61.6 billion, an increase of 2.5% compared to the same period for 1997.
Alcatel's business in the United States continued to expand, offsetting
declining sales in Southeast Asia. Order bookings increased 3.5% to FF 64.4
billion during the first half 1998 compared with the first half of 1997. On a
comparable basis and at constant copper prices, orders increased by 5.8%
compared to the corresponding period in 1997.
Alcatel's income from operations increased by 15% to FF 2.3 billion in
the first half of 1998, compared to FF 2.0 billion for the first half of 1997.
Growth in income from operations was due principally to the Telecom segment,
particularly by sales of terrestrial and submarine transmission systems. Growth
was limited by a slowdown in Telecom sales in the second quarter of 1998
compared with the second quarter of 1997. The Telecom segment reported an
exceptionally high level of sales in the second quarter of 1997 due to the
digitalization program of German customers. The digitalization program was
completed in 1997.
Financial income increased by FF 939 million to FF 292 million in the
first half of 1998 from a loss of FF 647 million during the corresponding period
in 1997. This increase reflects principally FF 635 million in dividends received
from unconsolidated companies, including principally a dividend received from
Havas, as well as a FF 171 million premium received upon the conversion of
convertible bonds. Net interest expense decreased by FF 329 million to FF 444
million due principally to the conversion of convertible bonds, the application
of proceeds of the disposal of Cegelec, and a decrease in interest rates.
Alcatel's restructuring costs fell to FF 55 million in the first half of
1998 compared to 259 million during the corresponding period in 1997,
principally because Alcatel did not introduce any significant new restructuring
plans in 1998.
Amortization of goodwill for the first half of 1998 amounted to FF 993
million, an increase of FF 13 million compared with the first half of 1997.
Other revenue amounted to FF 14.2 billion for the first half of 1998,
compared with FF 1.1 billion for the first half of 1997. In the first half of
1998, Alcatel recorded FF 14.2 billion in net capital gains, of which 13.7
billion related to the disposals of Cegelec and ALSTOM.
Income before taxes and share in net income of equity amounted to FF 15.7
billion for the first half of 1998 compared with FF 1.2 billion for the first
half of 1997. This increase is principally due to net capital gains of FF 13.7
billion on the disposals of Cegelec and ALSTOM.
Alcatel's income taxes for the first half of 1998 amounted to FF 1.1
billion, an increase of FF 840 million compared to the same period in 1997. The
increase is attributable to taxes on net capital gains relating to the disposals
of Cegelec and ALSTOM.
Share in net income of equity affiliates decreased by FF 89 million to FF
656 million in the first half 1998 compared with FF 745 million in the first
half of 1997 (restated to include the Engineering and Systems segment and the
Energy and Transport segment as equity affiliates). This decline was due
principally to a decline of net income of Framatome in the first half of 1998.
Minority interests amounted to a charge of FF 27 million in the first half 1998,
an increase of FF 104 million compared with the first half of 1997.
Net income amounted to FF 15.2 billion compared with FF 1.5 billion in
the first half of 1997. This figure includes an exceptional after-tax FF 13.2
billion net capital gain resulting from the disposals of Cegelec and ALSTOM.
12
<PAGE> 14
TELECOM
Net sales by the Telecom segment (including net sales to other segments)
increased by 6% to FF 40.9 billion for the first half of 1998 compared with FF
38.6 billion for the first half of 1997, due principally to growth in sales by
the terrestrial and submarine networks, business networks, and space
communications operations. Net sales increased 6.5% on a comparable basis. Net
sales by destination in Europe remained stable, while sales to North America and
the rest of the world increased in the first half of 1998. Sales to Asia
decreased in the first half of 1998 due principally to the region's financial
crisis.
Order bookings amounted to FF 44.1 billion in the first half of 1998
compared with FF 42.1 billion for the same period in 1997 and increased by 4.7%
on a comparable basis. Order growth was strong in terrestrial and submarine
transmission. However, it was weak in mobile communications, due in large
measure to the negative impact on growth in Asia resulting from the Asian
crisis, and in access systems, which were affected by the completion of the
digitalization program in Germany.
The Telecom segment's income from operations increased to FF 810 million
compared with FF 591 million in the first half of 1997. Growth was sustained in
terrestrial and submarine transmission systems. This partially offset the
slowdown in switching and access due to the completion of the digitalization
program in Germany.
CABLES AND COMPONENTS
The Cables and Components segment's net sales (including net sales to
other segments) remained stable at FF 23.7 billion for the six months ended June
30, 1998, compared to FF 23.6 billion for the same period in 1997. On a
comparable basis and at constant copper prices, the increase amounted to 8%. The
sharp fall in prices with respect to telecommunications cables was offset by
higher volumes in Europe, as well as by the emergence of "global" customers and
new operators. Sales by the associated components sector were stable in most
product lines, with the negative impact of the Asian crisis being compensated by
a healthy market in Europe. The net sales of the power cable business has also
remained relatively stable due to the increase in volume, which offset an
industry-wide price decline due to the fall in copper prices.
The Cables and Components segment's income from operations remained
stable in the first half of 1998 and amounted to FF 1,310 million, compared with
FF 1,269 for the first half of 1997. Significant pricing pressure, especially in
fiber optic cables, was partially offset by productivity gains and growth in
volume.
LIQUIDITY AND CAPITAL RESOURCES
Alcatel's main source of cash during the first six months of 1998 was
cash proceeds, net of cash sold, from dispositions of previously consolidated
and unconsolidated companies, principally Cegelec and ALSTOM, together with cash
expenditures for acquisitions of consolidated companies, net of cash acquired,
and unconsolidated companies which amounted to FF 19.9 billion during the first
six months of 1998, compared with FF 4.1 billion during the first six months of
1997. Net cash used by operating activities amounted to FF 467 million for the
first half of 1998, compared to FF 1.5 billion used in the first half of 1997.
Proceeds from the disposals of Cegelec and ALSTOM, net of cash sold, accounted
for FF 13.5 billion before taxes. Because Alcatel typically receives most of its
net cash from operating activities during the second half of the year, net cash
from operating activities during the first six months of 1998 and 1997 is not
representative of full year results. Short term investments increased by FF 2.1
billion, amounting to FF 8.1 billion at June 30, 1998, compared to FF 6.0
billion at December 31, 1997, due principally to the application of the proceeds
of the disposal of Cegelec. Proceeds from the disposal of fixed assets amounted
to FF 176 million during the first half of 1998, compared to FF 428 million
during the first half of 1997. Proceeds from the issuance of shares amounted to
FF 309 million during the six-month period ended June 30, 1998, and mainly
consisted of the issuance of shares in connection with capital increases
reserved for employees and stock options for executive officers of Alcatel.
Capital expenditures for new plant and equipment (including intangible
assets but excluding goodwill) amounted to FF 2.4 billion during the first six
months of 1998, compared with FF 3.0 billion in the first six months of 1997. In
addition, cash expenditures for acquisitions, net of cash required, declined to
FF 124 million during the first half of 1998, compared with FF 513 million in
the earlier period. Net cash flow after investments amounted to FF 13.6 billion
13
<PAGE> 15
for the first six months of 1998, compared with a negative net cash flow after
investment of FF 1.4 billion for the first six months of 1997. The principal
reason for the change in cash flow after investment is the increase in cash
proceeds from the disposals of Cegelec and ALSTOM.
Alcatel's cash and cash equivalents aggregated FF 20.0 billion at June
30, 1998, compared with FF 21.8 billion at the end of 1997. The net decrease in
cash and cash equivalents amounted to FF 1.8 billion in the first six months of
1998, compared with a decrease of FF 1.9 billion in 1997. This reduction is due
to payments on outstanding indebtedness and the payment of dividends on Alcatel
shares.
At June 30, 1998, Alcatel had approximately FF 13.4 billion in unused
committed credit lines with numerous banks, denominated in francs and various
other currencies.
Total financial debt at June 30, 1998 decreased by FF 9.5 billion on
December 31, 1997 to FF 30.3 billion. Alcatel's ratio of net debt (short-term
and long-term debt, net of short-term investments and cash and cash equivalents)
to shareholders' equity was 27.1%, 33.6% and 60.6% at December 31, 1997, 1996
and 1995, respectively and decreased to 3.0% at June 30, 1998. This decrease was
due in part to an increase in shareholders' equity to FF 65.3 billion, compared
to FF 44.0 billion at December 31, 1997. This increase is also due to the
exceptional increase in Alcatel's net income from proceeds of the disposals of
Cegelec and ALSTOM and also to the conversion of convertible bonds, which caused
a decrease of approximately FF 4.0 billion in financial indebtedness and a
corresponding increase of approximately FF 4.0 billion in equity.
Accrued contract costs and other reserves, which includes reserves for
restructuring and other reserves, amounted to FF 24.3 billion at June 30, 1998.
Restructuring costs of FF 1.1 billion were expensed in the first six months of
1998, mainly for the Telecom segment, and to a lesser extent for the Cables and
Components segment. Approximately 80% of restructuring reserves expensed have
been in cash and are classified as net cash provided by operating activities.
IMPACT OF ECONOMIC CRISES IN SOUTH EAST ASIA
The economic crises of certain countries in South East Asia have had a
negative impact on prices and demand for certain of the Company's products and
services, due particularly to a significant decline in infrastructure investment
in the region. Management believes that such impact has been relatively less
significant with respect to investments in telecommunications infrastructure.
Such developments have affected the results of operations of certain of the
Company's businesses, particularly the mobile communications division, which
experienced a significant decline in sales to Indonesia. Based on current
information, management does not believe that the impact of such economic crises
will be material for Alcatel on a consolidated basis. Net sales recorded by
Alcatel in 1997 in Asia amounted to approximately FF 5.8 billion, or
approximately 4.4% of the Group's consolidated net sales.
YEAR 2000 READINESS DISCLOSURE
Alcatel is working diligently to ensure that its products and information
technology systems are Year 2000 ready. The Group has initiated a comprehensive
global program to identify, prioritize and address potential problems in all
products and systems which may arise because of the Year 2000 problem, and has
put in place contingency plans and continues to develop, improve and put in
place additional contingency plans to address problems which may arise in the
event these programs fail to identify and correct any problems. The Group is
addressing year 2000 issues in two priority areas: 1) product readiness and
customer information programs and 2) internal information systems. Alcatel is
also monitoring the state of Year 2000 readiness of its suppliers and customers
in order to minimize the impact of any Year 2000 problems they may experience.
Product readiness and customer information program
The Group's programs for ensuring Year 2000 readiness for its products
are managed by each operating sector and operating division. In addition,
Alcatel has established a central task force in charge of coordinating and
reviewing all Year 2000 activities. The corporate executive in charge of the
task force reports directly to Alcatel's Executive Committee. Alcatel's Year
2000 program for product readiness consists of two major efforts: (1) an
14
<PAGE> 16
assessment of Alcatel products to identify potential problems and create
solutions and (2) a program designed to make information available to Alcatel
customers regarding potential Year 2000 programs relating to Alcatel products
and to propose solutions.
Alcatel began its product assessment program in 1996, and expects to
complete it during the first quarter of 1999. This internal review is designed
to identify potential Year 2000 problems in hardware and software produced by
Alcatel, and to develop software patches and other solutions to correct
identified problems. Alcatel's customer information program consists of
establishing an inventory of Alcatel products currently in use throughout the
world and contacting identified customers to inform them of potential problems
and to provide solutions. Alcatel's sales organization is primarily responsible
for contacting customers, and solutions are generally developed and implemented
in the context of systems updates which are carried out on a regular basis.
Alcatel is also assisting customers in testing the effectiveness of these
solutions. Alcatel estimates that it had substantially completed almost all of
its inventory by December 31, 1998, and intends to complete implementation of
its solutions at its customer locations by the end of the third quarter of 1999
or, based on customer requirements, at later times. Because the successful
completion of the implementation program is dependent on the cooperation of
Alcatel's customers, Alcatel may not complete implementation by its target date
or in time to avoid Year 2000 problems for some of its customers. Alcatel has
also established call centers and a Year 2000 page at its website
(www.alcatel.com) to provide customers with information regarding Year 2000
problems and solutions. Because of the degree of complexity of most of Alcatel's
products, Alcatel does not intend to publish a comprehensive list of its
products indicating whether they are Year 2000 ready. It has, however,
established such lists on its Year 2000 website with respect to certain standard
consumer products and other more standardized products.
Because the identification of Year 2000 product problems and
implementation of solutions is generally carried out as part of regular systems
updates, the cost of Alcatel's program is difficult to segregate from regular
operating revenue and expenses. It is therefore difficult to quantify the costs
of Alcatel's Year 2000 program for product readiness. Alcatel nevertheless
estimates that the total cost of implementing Year 2000 solutions for Alcatel
products will be approximately FF 900 million from the beginning of 1998, of
which approximately one-third had been spent by December 31, 1998. These amounts
cover costs of the Year 2000 readiness work for inventory, assessment,
remediation, testing and deployment including fees and consultant fees. Alcatel
has also hired limited numbers of external consultants, operating under Alcatel
management, at certain sites to assist Alcatel in its Year 2000 program. Alcatel
expects that most of these costs will be offset by additional revenue generated
by upgrades carried out in the framework of standard processes for upgrades and
maintenance.
Insurance
Alcatel has extended all of its group insurance policies beyond the Year
2000 without specific exclusions of Year 2000 risks. There can be no assurance,
however, that any claims Alcatel may make under such policies with respect to
any potential Year 2000 product liability will be paid promptly or at all.
Internal Information Systems
The Group's programs for ensuring Year 2000 readiness for its internal
information systems are organized by country. Alcatel has completed its review
of its internal information systems and identified those systems which require
repair in order to ensure a smooth transition to the Year 2000. With respect to
software systems developed by third party vendors, including Alcatel's financial
reporting systems, Alcatel has upgraded or is in the process of upgrading these
systems to versions or releases which are certified by their vendors as being
Year 2000 ready. For those information systems which were developed internally,
Alcatel's Information Systems staff has completed its review and has established
the second quarter of 1999 as its target for completion of repair or replacement
of its principal systems. Alcatel tests all systems prior to redeployment of
upgraded systems into production, and expects to complete substantially all of
such testing in the second quarter of 1999. A central team is monitoring
progress of these activities to identify any potential difficulties which may
prevent deployment by the second quarter of 1999 and to ensure remedial action
where appropriate.
Alcatel estimates that additional costs to update its internal
information systems will be approximately FF 250 million, of which approximately
two-thirds had been spent by December 31, 1998. Alcatel has not included in its
calculation of the costs relating to its internal information systems program
costs for previously planned updates and replacements of its systems, and has
not attempted to determine if the implementation of such updates and
replacements was accelerated due to the Year 2000. These cost estimates do not
include previously contemplated updates and replacements of Alcatel's internal
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<PAGE> 17
information systems. It is also difficult for Alcatel to segregate costs which
are borne directly to deal with the Year 2000 from costs which relate to the
introduction of the euro or to the general need to implement more efficient
internal information systems. Alcatel expects to fund such expenses through its
operating cash flow.
Facilities
Alcatel is reviewing the Year 2000 readiness of its manufacturing
facilities, principally through a decentralized program of inspection and
remediation conducted by each operating division. In addition, Alcatel has
established a centralized team to inspect its 19 principal manufacturing sites,
which together account for over three-quarters of Alcatel's manufacturing
capacity.
Human Resources
Alcatel has drawn from its existing engineering staff to create a team of
experts to design and implement Year 2000 solutions. At December 31, 1998,
approximately 3% of Alcatel's staff of approximately 20,000 software engineers
was dedicated to the Year 2000 issue. In addition, identification of Year 2000
problems and implementation of solutions is a regular part of the duties of
Alcatel's sales and engineering teams, in addition to their regular duties.
Third Party Readiness
The extent of Year 2000 readiness of third parties with whom Alcatel
maintains a material relationship may affect its operations or financial
performance. In order to ensure the continued supply of products and services
suppled by third parties, Alcatel has sent questionnaires to its third party
suppliers asking for a self-assessment of their Year 2000 readiness and has
sought commitments from each one to take all necessary steps to minimize any
effects of the Year 2000 issue on its dealings with Alcatel. Most of Alcatel's
third party suppliers are currently engaged in their own Year 2000 programs and
are unable or unwilling to provide such assessments and are unwilling to provide
product guarantees specifically guaranteeing Year 2000 readiness. Alcatel cannot
therefore certify that it will not experience interruptions in its third party
supplies or that any such interruptions will not materially adversely affect its
operations. In particular, Alcatel is currently in discussion with certain third
party suppliers of software that is incorporated into Alcatel products regarding
the refusal of such suppliers to guarantee the Year 2000 readiness of their
products. In such cases, Alcatel is endeavouring to test independently such
software as used in Alcatel product to resolve any identified problems. Alcatel
has, as part of its standard industrial policy, established alternate sources
for most of its supplies, and believes that this policy will reduce the risk of
interruption of its operations. Where alternate sources of supply are
unavailable, Alcatel has visited selected suppliers to independently assess
their Year 2000 readiness.
Worst Case Assessment
In the event Alcatel fails to identify and solve Year 2000 problems in
its products, telecommunication services for users of Alcatel telecommunications
products could be interrupted for extended periods of time and purchasers of
other Alcatel products could experience operational interruptions. A major
failure in Alcatel products could adversely impact the operations of its
customers and could cause Alcatel to incur significant costs and require it to
dedicate significant resources to remedy such problems. In order to minimize
this risk, Alcatel has developed a comprehensive program to identify and address
Year 2000 problems. Third party experts have provided technical support and
consultation to validate this program. Alcatel is also putting in place
customized contingency response plans for major customers, which include having
Alcatel engineers physically present at certain customer sites to respond
immediately to problems which may arise at or immediately after January 1, 2000.
Alcatel is also taking steps to ensure that sufficient staff is available at
that time to ensure prompt attention to Year 2000 issues affecting all its
customers. Although Alcatel believes that these contingency plans should be
adequate to address any Year 2000 problems, there can be no assurance that
Alcatel will be able to solve all problems which may arise. In the event Alcatel
fails to identify and resolve Year 2000 problems with respect to its internal
information systems, it could experience interruptions in manufacturing,
customer billing, payroll, accounts payable, or other operational processes.
Although Alcatel does not believe that any such interruptions would last for
extended periods of time or would materially adversely affect its financial
conditions or results of operations, there can be no assurance that this will be
the case. If any third party suppliers with whom Alcatel maintains a material
relationship fail to achieve substantial Year 2000 readiness, Alcatel could
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<PAGE> 18
experience interruptions in the supply of raw materials and components which
could interrupt the manufacture and delivery of Alcatel products. The
consequences of any such delays could have a material effect on Alcatel's
business, results of operations or financial condition. No assurance can be
given that all of Alcatel's customers or suppliers will have achieved Year 2000
readiness by January 1, 2000.
Alcatel believes that it has established a detailed and comprehensive
program to address the Year 2000 issue and believes that it will manage the
transition to the Year 2000 without experiencing any material adverse effect on
its financial condition or results of operations. Given the significance of the
potential consequences of a failure to resolve Year 2000 problems, there cannot,
however, be any assurance that any failure to address a particular Year 2000
problem will not have a material adverse effect on Alcatel's business or
financial condition. The actual results of Alcatel's Year 2000 program will be
affected by a variety of factors, not all of which are within the control of
Alcatel. Such factors include the ability to identify and solve computer
software and hardware problems, the ability of contractors and suppliers to
adequately prepare for the Year 2000 and cooperation of customers. It is
important to note that the description of Alcatel's efforts contains
forward-looking statements which are subject to risks and uncertainties which
could cause actual results to differ materially from those projected. This
description necessarily involved estimates and projections with respect to
activities required in the future. These estimates and projections are subject
to change as work continues, and such changes may be substantial.
INTRODUCTION OF THE EURO
Prior to January 1, 1999, the franc was part of the European Monetary
System ("EMS") exchange rate mechanism. Within the EMS, exchange rates
fluctuated within permitted margins, fixed by central bank intervention. Under
the provisions of the Treaty on European Union negotiated at Maastricht, The
Netherlands, in 1991 (the "Maastricht Treaty") and signed by the then 12
European Union Member States in early 1992, a European Monetary Union ("EMU"),
with a single European currency under the monetary control of the European
Central Bank, superseded the EMS. On January 1, 1999, the last stage of EMU came
into effect, with the creation of the euro and the replacement of the national
currencies of the 11 participating countries: Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. The
euro represents 6.55957 francs, and the franc is a subunit of the euro.
In 1998, a substantial portion of Alcatel's net sales were denominated in
francs and other currencies that have been replaced by the euro. The creation of
the euro may have significant effect on the economies of the participant
countries. Alcatel is currently assessing the competitive effects of the
introduction of the euro. Alcatel believes that the introduction of the euro
will facilitate its management of operating units located in the euro zone by
enhancing comparability. Alcatel also believes that the elimination of exchange
rate risk within the euro zone will reduce its costs with respect to hedging
expenses. Alcatel is able to bill its customers in euros and to make purchases
in euros. Since January 1, 1999, Alcatel's communications with the financial
markets have been in euros and, in January 1999, Alcatel converted its share
capital into euros.
Based on available information, Alcatel does not believe that additional
future costs incurred in connection with the introduction of the euro will have
a material adverse effect on its financial condition or results of operations.
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DESCRIPTION OF BUSINESS
You will find a complete description of the Company's and Alcatel's
businesses in their Annual Reports for 1997. Important recent events since the
filing of the Annual Reports, including those mentioned in the "Prospectus
Summary" above, are described in the quarterly and current reports filed by the
Company and Alcatel. See "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
Filings by the Company and Alcatel with the Commission. Prior to the
acquisition of the Company by Alcatel in September 1998, the Company filed
annual, quarterly and special reports and other information with the
Commission. As a foreign private issuer, Alcatel files annual and special
reports with the Commission. You may read and copy any document filed by the
Company or Alcatel at the Commission's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the Commission at
1-800-SEC-0330 for further information on the public reference rooms. Documents
which have been filed by the Company electronically with the Commission are
also available to you at the Commission's web site at http://www.sec.gov.
Alcatel has generally not filed documents electronically with the Commission.
Filings by Alcatel with the New York Stock Exchange. Alcatel ADSs are
listed on the New York Stock Exchange (the "NYSE"). As a result, the reports
described above which were or continue to be filed with the Commission by
Alcatel can also be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10005.
Reports to Holders of Alcatel ADSs. The Bank of New York, as depositary
for the Alcatel ADSs, mails to each holder registered on its books a copy of
Alcatel's annual report. The Bank of New York also mails to each holder a copy
of all notices of meetings of shareholders and other reports and communications
that are distributed by Alcatel to its shareholders generally.
Additional information in the Registration Statement. This Prospectus is
part of a Registration Statement on Form S-3/Form F-3 which the Company and
Alcatel have filed with the Commission. The Registration Statement contains
certain information and exhibits which are not required to be included in the
Prospectus. Certain of the information included in this Prospectus, such as the
description of the terms of the Notes, is a summary of the exhibits which set
forth such terms in full. Such summarized information is therefore not complete
in every respect. If you wish to consult the complete versions of the documents
which are summarized in the Prospectus, such documents may be read and copied
at the Commission's facilities as set forth above.
Documents incorporated by reference into the Prospectus. The Commission
allows the Company and Alcatel to "incorporate by reference" certain information
filed with the Commission. As a result, the Company and Alcatel can disclose
important information to you by referring you to those documents that are
considered part of this Prospectus. Information that the Company or Alcatel file
later with the Commission will automatically update and supersede the previously
filed information. The Company and Alcatel incorporate by reference the
documents listed below, and any future filings made with the Commission under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until
this offering has been completed.
For the Company (Commission File No. 0-10018), its:
---------------------------------------------------
(1) Annual Report on Form 10-K for the year ended December 31, 1997.
(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
(3) Quarterly Report on Form 10-Q for the quarter ended June 30,
1998.
(4) Current Report on Form 8-K dated June 4, 1998.
(5) Current Report on Form 8-K dated April 3, 1998.
(6) Current Report on Form 8-K dated April 1, 1998.
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For Alcatel (Commission File No. 1-11130), its:
-----------------------------------------------
(1) Annual Report on Form 20-F for the year ended December 31, 1997.
(2) Report of Foreign Private Issuer on Form 6-K dated June 8, 1998.
(3) Report of Foreign Private Issuer on Form 6-K dated June 19, 1998.
(4) Report of Foreign Private Issuer on Form 6-K dated July 29, 1998.
(5) Report of Foreign Private Issuer on Form 6-K dated August 28,
1998.
(6) Report of Foreign Private Issuer on Form 6-K dated September 9,
1998.
(7) Report of Foreign Private Issuer on Form 6-K dated September 21,
1998 regarding first half results.
(8) Report of Foreign Private Issuer on Form 6-K dated September 21,
1998 regarding the share buy-back program.
(9) Report of Foreign Private Issuer on Form 6-K dated October 22,
1998.
(10) Report of Foreign Private Issuer on Form 6-K dated December 9,
1998.
(11) Report of Foreign Private Issuer on Form 6-K dated January 29,
1999.
(12) Report of Foreign Private Issuer on Form 6-K dated February 5,
1999.
(13) Report of Foreign Private Issuer on Form 6-K dated February 8,
1999.
(14) Report of Foreign Private Issuer on Form 6-K dated March 4, 1999.
(15) Report of Foreign Private Issuer on Form 6-K dated March 11, 1999.
(16) The descriptions of the ordinary shares of Alcatel and the
American Depositary Shares representing such shares as contained
in Alcatel's Registration Statement on Form 8-A dated April 30,
1992, including all amendments and reports filed for the purpose
of updating such descriptions.
You may request copies of these filings at no cost by writing or
telephoning us at the following address:
Alcatel USA, Inc.
1000 Coit Road
Plano, Texas 75075
Attention: General Counsel
(972) 519-3000
Web sites for the Company and Alcatel. You can also obtain more
information about the Company and Alcatel at their web sites:
www.ans.alcatel.com for the Company, and www.alcatel.com for Alcatel.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
Alcatel is a French societe anonyme organized under the laws of the
Republic of France. Most of Alcatel's directors and officers, as well as certain
of the experts named herein, are not residents of the United States, and a
substantial portion of the assets of Alcatel and its directors and officers are
located outside the United States. As a result, you may not be able to effect
service of process within the United States upon such persons. You may also not
be able to enforce upon such persons judgments of courts of the United States
based upon civil liability provisions of the U.S. Federal securities laws. If
you bring an original action in France, based solely upon the U.S. Federal
securities laws, French courts may not have jurisdiction to grant the remedies
sought. If you try to enforce in French courts judgments of U.S. courts which
were rendered against French persons, such French persons may first have to
waive their right under French law to be sued in France only. Alcatel believes
that none of the French persons described above, including Alcatel, have waived
such right with respect to actions based solely upon U.S. Federal securities
laws. In addition, if you bring an action in the United States under the U.S.
Federal securities laws, the French law of July 16, 1980, may preclude or
restrict the obtaining of evidence in France or from French persons in
connection with such action.
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DESCRIPTION OF NOTES
The Company issued the Notes under an Indenture, dated as of August
12, 1997, between the Company and The Bank of New York, as Trustee (the
"Trustee"). The initial Indenture has been supplemented by the First
Supplemental Indenture, dated as of September 4, 1998, between the Company and
the Trustee, and by the Second Supplemental Indenture, dated as of April 1,
1999, between the Company and the Trustee (the initial Indenture together with
the Supplemental Indentures, the "Indenture").
The Indenture is summarized below. Because it is a summary, it does
not contain all of the information that may be important to you. A copy of the
initial Indenture was filed as an exhibit to the Company's Current Report on
Form 8-K dated, August 26, 1997. A copy of the First Supplemental Indenture was
filed as an exhibit to Alcatel's Report of Foreign Private Issuer on Form 6-K
dated September 9, 1998. A copy of the Second Supplemental Indenture was filed
on April 9, 1999 as an exhibit to the Registration Statement of which this
Prospectus forms a part. We suggest that you read those parts of the Indenture
that are important to you. You especially need to read the Indenture to get a
complete understanding of your rights and our obligations in connection with the
conversion, redemption and repurchase of the Notes and in the event of the
merger or sales of assets of the Company.
GENERAL; GUARANTY
In August 1997, the Company issued an aggregated principal amount of
$400,000,000 of the Notes to the Initial Purchasers (as defined in the
Indenture) pursuant to exemptions from the Securities Act of 1933, as amended
(the "Securities Act"). The Notes were offered and sold by the Initial
Purchasers to Qualified Institutional Buyers (as defined in the Indenture) in
reliance on Rule 144A of the Securities Act and in offshore transactions to
non-U.S. persons in reliance on Regulation S under the Securities Act.
The Notes are unsecured subordinated obligations of the Company, and
will mature on August 1, 2004. Payment in full of the principal amount of the
Notes will be due August 1, 2004. The Notes bear interest at the rate of 7% per
annum. The interest is payable semiannually on February 1 and August 1 of each
year (each, an "Interest Payment Date"). Following Alcatel's acquisition of
Alcatel USA in September 1998, Alcatel fully and unconditionally guaranteed the
due and punctual payment of the principal of, premium, if any, and interest
(including Liquidated Damages, as defined in the Indenture) on the Notes. In
case of a failure of the Company to pay or cause to be paid punctually any such
amounts in accordance with the terms of the Indenture, Alcatel will, upon
written notice from the Trustee, pay or cause to be paid punctually such amounts
when they become due and payable in accordance with the Guaranty.
You can convert the Notes into ADSs. Each ADS represents one-fifth of
an ordinary share of Alcatel. The conversion rate is 16.3901 ADSs per $1,000
principal amount of Notes (equivalent to a conversion price of $61.012 per ADS).
The conversion price is subject to adjustment upon the occurrence of certain
events described below under "--Conversion Rights." You may convert the Notes at
any time prior to the close of business on August 1, 2004, unless the Notes have
been previously redeemed or repurchased. In case of redemption or repurchase,
you may convert the Notes until the close of business on the fifth Trading Day
(as defined below) prior to the date of redemption or the second Trading Day
prior to the date of repurchase. "Trading Days" means:
(1) if the ADSs are listed or admitted for trading on any national
securities exchange, days on which such national securities
exchange is open for business;
(2) if the ADSs are quoted on the Nasdaq National Market or any other
system of automated dissemination of quotations of securities
prices, days on which trades may be effected through such system;
or
(3) if the ADSs are not listed or admitted for trading on any national
securities exchange or quoted on the Nasdaq National Market or any
other system of automated dissemination of quotation of securities
prices, days on which the ADSs are traded the regular way in the
over-the-counter market and for which a closing bid and a closing
asked price for the ADSs are available.
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The Company may redeem the Notes on or after August 1, 2000, in whole
or in part, at the redemption prices set forth below under "-- Redemption," plus
accrued interest to the redemption date.
CONVERSION RIGHTS
General
You will have the right to convert any portion of the principal amount
of a Note that is an integral multiple of $1,000 (provided that the unconverted
portion of such Note is an integral multiple of $1,000) into ADSs. Each ADS
represents one-fifth of an ordinary share of Alcatel. You may convert the Notes
at any time prior to the close of business on August 1, 2004, unless previously
redeemed or purchased. The conversion price is $61.012 per ADS, subject to
adjustment as described below. You may convert a Note called for redemption or
delivered for repurchase until the close of business on the fifth Trading Day
prior to the redemption date for such Note or the second Trading Day preceding
the repurchase date, as the case may be. The Company will acquire the ADSs to
be delivered upon conversion of the Notes through open-market purchases. The
conversion of a Note will be treated as a taxable event. See "United States
Taxation -- Taxation of U.S. Holders -- Notes -- United States Holders -- Sale,
Exchange or Redemption of Notes or Conversion of Notes for ADSs."
Procedure
You may convert any Note by delivering the Note to the specified
office of a Conversion Agent (as defined in the Indenture), accompanied by a
duly signed and completed notice of conversion, a copy of which may be obtained
from any Conversion Agent. The conversion date will be the date on which you
deliver the Note and the duly signed and completed notice of conversion. As
promptly as practicable on or after the conversion date, the Company will cause
to be delivered to the Trustee an American Depositary Receipt ("ADR") evidencing
the number of ADSs deliverable upon conversion. The Company will also deliver to
the Trustee payment in cash, based on the market price of the ADSs at the close
of business on the day of conversion, in lieu of any fraction of an ADS. Such
ADR and payment will be sent to you by the Trustee. If you surrender a Note for
conversion between the close of business on any Regular Record Date (as defined
below) and the opening of business on the next succeeding Interest Payment Date,
you must include payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of such Notes being surrendered
for conversion, except under certain conditions. Such payment must be in New
York Clearing House funds or other funds acceptable to the Company. In general,
if you surrender a Note for conversion on a date that is not an Interest Payment
Date, you will not receive any interest for the period from the last Interest
Payment Date to the date of conversion. You also will not be entitled to receive
any dividends on ADSs delivered upon conversion if such dividends were payable
to holders of ADSs on a record time before the close of business on the
conversion date. "Regular Record Date" for interest payable in respect of any
Note on any Interest Payment Date means the January 15 or July 15 (whether or
not a Business Day as defined below), as the case may be, next preceding such
Interest Payment Date.
The Company will pay any taxes or duties on the delivery of ADSs on
conversion of a Note, but only if the ADSs are delivered in the name of the
holder of the Note. The Company will not deliver ADSs unless and until the
person requesting such delivery has paid to the Company the amount of any tax or
duty due on the delivery of the ADSs in the name of a person other than the
holder of the Note.
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The conversion price may be adjusted in certain events, including:
(1) Alcatel pays dividends (and other distributions) in Alcatel Shares;
(2) Alcatel issues to holders of its shares rights, options or warrants
entitling them to subscribe for or purchase Alcatel Shares such that the
price per ADS would be less than the then current market price (determined
as provided in the Indenture) of ADSs;
(3) Alcatel distributes to all holders of its shares evidences of indebtedness,
shares of capital stock, or certain property;
(4) Alcatel distributes to all holders of its shares cash (excluding any cash
referred to in (3) above, or distributed upon a merger or consolidation to
which the next paragraph applies) in an aggregate amount that, combined
with (i) the aggregate amount of any other such all-cash distributions made
within the preceding 12 months in respect of which no adjustment has been
made and (ii) the aggregate amount of any cash and the fair market value of
other consideration payable in respect of any tender offer by Alcatel or
any of its subsidiaries for ADSs concluded within the preceding 12 months
in respect of which no adjustment has been made, exceeds 12.5% of Alcatel's
market capitalization on the record date for such distribution; and
(5) Alcatel or any of its subsidiaries successfully completes a tender offer
for shares of Alcatel which involves an aggregate consideration that,
together with (i) the aggregate of cash and other consideration payable in
a tender offer by Alcatel or any of its subsidiaries for shares of Alcatel
expiring within the 12 months preceding the expiration of such tender offer
in respect of which no adjustment has been made and (ii) the aggregate
amount of any cash distributions to all holders of shares of Alcatel within
the 12 months preceding the expiration of such tender offer in respect of
which no adjustments have been made, exceeds 12.5% of the Alcatel's market
capitalization on the expiration of such tender offer.
The Company may reduce the conversion price as it considers advisable in
order to avoid or diminish any income tax to holders of ADSs or shares of
Alcatel which may result from any dividend, distribution of stock or issuance of
rights or warrants. The Company is not required to adjust the conversion price
until the cumulative adjustments amount to 1.0% or more of the conversion price.
The Company will compute any adjustments to the conversion price pursuant to
this paragraph and will mail notice of any such adjustments to holders of the
Notes. See "--Notices."
In case Alcatel consolidates or merges with or into another Person (as
defined in the Indenture), or another Person merges into Alcatel, or Alcatel
sells or transfers all or substantially all of its assets, you will be able to
convert a Note only into the kind and amount of securities, cash and other
property which a holder of ADSs would have received upon such consolidation,
merger, sale or transfer.
If Alcatel makes a distribution of property to its stockholders that would
be taxable to such stockholders as a dividend for federal income tax purposes
(e.g., distributions of evidences of indebtedness or assets of Alcatel, but
generally not stock dividends on shares of Alcatel or rights to subscribe for
shares of Alcatel) and, as a result, the number of ADSs into which Notes are
convertible is increased, such increase may be deemed for federal income tax
purposes to be the payment of a taxable dividend to holders of Notes. See
"Taxation--Taxation of U.S. Holders--ADSs and Alcatel Shares."
SUBORDINATION
As set forth in the Indenture, the Notes will be subordinated in right of
payment to the prior payment of all Senior Indebtedness of the Company. "Senior
Indebtedness" means the principal of (and premium, if any) and interest on, and
all fees and other amounts payable in connection with:
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(1) indebtedness of the Company evidenced by credit or loan agreements,
notes, bonds, debentures or other written obligations;
(2) all obligations of the Company for money borrowed;
(3) all obligations of the Company evidenced by a note or similar
instrument given in connection with the acquisition of any
businesses, properties or assets of any kind;
(4) obligations of the Company as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally
accepted accounting principles;
(5) obligations of the Company under interest rate and currency swaps,
caps, floors, collars, hedge agreements, forward contracts or
similar agreements or arrangements intended to protect the Company
against fluctuations in interest or currency exchange rates;
(6) all obligations of the type referred to in clauses (1) through (5)
above and all dividends which the Company has assumed or
guaranteed for another person, or for which the Company is
responsible or liable, or which is secured by a lien on property
of the Company; and
(7) renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in
exchange for, any indebtedness or obligation described in clauses
(1) through (6).
However, Senior Indebtedness shall not include the Notes or any such
indebtedness or obligation:
(1) if the terms of such indebtedness or obligation provide that such
indebtedness or obligation is not superior in right of payment to
the Notes;
(2) if such indebtedness or obligation is non-recourse to the Company;
or
(3) if such indebtedness or obligation is a conditional sale contract
or any account payable or any other indebtedness created or assumed
by the Company in the ordinary course of business in connection
with the obtaining of inventories or services.
As a result of such subordination, holders of Senior Indebtedness may
recover more from the Company, on a per dollar of principal basis, than you in
the event of:
(1) any payment or distribution of assets upon any liquidation,
dissolution or winding up, or
(2) the acceleration of the maturity of any Notes.
Such subordination may result in less or no payments in such
circumstances. In addition, the Company will make no payments of principal,
premium or interest on the Notes if there shall have occurred and be continuing
a default in any payment with respect to Senior Indebtedness, or an event of
default with respect to any Senior Indebtedness permitting the holders thereof
to accelerate maturity.
As of June 30, 1998, the aggregate amount of Senior Indebtedness
outstanding was approximately $353.92 million, which includes indebtedness of
the subsidiaries of the Company guaranteed by the Company. In addition, the
Notes will be effectively subordinated to all indebtedness and other
liabilities (including trade payables and lease obligations) of the Company's
subsidiaries, because any right of the Company to receive any assets of its
subsidiaries upon their liquidation or reorganization (and the subsequent right
of the holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors.
The Indenture does not limit the Company's ability to incur Senior
Indebtedness or any other indebtedness. The Indenture also does not limit the
ability of the Company's subsidiaries to incur additional indebtedness or other
liabilities.
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<PAGE> 25
REDEMPTION
The Company may redeem the Notes, in whole or in part, beginning August
1, 2000. The Company must give at least 30 days' and not more than 60 days'
prior notice.
The redemption price (expressed as a percentage of principal amount)
for the 12-month periods beginning on August 1 of the following
years are:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 104.0
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 103.0
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . 102.0
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 101.0
</TABLE>
The redemption price after such periods is 100% of the principal amount of the
Notes. In addition, the redemption price will also always include accrued
interest to the date of redemption.
No sinking fund is provided for the Notes.
PAYMENT AND CONVERSION
The principal of the Notes will be payable in U.S. dollars. For payment
of principal, you must surrender your Notes at the Corporate Trust Office of the
Trustee in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company designated by it for such purpose. The principal
will be paid by U.S. dollar check, or by transfer to a U.S. dollar account (if
you hold more than U.S.$2,000,000 in principal and furnish wire instructions in
writing to the Trustee no later than 15 days prior to the relevant payment date)
which you maintain with a bank in the Borough of Manhattan, The City of New
York. Notes will bear interest at a rate of 7% per year from the most recent
Interest Payment Date. Interest will be paid on February 1 and August 1 of each
year to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the preceding January 15 or July 15, as
the case may be. Interest will be paid by U.S. dollar check drawn on a bank in
the Borough of Manhattan, The City of New York, mailed to your address as it
appears in the Security Register (as defined in the Indenture). If you hold more
than $2,000,000 in principal, you can also request in writing to the Security
Registrar (as defined under -- "Transfer and Exchange"), not later than the
relevant Record Date (as defined in the Indenture), that payments of interest be
transferred to a U.S. dollar account which you maintain with a bank in the
Borough of Manhattan, The City of New York. No transfer to a dollar account will
be made unless the Trustee has received written wire instructions not less than
15 days prior to the relevant payment date.
Any payment on the Notes due on any day which is not a Business Day is
not required to be made on such day. Such payment may be made on the next
succeeding Business Day with the same force and effect as if made on the initial
due date. No interest shall accrue on such payment as a result of such delay.
"Business Day," when used with respect to any place of payment, place of
conversion or any other place, means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in such place of
payment, place of conversion or other place, are authorized or obligated by law
or executive order to close.
You may surrender Notes for conversion at the Corporate Trust Office of
the Trustee, or at such other office or agency of the Company. You must include
with Notes surrendered for conversion appropriate notices and any payments in
respect of interest or taxes, as applicable, as described above under
"--Conversion Rights".
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<PAGE> 26
The Company has initially appointed the Trustee as Paying Agent (as defined
in the Indenture) and Conversion Agent (as defined in the Indenture). The
Company may at any time terminate the appointment of any Paying Agent or
Conversion Agent and appoint additional or other Paying Agents and Conversion
Agents. However, until the Notes have been delivered to the Trustee for
cancellation, or monies sufficient to pay the principal of, premium, if any, and
interest on the Notes have been made available for payment and either paid or
returned to the Company as provided in the Indenture, the Company must maintain
an office or agency in the Borough of Manhattan, The City of New York, for
payments with respect to the Notes and for the surrender of Notes for
conversion. The Company will give notice of any such termination or appointment
and of any change in the office through which any Paying Agent or Conversion
Agent will act in accordance with "--Notices" below.
If you do not claim any monies deposited with the Trustee or any
Paying Agent, or then held by the Company, in trust for the payment of principal
of, premium, if any, or interest on your Notes for two years after such payment
has become due and payable, such monies will be paid to the Company. You will
then be able to look only to the Company for payment.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined below) occurs, you shall have the
right to require the Company to repurchase any portion of your Notes in a
principal amount equal to $5,000 or any integral multiple of $1,000 in excess
thereof. The Company will repurchase your Notes on the date (the "Repurchase
Date") that is 45 days after the date of the Company Notice (as defined below).
The price paid by the Company will be 100% of the principal amount of the Notes
to be repurchased (the "Repurchase Price"), together with interest accrued to
the Repurchase Date.
The Company may choose to pay the Repurchase Price in ADSs instead of cash.
In such event, the ADSs will be valued at 95% of the average of the closing
prices of the ADSs for the five consecutive Trading Days ending on and including
the third Trading Day preceding the Repurchase Date.
No later than the 30th day after a Change in Control, the Company will give
you notice (a "Company Notice"). To exercise your repurchase right, you must
deliver to the Trustee or any Paying Agent, no later than the 30th day after the
date of the Company Notice, irrevocable written notice of your exercise of the
repurchase right. You must also deliver your Notes to be repurchased. At least
two Trading Days prior to the Repurchase Date, the Company must publish a
Company Notice specifying whether the Company will pay the Repurchase Price in
cash or in ADSs.
A "Change in Control" means:
(1) the acquisition by any Person, directly or indirectly, of
50% or more of the total voting power of all shares of
capital stock of the Company; or
(2) any consolidation or merger of the Company with or into any
other Person, any merger of another person with or into the
Company, or any conveyance, sale, transfer or lease of all
or substantially all of the assets of the Company to another
Person.
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<PAGE> 27
However, a Change in Control shall not be deemed to have occurred if
either:
(1) the closing price per ADS for any five Trading Days during the 10
Trading Days ending immediately after the later of the Change in
Control or the public announcement of the Change in Control (in the
case of a Change in Control under clause (i) above), or the 10
Trading Days ending immediately prior to the date of the Change in
Control (in the case of a Change in Control under clause (ii)
above) shall be at least 105% of the conversion price of the Notes
on each such Trading Day, or
(2) in the event the Change in Control results from the acquisition of
the common stock of Alcatel, all the consideration to be paid for
the Alcatel common stock in the transaction constituting the Change
in Control consists of shares of common stock traded on a national
securities exchange or quoted on the Nasdaq National Market and, as
a result of such transaction, the Notes become convertible solely
into such common stock.
If the Company fails to repurchase the Notes when required, such
failure would result in an Event of Default. See "--Events of Default."
The Company may at any time purchase Notes in the open market or by
tender at any price or by private agreement. To the extent permitted by
applicable law and subject to restrictions contained in the Purchase Agreement,
dated August 7, 1997, between the Company and the Initial Purchasers, the
Company may re-issue or resell any such Notes, or surrender them to the Trustee
for cancellation. Any Notes so surrendered may not be re-issued or resold and
will be canceled promptly.
Despite the foregoing provisions, you will not necessarily be protected
in the event of highly leveraged or other transactions involving the Company
that may adversely affect you.
MERGERS AND SALES OF ASSETS BY THE COMPANY
Except as stated below, the Company may not consolidate with or merge
into any other Person or convey, transfer or lease all its properties and assets
substantially as an entirety to any Person. Similarly, the Company shall not
permit any Person to consolidate with or merge into the Company or convey,
transfer or lease all or substantially all of its properties and assets to the
Company. Such transactions would be permitted if:
(1) the Person formed by such consolidation or into which the Company
is merged, or the Person which acquires or leases the properties
and assets of the Company, shall be a corporation, limited
liability company, partnership or trust, organized and validly
existing under the laws of the United States of America, which
shall expressly assume, by a supplemental indenture, the payment of
the Notes and the performance or observance of every covenant of
the Indenture to be performed or observed by the Company and which
shall provide for conversion rights in accordance with the
Indenture;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be
continuing; and
(3) the Company has delivered to the Trustee an officer's certificate
and an opinion of counsel, each stating that such consolidation,
merger, conveyance, transfer or lease and supplemental indenture
(if required) complies with, among other things, the requirements
set forth in this paragraph.
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<PAGE> 28
EVENTS OF DEFAULT
The following are Events of Default:
(1) failure to pay principal of or premium, if any, on any Note at its
maturity;
(2) failure to pay any interest on any Note when due, continuing for 30
days;
(3) failure to perform, or the breach of, any covenant or warranty of
the Company in the Indenture, continuing for 60 days after written
notice to the Company by the Trustee;
(4) failure to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by the Company in excess of
$20,000,000 if such indebtedness is not discharged, or such
acceleration is not annulled, within 30 days after written notice;
and
(5) certain events of bankruptcy, insolvency or reorganization.
The Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at your request or direction unless you offer to
the Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Trustee, the holders of a majority in aggregate principal
amount of the Outstanding Notes (as defined in the Indenture) will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee.
If an Event of Default shall occur and be continuing, either the
Trustee or the holders of at least 25% in principal amount of the Outstanding
Notes may accelerate the maturity of all Notes. However, after such
acceleration, but before a judgment or decree, the holders of a majority in
aggregate principal amount of Outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived.
For information as to waiver of defaults, see "--Meetings, Modification and
Waiver."
You will not have any right to institute any proceeding with respect to
the Indenture unless you shall have previously given to the Trustee written
notice of a continuing Event of Default. In addition, the holders of not less
than 25% in principal amount of the Outstanding Notes must also have made
written request, and offered reasonable indemnity, to the Trustee to institute
such proceeding as trustee. You also will not have any right to institute any
proceeding if the Trustee has received from the holders of a majority in
principal amount of the Outstanding Notes a direction inconsistent with such
request, or if the Trustee shall have instituted such proceeding within 60 days.
However, such limitations do not apply to you if you institute a suit (i) for
the enforcement of payment of the principal of, premium, if any, or interest on
any Note on or after the respective Stated Maturities (as defined in the
Indenture) expressed in such Note or (ii) for the right to convert such Note in
accordance with the Indenture.
The Company must furnish the Trustee annually with a statement as to
the performance by the Company of certain of its obligations under the Indenture
and as to any default in such performance.
MEETINGS, MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of the
holders of Notes to consider matters affecting their interests.
Modifications and amendments of the Indenture may be made, and certain
past defaults by the Company may be waived, either:
(1) with the written consent of the holders of a majority in aggregate
principal amount of the Outstanding Notes or
(2) by the adoption of a resolution, at a meeting of holders of the
Notes at which a quorum is present, by the holders of at least 66
2/3% in aggregate principal amount represented at such meeting or
by a majority in aggregate principal amount of the Outstanding
Notes. However, no such modification or amendment may, without
the consent of each holder:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Note;
(b) reduce the principal amount or the rate of interest payable on
any Note;
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<PAGE> 29
\
(c) reduce the amount payable upon redemption or repurchase;
(d) adversely modify the repurchase right;
(e) change the currency for payment on any Note;
(f) impair the right to institute suit for the enforcement of payment
on or after the Stated Maturity, the redemption date or Repurchase
Date;
(g) modify the obligation of the Company to maintain an office or
agency in New York City;
(h) adversely modify the subordination provisions;
(i) reduce the above-stated percentage of Notes necessary to modify or
amend the Indenture;
(j) reduce the percentage of aggregate principal amount of Notes
necessary for waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults;
(k) reduce the percentage in aggregate principal amount of Notes
required for the adoption of a resolution or the quorum required at
any meeting of holders of Notes at which a resolution is adopted;
(l) adversely affect the right to convert any Note except as permitted
as described under "--Conversion Rights;"
(m) modify the obligation of the Company to deliver information
required under Rule 144A to permit resales of Notes and ADSs in the
event the Company ceases to be subject to certain reporting
requirements under the United States securities laws;
(n) adversely modify the provisions described under "--Repurchase at
Option of Holders Upon a Change in Control"; or
(o) modify certain of the Company's obligations under the Registration
Rights Agreement (as defined below) or its obligation to pay
additional interest upon any failure to comply with such
obligations.
The quorum at any meeting called to adopt a resolution will be a
majority in aggregate principal amount of the Notes. In the event a meeting is
adjourned for lack of quorum and the meeting is reconvened, the quorum will be
25% of aggregate principal amount.
The holders of a majority in aggregate principal amount of the Notes
may waive compliance by the Company with certain restrictive provisions of the
Indenture. The holders of (1) 66 2/3% in aggregate principal amount at a meeting
or (2) a majority in aggregate principal amount of the Notes may waive any past
default under the Indenture. However, such holders may not waive a default in
the payment of principal, premium, if any, or interest, or a default with
respect to a covenant or condition that may only be modified or amended with the
consent of each holder.
REGISTRATION RIGHTS
This summary of certain provisions of the Registration Rights
Agreement, dated as of August 12, 1997, by and between the Company and the
Initial Purchasers (the "Registration Rights Agreement") does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the Registration Rights Agreement. In the Registration Rights
Agreement the Company agreed, among other things, to (1) file with the
Commission within 90 days after the date of original issuance of the Notes, a
Registration Statement (the "Shelf Registration Statement"), of which this
Prospectus is a part, covering resales of the Registrable Securities (as defined
under "Description of Registration Rights Agreement") and (2) use its reasonable
best efforts to cause the Shelf Registration Statement to be declared effective
under the Securities Act within 90 calendar days after the date of such filing.
See "Description of Registration Rights Agreement."
The Company must keep the Shelf Registration Statement effective until
the earliest of:
(1) the expiration of two years from the time the Shelf Registration
Statement is declared effective,
(2) such time as all Registrable Securities have been sold pursuant to
the Shelf Registration Statement, transferred pursuant to Rule 144
under the Securities Act or otherwise transferred in a manner that
results in a new security not subject to transfer restrictions
under the Securities Act being delivered pursuant to the Indenture
and
(3) such time as, in the opinion of counsel, all of the Registrable
Securities held by non-affiliates of the Company are eligible for
resale pursuant to Rule 144(k) under the Securities Act and the
legends described have been removed from such Registrable
Securities.
In the event that, during the period that the Company is required to
maintain the effectiveness of the Shelf Registration Statement, the Shelf
Registration Statement ceases to be effective (or the holders are otherwise
prevented or restricted by the Company from effecting sales pursuant thereto)
for more than 60 days, whether or not consecutive, during any 12-month period
(an "Effectiveness Failure"), then the interest rate borne by the Notes will
increase by an additional one- half of one percent (0.50%) per annum from the
61st day of the applicable 12-month period such Shelf Registration Statement
ceases to be effective (or the holders are otherwise prevented or restricted by
the Company from effecting sales
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<PAGE> 30
pursuant thereto) until such time as the Effectiveness Failure is cured. For
the purpose of determining an Effectiveness Failure, days on which the Company
has been obligated to pay additional interest in accordance with the foregoing
in respect of a prior Effectiveness Failure within the applicable 12-month
period will not be included. The Registration Rights Agreement provides that
the additional interest described in this paragraph with respect to a
Registration Default will be the exclusive monetary remedy available to holders
of Notes for such Registration Default (as defined in the Indenture).
TRANSFER AND EXCHANGE
Upon written request, you may exchange any Note at any time into an
equal aggregate principal amount of Notes of different authorized denominations.
You may present Notes for transfer (with the form of transfer endorsed
thereon duly executed) or exchange, at the office of any transfer agent (the
"Security Registrar"), without service charge. In the case of a transfer, you
must pay any taxes and other governmental charges. The transfer agent or the
Security Registrar will effect any registration of transfer or exchange once it
is satisfied with the documents of title and identity of the person making the
request. Notes may be transferred in whole or in part in authorized
denominations.
The Company has initially appointed the Trustee as Security Registrar
and transfer agent. The Trustee acts through its Corporate Trust Office in the
Borough of Manhattan, The City of New York. The Company reserves the right to
vary or terminate the appointment of the Security Registrar or of any transfer
agent or to appoint additional or other transfer agents or to approve any change
in the office through which any Security Registrar or any transfer agent acts.
However, the Company must maintain a Security Registrar and a transfer agent in
the Borough of Manhattan, The City of New York.
In the event the Company redeems any Notes for any of the reasons set
forth under "--Redemption," the Company will not be required (1) to register the
transfer or exchange of the Notes for a period of 15 days immediately preceding
the date the Company gives notice identifying the Notes called for such
redemption or (2) to register the transfer or exchange of any Note, or portion
thereof, called for redemption.
PURCHASE AND CANCELLATION
The Company or any subsidiary may at any time and from time to time
purchase Notes at any price in the open market or otherwise.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. The Trustee shall
cancel promptly all Securities so delivered to the Trustee. No Securities shall
be authenticated in lieu of or in exchange for any Securities canceled as
provided in the Indenture.
TITLE
With respect to any Note, the Company, the Trustee, the Paying
Agent and any other agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner thereof.
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<PAGE> 31
NOTICES
Notices to you will be mailed to your address as it appears in the
Security Register. Such notices will be deemed to have been given when mailed.
Notice of a redemption of Notes will be given at least once not less
than 30 nor more than 60 days prior to the redemption date. Such notice will
specify the redemption date.
REPLACEMENT OF NOTES
Notes that become mutilated, destroyed, stolen or lost will be replaced
by the Company at your expense upon delivery to the Trustee of the mutilated
Notes or evidence of their loss, theft or destruction. In the case of a lost,
stolen or destroyed Note, you must cover the expense of an indemnity
satisfactory to the Trustee and the Company before a replacement Note will be
issued.
PAYMENT OF STAMP AND OTHER TAXES
The Company shall pay all stamp and other duties, if any, which may be
imposed by the United States or any political subdivision thereof with respect
to the issuance, transfer, exchange or conversion of the Notes. The Company will
not be required to make any payment with respect to any other tax, assessment or
governmental charge imposed by any government or any political subdivision.
GOVERNING LAW
The Indenture and the Notes are governed by and construed in
accordance with the laws of the State of New York, United States of America.
THE TRUSTEE
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
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<PAGE> 32
TAXATION
The following is a summary of certain French and United States tax
considerations relating to the purchase, ownership and disposition of the Notes,
of ADSs which may be delivered upon your conversion of the Notes, and of the
underlying Alcatel Shares. This summary does not purport to be a complete
analysis of all the potential tax considerations relating to the Notes, the ADSs
or the Alcatel Shares. This summary discusses the tax considerations applicable
to persons who purchase the Notes from the Selling Securityholders. It does not
discuss the tax considerations applicable to subsequent purchasers of the Notes.
This summary does not address tax considerations applicable to investors that
may be subject to special tax rules, such as individual retirement or other
tax-deferred accounts, banks, tax-exempt organizations, insurance companies,
dealers in securities or currencies. It does not address tax considerations
applicable to persons that will hold Notes as a part of a hedge, straddle, or
"synthetic security" or other integrated investment (including a "conversion
transaction") or situations in which the functional currency of the holder is
not the U.S. dollar. This summary is based on current United States and French
tax laws and regulations, and the Convention Between the United States of
America and the French Republic for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital of
August 31, 1994 (the "Treaty") entered into force on December 30, 1995. All of
these laws and agreements are subject to change, possibly with retroactive
effect, or to different interpretations. This summary does not consider the
effect of any applicable state, local or other tax laws.
For purposes of the Treaty and the United States Internal Revenue Code of
1986 (the "Code") as amended, U.S. Holders of ADRs (as defined below) will be
treated as the owners of ADSs evidenced by such ADRs and as owners of the
Alcatel Shares represented by such ADSs.
Persons considering the purchase of Notes should consult their own tax
advisors with respect to the application of the French tax laws and United
States federal income and estate tax laws to their particular situations. In
addition, such persons should consult their tax advisors with respect to any
tax consequences arising under the laws of any state, local or foreign taxing
jurisdiction or under any applicable tax treaty.
As used in this Prospectus, the term "U.S. person" means any person that
is, for United States federal income tax purposes:
(1) an individual who is a citizen or resident of the United States;
(2) a corporation, or one of certain other entities created or organized
under the laws of the United States or political subdivision thereof;
(3) an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or
(4) a trust subject to the primary supervision of a United States court and
the control of one or more United States persons.
A "Non-U.S. person" is any person that is not a U.S. person. For
purposes of the following discussion, a "U.S. Holder" is a U.S. person
who is a beneficial owner of Notes, ADSs or Alcatel Shares. A "Non-U.S.
Holder" is a Non-U.S. person that is a beneficial owner of Notes, ADSs
or Alcatel Shares.
TAXATION OF U.S. HOLDERS
NOTES
Payments of Interest
U.S. Holders generally must include interest received on their Notes in
their income as U.S.-source ordinary income at the time such holders receive
or accrue such interest, in accordance with such U.S. Holder's method of
accounting for United States federal income tax purposes.
No withholding of French tax will be required with respect to any payment
made by Alcatel under the Guaranty to a U.S. Holder. See "French Taxation --
Taxation of Payments Made Under the Guarantee."
Market Discount, Acquisition Premium
If a U.S. Holder acquires a Note for an amount that is less than its
original issue price, the amount of the difference will be treated as "market
discount," unless such difference is less than a specified de minimis amount.
For these purposes the original issue price equals the first price to the public
(excluding bond houses, brokers and similar persons or organization acting in
the capacity of underwriters, placement agents or wholesalers) at which a
substantial amount of the Notes was sold for money. Under the market discount
rules of the Code, a U.S. Holder must treat any principal payment on, or any
gain on the sale, exchange, retirement or other disposition (including a gift)
of, a Note as ordinary income to the extent of any accrued market discount that
has not previously been included in income. Market discount generally accrues on
a straight-line basis over the remaining term of the Note, unless the U.S.
Holder elects to accrue market discount on a constant interest method. A U.S.
Holder is not allowed to deduct immediately all or a portion of the interest
expense on any indebtedness incurred or continued to purchase or to carry such
Note.
A U.S. Holder may elect to include market discount in income currently as
it accrues (either on a straight-line basis or, if the U.S. Holder so elects, on
a constant-yield basis). In that case the interest deferral rule set forth in
the preceding paragraph will not apply. Such an election will apply to all debt
instruments that a U.S. Holder acquires on or after the first day of the first
taxable year to which such election applies. The U.S. Holder may revoke such
election only with the consent of the Internal Revenue Service (the "IRS").
If a U.S. Holder purchases a Note for an amount in excess of the sum of all
amounts payable on the Note after the purchase date, the U.S. Holder may elect
to treat such excess as amortizable bond premium. In that case the amount of
interest required to be included in the U.S. Holder's income each year with
respect to interest on the Note will be reduced by the amount of amortizable
bond premium allocable (based on the Note's yield to maturity) to such year. Any
election to amortize bond premium applies to all debt instruments acquired by
the U.S. Holder on or after the first day of the first taxable year to which
such election applies. The U.S. Holder may revoke such election only with the
consent of the IRS. A U.S. Holder that does not elect to amortize bond premium
generally will be entitled to treat the premium as a capital loss when the Note
matures.
Adjustments to Conversion Rate
If at any time (1) Alcatel makes a distribution of cash or other property
to its shareholders or purchases Alcatel Shares or ADSs and such distribution or
purchase would be taxable to such shareholders as a dividend for United States
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of Alcatel, but generally not stock dividends or rights to subscribe for
Alcatel Shares or ADSs) and, pursuant to the antidilution provisions of the
Indenture, the conversion rate of the Notes is increased, or (2) the Company or
Alcatel decides to increase at its discretion the conversion rate of the Notes,
such increase in conversion rate may be deemed to be the payment of a taxable
dividend to holders of Notes. U.S. Holders of Notes could therefore have taxable
income as a result of an event pursuant to which they received no cash or
property.
Sale, Exchange or Redemption of Notes or Conversion of Notes for ADSs
Upon the sale, exchange, redemption or other disposition of a Note,
including the conversion of a Note in exchange for ADSs, a U.S. Holder generally
will recognize gain or loss equal to the difference between (1) the amount of
cash proceeds and the fair market value of any property received on the sale,
exchange or redemption and (2) such U.S. Holder's adjusted tax basis in the
Note. A U.S. Holder's adjusted tax basis in a Note generally will equal the cost
of the Note to such holder. Such gain or loss will be capital gain or loss
except to the extent such amount is attributable to accrued interest income not
previously included in income, which is taxable as ordinary income. See "--
Market Discount, Acquisition Premium." In the case of a U.S. Holder who is an
individual, capital gains are generally subject to taxation at preferential
rates if certain prescribed minimum holding periods are met.
ADSs AND ALCATEL SHARES
The following generally summarizes the material French and United States
federal income tax consequences to U.S. Holders of ADSs or Alcatel Shares having
all of the following characteristics:
(1) they own, directly and indirectly, less than 10 percent of the capital
of the Company;
(2) they are entitled to Treaty benefits;
(3) they hold the Alcatel Shares or ADSs as capital assets; and
(4) their functional currency is the U.S. dollar.
See also "French Taxation."
Withholding-Avoir Fiscal
Dividends will be paid out of after-tax income. Under French domestic law,
dividends paid to non-residents are normally subject to a 25 percent French
withholding tax. Also, non-residents generally are not eligible for the benefit
of the avoir fiscal, which is a tax credit to which French tax residents are
usually entitled. The avoir fiscal generally equals 45% of the dividend paid,
unless it is being used by an individual, in which case it is equal to 50% of
the dividend paid.
However, under the Treaty, a U.S. Holder whose ownership of the ADSs or
Alcatel Shares is not effectively connected with a permanent establishment or a
fixed base in France can claim the benefit of a withholding tax at the reduced
rate of 15 percent. An Eligible U.S. Holder (as defined below) would also be
entitled to a payment equal to the avoir fiscal, i.e. of 45% or 50% of the
dividend paid (depending on whether the user of such avoir fiscal is an
individual or not) less a 15 percent withholding tax. As noted below, an
Eligible U.S. Holder will not receive payment of the avoir fiscal until after
the close of the calendar year in which the dividend was paid. Also, such
payment will be made by the French tax authorities upon receipt of a claim made
by the Eligible U.S. Holder for such payment.
An Eligible U.S. Holder is a U.S. Holder whose ownership of ADSs or Alcatel
Shares is not effectively connected with a permanent establishment or fixed base
in France and who is:
(1) an individual or other non-corporate holder that is a resident of the
United States as defined pursuant to the provisions of the Treaty,
(2) a United States corporation, other than a regulated investment company,
(3) a United States corporation which is a regulated investment company
only if less than 20 per cent. of its shares are beneficially owned
by persons who are neither citizens nor residents of the United
States, or
(4) a partnership or trust that is treated as a resident of the United
States as defined pursuant to the provisions of the Treaty, but only to
the extent that its partners, beneficiaries or grantors would qualify
under clause (1) or (2) above.
In general, under the Treaty, an Eligible U.S. Holder may receive a payment
of the avoir fiscal only if such holder (or its partners, beneficiaries or
grantors, if the holder is a partnership or trust) attests that it is subject to
United States federal income taxes on the payment of the avoir fiscal and the
related dividend. However, certain tax-exempt "US Pension Funds", as defined
below, and certain other tax-exempt entities (including certain governmental
institutions, not-for-profit organisations and individuals with respect to
dividends beneficially owned by such individuals and derived from an investment
retirement account) ("Other Tax-Exempt Entities") that own, directly or
indirectly, less than 10 percent of the capital of the Company, and that satisfy
certain filing formalities specified in regulations issued by the French tax
authorities (1) are entitled to a payment, subject to French withholding tax,
equal to 30/85 of the gross avoir fiscal (the "partial avoir fiscal") and (2)
are eligible for the reduced withholding tax rate of 15 percent. on dividends. A
"US Pension Fund" includes the exempt pension funds subject to the provisions of
Section 401(a) (qualified retirement plans), Section 403(b) (tax deferred
annuity contracts) or Section 457 (deferred compensation plans) of the Code,
established and managed in order to pay retirement benefits.
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In order to benefit from the reduced rate of withholding tax and the
payment of the avoir fiscal an Eligible US Holder must complete and file with
the French tax authorities before the date of payment of the dividend:
(1) French Treasury Form RF 1 A EU-NO. 5052 (the "Form") together with, if
such Eligible US Holder is not an individual, an affidavit attesting that it is
the beneficial owner of all the rights attached to the full ownership of the
ADSs or Alcatel Shares, including but not limited to dividend rights; or
(2) if completion of the Form is not possible prior to the payment of
dividends, such holder duly completes and provides the French tax authorities
with a simplified certificate (the "Certificate") stating that:
(a) such holder is a U.S. resident under the Treaty;
(b) such holder's ownership of the ADSs or Alcatel Shares is not
effectively connected with a permanent establishment or fixed base in
France;
(c) such holder owns all the rights attached to the full ownership of
the ADSs or Alcatel Shares, including but not limited to dividend rights;
and
(d) such holder meets all the requirements of the Treaty for obtaining
the benefit of the reduced rate of withholding tax and the right to payment
of the French avoir fiscal.
Dividends paid to a U.S. Holder that is not entitled to the avoir fiscal
(i.e., not an Eligible U.S. Holder) or to an Eligible U.S. Holder that has not
filed a completed Form or Certificate before the dividend payment date will be
subject to French withholding tax at the rate of 25 percent. Such holder may
claim a refund of the excess withholding tax and an Eligible U.S. Holder may
claim the avoir fiscal by completing and providing the French tax authorities
with the Form before December 31 of the year following the end of the calendar
year in which the dividend is paid. US Pension Funds and Other Tax-Exempt
Entities may have to supply additional documentation to evidence their
entitlement to the benefit of the reduced rate of withholding tax and of the
partial avoir fiscal.
Eligible U.S. Holders, U.S. Pension Funds and Other Tax-Exempt Entities
must file the Form or certificate, when applicable, the affidavit in order
to receive payment of the avoir fiscal or partial avoir fiscal (whichever is
applicable. The avoir fiscal or partial avoir fiscal is generally paid within
12 months of filing the form, but not before January 15 following the end of the
calendar year in which the related dividend is paid. Similarly, any French
withholding tax refund is generally paid within the same delay.
The Form or the Certificate, together with their respective instructions,
will be provided by the Depositary to all holders of ADRs registered with the
Depositary and are also available from the United States Internal Revenue
Service. The Depositary will arrange for the filing with the French tax
authorities of all Forms or Certificates that are returned to it in sufficient
time. (See "Description of Depositary Arrangements -- Dividends, Other
Distributions and Rights".)
For United States federal income tax purposes, U.S. Holders must include
the gross amount of a dividend and the amount of the avoir fiscal received,
without deduction for any French withholding tax, in their gross income as
dividend income on the date each such payment is received. No dividends received
deduction will be allowed. Such dividends will generally constitute foreign
source "passive" or (in the case of certain holders) "financial services" income
for foreign tax credit purposes. The amount of any dividend paid in French
francs, including the amount of any French taxes withheld therefrom, will be
equal to the U.S. dollar value of the French francs on the date such dividend is
included in income, regardless of whether the payment is in fact converted into
U.S. dollars. A U.S. Holder will generally be required to recognise United
States source ordinary income or loss upon the subsequent sale or disposition of
French francs. Moreover, a U.S. Holder may be required to recognise foreign
currency gain or loss, which will generally be United States source ordinary
income or loss, upon the receipt of a refund of amounts, if any, withheld from a
dividend in excess of the Treaty rate of 15 per cent.
French withholding tax imposed at the Treaty rate of 15 per cent on
dividends paid by the Company and on any related payment of the avoir fiscal is
treated as payment of a foreign income tax. Subject to certain conditions and
limitations, such tax may be taken as a credit against such US Holder's United
States federal income tax liability. Alternatively, a U.S. Holder may claim the
foreign taxes as an itemised deduction for the taxable year within which they
are paid or accrued. A deduction does not reduce U.S. tax on a dollar-for-dollar
basis like a tax credit. The deduction, however, is not subject to the
limitations applicable to foreign tax credits.
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If Alcatel Shares are sold on the monthly settlement market of the Paris
Bourse during the month of and prior to a dividend payment date, the seller of
the Alcatel Shares rather than the purchaser will generally be entitled to the
avoir fiscal with respect to dividends paid on such Alcatel Shares on such date.
Precompte
Dividends distributed by French companies out of profits which have not
been taxed at the ordinary corporate income tax rate or which have been earned
and taxed more than five years before the distribution and which give rise to
the avoir fiscal are subject to a precompte. The distributing company pays the
precompte to the French tax authorities. The precompte is generally equal to
one-half of the net dividend distributed before withholding tax. However, the
precompte may be reduced to 45% in respect of dividends paid to holders that are
entitled to use the avoir fiscal at the rate of 45% rather than the rate of 50%.
However, the company must certify to have distributed such dividends to such
beneficiaries.
A U.S. Holder not entitled to the full avoir fiscal may generally obtain a
refund from the French tax authorities of any precompte paid by the Company with
respect to the dividends distributed. Pursuant to the Treaty, the amount of the
precompte refunded to United States residents is reduced by the 15 per cent
withholding tax applicable to dividends and the partial avoir fiscal, if any. A
U.S. Holder is only entitled to a refund of precompte actually paid in cash by
the Company and is not entitled to a refund of the precompte paid by the Company
by off-setting French and/or foreign tax credits.
A U.S. Holder entitled to the refund of the precompte must apply for such
refund by filing a French Treasury form (RF 1 B EU-NO. 5053) before the end of
the calendar year following the year in which the dividend was paid. The form
and its instructions are available from the United States Internal Revenue
Service or at the Centre des impots des non residents (9 rue d'Uzes, 75094 Paris
Cedex 2, France).
For United States federal income tax purposes, a U.S. Holder must include
the amount of the precompte received in its gross income as dividend income in
the year such payment is received.
Sale or Other Disposition of ADSs or Alcatel Shares
A U.S. Holder who is a resident of the United States (as defined pursuant
to the Treaty) will not be subject to French tax on any capital gain from the
sale or exchange of ADSs or Alcatel Shares unless these ADSs or Alcatel Shares
form part of the business property of a permanent establishment or fixed base
that the U.S. Holder has in France. Special rules apply to individuals who are
residents of more than one country.
A transfer of Alcatel Shares evidenced by a written agreement may be
subject to French registration duty. See "French Taxation -- Taxation of Sale or
Other Disposition of Alcatel Shares."
In general, for United States federal income tax purposes, a U.S. Holder
will recognize capital gain or loss on the sale or exchange of ADSs or Alcatel
Shares in the same manner as on the sale or exchange of any other shares held as
capital assets. Such gain, if any, will generally be United States source gain.
U.S. Holders should consult their tax advisors regarding the source of any loss
recognized upon the sale or other disposition of Shares. In the case of a U.S.
Holder who is an individual, capital gains will generally be subject to U.S.
federal income tax at preferential rates if specified minimum holding periods
are met.
French Estate and Gift Taxes
Pursuant to The Convention Between the United States of America and the
French Republic for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Estates, Inheritance and Gifts, a
transfer of ADSs or Alcatel Shares by gift or by reason of the death of a US
Holder will not be subject to French gift or inheritance tax, unless (1) the
donor or the transferor is domiciled in France at the time of making the gift or
at the time of his or her death, or (2) the ADSs or Alcatel Shares were used in,
or held for use in, the conduct of a business through a permanent establishment
or fixed base in France.
French Wealth tax
The French wealth tax does not generally apply to the ADSs or Alcatel
Shares owned by a U.S. Holder who is a resident of the United States as defined
pursuant to the provisions of the Treaty.
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TAXATION OF NON-U.S. HOLDERS
NOTES
Payments of Interest
Payments of principal and interest on a Note to a Non-U.S. Holder will not
be subject to United States federal withholding tax provided that:
(1) the holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company
entitled to vote;
(2) the holder is not a controlled foreign corporation that is related
directly or indirectly to the Company through stock ownership;
(3) the holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code; and
(4) either:
(a) the beneficial owner of the Note, under penalties of perjury,
provides the Company or its agent with its name and address and
certifies that it is not a U.S. person; or
(b) a securities clearing organization, bank, or other financial
institution that holds customers' securities in the ordinary course
of its trade or business (a "financial institution") certifies to
the Company or its agent, under penalties of perjury, that it or
another financial institution has received such a statement from
the beneficial owner by and furnishes to the Company or its agent a
copy thereof (the "Portfolio Interest Exemption").
The gross amount of payments of interest to a Non-U.S. Holder that does not
qualify for the Portfolio Interest Exemption and that is not effectively
connected with a United States trade or business will be subject to United
States federal income tax at the rate of 30%, unless a United States income tax
treaty applies to reduce or eliminate withholding.
A Non-U.S. Holder that is engaged in a trade or business in the United
States will generally be subject to tax in the same manner as a U.S. person to
the extent that such income is effectively connected with the conduct of such
trade or business. Such effectively connected income received by a Non-U.S.
Holder which is a corporation may in certain circumstances be subject to an
additional "branch profits tax" at a 30% rate or, if applicable, a lower treaty
rate.
To claim the benefit of a tax treaty or to claim exemption from withholding
because the income is effectively connected with a U.S. trade or business, the
Non-U.S. Holder must provide a properly executed Form 1001 or 4224, as
applicable, prior to the payment of interest. The Non-U.S. Holder must
periodically update these forms. Finalized Treasury Regulations applicable to
payments made after December 31, 1999, require Non-U.S. Holders or, under
certain circumstances, a "qualified intermediary" to file a "withholding
certificate" with the Company's withholding agent to obtain the benefit of an
applicable tax treaty providing for a lower rate of withholding tax. Such
certificate must contain, among other information, the name and address of the
Non-U.S. Holder.
Sale, Exchange or Redemption of Notes or Conversion of Notes for ADSs
Subject to the discussion below on U.S. backup withholding, upon the sale,
exchange, redemption or other disposition of a Note, including the conversion of
a Note in exchange for ADSs, a non-U.S. Holder generally will not be subject to
United States federal income tax or withholding tax unless (1) the holder is an
individual who was present in the United States for 183 days or more during the
taxable year and certain other conditions are met, or (2) the gain is
effectively connected with the conduct of a trade or business of such holder in
the United States.
United States Estate Tax
A Note held by an individual who is not a citizen or resident of the United
States at the time of death will not be includable in the decedent's gross
estate for United States estate tax purposes subject to the following, (1) such
holder or beneficial owner did not at the time of death actually or
constructively own 10% or more of the combined voting power of all classes of
stock of the Company entitled to vote, and (2) at the time of death, payments
with respect to such Note would not have been effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United States.
ADSs AND ALCATEL SHARES
See "French Taxation" for a summary of French tax consequences to a
Non-U.S. Holder of holding Alcatel Shares or ADSs.
Subject to the discussion below entitled "United States Information
Reporting and Backup Withholding," upon receipt of dividends paid on Alcatel
Shares or ADSs or upon the sale, exchange or other disposition of Alcatel Shares
or ADSs, a Non-U.S. Holder generally will not be subject to United States
federal income tax or withholding tax unless (1) such holder is an individual
who was present in the United States for 183 days or more during the taxable
year and certain other conditions are met, or (2) the dividend or gain is
effectively connected with the conduct of a trade or business of such holder in
the United States.
UNITED STATES INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on a Note, payments of dividends on an
ADS or Alcatel Share, and payments of the proceeds of the sale of a Note, ADS or
Alcatel Share to certain non-corporate U.S. Holders. A 31% backup withholding
tax may apply to such payment if the U.S. Holder:
(1) fails to furnish or certify his correct taxpayer identification number
("TIN") to the payor in the manner required,
(2) is notified by the IRS that he has failed to report payments of
interest or dividends properly or
(3) under certain circumstances, fails to certify that he has not been
notified by the IRS that he is subject to backup withholding for
failure to report interest or dividend payments.
Information reporting requirements may apply to payments of interest or
dividends to Non-U.S. Holders where such interest or dividends are subject to
withholding or are exempt from United States withholding tax or eligible for a
reduced rate pursuant to a tax treaty, or where such interest is exempt from
United States tax under the Portfolio Interest Exemption. Copies of these
information returns may also be made available under the provisions of a
specific treaty or agreement to the tax authorities of the country in which the
Non-U.S. Holder resides.
Treasury Regulations provide that backup withholding and information
reporting will not apply to a Non-U.S. Holder if the Non-U.S. Holder certifies
as to its status as a Non-U.S. Holder under penalties of perjury or otherwise
establishes an exemption (provided that neither the Company nor its paying agent
has actual knowledge that the holder is a U.S. person or that the conditions of
any other exemption are not, in fact, satisfied).
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
Finalized Treasury Regulations have generally expanded the circumstances
under which information reporting and backup withholding may apply for payments
made after December 31, 1999. Holders of Notes should consult their tax advisors
regarding the application of the information reporting and backup withholding
rules, including such Treasury Regulations.
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FRENCH TAXATION
The following discussion is a general summary of the material French
tax consequences of payments made under the Guarantee and of the ownership and
disposition of Alcatel Shares by a holder that is not a resident of France and
does not hold the Alcatel Shares in connection with a business conducted in
France. This summary is based on current laws, and is subject to any change.
This discussion is intended only as a descriptive summary and does not
purport to be a complete analysis or list of all potential tax effects of the
purchase or ownership of the Alcatel Shares.
POTENTIAL PURCHASERS OF ALCATEL SHARES SHOULD CONSULT THEIR OWN TAX
ADVISOR CONCERNING THE CONSEQUENCES OF OWNERSHIP AND DISPOSAL OF ALCATEL SHARES.
Taxation of Payments Made Under the Guarantee
Under current French law, no withholding of French tax will be required
with respect to any payments made by Alcatel under the Guarantee to a holder of
Notes that is not a resident of France for French tax purposes.
Taxation on Sale or Other Disposition of Alcatel Shares
Subject to more favorable provisions of any applicable tax treaty,
persons who are not residents of France for the purpose of French taxation and
who have held a maximum of 25 percent, directly or indirectly, of the dividend
rights (benefices sociaux) of Alcatel at any time during the preceding five
years, are not generally subject to any French income tax or capital gains tax
on any sale or other disposition of Alcatel Shares.
If a transfer of Alcatel Shares is evidenced by a written agreement,
such share transfer agreement is, in principle, subject to registration
formalities and to a one percent registration duty assessed on the higher of the
purchase price and the market value of the Alcatel Shares (subject to a maximum
assessment of FF 20,000 per transfer). Generally, no duty is due if the transfer
is not evidenced by a written agreement or if such written agreement is executed
outside France. In addition, non-French residents are not required to pay a
stock exchange stamp tax on the sale of their Alcatel Shares.
Taxation of Dividends
Dividends will be paid out of after-tax income. Under French domestic
law, dividends paid to non-residents are normally subject to a 25 percent French
withholding tax. Also, non-residents generally are not eligible for the benefit
of the avoir fiscal, which is a tax credit to which French tax residents are
usually entitled. The avoir fiscal generally equals 45% of the dividend paid,
unless it is being used by an individual, in which case it is equal to 50% of
the dividend paid. Holders that are entitled to benefit under an applicable tax
treaty, and that comply with the procedures for claiming such benefits, may be
subject to a reduced rate of withholding tax, and may be entitled to receive a
refund of the avoir fiscal, as described below.
France has entered into treaties with the following jurisdictions under
which qualifying residents are entitled to obtain from the French tax
authorities a reduction (generally to a rate of 15 percent) of all or part of
such withholding tax and a refund of the avoir fiscal (net of applicable
withholding tax). German tax residents are entitled to a tax credit in an amount
equal to the amount of the applicable avoir fiscal and the amount of the
applicable withholding tax.
Countries and Territories
Australia Canada Israel Malta Pakistan Togo
Austria Finland Italy Mauritius Senegal Turkey
Belgium Gabon Ivory Coast Mexico Singapore United Kingdom
Bolivia Germany Japan Netherlands South Korea United States of
Brazil Ghana Luxembourg New Zealand Spain America
Burkina Faso Iceland Malaysia Niger Sweden Venezuela
Cameroun India Mali Norway Switzerland
Territoires d'Outre-Mer and Other
Mayotte
New Caledonia
Saint-Pierre et Miquelon
Treaties with some of the countries and territories listed above
provide special rules as to the circumstances in which corporate holders will be
entitled to the avoir fiscal. Such treaties limit the rights to such a refund
strictly to individual residents (as opposed to corporate entities).
Except for the United States of America, none of the countries and
territories listed above has treaties with France with provisions applicable to
ADSs (as opposed to Shares) with respect to claiming benefits thereunder.
Accordingly, the discussion of treaty benefits in this sub-section does not
relate to holders of ADSs.
Dividends paid to non-residents of France qualifying for the avoir
fiscal in accordance with a tax treaty (other than German residents) will be
subject, on the date of payment, to the withholding tax at the reduced rate
provided for by such treaty (subject to certain filing formalities) rather than
to the French withholding tax at the rate of 25 percent to be later reduced to
the treaty rate. However such persons must establish their entitlement to the
reduced rate of withholding tax before the date of payment.
If a seller sells its Alcatel Shares in a trade executed on the monthly
settlement market during the month of a dividend payment date, the seller rather
than the purchaser will generally be entitled to the avoir fiscal with respect
to dividends paid on those Alcatel Shares.
Dividends distributed by French companies out of profits which have not
been taxed at the ordinary corporate income tax rate or which have been earned
and taxed more than five years before the distribution are subject to a
precompte. The distributing company pays the precompte to the French tax
authorities. The precompte is generally equal to one-half of the net dividend
distributed before withholding tax. However, the precompte may be reduced to 45%
in respect of dividends distributed as of January 1, 1999 to holders that are
entitled to use the avoir fiscal at the rate of 45% rather than the rate of 50%.
However the Company must attest to have distributed such dividends to such
beneficiaries. When a tax treaty in force (1) does not provide for a refund of
the avoir fiscal to a non-resident investor or (2) when the non-resident
investor is not entitled to such refund but is otherwise entitled to the
benefits of a tax treaty, such investor generally may obtain from the French tax
authorities a refund of such precompte actually paid in cash by Alcatel, if any
(net of applicable withholding tax).
French Estate and Gift Tax
France imposes estate and gift tax on securities of a French company
acquired by inheritance or gift from a non-resident of France. France has
entered into estate and gift tax treaties with a number of countries pursuant to
which, assuming certain conditions are met, residents of the treaty countries
may, under certain conditions, be exempted from such tax or obtain a tax
credit. Prospective investors in Alcatel Shares should consult their own
advisors concerning the applicability of French estate and gift tax to their
shareholding in Alcatel and the availability of, and the conditions for claiming
exemption under, any applicable treaty.
French Wealth Tax
The French wealth tax (impot de solidarite sur la fortune) does not
apply to non-French resident individual investors owning directly or indirectly
less than 10 percent of the share capital of Alcatel.
DESCRIPTION OF REGISTRATION RIGHTS AGREEMENT
The following summary of certain provisions of the Registration Rights
Agreement does not contain all of the information which may be important to you.
A copy of the Registration Rights Agreement was filed in the Company's Current
Report on Form 8-K on August 26, 1997, and is incorporated by reference herein.
SHELF REGISTRATION STATEMENT
The Registration Rights Agreement required the Company to file a Shelf
Registration Statement, of which this Prospectus is a part, with the Commission
within 90 days of August 12, 1997. Such filing was to be for the benefit of the
holders of the Notes and the Common Stock issuable upon conversion of the Notes,
or, in the event the Notes become convertible into securities other than Common
Stock, of such other securities (collectively, the "Registrable Securities").
The Registration Rights Agreement also requires the Company to use its
reasonable best efforts to have the Shelf Registration Statement declared
effective within 90 days after such filing. The Company is obligated to keep the
Shelf Registration Statement effective until the earliest of:
(1) the expiration of two years from the time the Shelf Registration
Statement is declared effective;
(2) such time as all Registrable Securities have been sold pursuant to
the Shelf Registration Statement, transferred pursuant to Rule 144
under the Securities Act or otherwise transferred in a manner that
results in a new security not subject to transfer restrictions
under the Securities Act being delivered pursuant to the Indenture;
and
(3) such time as, in the opinion of counsel, all of the Registrable
Securities held by non-affiliates of the Company are eligible for
resale pursuant to Rule 144(k) under the Securities Act and the
legends described under "Notice to Investors" have been removed
from such Registrable Securities.
ADDITIONAL INTEREST
If the Company fails to comply with certain of its obligations under
the Registration Rights Agreement, additional interest is payable on the Notes
as described under "Description of Notes--Registration Rights."
UNDERWRITTEN OFFERING
The Registration Rights Agreement provides that holders of 33 1/3% of
the Registrable Securities may elect to have one underwritten offering. The
managing underwriter(s) for any such offering must be selected by holders of
50% of the Registrable Securities to be included in the underwritten offering
and must be reasonably acceptable to the Company. The Company has the right to
defer any underwritten offering for up to 120 days for a valid business reason.
FEES AND EXPENSES
In the Registration Rights Agreement, the Company agreed to pay all
fees and expenses incident to the filing of the Shelf Registration Statement and
maintaining its effectiveness for resales of Registrable Securities. In
addition, the Company agreed to pay up to a maximum of $85,000 for the fees and
disbursements of a single counsel selected by holders of not less than 25% of
the Registrable Securities to represent them in connection with the Shelf
Registration Statement. Except as provided in the preceding sentence, the
holders of Registrable Securities included in the Shelf Registration Statement
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<PAGE> 37
are responsible (on a pro rata basis based on the principal amount of
Registrable Securities included therein) for the fees and disbursements of such
counsel.
In the case of an underwritten offering, the Company will pay up to a
maximum of $200,000 for the fees and expenses in connection therewith (the fees
and disbursements of one counsel for the holders participating in such offering
being included in such fees and expenses). The holders participating in such
offering will be responsible (on a pro rata basis based on the principal amount
of Registrable Securities included in such offering) for all fees and expenses
of such underwritten offering in excess of $200,000, including any fees and
expenses of counsel to the holders, counsel to the Company and the Company's
independent public accountants that may constitute part of such excess amount.
In no event will the Company be responsible for underwriting discounts
or commissions in connection with such underwritten offering.
INDEMNIFICATION
In the Registration Rights Agreement, the Company agreed to indemnify
the holders of Registrable Securities against certain liabilities, including
liabilities under the Securities Act, and each holder of Registrable Securities
included in the Shelf Registration Statement is obligated to indemnify the
Company and any other holder against any liability with respect to any
information furnished by such holder in writing to the Company expressly for
use in the Shelf Registration Statement.
SELLING SECURITYHOLDERS
The Notes were originally issued by the Company to Goldman, Sachs & Co.
and NationsBanc Capital Markets, Inc. (the "Initial Purchasers") on August 12,
1997. Such issuance was made pursuant to an exemption from the registration
requirements provided by Section 4(2) of the Securities Act. The Initial
Purchasers simultaneously sold the Notes in transactions exempt from the
registration requirements of the Securities Act pursuant to Rule 144A of the
Securities Act or Regulation S of the Securities Act. An aggregate of
$400,000,000 principal amount of Notes was issued and was outstanding as of
April 9, 1999.
This Prospectus relates to the offer and sale by each Selling
Securityholder of the following securities (the "Resale Securities"): (1) the
Notes that are set forth in the table below with respect to such Selling
Securityholder (as such table may be amended from time to time by means of a
supplement or amendment hereto), together with the related Guarantee, and (2)
all ADSs that may be acquired by any Selling Securityholder upon conversion of
any Note to which this Prospectus relates as described in the preceding clause.
The "Selling Securityholders" include: (1) each person and entity that
is identified as a Selling Securityholder in the table below (which may be
supplemented or amended from time to time) and (2) any transferee, donee,
pledgee or other successor of any such person or entity that acquires any of the
Resale Securities in a transaction exempt from the registration requirements of
the Securities Act and that is identified in a supplement or amendment to this
Prospectus.
Based upon information provided to the Company by each Selling
Securityholder, the table below indicates with respect to each Selling
Securityholder: (1) the aggregate principal amount of Notes beneficially owned
by such Selling Securityholder and (2) the aggregate number of ADSs deliverable
upon conversion of such Notes (rounded down to the nearest whole number) based
upon the current per ADS conversion price. The table below also indicates by
footnote reference any material relationship that a Selling Securityholder has
had with the Company or Alcatel during the preceding three years. This
Prospectus covers all Securities shown in the table below, and the Company may
from time to time supplement or amend this Prospectus to reflect the required
information concerning any additional Selling Securityholders.
36
<PAGE> 38
<TABLE>
<CAPTION>
NUMBER OF ADSs
PRINCIPAL AMOUNT ISSUABLE UPON
SELLING SECURITYHOLDER(1) OF NOTES OWNED CONVERSION OF NOTES(2)
------------------------------------------------------------ --------------------- ----------------------
<S> <C> <C>
Fidelity Securities Fund: Fidelity Growth & Income Portfolio 20,000,000 327,804
Natwest Securities Limited 12,792,000 209,664
Argent Classic Convertible Arbitrage Fund (Bermuda) L.P. 9,700,000 158,985
Investcorp SAM Limited 9,500,000 155,707
J.P. Morgan & Co. Incorporated 8,600,000 140,956
SMM Company B.V. 6,100,000 99,980
CFW-C, L.P. 6,000,000 98,341
BancAmerica Robertson Stephens 5,230,000 85,721
Capital Markets Transactions Inc. 5,000,000 81,951
Gryphon Domestic III, LLC 5,000,000 81,951
Oregon - Equity Fund 5,000,000 81,951
Silverton International Fund Limited 4,000,000 65,561
Travelers Indemnity Company 2,686,000 44,024
Smith Barney Inc. 2,545,000 41,713
Allstate Insurance Company 2,500,000 40,976
The Travelers Insurance Company 2,014,000 33,010
South Dakota Retirement System 2,000,000 32,780
HSBC Securities, Inc. 1,500,000 24,585
Rhapsody Fund, LP 1,500,000 24,585
PRIM Board 1,125,000 18,439
Arpeggio Fund, LP 1,000,000 16,390
CIBC Oppenheimer Corp. 1,000,000 16,390
Lazard Freres and Co., L.L.C. 1,000,000 16,390
Salomon Brothers Equity Arbitrage Finance Limited I 1,000,000 16,390
Stark International 1,000,000 16,390
Goldman, Sachs & Co., Bank Zurich 900,000 14,751
Salomon Brothers Diversified Arbitrage Strategies Finance Ltd 875,000 14,341
MIMLIC Asset Management Co. 865,000 14,178
The Minnesota Mutual Life Insurance Company 865,000 14,178
Halliburton Company Employee Benefit 820,000 13,440
Franklin Universal Trust 750,000 12,293
Castle Convertible Fund, Inc. 500,000 8,195
Franklin Investors Securities Trust 500,000 8,195
Franklin Multi-Income Trust 500,000 8,195
Franklin Strategic Income Fund 500,000 8,195
Swiss Bank Corporation - London Branch 500,000 8,195
Argent Classic Convertible Arbitrage Fund L.P. 300,000 4,917
Fairfax County Police Pension and Retirement Fund 295,000 4,835
Fairfax County URS Convertible Bonds 295,000 4,835
Lehman Brothers Inc. 235,000 3,852
Travelers Life Insurance Company, Separate Account TLAC 202,000 3,311
Robert Kirk 200,000 3,278
Kapiolani Medical 190,000 3,114
Woodson W. Fishback Trust 170,000 2,786
The Travelers Life & Annuity Company 167,000 2,737
Mildred Fishback Revocable Trust 130,000 2,131
ALCAN Corp. Master Retirement Trust 125,000 2,049
Hawaii Airlines Pilots Retirement Plan 125,000 2,049
Benjamin Moore & Co. Retirement Income 100,000 1,639
IBEW Local 292 Pension Fund 100,000 1,639
Travelers Series Trust Convertible Bond Portfolio 98,000 1,606
Hawaii Airlines - IAM 85,000 1,393
Nestle USA 45,000 738
AICPA Long Term Investment Fund 20,000 328
Halliburton Foundation, Inc. 20,000 328
Hawaii Airlines Salaried Emply. 20,000 328
AICPA Revised Staff Pension Plan 15,000 246
Holton Arms School Pooled Investment Fund 15,000 246
Inland Foundation, Inc. 10,000 164
</TABLE>
________________
(1) Each Selling Securityholder is the beneficial owner of the indicated
Notes. In certain cases, the indicated Notes may be held of record by a
nominee or custodian for the account of the Selling Securityholder.
(2) The per ADS conversion price and, therefore, the number of
ADSs that may be deliverable upon conversion of the Notes is subject to
adjustment as described under "Description of Notes--Conversion Rights."
37
<PAGE> 39
PLAN OF DISTRIBUTION
The Notes were issued in connection with a private placement. The
Resale Securities, of which the Notes constitute a part, may be sold from time
to time by the Selling Securityholders. The Selling Securityholders may from
time to time sell all or a portion of the Resale Securities in transactions in
the over-the-counter market, in negotiated transactions, or a combination of
such methods of sale, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Resale Securities may be sold directly or through broker-dealers. If the Resale
Securities are sold through broker-dealers, the Selling Securityholders may pay
brokerage commissions and charges. The methods by which the Resale Securities
may be sold include:
(1) a block trade (which may involve crosses) in which the broker or dealer
so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate
the transaction;
(2) by a broker or dealer as principal and resale by such broker or dealer
for its own account pursuant to this Prospectus;
(3) exchange distributions and/or secondary distributions;
(4) ordinary brokerage transactions and transactions in which the broker
solicits purchasers and
(5) privately negotiated transactions.
Pursuant to the provisions of the Registration Rights Agreement entered
into by the Company and the Initial Purchaser, the Company will pay the costs
and expenses incident to its registration and qualification of the Resale
Securities offered hereby, including registration and filing fees. In addition,
the Company has agreed to indemnify the Selling Securityholders against certain
liabilities, including liabilities arising under the Securities Act. See
"Description of Notes--Registration Rights Agreement."
The holders of the Resale Securities are qualified institutional buyers
within the meaning of Rule 144A of the Securities Act or non-U.S. persons within
the meaning of Regulation S under the Securities Act. Prior to any use of this
Prospectus for the resale of the Resale Securities, this Prospectus will be
amended or supplemented to set forth the name of the Selling Securityholder, the
amount of the Notes and/or the number of Alcatel Shares or ADSs beneficially
owned by such Selling Securityholder, and the amount of the Notes and/or the
number of ADSs to be offered for resale by such Selling Securityholder. The
supplemented or amended Prospectus will also disclose whether any Selling
Securityholder selling in connection with such supplemented or amended
Prospectus has held any position or office with, been employed by or otherwise
had a material relationship with, the Company, Alcatel or any of their
affiliates during the three years prior to the date of the supplemented or
amended Prospectus.
The Selling Securityholders and any broker-dealer participating in the
distribution of the Resale Securities may be deemed to be "underwriters" within
the meaning of the Securities Act, and any profit and any commissions paid or
any discounts or concessions allowed to any such broker-dealer may be deemed to
be underwriting discounts and commissions under the Securities Act. The Selling
Securityholders may indemnify any broker-dealer that participates in
transactions involving the sale of Notes and the Common Stock against certain
liabilities, including liabilities under the Securities Act.
We cannot be certain that the Selling Securityholders will sell any or
all of the Resale Securities offered by them under this Prospectus. The resale
of the Resale Securities will be freely transferable in the hands of persons
other than affiliates of the Company or Alcatel.
The Company and Alcatel will receive none of the proceeds from the
resale of the Resale Securities.
LEGAL MATTERS
The validity of the issuance of the Notes offered under this Prospectus
will be passed upon for the Selling Securityholders by Baker & McKenzie, Dallas,
Texas. The validity under French law of the issuance of the Guarantee and the
Alcatel Shares registered under this Prospectus will be passed upon for the
Selling Securityholders by Pascal Durand-Barthez, general counsel of Alcatel.
The validity of the Guarantee under U.S. law will be passed upon for the Selling
Securityholders by Shearman & Sterling.
38
<PAGE> 40
EXPERTS
The consolidated financial statements and schedule of the Company and
its subsidiaries in the Company's Annual Report (Form 10-K) for the year ended
December 31, 1997, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon incorporated by reference therein and
incorporated herein by reference. The consolidated financial statements of
Alcatel and its subsidiaries in Alcatel's Annual Report (Form 20-F) for the year
ended December 31, 1997, have been audited by Arthur Andersen LLP, independent
auditors, as set forth in their report therein incorporated herein by reference.
Such consolidated financial statements are incorporated in this Prospectus by
reference in reliance upon such reports given upon the authority of such firms
as experts in accounting and auditing.
39
<PAGE> 41
<PAGE> 42
ALCATEL
INDEX TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Income Statements for six month periods
ended June 30, 1998 and 1997.......................................... F-2
Consolidated Balance Sheet at June 30, 1998
and December 31, 1997................................................. F-3
Consolidated Statements of Cash Flow for six month periods
ended June 30, 1998 and 1997.......................................... F-5
Consolidated Statements of Changes in Shareholders' Equity
for the year ended December 31, 1997 and
the six month period ended June 30, 1998.............................. F-6
Notes to Consolidated Financial Statements................................. F-7
F-1
<PAGE> 43
UNAUDITED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS FOR ALCATEL
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
(in millions of French francs) SIX MONTH PERIOD ENDED JUNE 30,
1998 1997 1997
RESTATED * AS PUBLISHED
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES FF 61,604 FF 60,073 FF 86,828
Cost of sales (44,714) (44,394) (65,917)
- - -----------------------------------------------------------------------------------------------------------------------
GROSS MARGIN 16,890 15,679 20,911
- - -----------------------------------------------------------------------------------------------------------------------
Administratives and selling expenses (9,121) (8,701) (12,154)
R&D expenses (5,467) (4,992) (6,075)
- - -----------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 2,302 1,986 2,682
- - -----------------------------------------------------------------------------------------------------------------------
Financial income (loss) 292 (647) (297)
Restructuring costs (55) (259) (759)
Amortization of goodwill (993) (1,006) (1,091)
Other revenue (expense) 14,171 1,102 1,332
- - -----------------------------------------------------------------------------------------------------------------------
INCOME BEFORE TAXES AND SHARE IN NET INCOME 15,717 1,176 1,867
OF EQUITY AFFILIATES
- - -----------------------------------------------------------------------------------------------------------------------
Income tax (1,141) (301) (578)
Share in net income of equity affiliates 656 745 366
Minority interests (27) (131) (166)
- - -----------------------------------------------------------------------------------------------------------------------
NET INCOME 15,205 1,489 1,489
- - -----------------------------------------------------------------------------------------------------------------------
Net income per share (in French francs): - basic 95.68 9.52 9.52
- diluted 88.23 9.42 9.42
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* In order to make comparisons easier, "Engineering and Systems" and "Energy
and Transport" sectors have been accounted for under the equity method.
F-2
<PAGE> 44
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------
ASSETS 06/30/98 12/31/97
(in millions of French francs) *
- - ------------------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill, net value FF 27,562 FF 29,896
Other intangible assets 880 820
INTANGIBLE ASSETS, NET VALUE 28,442 30,716
- - ------------------------------------------------------------------------------------------------
Property, plant and equipment 62,567 77,901
Depreciation (40,714) (49,360)
PROPERTY, PLANT AND EQUIPMENT, NET VALUE 21,853 28,541
- - ------------------------------------------------------------------------------------------------
Share in net assets of equity affiliates 6,569 4,718
Other investments and miscellaneous, net 13,618 13,229
INVESTMENTS AND OTHER NON-CURRENT ASSETS 20,187 17,947
- - ------------------------------------------------------------------------------------------------
TOTAL NON CURRENT ASSETS 70,482 77,204
- - ------------------------------------------------------------------------------------------------
INVENTORIES AND WORK IN PROGRESS 25,498 43,627
- - ------------------------------------------------------------------------------------------------
Trade receivables and related accounts 50,636 81,840
Other accounts receivable 14,089 21,282
ACCOUNTS RECEIVABLE 64,725 103,122
- - ------------------------------------------------------------------------------------------------
Short-term investments 8,121 5,984
Marketable securities, net value 2,308 3,242
Cash on hand 17,676 18,593
- - ------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS 19,984 21,835
- - ------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS AND CASH AND CASH EQUIVALENT 28,105 27,819
- - ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 118,328 174,568
- - ------------------------------------------------------------------------------------------------
TOTAL ASSETS 188,810 251,772
- - ------------------------------------------------------------------------------------------------
</TABLE>
* Long-term interest bearing receivables, previously included under "Other
investments and miscellaneous, net" for the long-term portion and under
"Other accounts receivable" for the short-term portion, have been
reclassified as "Trade receivables."
F-3
<PAGE> 45
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'S EQUITY 06/30/98 12/31/1997
(in millions of French francs) BEFORE AFTER
APPROPRIATION APPROPRIATION
- - ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital stock (FF 40 Nominal value;
169,270,712 shares Issued at June 30, 1998,
162,084,374 at June 30, 1997
And 163,199,080 at December 31, 1997) FF 6,771 FF 6,527
Additional paid-in capital 39,824 35,772
Retained earnings 11,397 9,846
Cumulative translation adjustments (5,318) (5,607)
Net income 15,205 -
Less treasury stock at cost (2,584) (2,584)
SHAREHOLDERS' EQUITY 65,295 43,954
- - -----------------------------------------------------------------------------------------------
MINORITY INTERESTS 2,972 1,777
- - -----------------------------------------------------------------------------------------------
Accrued pension and retirement obligations 7,690 8,777
Accrued contract costs and other reserves 24,297 40,075
TOTAL RESERVES FOR LIABILITIES AND CHARGES 31,987 48,852
- - -----------------------------------------------------------------------------------------------
Bonds and notes issued 17,908 21,164
Other borrowings 12,343 18,557
TOTAL FINANCIAL DEBT 30,251 39,721
- - -----------------------------------------------------------------------------------------------
Customers' deposits and advances 12,127 50,304
Trade payables and related accounts 22,555 32,412
Other payables 23,623 34,752
TOTAL OTHER LIABILITIES 58,305 117,468
- - -----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 188,810 251,772
- - -----------------------------------------------------------------------------------------------
</TABLE>
F-4
<PAGE> 46
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------
(in millions of French francs) SIX MONTH PERIOD ENDED JUNE 30
1998 1997*
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income FF 15,205 FF 1,489
Minority interests 27 164
Adjustments to reconcile income before minority
interests to net cash provided
by operating activities :
- - - Depreciation, amortization, net 3,544 4,449
- - - Changes in reserves for pension obligations, net 274 247
- - - Changes in other reserves, net (1,245) (881)
- - - Net (gain) loss on disposal of non-current assets (14,209) (1,266)
- - - Share in net income of equity affiliates
(net of dividends received) (251) (56)
- - - Other
WORKING CAPITAL PROVIDED BY OPERATIONS 3,345 4,146
- - ----------------------------------------------------------------------------------------------------------
Net change in current assets and liabilities : 3,812 (5,701)
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (467) (1,555)
- - ----------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from disposal of fixed assets 176 428
Capital expenditures (2,441) (2,959)
Decrease (increase) in loans 185 (521)
Cash expenditures for acquisition of consolidated companies,
net of cash acquired, and for acquisition of unconsolidated companies (124) (513)
Cash proceeds from sale of previously consolidated companies,
net of cash sold, and from sale of unconsolidated companies 20,070 4,564
Decrease (increase) in short-term investments (3,736) (875)
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 14,130 124
- - ----------------------------------------------------------------------------------------------------------
NET CASH FLOW AFTER INVESTMENT 13,663 (1,431)
- - ----------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES
Increase (decrease) in short-term debt (18,278) (6,769)
Proceeds from issuance of long-term debt 4,371 1,662
Proceeds from issuance of shares 309 191
Dividends paid (1,880) (1,648)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (15,478) (6,564)
- - ----------------------------------------------------------------------------------------------------------
Net effect of exchange rate change (36) 427
NET INCREASE (DECREASE) IN MARKETABLE SECURITIES AND CASH (1,851) (7,568)
- - ----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 21,835 23,721
- - ----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR 19,984 16,153
- - ----------------------------------------------------------------------------------------------------------
</TABLE>
* Changes in interest bearing receivables, previously included under "changes
in loans" for the long-term portion have been reclassified as changes in
"accounts receivable".
F-5
<PAGE> 47
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------------
(IN MILLIONS OF FRENCH FRANCS) NOTE NUMBER CAPITAL ADDI- RETAINED CUMULATIVE NET TREASURY SHARE-
OF SHARES STOCK TIONAL EARNINGS TRANSLATION INCOME STOCK HOLDERS'
OUTSTANDING PAID-IN ADJUSTMENTS OWNED BY EQUITY
CAPITAL CONSOLIDATED
SUBSIDIARIES
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,1997 FF 157,953,570 6,527 35,772 9,846 (5,607) 0 (2,584) 43,954
AFTER APPROPRIATION
- - --------------------------------------------------------------------------------------------------------------------------------
Capital increase (17a) 6,071,632 244 4,052 4,296
Translation adjustment 288 288
Net change in treasury stock owned
by consolidated subsidiaries 60 60
Other changes 1,491 * 1,491
Net income 15,205 15,205
- - --------------------------------------------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1998 FF 164,025,202 6,771 39,824 11,397 (5,319) 15,205 (2,584) 65,294
- - --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Of which FF 1,500 million related to Thomson CSF's stake in "Alcatel Space".
F-6
<PAGE> 48
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1
FINANCIAL STATEMENTS
The Unaudited Condensed Consolidated Interim Financial Statements and related
notes have been prepared in accordance with French GAAP and do not necessarily
include all disclosures required by such principles. However, in the opinion of
the management of the Company, all adjustments necessary to present fairly the
financial position as of June 30, 1998, results of operations and cash flows for
the six-month period ended June 30, 1998 and 1997 have been made.
NOTE 2
FINANCIAL INCOME
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
in millions of French francs JUNE 30, JUNE 30,
1998 1997
- - --------------------------------------------------------------------------------
<S> <C> <C>
NET INTEREST (EXPENSE) INCOME (444) (773)
Dividends * 783 148
Provisions for depreciation of investments** (15) 114
Net exchange gain (loss) (61) (58)
Other financial items (net) 29 (78)
- - --------------------------------------------------------------------------------
FINANCIAL INCOME (LOSS) 292 (647)
- - --------------------------------------------------------------------------------
</TABLE>
* received from unconsolidated companies (excluding equity affiliates).
** which includes FF 113 million in 1997 and for the first half 1997 related to
Alcatel Alsthom Shares held on a long-term basis by subsidiaries.
NOTE 3
CHANGE IN CONSOLIDATED COMPANIES
Changes in the consolidated companies
The main changes for the first half 1998 in the consolidated companies are as
follows :
- - - In March 1998, Alcatel sold to ALSTOM (previously GEC ALSTHOM NV) most of the
Engineering and Systems Sector's activities. In order to allow easier
comparisons, the activities disposed of, have been accounted for under the
equity method from January 1, 1998 to March 31, 1998 (effective date of the
transaction).
- - - In June 1998, ALSTOM made an International Initial Public Offering of shares
for a maximum 120.9 million of shares, of which 11.7 million new shares and
109.2 million shares previously held by General Electric company, p.l.c (GEC)
and Alcatel and its 100% owned subsidiary Societe Immobiliere Kleber-Lauriston
(SIKL). Following this offering, Alcatel retains a 24% stake in the capital at
June 30, 1998. In order to allow easier comparisons, ALSTOM is accounted for
under the equity method from January 1, 1998 and the accounting date for the
disposal is on June 30, 1998.
- - - In April 1998, Alcatel signed with Aerospatiale, Dassault Industries, Thomson
CSF and Thomson SA a cooperation agreement for the purpose of creating a
significant defence and electronics entity by grouping within Thomson CSF the
electronic and defence activities of Alcatel Alsthom and Dassault Electronique
and by
F-7
<PAGE> 49
grouping the satellite activities of Alcatel, Aerospatiale and Thomson
CSF within a single new company - Alcatel Space. Following the transaction,
Alcatel Alsthom holds a 15.84% stake in Thomson CSF and a 51% stake in Alcatel
Space. In view of Alcatel's mandate regarding the management of Thomson CSF as
outlined in the Shareholders Agreement and Alcatel's 15.84% share in Thomson
CSF. Thomson CSF is consolidated under the equity method. The transactions are
accounted for as of June 30, 1998 and have no impact on the first half year's
income.
NOTE 4
SUBSEQUENT EVENTS
In September 1998, Alcatel acquired DSC Communications Corporation ("DSC"), a US
company designing, developing, manufacturing and marketing switching and
transmission and access products. At the effective time of the acquisition, each
outstanding share of DSC was converted into 0.815 ADS. In connection with this
acquisition, Alcatel registered 110,020,000 additional ADSs (22,004,000 shares),
representing the maximum number of ADSs issuable upon consummation of the merger
(including exercisable stock options and convertibles notes).
Since September 18, 1998, class action lawsuits (the "Action") have been filed
against the Company challenging the accuracy of certain public disclosures made
by the Company regarding its financial condition during the first nine months of
1998. It is not possible at this early stage of the cases to predict the outcome
with certainty. In the opinion of the Company, the actions lack merit and the
Company intends to defend against them vigorously. Although Alcatel does not
believe that the ultimate outcome of these proceedings will have a material
adverse effect on its consolidated financial position or results of operations,
no assurance may be given that these proceedings, if adversely determined, would
not have such an effect.
In December 1998, Alcatel acquired Packet Engines Corporation, a US company for
$ 315 millions in cash. The acquisition allows Alcatel to increase its US
presence in the Internet Protocole and data communications market.
NOTE 5
SIGNIFICANT DIFFERENCES BETWEEN FRENCH AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The accompanying Unaudited Condensed Consolidated Interim Financial Statements
have been prepared in accordance with French GAAP which differ in certain
significant respects from those applicable in the United States (U.S. GAAP).
These differences relate mainly to the following items, and the necessary
adjustments are shown in the table set forth below (see Note 6).
(A) ACCOUNTING FOR LONG-TERM CONTRACTS
For the first six months ended June 30, 1997, revenue and margins of
long-term contracts were recorded upon completion in the Engineering and Systems
segment, and income on long-term contracts has been adjusted, using the
percentage-of-completion method for material differences.
For the first six months ended June 30, 1998, the Engineering and Systems
segment recognized revenue and margins of long-term contracts using the
percentage of completion method.
(B) ACCOUNTING FOR GAINS ON SALES OF TREASURY STOCK
Alcatel Alsthom includes gains on its own Shares sold by its subsidiaries in
the determination of its income. Under U.S. GAAP, such gains are credited
directly to equity.
F-8
<PAGE> 50
(C) AMORTIZATION OF ACQUISITION GOODWILL
In France, goodwill is generally amortized over 20 years. Under U.S. GAAP,
goodwill must be amortized against income over its estimated life not to exceed
40 years. The company has concluded that the goodwill has an indeterminate life
and, as a result, has used a 40-year life in preparing the U.S. GAAP
reconciliation.
(D) FAIR VALUE ACCOUNTING FOR THE MERGERS WITH COMPAGNIE FINANCIERE ALCATEL,
ALSTHOM AND GENERALE OCCIDENTALE
Alcatel Alsthom accounted for the mergers with Compagnie Financiere Alcatel,
Alsthom and Generale Occidentale, paid for with its own newly-issued Shares, on
the basis of the historical value of the net assets transferred to the group.
Under U.S. GAAP, the net assets acquired by issuing shares are recorded at the
fair value of the shares issued using the purchase accounting method.
Accordingly, additional goodwill amortization has been reflected in the U.S.
GAAP reconciliation.
(E) ACQUISITION GOODWILL CHARGED AGAINST SHAREHOLDERS' EQUITY
A portion of the goodwill related to the acquisition of a majority interest
in Telettra (1991), Alcatel SEL (1992) and of the 30% stake in Alcatel n.v.
(1992) was directly charged against shareholders' equity. Under U.S. GAAP,
acquisition goodwill is classified as an intangible asset. For reconciliation
purposes, the Company has amortized acquisition goodwill over a 40-year life.
(F) ACCOUNTING FOR MARKETABLE SECURITIES AND MARKETABLE EQUITY SECURITIES
Alcatel Alsthom accounts for its investments at the lower of historical cost
or fair value, assessed investment by investment. Under U.S. GAAP, certain
investments in equity securities are stated at fair value. Changes in fair value
related to trading securities are included in net income while those relating to
available-for-sale securities are included directly in shareholders' equity.
(G) LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFIT AND OTHER
COSTS
Alcatel Alsthom accounts for such liabilities when restructuring programs
have been finalized and approved by group management. The group has applied EITF
94-3, SFAS 88 and SFAS 112 in preparing the U.S. GAAP reconciliation. Under such
requirements, the conditions to be met in order to record a restructuring
reserve in the balance sheet are more stringent than under Alcatel Alsthom's
policy.
(H) ACCOUNTING FOR CLOSING OF DUPLICATE FACILITIES OF ACQUIRING COMPANIES
Under certain conditions, Alcatel Alsthom accounted for costs incurred to
close duplicate facilities of acquiring companies as part of the cost of
acquisition. Under U.S. GAAP, such costs are charged to income.
(I) ACCOUNTING FOR THE ACQUISITION OF THE 30% STAKE IN ALCATEL N.V.
In connection with this transaction, Alcatel Alsthom used forward exchange
contracts to reduce its foreign currency exposure relative to the cash payments
in 1993 and 1994. The premium on these contracts was charged to expenses in 1992
net income. Under U.S. GAAP, the premium should be included in net income over
the life of the contracts.
In addition, this investment was accounted for at the price contractually
agreed which did not include any interest factor. Under U.S. GAAP, this
investment would be recorded using the present value of the future payments.
F-9
<PAGE> 51
(J) INCOME TAXES
Income taxes have been accounted for in accordance with the Financial
Accounting Standard Board's Statement N(degree) 109 "Accounting for Income
Taxes". The main reconciling differences arise from the recognition of more
deferred tax assets (and subsequent adjustment to the valuation allowance) under
U.S. GAAP than under French GAAP.
(K) DISCONTINUED OPERATIONS
In March 1998, Alcatel sold to ALSTOM (previously GEC ALSTHOM NV) most of
the Engineering and Systems Sector's activities. In order to allow easier
comparisons, the activities disposed of, have been accounted for under the
equity method from January 1, 1998 to March 31, 1998 (effective date of the
transaction).
In June 1998, ALSTOM made an International Initial Public Offering of shares
for a maximum 120.9 million of shares, of which 11.7 million new shares and
109.2 million shares previously held by General Electric company, p.l.c (GEC)
and Alcatel and its 100% owned subsidiary Societe Immobiliere Kleber-Lauriston
(SIKL). Following this offering, Alcatel retains a 24% stake in the capital at
June 30, 1998. In order to allow easier comparisons, ALSTOM is accounted for
under the equity method from January 1, 1998 and the accounting date for the
disposal is on June 30, 1998.
Under U.S. GAAP, operations of a segment that has been discontinued are
reported separately as a component of income before extraordinary items.
The presentation would have been as follows:
<TABLE>
<CAPTION>
Six month period ended June 30
Discontinued operations: 1998 1997
----------- -----------
<S> <C> <C>
Income from operations of discontinued segments FF 443 FF 390
Gain on disposal of discontinued segments FF 12,346 -
(less applicable income taxes of FF 570)
</TABLE>
The reconciliation to U.S. GAAP shows the reversal of the adjustments
between French and US principles for the previous years.
(L) ACCOUNTING FOR THOMSON CSF'S INVESTMENT
The investment in Thomson CSF's shares has been accounted for as an exchange
of a similar line of business and is recorded at carryover basis without impact
in the income statement. Under U.S. GAAP, such transactions are recorded at fair
value, with recognition of a gain based on the proportion of the business that
is "sold".
F-10
<PAGE> 52
NOTE 6
RECONCILIATION TO U.S. GAAP
(1) NET INCOME
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
JUNE 30,
1998 1997
------------ ------------
(IN MILLIONS)
<S> <C> <C>
NET INCOME AS REPORTED IN THE CONSOLIDATED
INCOME STATEMENTS FF 15,205 FF 1,489
Accounting for long term contracts 15
Accounting for gains on sales of treasury stock (113)
Amortization of acquisition goodwill 542 521
Fair value accounting for the mergers of Alcatel
Alsthom with subsidiaries (amortization of
acquisition goodwill) (40) (56)
Acquisition goodwill charged against shareholders' equity (42) (42)
Accounting for investments in securities 462 (2)
Restructuring costs 64 971
Accounting for the acquisition of the 30% stake
in Alcatel n.v. 5 5
Income taxes (596) (869)
Accounting for disposal of Cegelec and GEC ALSTHOM (811) -
Accounting for the investment in Thomson CSF 3,940 -
Other adjustments (170) (74)
Tax effect of the above adjustments (128) (36)
------------ ------------
NET INCOME ACCORDING TO U.S. GAAP FF 18,431 FF 1,809
============ ============
Net income under U.S. GAAP per share (a)
- basic 115.98 11.56
- diluted 106.86 11.44
</TABLE>
- - -----------
* U.S. GAAP adjustments are presented after taking into consideration the
impact on minority interests.
F-11
<PAGE> 53
(2) STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED JUNE 30, 1998
------------------------------------
(IN MILLIONS)
<S> <C>
NET INCOME UNDER U.S. GAAP FF 18,431
Other comprehensive income
- - - Under French Gaap
Foreign currency translation adjustments 288
Net change in treasury stock owned by
consolidated subsidiaries 60
Dilution in Alcatel Space related to Thomson CSF'S stake 1,500
Other comprehensive income (9)
- - - Reconciliation to US Gaap
Foreign currency translation adjustments (90)
Unrealized gains on securities 3,258
Minimum pension liabilities adjustments 595
Tax effect on the above adjustments (1,028)
-----------
COMPREHENSIVE INCOME ACCORDING TO U.S. GAAP FF 23,005
</TABLE>
(3) SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED JUNE 30, 1998
------------------------------------
(IN MILLIONS)
<S> <C>
SHAREHOLDERS' EQUITY AS REPORTED IN THE CONSOLIDATED
INTERIM BALANCE SHEETS FF 65,295
Amortization of acquisition goodwill 2,480
Fair value accounting for the mergers of Alcatel Alsthom
with subsidiaries (acquisition goodwill) 3,530
Acquisition goodwill charged against shareholders' equity 2,827
Accounting for investments in securities 6,566
Restructuring costs 1,778
Accounting for the acquisition of the 30% stake in
Alcatel n.v. (306)
Income taxes 420
Accounting for disposal of Cegelec and GEC ALSTHOM (811)
Accounting for the investment in Thomson CSF 3,940
Other adjustments (924)
Tax effect of the above adjustments (1,950)
Minority interests (33)
----------
SHAREHOLDERS' EQUITY ACCORDING TO U.S. GAAP FF 82,812
</TABLE>
F-12
<PAGE> 54
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The table below sets forth the estimated expenses expected to be paid
by the Company in connection with the issuance and distribution of the
Resale Securities covered by this Registration Statement. For information
concerning certain additional expenses that the Company and/or the Selling
Securityholders may be required to pay in the event that there is an
underwritten offering of the Resale Securities, see "Plan of Distribution."
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee........... $118,000
Printing and Engraving Expenses............................... 15,000
Legal Fees and Expenses (other than Blue Sky)................. 100,000
"Blue Sky" Fees and Expenses.................................. 1,000
Accounting Fees and Expenses.................................. 10,000
Miscellaneous................................................. 1,226
--------
Total................................................... $245,226
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
provides that a director or officer of a corporation (i) shall be
indemnified by the corporation for all expenses of litigation or other legal
proceedings brought against such person by reason of the fact that such
person is or was a director or an officer of the corporation when he is
successful on the merits, (ii) may be indemnified by the corporation for the
expenses, judgments, fines, and amounts paid in settlement of such
litigation (other than a derivative suit) even if he is not successful on
the merits if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation (and, in the
case of a criminal proceeding, had no reason to believe his conduct was
unlawful), and (iii) may be indemnified by the corporation for expenses of a
derivative suit (a suit by a stockholder alleging a breach by a director or
officer of a duty owed to the corporation), even if he is not successful on
the merits, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, provided
that no such indemnification may be made in accordance with this clause
(iii) if the director or officer is adjudged liable to the corporation,
unless a court determines that, despite such adjudication but in view of all
circumstances, he is fairly and reasonably entitled to indemnification of
such expenses. The indemnification described in clauses (ii) and (iii) above
shall be made only upon order by a court or a determination by (a) a majority
of directors who are not parties to such action, (b) a majority vote of a
committee consisting of such disinterested directors, (c) independent legal
counsel in a written opinion if no such disinterested directors exist, or if
such disinterested directors so direct, or (d) the stockholders, that
indemnification is proper because the applicable standard of conduct is met.
Expenses incurred by a director or officer in defending an action may be
advanced by the corporation prior to the final disposition of such action
upon receipt of an undertaking by such director or officer to repay such
expenses if it is ultimately determined that he is not entitled to be
indemnified in connection with the proceeding to which the expenses relate.
II-1
<PAGE> 55
The Company maintains liability insurance for its directors and officers,
including insurance against liabilities under the Securities Act.
Alcatel maintains liability insurance for its directors and officers,
including insurance against liabilities under the Securities Act.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
4.1 Indenture, dated August 12, 1997, between the Company, Alcatel and The Bank of New York, as Trustee as
supplemented by the First Supplemental Indenture, dated as of September 4, 1998, and as further supplemented
by the Second Supplemental Indenture, dated as of April 1, 1999, restated as supplemented for informational
purposes only
*4.2 First Supplemental Indenture, dated as of September 4, 1998, between the Company and The Bank of New
York, as Trustee (incorporated by reference to Exhibit 99.3 to Alcatel's Report of Foreign Private Issuer on Form
6-K dated September 9, 1998, Commission File No. 1-11130)
4.3 Second Supplemental Indenture, dated as of April 1, 1999, between the Company and The Bank of New York, as Trustee
4.4 Guaranty, dated September 17, 1998, by Alcatel
*4.5 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the Company's
Current Report on Form 8-K, Commission File No. 0-10018)
4.6 Form of Notes (included in Exhibit 4.1)
4.7 Amended and Restated Certificate of Incorporation of the Company, dated as of December 31, 1998
4.8 Amended and Restated Bylaws of the Company, dated as of December 31, 1998
*4.9 Amended and Restated Deposit Agreement, dated as of March 10, 1997, between Alcatel and The Bank of New York, as
depositary (incorporated by reference to the Registration Statement on Form F-6, dated February 21, 1997, Commission
File No. 333-6506)
4.10 Articles of Association and Bylaws of Alcatel, dated as of January 28, 1998
*5.1 Opinion of Baker & McKenzie
5.2 Opinion of Pascal Durand-Barthez
5.3 Opinion of Shearman & Sterling
8 Tax opinion of Shearman & Sterling
12.1 Computation of ratio of earnings to fixed charges of the Company
12.2 Computation of ratio of earnings to fixed charges of Alcatel
23.1 Consent of Ernst & Young LLP
23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Baker & McKenzie (included in Exhibit 5.1)
23.4 Consent of Pascal Durand-Barthez (included in Exhibit 5.2)
23.5 Consent of Shearman & Sterling (included in Exhibit 5.3)
24.1 Power of Attorney of the Company (see signature pages of Registration Statement)
24.2 Power of Attorney of Alcatel (see signature pages of Registration Statement)
*25 Form T-1 Statement of Eligibility and Qualification of Trustee (bound separately)
</TABLE>
- - ---------------------------
* Previously filed
II-2
<PAGE> 56
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
Plan of Distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrants hereby undertake that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrants' respective annual reports pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized, in the City of Plano, State of Texas, on April 9, 1999.
ALCATEL USA, INC.
By: /s/ Krish A. Prabhu
-----------------------------------
Name: KRISH A. PRABHU
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on April 9, 1999. Each person whose signature appears below
hereby authorizes and appoints Serge Tchuruk, Jean-Pierre Halbron and Krish A.
Prabhu, and each of them, any one of whom may act without joinder of the other,
as his attorney-in-fact to sign on his behalf individually and in the capacity
stated below all amendments and post-effective amendments to this Registration
Statement as that attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Krish A. Prabhu Director, President and Chief
- - ------------------------------------------ Executive Officer
KRISH A. PRABHU
/s/ Hubert de Pesquidoux Chief Financial Officer and
- - ------------------------------------------ Chief Accounting Officer
HUBERT DE PESQUIDOUX
/s/ Jean-Pierre Halbron Director
- - ------------------------------------------
JEAN-PIERRE HALBRON
/s/ Helle Kristoffersen Director
- - ------------------------------------------
HELLE KRISTOFFERSEN
</TABLE>
II-4
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form F-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, hereunto
duly authorized, in Paris, France, on April 9, 1999.
ALCATEL
By: /s/ Jean-Pierre Halbron
-----------------------------------
Name: Jean-Pierre Halbron
Title: Senior Executive Vice-President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on April 9, 1999. Each person whose signature appears below
hereby authorizes and appoints Serge Tchuruk and Jean-Pierre Halbron, and each
of them, either one of whom may act without joinder of the other, as his
attorney-in-fact to sign on his behalf individually and in the capacity stated
below all amendments and post-effective amendments to this Registration
Statement as that attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Serge Tchuruk Chairman of the Board (Chief Executive
- - ------------------------------------- Officer and Director)
Serge Tchuruk
/s/ Jean-Pierre Halbron Senior Executive Vice President
- - ------------------------------------- (Principal Financial and Accounting
Jean-Pierre Halbron Officer)
Director
- - -------------------------------------
Ambroise Roux
/s/ Rand V. Araskog Director
- - -------------------------------------
Rand V. Araskog
/s/ Daniel Bernard Director
- - -------------------------------------
Daniel Bernard
/s/ Philippe Bissara Director
- - -------------------------------------
Philippe Bissara
Director
- - -------------------------------------
Paolo Cantarella
/s/ Guy Dejouany Director
- - -------------------------------------
Guy Dejouany
/s/ Jacques Friedmann Director
- - -------------------------------------
Jacques Friedmann
/s/ Noel Goutard Director
- - -------------------------------------
Noel Goutard
/s/ Francois de Laage de Meux Director
- - -------------------------------------
Francois de Laage de Meux
/s/ Thierry De Loppinot Director
- - -------------------------------------
Thierry De Loppinot
/s/ Pierre-Louis Lions Director
- - -------------------------------------
Pierre-Louis Lions
/s/ Bruno Vaillant Director
- - -------------------------------------
Bruno Vaillant
/s/ Marc Vienot Director
- - -------------------------------------
Marc Vienot
/s/ Helmut Werner Director
- - -------------------------------------
Helmut Werner
/s/ George B. Brunt Authorized Representative
- - -------------------------------------
George B. Brunt
</TABLE>
II-5
<PAGE> 59
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
4.1 Indenture, dated August 12, 1997, between the Company, Alcatel and The Bank of New York, as Trustee
as supplemented by the First Supplemental Indenture, dated as of September 4, 1998, and as further supplemented
by the Second Supplemental Indenture, dated as of April 1, 1999, restated as supplemented for informational
purposes only
*4.2 First Supplemental Indenture, dated as of September 4, 1998, between the Company and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 99.3 to Alcatel's Report of Foreign Private Issuer on Form 6-K
dated September 9, 1998, Commission File No. 1-11130)
4.3 Second Supplemental Indenture, dated as of April 1, 1999, between the Company and The Bank of New York,
as Trustee
4.4 Guaranty, dated September 17, 1998, by Alcatel
*4.5 Registration Rights Agreement, dated as of August 12, 1997, among the Company, Goldman, Sachs & Co. and
NationsBanc Capital Markets, Inc. (incorporated by reference to Exhibit No. 4.2 to the Company's
Current Report on Form 8-K, Commission File No. 0-10018)
4.6 Form of Notes (included in Exhibit 4.1)
4.7 Amended and Restated Certificate of Incorporation of the Company, dated as of December 31, 1998
4.8 Amended and Restated Bylaws of the Company, dated as of December 31, 1998
*4.9 Amended and Restated Deposit Agreement dated as of March 10, 1997, between Alcatel and The Bank of New York, as
depositary (incorporated by reference to the Registration Statement on Form F-6, dated February 21, 1997, Commission
File No. 333-6506)
4.10 Articles of Association and Bylaws of Alcatel, dated as of January 28, 1998
*5.1 Opinion of Baker & McKenzie
5.2 Opinion of Pascal Durand-Barthez
5.3 Opinion of Shearman & Sterling
8 Tax opinion of Shearman & Sterling
12.1 Computation of ratio of earnings to fixed charges of the Company
12.2 Computation of ratio of earnings to fixed charges of Alcatel
23.1 Consent of Ernst & Young LLP
23.2 Consent of Arthur Andersen LLP
*23.3 Consent of Baker & McKenzie (included in Exhibit 5.1)
23.4 Consent of Pascal Durand-Barthez (included in Exhibit 5.2)
23.5 Consent of Shearman & Sterling (included in Exhibit 5.3)
24.1 Power of Attorney of the Company (see signature pages of Registration Statement)
24.2 Power of Attorney of Alcatel (see signature pages of Registration Statement)
*25 Form T-1 Statement of Eligibility and Qualification of Trustee (bound separately)
</TABLE>
_________________________
* Previously filed
<PAGE> 1
EXHIBIT 4.1
-----------------------------------------------------------------------
ALCATEL USA, INC., ISSUER
(FORMERLY, DSC COMMUNICATIONS CORPORATION)
ALCATEL, GUARANTOR
AND
THE BANK OF NEW YORK, TRUSTEE
----------------
INDENTURE
DATED AS OF AUGUST 12, 1997
AS SUPPLEMENTED BY THE FIRST SUPPLEMENTAL INDENTURE, DATED AS OF
SEPTEMBER 4, 1998 AND AS FURTHER SUPPLEMENTED BY THE SECOND
SUPPLEMENTAL INDENTURE, DATED AS OF APRIL 1, 1999
----------------
U.S.$400,000,000
7% CONVERTIBLE SUBORDINATED NOTES
DUE AUGUST 1, 2004
[RESTATED AS SUPPLEMENTED FOR INFORMATIONAL PURPOSES ONLY]
-----------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
RECITALS OF THE COMPANY.........................................................
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION..........................................................
SECTION 1.1. Definitions...................................................... 1
Act.................................................................. 2
Affiliate............................................................ 2
Agent Member......................................................... 2
Alcatel.............................................................. 2
Alcatel ADSs......................................................... 2
Applicable Procedures................................................ 3
Authenticating Agent................................................. 3
Authorized Newspaper................................................. 3
Board of Directors................................................... 3
Board Resolution..................................................... 3
Business Day......................................................... 3
CEDEL................................................................ 3
Change in Control.................................................... 3
Closing Price Per Alcatel ADS........................................ 3
Code................................................................. 3
Commission........................................................... 4
Common Stock......................................................... 4
Common stock......................................................... 4
Company.............................................................. 4
Company Notice....................................................... 4
Company Request or Company Order..................................... 4
Constituent Person................................................... 4
Conversion Agent..................................................... 4
Conversion Price..................................................... 4
Conversion Rate...................................................... 4
Corporate Trust Office............................................... 4
Corporation.......................................................... 4
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
i
<PAGE> 3
Page
----
Defaulted Interest................................................... 4
Depositary........................................................... 5
Dollar or U.S.$...................................................... 5
DTC.................................................................. 5
Euroclear............................................................ 5
Event of Default..................................................... 5
Exchange Act......................................................... 5
Exchange Date........................................................ 5
Global Security...................................................... 5
Holder............................................................... 5
Indenture............................................................ 5
Initial Purchasers................................................... 5
Interest Payment Date................................................ 5
Liquidated Damages................................................... 5
Maturity............................................................. 5
Non-electing Alcatel ADS............................................. 6
Notice of Default.................................................... 6
Officers' Certificate................................................ 6
Opinion of Counsel................................................... 6
Outstanding.......................................................... 6
Paying Agent......................................................... 7
Person............................................................... 7
Place of Conversion.................................................. 7
Place of Payment..................................................... 7
Predecessor Security................................................. 7
Purchase Agreement................................................... 7
Record Date.......................................................... 7
Record Date Period................................................... 7
Redemption Date...................................................... 7
Redemption Price..................................................... 7
Registered Security.................................................. 7
Registrable Securities............................................... 7
Regular Record Date.................................................. 8
Regulation S......................................................... 8
Regulation S Certificate............................................. 8
Regulation S Global Security......................................... 8
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE> 4
Page
----
Regulation S Legend.................................................. 8
Regulation S Securities.............................................. 8
Repurchase Date...................................................... 8
Repurchase Price..................................................... 8
Responsible Officer.................................................. 8
Restricted Global Security........................................... 8
Restricted Period.................................................... 8
Restricted Securities................................................ 8
Restricted Securities Certificate.................................... 8
Restricted Securities Legend......................................... 9
Rule 144A............................................................ 9
Rule 144A Information................................................ 9
Rule 144A Securities................................................. 9
Securities........................................................... 9
Securities Act....................................................... 9
Securities Act Legend................................................ 9
Security Register and Security Registrar............................. 9
Senior Indebtedness.................................................. 9
Shelf Registration Statement........................................ 10
Special Record Date................................................. 10
Stated Maturity..................................................... 10
Subsidiary.......................................................... 10
Successor Security.................................................. 10
Surrender Certificate............................................... 10
Trading Days........................................................ 10
Trust Indenture Act................................................. 11
Trustee............................................................. 11
United States....................................................... 11
Unrestricted Securities Certificate................................. 11
Vice President...................................................... 11
SECTION 1.2.
Compliance Certificates and Opinions................................ 11
SECTION 1.3.
Form of Documents Delivered to the Trustee.......................... 12
SECTION 1.4.
Acts of Holders of Securities....................................... 12
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
iii
<PAGE> 5
Page
----
SECTION 1.5.
Notices, Etc., to Trustee and Company............................... 14
SECTION 1.6.
Notice to Holders of Securities; Waiver............................. 15
SECTION 1.7.
Effect of Headings and Table of Contents............................ 15
SECTION 1.8.
Successors and Assigns.............................................. 15
SECTION 1.9.
Separability Clause................................................. 16
SECTION 1.10.
Benefits of Indenture............................................... 16
SECTION 1.11.
Governing Law....................................................... 16
SECTION 1.12.
Legal Holidays...................................................... 16
SECTION 1.13.
Conflict with Trust Indenture Act................................... 16
ARTICLE TWO
SECURITY FORMS...................................................... 17
SECTION 2.1.
Form Generally...................................................... 17
SECTION 2.2.
Form................................................................ 18
SECTION 2.3.
Form of Certificate of Authentication............................... 33
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
iv
<PAGE> 6
Page
----
SECTION 2.4.
Form of Conversion Notice........................................... 33
ARTICLE THREE
THE SECURITIES...................................................... 35
SECTION 3.1.
Title and Terms..................................................... 35
SECTION 3.2.
Denominations....................................................... 35
SECTION 3.3.
Execution, Authentication, Delivery and Dating...................... 36
SECTION 3.4.
Global Securities................................................... 36
SECTION 3.5.
Registration, Registration of Transfer and Exchange;
Restrictions on Transfer....................................... 36
SECTION 3.6.
Mutilated, Destroyed, Lost or Stolen Securities..................... 42
SECTION 3.7.
Payment of Interest; Interest Rights Preserved...................... 42
SECTION 3.8.
Persons Deemed Owners............................................... 44
SECTION 3.9.
Cancellation........................................................ 44
SECTION 3.10.
Computation of Interest............................................. 44
SECTION 3.11.
[Reserved].......................................................... 44
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
v
<PAGE> 7
Page
----
SECTION 3.12.
CUSIP Numbers....................................................... 44
ARTICLE FOUR
SATISFACTION AND DISCHARGE.......................................... 44
SECTION 4.1.
Satisfaction and Discharge of Indenture............................. 44
SECTION 4.2.
Application of Trust Money.......................................... 46
ARTICLE FIVE
REMEDIES............................................................ 46
SECTION 5.1.
Events of Default................................................... 46
SECTION 5.2.
Acceleration of Maturity; Rescission and Annulment.................. 47
SECTION 5.3.
Collection of Indebtedness and Suits for Enforcement by Trustee..... 48
SECTION 5.4.
Trustee May File Proofs of Claim.................................... 49
SECTION 5.5.
Trustee May Enforce Claims Without Possession of Securities......... 50
SECTION 5.6.
Application of Money Collected...................................... 50
SECTION 5.7.
Limitation on Suits................................................. 51
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture
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SECTION 5.8.
Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert............................................. 51
SECTION 5.9.
Restoration of Rights and Remedies.................................. 51
SECTION 5.10.
Rights and Remedies Cumulative...................................... 52
SECTION 5.11.
Delay or Omission Not Waiver........................................ 52
SECTION 5.12.
Control by Holders of Securities.................................... 52
SECTION 5.13.
Waiver of Past Defaults............................................. 52
SECTION 5.14.
Undertaking for Costs............................................... 53
SECTION 5.15.
Waiver of Stay, Usury or Extension Laws............................. 53
ARTICLE SIX
THE TRUSTEE......................................................... 54
SECTION 6.1.
Certain Duties and Responsibilities................................. 54
SECTION 6.2.
Notice of Defaults.................................................. 55
SECTION 6.3.
Certain Rights of Trustee........................................... 55
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture
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SECTION 6.4.
Not Responsible for Recitals or Issuance of Securities.............. 56
SECTION 6.5.
May Hold Securities, Act as Trustee Under Other Indentures.......... 56
SECTION 6.6.
Money Held in Trust................................................. 57
SECTION 6.7.
Compensation and Reimbursement...................................... 57
SECTION 6.8.
Corporate Trustee Required; Eligibility............................. 57
SECTION 6.9.
Resignation and Removal; Appointment of Successor................... 59
SECTION 6.10.
Acceptance of Appointment by Successor.............................. 59
SECTION 6.11.
Merger, Conversion, Consolidation or Succession to Business......... 59
SECTION 6.12.
Authenticating Agents............................................... 60
SECTION 6.13.
Disqualification; Conflicting Interests............................. 61
SECTION 6.14.
Preferential Collection of Claims Against Company................... 61
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................ 61
SECTION 7.1.
Company May Consolidate, Etc., Only on Certain Terms................ 62
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture
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SECTION 7.2.
Successor Substituted............................................... 62
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES............................................. 63
SECTION 8.1.
Supplemental Indentures Without Consent of Holders of Securities... 63
SECTION 8.2.
Supplemental Indentures With Consent of Holders of Securities....... 64
SECTION 8.3.
Execution of Supplemental Indentures................................ 65
SECTION 8.4.
Effect of Supplemental Indentures................................... 66
SECTION 8.5.
Reference in Securities to Supplemental Indentures.................. 66
SECTION 8.6.
Notice of Supplemental Indentures................................... 66
ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES................................... 66
SECTION 9.1.
Purposes for Which Meetings May Be Called........................... 66
SECTION 9.2.
Call, Notice and Place of Meetings.................................. 66
SECTION 9.3.
Persons Entitled to Vote at Meetings................................ 66
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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SECTION 9.4.
Quorum; Action...................................................... 66
SECTION 9.5.
Determination of Voting Rights; Conduct and Adjournment of Meetings. 67
SECTION 9.6.
Counting Votes and Recording Action of Meetings..................... 67
ARTICLE TEN
COVENANTS........................................................... 68
SECTION 10.1.
Payment of Principal, Premium and Interest.......................... 68
SECTION 10.2.
Maintenance of Offices or Agencies.................................. 69
SECTION 10.3.
Money for Security Payments To Be Held in Trust..................... 69
SECTION 10.4.
[Reserved].......................................................... 70
SECTION 10.5.
Existence........................................................... 71
SECTION 10.6.
Maintenance of Properties........................................... 71
SECTION 10.7.
Payment of Taxes and Other Claims................................... 71
SECTION 10.8.
Registration and Listing............................................ 71
SECTION 10.9.
Statement by Officers as to Default................................. 72
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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SECTION 10.10.
Delivery of Certain Information..................................... 72
SECTION 10.11.
Resale of Certain Securities; Reporting Issuer...................... 73
SECTION 10.12.
Registration Rights................................................. 73
SECTION 10.13.
Waiver of Certain Covenants......................................... 74
ARTICLE ELEVEN
REDEMPTION OF SECURITIES........................................... 75
SECTION 11.1.
Right of Redemption................................................. 75
SECTION 11.2.
Applicability of Article............................................ 75
SECTION 11.3.
Election to Redeem; Notice to Trustee............................... 75
SECTION 11.4.
Selection by Trustee of Securities To Be Redeemed................... 75
SECTION 11.5.
Notice of Redemption................................................ 76
SECTION 11.6.
Deposit of Redemption Price......................................... 77
SECTION 11.7.
Securities Payable on Redemption Date............................... 77
SECTION 11.8.
Securities Redeemed in Part......................................... 78
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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ARTICLE TWELVE
CONVERSION OF SECURITIES............................................ 78
SECTION 12.1.
Conversion Privilege and Conversion Price........................... 78
SECTION 12.2.
Exercise of Conversion Privilege.................................... 78
SECTION 12.3.
Fractions of Alcatel ADSs........................................... 80
SECTION 12.4.
Adjustment of Conversion Price...................................... 80
SECTION 12.5.
Notice of Adjustments of Conversion Price........................... 85
SECTION 12.6.
Notice of Certain Corporate Action.................................. 85
SECTION 12.7.
Company to Reserve Common Stock..................................... 86
SECTION 12.8.
Taxes on Conversions................................................ 86
SECTION 12.9.
Covenant as to Alcatel ADSs......................................... 86
SECTION 12.10.
Cancellation of Converted Securities................................ 87
SECTION 12.11.
Provision in Case of Consolidation, Merger or Sale of Assets........ 87
SECTION 12.12.
Responsibility of Trustee for Conversion Provisions................. 88
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES......................................... 81
SECTION 13.1.
Securities Subordinate to Senior Indebtedness....................... 81
SECTION 13.2.
Payment Over of Proceeds Upon Dissolution, Etc...................... 89
SECTION 13.3.
No Payment When Senior Indebtedness in Default...................... 90
SECTION 13.4.
Payment Permitted If No Default..................................... 90
SECTION 13.5.
Subrogation to Rights of Holders of Senior Indebtedness............. 90
SECTION 13.6.
Provisions Solely to Define Relative Rights......................... 91
SECTION 13.7.
Trustee to Effectuate Subordination................................. 91
SECTION 13.8.
No Waiver of Subordination Provisions............................... 91
SECTION 13.9.
Notice to Trustee................................................... 92
SECTION 13.10.
Reliance on Judicial Order or Certificate of Liquidating Agent...... 93
SECTION 13.11.
Trustee Not Fiduciary for Holders of Senior Indebtedness............ 93
SECTION 13.12.
Reliance by Holders of Senior Indebtedness on Subordination
Provisions..................................................... 93
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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SECTION 13.13.
Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights............................................ 93
SECTION 13.14.
Article Applicable to Paying Agents................................. 93
SECTION 13.15.
Certain Conversions and Repurchases Deemed Payment.................. 94
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL..................................... 94
SECTION 14.1.
Right to Require Repurchase......................................... 94
SECTION 14.2.
Conditions to the Company's Election to Pay the Repurchase Price
in Alcatel ADSs................................................. 95
SECTION 14.3.
Notices; Method of Exercising Repurchase Right, Etc................. 96
SECTION 14.4.
Certain Definitions................................................. 99
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY;
NON-RECOURSE....................................................... 100
SECTION 15.1.
Company to Furnish Trustee Names and Addresses of Holders.......... 100
SECTION 15.2.
Preservation of Information........................................ 100
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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SECTION 15.3.
No Recourse Against Others......................................... 101
SECTION 15.4.
Reports by Trustee................................................. 101
SECTION 15.5.
Reports by Company................................................. 101
ARTICLE SIXTEEN
THE GUARANTY....................................................... 101
SECTION 16.1
Guaranty........................................................... 101
TESTIMONIUM........................................................ 102
SIGNATURES AND SEALS................................................ NA
ACKNOWLEDGMENTS....................................................
ANNEX I............................................................ I-I
ANNEX A............................................................ A-I
ANNEX B............................................................ B-I
ANNEX C............................................................ C-I
ANNEX D............................................................ D-I
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE> 17
This Indenture is dated as of August 12, 1997, between Alcatel USA, Inc.,
formerly DSC Communications Corporation, a Delaware corporation, having its
principal office at 1000 Coit Road, Plano, Texas 75075 (herein called the
"Company"); Alcatel, a French societe anonyme ("Alcatel" or the "Guarantor");
and The Bank of New York, a New York banking corporation as Trustee hereunder
(herein called the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of August 12, 1997 (the "Initial Indenture"),
providing for the creation and issuance by the Company of 7% Convertible
Subordinated Notes due August 1, 2004, which has been supplemented by the First
Supplemental Indenture, dated as of September 4, 1998, between the Company and
the Trustee (the "First Supplemental Indenture") and the Second Supplemental
Indenture, dated as of April 1, 1999, between the Company, Alcatel and the
Trustee (the "Second Supplemental Indenture", together with the Initial
Indenture and the First Supplemental Indenture, the "Indenture");
WHEREAS, the Company, Alcatel and the Bank of New York have restated
the original indenture for informational purposes only to reflect the
modifications thereto resulting from the execution of the First Supplemental
Indenture and the Second Supplemental Indenture (the "Amended and Restated
Indenture" or the "Indenture");
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 7%
Convertible Subordinated Notes due August 1, 2004 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the delivery of the Alcatel ADSs deliverable
upon the conversion of the Securities have been done.
RECITALS OF ALCATEL
Alcatel has duly executed and delivered the Guaranty dated as of
September 17, 1998, a copy of which is attached hereto as Annex I (the
"Guaranty");
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
<PAGE> 18
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Alcatel" means Alcatel, a company organized under the laws of the
Republic of France, and the parent of the Company.
"Alcatel ADSs" means the American depositary shares issued under the
depositary agreement, dated as of March 1, 1991 and amended and restated as of
March 15, 1992, as amended by Amendment No. 1 dated as of January 3, 1997 and as
further amended and restated as of March 10, 1997, among Alcatel, The Bank of
New York, as depositary, and holders of American depositary receipts evidencing
such American depositary shares, each representing one-fifth of one ordinary
share of Alcatel.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of Euroclear and
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<PAGE> 19
CEDEL, and of the Depositary for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized pursuant to Section
6.12 to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper in the English language,
customarily published on each Monday, Tuesday, Wednesday, Thursday and Friday,
whether or not published on Saturdays, Sundays or holidays, and of general
circulation in a Place of Payment.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board empowered to act for it with
respect to this Indenture.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place
of Conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion or other place, as
the case may be, are authorized or obligated by law or executive order to close;
provided, however, that a day on which banking institutions in New York, New
York are authorized or obligated by law or executive order to close shall not be
a Business Day for purposes of Section 13.9; provided, further, that a day on
which banking institutions in New York, New York are authorized or obligated by
law or executive order to close shall not be a Business Day for purposes of
Section 11.6.
"CEDEL" means Cedel Bank, S.A. (or any successor securities clearing
agency).
"Change in Control" has the meaning specified in Section 14.4(b).
"Closing Price Per Alcatel ADS" means, with respect to the Alcatel
ADSs, for any day, (i) the closing bid price regular way on the Nasdaq National
Market or, (ii) if the Alcatel ADSs are not quoted on the Nasdaq National
Market, the reported last sales price regular way per Alcatel ADS or, in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, in either case, on the principal national
securities exchange on which the Alcatel ADSs are listed or admitted to trading,
or (iii) if the Alcatel ADSs are not quoted on the Nasdaq National Market or
listed or admitted to trading on any national securities exchange, the average
of the closing bid prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm selected from time to time by Alcatel for that
purpose.
"Code" has the meaning specified in Section 2.1.
3
<PAGE> 20
"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock", unless otherwise stated, means the Common Stock of
Alcatel, nominal value EUR 10 per share.
"Common stock" includes any stock of any class of capital stock which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
issuer thereof and which is not subject to redemption by the issuer thereof.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Notice" has the meaning specified in Section 14.3.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President or a Vice
President, and by its principal financial officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Person" has the meaning specified in Section 12.11.
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Twelve. The Company has initially
appointed the Trustee as its Conversion Agent in the Borough of Manhattan, The
City of New York.
"Conversion Price" has the meaning specified in Section 14.4(c).
"Conversion Rate" has the meaning specified in Section 12.1.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 101 Barclay St.,
Floor 21 West, New York, New York 10286).
"Corporation" means a corporation or company, including without
limitation a limited liability company, an association, joint-stock company or
business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
4
<PAGE> 21
"Depositary" means, with respect to any Registered Securities, a
clearing agency that is registered as such under the Exchange Act and is
designated by the Company to act as Depositary for such Registered Securities
(or any successor securities clearing agency so registered).
"Dollar" or "U.S.$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934
(or any successor statute), as amended from time to time.
"Exchange Date" means the date and day on which the Restricted Period
expires.
"Global Security" means a Registered Security that is registered in the
Security Register in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Goldman, Sachs & Co., NationsBanc Capital
Markets, Inc. and Goldman Sachs International, collectively.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.
"Liquidated Damages" has the meaning specified in Section 10.12.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, exercise of the repurchase right set forth in
Article Fourteen or otherwise.
5
<PAGE> 22
"Non-electing Alcatel ADS" has the meaning specified in Section 12.11.
"Notice of Default" has the meaning specified in Section 5.1.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for the payment or redemption of which money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities, provided that if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.6 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; provided, however, that in
determining whether the Holders of the requisite principal amount of Outstanding
Securities are present at a meeting of Holders of Securities for quorum purposes
or have given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such determination as
to the presence of a quorum or upon any such request, demand, authorization,
direction, notice, consent or waiver, only Securities which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor.
6
<PAGE> 23
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent in the Borough of Manhattan, The City of New York.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
"Place of Payment" has the meaning specified in Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement, dated as of August
7, 1997, between the Company and the Initial Purchasers, as such agreement may
be amended from time to time.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Security issued in substantially the
form set forth in Section 2.2 and registered in the Security Register. A Global
Security is a Registered Security.
"Registrable Securities" has the meaning specified in Section 10.12.
"Registration Default" has the meaning specified in Section 10.12.
"Registration Rights Agreement" has the meaning specified in
Section 2.2.
7
<PAGE> 24
"Regular Record Date" for interest payable in respect of any Registered
Security on any Interest Payment Date means the January 15 or July 15 (whether
or not a Business Day), as the case may be, next preceding such Interest Payment
Date.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in
Section 2.1.
"Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in Section 2.2 to be placed
upon a Regulation S Global Security.
"Regulation S Securities" means all Securities required pursuant to
Section 3.5(c) to bear a Regulation S Legend. Such term includes the Regulation
S Global Security.
"Repurchase Date" has the meaning specified in Section 14.1.
"Repurchase Price" has the meaning specified in Section 14.1.
"Responsible Officer", when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee including without
limitation any vice president, assistant vice president, assistant treasurer,
assistant secretary, corporate trust officer, assistant corporate trust officer
or other employee of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge and familiarity with the particular
subject.
"Restricted Global Security" has the meaning specified in Section 2.1.
"Restricted Period" means the period of 41 consecutive days beginning
on and including the later of (i) the day on which Securities are first offered
to persons other than distributors (as defined in Regulation S) in reliance on
Regulation S and (ii) the last original issuance date of the Securities.
"Restricted Securities" means all Securities required pursuant to
Section 3.5(c) to bear any Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Annex B.
8
<PAGE> 25
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in Section 2.2 to be placed upon each Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.10.
"Rule 144A Securities" means the Securities purchased by the Initial
Purchaser from the Company pursuant to the Purchase Agreement and resold by the
Initial Purchaser, other than the Regulation S Securities.
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company".
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
"Senior Indebtedness" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the filing of a petition
initiating any proceeding under city, state, federal or foreign bankruptcy laws,
whether or not allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of the Indenture or thereafter created, incurred or assumed: (a) indebtedness of
the Company evidenced by credit or loan agreements, notes, bonds, debentures, or
other written obligations, including, but not limited to as of June 30, 1997 the
Company's five-year, unsecured $160.0 million revolving credit facility with
several banks, $168.8 million outstanding principal amount of the Company's 9.0%
unsecured notes which mature from 1997 to 2003, $10.8 million outstanding
principal amount of the Company's 8.75% unsecured notes which mature from 1997
to 2000 and $83.0 million outstanding principal amount of the Company's variable
rate unsecured notes which mature from 1999 to 2011, (b) all obligations of the
Company for money borrowed, (c) all obligations of the Company evidenced by a
note or similar instrument given in connection with the acquisition of any
businesses, properties or assets of any kind, (d) obligations of the Company as
lessee under leases required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles, (e) obligations of the
Company under interest rate and currency swaps, caps, floors, collars, hedge
agreements, forward contracts, or similar agreements or arrangements intended to
protect the Company against fluctuations in interest
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or currency exchange rates, (f) all obligations of the type referred to in
clauses (a) through (e) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed or
guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on property of the Company, and (g) renewals, extensions,
modifications, replacements, restatements and refundings of, or any indebtedness
or obligation issued in exchange for, any such indebtedness or obligation
described in clauses (a) through (f) of this paragraph; provided, however, that
Senior Indebtedness shall not include the Securities or any such indebtedness or
obligation (a) if the terms of such indebtedness or obligation (or the terms of
the instrument under which, or pursuant to which it is issued) provide that such
indebtedness or obligation is not superior in right of payment to the
Securities, (b) if such indebtedness or obligation is non-recourse to the
Company or (c) if such indebtedness or obligation is a conditional sale contract
or any account payable or any other indebtedness created or assumed by the
Company in the ordinary course of business in connection with the obtaining of
inventories or services.
"Shelf Registration Statement" has the meaning specified in
Section 10.12.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Company pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock or
other similar interests in the corporation which ordinarily has or have voting
power for the election of directors, or persons performing similar functions,
whether at all times or only so long as no senior class of stock or other
interests has or have such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.6 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Surrender Certificate" means a certificate substantially in the form
set forth in Annex D.
"Trading Days" means (i) if the Alcatel ADSs are quoted on the Nasdaq
National Market or any other system of automated dissemination of quotations of
securities prices, days on which trades may be effected through such system;
(ii) if the Alcatel ADSs are listed or admitted for trading on any national
securities exchange, days on which such national
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securities exchange is open for business; or (iii) if the Alcatel ADSs are not
listed or admitted for trading on any national securities exchange or quoted on
the Nasdaq National Market or any other system of automated dissemination of
quotation of securities prices, days on which the Alcatel ADSs are traded
regular way in the over-the-counter market and for which a closing bid and a
closing asked price for the Alcatel ADSs are available.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"Unrestricted Securities Certificate" means a certificate substantially
in the form set forth in Annex C.
"Vice President", when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president".
SECTION 1.2. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in Section 10.9) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
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(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3. Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders of Securities.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by (1) one or
more instruments of substantially similar tenor signed by such Holders in person
or by an agent or proxy duly appointed in writing by such Holders or (2) the
record of Holders of Securities voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities duly
called and held in accordance with the provisions of Article Nine. Such action
shall become effective when such instrument or instruments or record is
delivered to the Trustee and, where it is hereby expressly required, to the
Company. The Trustee shall promptly deliver to the Company copies of all such
instruments and records delivered to the Trustee. Such
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instrument or instruments and record (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
of Securities signing such instrument or instruments and so voting at such
meeting. Proof of execution of any such instrument or of a writing appointing
any such agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section. The record of any meeting of Holders of Securities
shall be proved in the manner provided in Section 9.6.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The principal amount and serial number of any Registered Security
held by any Person, and the date of his holding the same, shall be proved by the
Security Register.
(d) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section 1.4.
(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee and the Holders of such record date.
If not set by the Company prior to the first solicitation of a Holder made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of Holders required to
be provided pursuant to Section 15.1) prior to such first solicitation or vote,
as the case may be. With regard to any record date, the Holders on such date (or
their duly appointed agents or proxies), and only such Persons, shall be
entitled to give or take, or vote on, the relevant action, whether or not such
Holders remain Holders after such record date. Notwithstanding the foregoing,
the Company shall not set a record date for, and the provisions of this
paragraph shall not apply with respect to, any notice, declaration or direction
referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of
default or breach referred to in Section 5.1(4), if such default or breach has
occurred and is continuing and the Trustee shall not have given such a notice to
the Company, (ii) any declaration of acceleration referred to in Section 5.2, if
an Event of Default has occurred and is continuing and the Trustee shall not
have given such a declaration to the Company, or (iii) any direction referred to
in Section 5.12, if the Trustee shall not have taken the action specified in
such direction,
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<PAGE> 30
then, with respect to clauses (ii) and (iii), a record date shall automatically
and without any action by the Company or the Trustee be set for determining the
Holders entitled to join in such declaration or direction, which record date
shall be the close of business on the tenth day (or, if such day is not a
Business Day, the first Business Day thereafter) following the day on which the
Trustee receives such declaration or direction, and, with respect to clause (i),
the Trustee may set any day as a record date for the purpose of determining the
Holders entitled to join in such notice of default. Promptly after such receipt
by the Trustee of any such declaration or direction referred to in clause (ii)
or (iii), and promptly after setting any record date with respect to clause (i),
and as soon as practicable thereafter, the Trustee shall notify the Company and
the Holders of any such record date so fixed. The Holders on such record date
(or their duly appointed agents or proxies), and only such Persons, shall be
entitled to join in such notice, declaration or direction, whether or not such
Holders remain Holders after such record date; provided that, unless such
notice, declaration or direction shall have become effective by virtue of
Holders of the requisite principal amount of Securities on such record date (or
their duly appointed agents or proxies) having joined therein on or prior to the
90th day after such record date, such notice, declaration or direction shall
automatically and without any action by any Person be canceled and of no further
effect. Nothing in this paragraph shall be construed to prevent a Holder (or a
duly appointed agent or proxy thereof) from giving, before or after the
expiration of such 90-day period, a notice, declaration or direction contrary to
or different from, or, after the expiration of such period, identical to, the
notice, declaration or direction to which such record date relates, in which
event a new record date in respect thereof shall be set pursuant to this
paragraph. In addition, nothing in this paragraph shall be construed to render
ineffective any notice, declaration or direction of the type referred to in this
paragraph given at any time to the Trustee and the Company by Holders (or their
duly appointed agents or proxies) of the requisite principal amount of
Securities on the date such notice, declaration or direction is so given.
(f) Except as provided in Sections 5.12 and 5.13, any request, demand,
authorization, direction, notice, consent, election, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
(g) The provisions of this Section 1.4 are subject to the provisions of
Section 9.5.
SECTION 1.5. Notices, Etc., to Trustee, Company and Alcatel.
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee by any Holder of Securities or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee and received at its Corporate Trust Office,
ATTENTION: CORPORATE TRUST ADMINISTRATION; facsimile no. (212) 815-5915.
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(2) the Company or Alcatel by the Trustee or by any Holder of
Securities shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing, mailed, first-class postage prepaid,
or telecopied and confirmed by mail, first-class postage prepaid, or delivered
by hand or overnight courier, addressed (i) if to the Company, to Alcatel USA,
Inc. at 1000 Coit Road, Plano, Texas 75075, Attention: Treasurer; fascimile no.
(972) 519-2688, or at any other address previously furnished in writing to the
Trustee by the Company; and (ii) if to Alcatel, to Alcatel at 54, rue la Boetie,
Paris, France, 75008, Attention: Chief Financial Officer; facsimile no. (331)
40.76.14.91.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 1.6. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid, to each Holder of a Security affected by such event, at the address of
such Holder as it appears in the Security Register, not earlier than the
earliest date and not later than the latest date prescribed for the giving of
such notice.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities. In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification to Holders of Registered Securities as shall be made with
the approval of the Trustee, which approval shall not be unreasonably withheld,
shall constitute a sufficient notification to such Holders for every purpose
hereunder.
Such notice shall be deemed to have been given when such notice is
mailed.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
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SECTION 1.9. Separability Clause.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.10. Benefits of Indenture.
Except as provided in the next sentence, nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Thirteen are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness.
SECTION 1.11. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE UNITED STATES OF AMERICA.
SECTION 1.12. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
Holder of a Security has a right to convert his Security shall not be a Business
Day at a Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of, premium, if any, or interest on, or the payment of the
Repurchase Price (whether the same is payable in cash or in Alcatel ADSs) with
respect to, or delivery for conversion of, such Security need not be made at
such Place of Payment or Place of Conversion, as the case may be, on or by such
day, but may be made on or by the next succeeding Business Day at such Place of
Payment or Place of Conversion, as the case may be, with the same force and
effect as if made on the Interest Payment Date, Redemption Date or Repurchase
Date, or at the Stated Maturity or by such last day for conversion; provided,
however, that in the case that payment is made on such succeeding Business Day,
no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date, Repurchase Date, Stated Maturity or
last day for conversion, as the case may be.
SECTION 1.13. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Until such time as this Indenture shall be qualified under the Trust Indenture
Act, this
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Indenture, the Company and the Trustee shall be deemed for all purposes hereof
to be subject to and governed by the Trust Indenture Act to the same extent as
would be the case if this Indenture were so qualified on the date hereof.
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Form Generally.
The Securities shall be in substantially the forms set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange, the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be Registered Securities.
The Trustee's certificates of authentication shall be in substantially
the form set forth in Section 2.3.
Conversion notices shall be in substantially the form set forth in
Section 2.5.
Repurchase notices shall be substantially in the form set forth in
Section 2.2.
The Securities shall be printed, lithographed, typewritten or engraved
or produced by any combination of these methods on steel engraved borders if so
required by any securities exchange upon which the Securities may be listed, or
may be produced in any other manner permitted by the rules of any such
securities exchange, or, if the Securities are not listed on a securities
exchange, in any other manner approved by the Company all as determined by the
officers executing such Securities, as evidenced by their execution thereof.
Upon their original issuance, Rule 144A Securities shall be issued in
the form of one or more Global Securities without interest coupons and shall be
registered in the name of DTC, as Depositary, or its nominee and deposited with
the Trustee, as custodian for DTC, for credit by DTC to the respective accounts
of beneficial owners of the Securities represented thereby (or such other
accounts as they may direct). Such Global Security, together with its Successor
Securities which are Global Securities other than the Regulation S Global
Security, are collectively herein called the "Restricted Global Security".
Upon their original issuance, Regulation S Securities shall be issued
in the form of one or more Global Securities without interest coupons and shall
be registered in the name of DTC, as Depositary, or its nominee and deposited
with the Trustee, as custodian for DTC for credit to the respective accounts at
DTC of the depositaries for Morgan Guaranty Trust
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Company of New York, Brussels office, as operator of Euroclear, or CEDEL. Such
Global Security, together with its Successor Securities which are Global
Securities other than the Restricted Global Security, are collectively herein
called the "Regulation S Global Security".
SECTION 2.2. Form of Security
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY
OTHER THAN ANY RESTRICTED GLOBAL SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND ANY ALCATEL ADSs
DELIVERABLE UPON ITS CONVERSION MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLI CABLE EXEMPTION THEREFROM. THIS
SECURITY MAY ONLY BE SOLD IN ACCORDANCE WITH THE INDENTURE, COPIES OF WHICH ARE
AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH
PURCHASER OF THIS SECURITY WHICH IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF ALCATEL USA, INC.
(THE "COMPANY") THAT (A) THIS SECURITY AND ANY ALCATEL ADSs DELIVERABLE UPON ITS
CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE
PROVISIONS OF RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) IN THE
CASE OF ANY PURCHASER, OTHER THAN A PURCHASER WHO HAS OTHERWISE AGREED WITH THE
COMPANY IN WRITING, TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF
AVAILABLE), (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN EACH OF CASES
(I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES
AND OTHER JURISDICTIONS OF THE UNITED STATES, AND THAT (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER OF THIS SECURITY OR ANY ALCATEL ADSs DELIVERABLE UPON ITS
CONVERSION IS
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REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY AND ANY ALCATEL ADSs
DELIVERABLE UPON ITS CONVERSION FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
THIS SECURITY, ANY ALCATEL ADSs DELIVERABLE UPON ITS CONVERSION AND ANY
RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY
THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS
SECURITY AND ANY SUCH ALCATEL ADSs TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS
SECURITY AND ANY SUCH ALCATEL ADSs SHALL BE DEEMED BY THE ACCEPTANCE OF THIS
SECURITY AND ANY SUCH ALCATEL ADSs TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED
GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR)
WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
SUCH SECURITIES AND ANY ALCATEL ADSs DELIVERABLE UPON THEIR CONVERSION MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. SUCH SECURITIES MAY ONLY BE SOLD IN ACCORDANCE
WITH THE INDENTURE, COPIES OF WHICH ARE AVAILABLE FOR INSPECTION AT THE
CORPORATE TRUST OFFICE OF THE TRUSTEE. EACH PURCHASER OF ANY BENEFICIAL INTEREST
IN THE SECURITIES WHICH IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) IS HEREBY NOTIFIED THAT THE SELLER OF SUCH
BENEFICIAL INTEREST IN THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED
BY THIS RESTRICTED GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY
HOLDING THE RESTRICTED GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST
ON THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH
ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF ALCATEL USA, INC. (THE
"COMPANY") THAT (A) ANY BENEFICIAL INTEREST IN THE SECURITIES AND ANY ALCATEL
ADSs DELIVERABLE UPON THEIR CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
19
<PAGE> 36
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) IN
AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF RULE 904 OF REGULATION
S UNDER THE SECURITIES ACT, (III) IN THE CASE OF ANY PURCHASER, OTHER THAN A
PURCHASER WHO HAS OTHERWISE AGREED WITH THE COMPANY IN WRITING, TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF AVAILABLE), (IV)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND IN EACH OF CASES (I) THROUGH (V) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES, AND THAT (B) THE BENEFICIAL OWNER WILL, AND
EACH SUBSEQUENT BENEFICIAL OWNER OF THIS SECURITY OR ANY ALCATEL ADSs
DELIVERABLE UPON ITS CONVERSION IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY
BENEFICIAL INTEREST IN THE SECURITIES AND ANY ALCATEL ADSs DELIVERABLE UPON ITS
CONVERSION FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THIS SECURITY, ANY ALCATEL ADSs DELIVERABLE UPON ITS CONVERSION AND ANY
RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY
THE RESTRICTIONS ON AND PROCEDURES FOR RESALES AND OTHER TRANSFERS OF THIS
SECURITY AND ANY SUCH ALCATEL ADSs TO REFLECT ANY CHANGE IN APPLICABLE LAW OR
REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE
RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER AND BENEFICIAL
OWNERS OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY
AND ANY SUCH ALCATEL ADSs SHALL BE DEEMED BY THE ACCEPTANCE OF THIS GLOBAL
SECURITY AND THE BENEFICIAL INTERESTS THEREIN AND ANY SUCH ALCATEL ADSs TO HAVE
AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY
FOR WHICH DTC IS TO BE THE DEPOSITARY:
20
<PAGE> 37
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ALCATEL USA,
INC. OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR REGISTERED
SECURITIES IN DEFINITIVE REGISTERED FORM IN THE LIMITED CIRCUMSTANCES REFERRED
TO IN THE INDENTURE, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH REGULATION S
GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS PREDECESSOR)
WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN
THEM IN REGULATION S UNDER THE SECURITIES ACT.]
ALCATEL USA, INC.
7% CONVERTIBLE SUBORDINATED NOTE
DUE AUGUST 1, 2004
No. _____________ U.S.$_____
[IF RESTRICTED GLOBAL SECURITY - CUSIP NO. ]
[IF REGULATION S GLOBAL SECURITY - CUSIP NO. ]
21
<PAGE> 38
ALCATEL USA, INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company", which term includes
any successor Person under the Indenture referred to on the reverse hereof), for
value received, hereby promises to pay to _______________, or registered
assigns, the principal sum of _____________ United States Dollars (U.S.$ _____)
[IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT -- (which principal amount
may from time to time be increased or decreased to such other principal amounts
(which, taken together with the principal amounts of all other Outstanding
Securities, shall not exceed $400,000,000 in the aggregate at any time) by
adjustments made on the records of the Trustee hereinafter referred to in
accordance with the Indenture)] on August 1, 2004 and to pay interest thereon,
from August 12, 1997, or from the most recent Interest Payment Date (as defined
below) to which interest has been paid or duly provided for, semi-annually in
arrears on February 1 and August 1 in each year (each, an "Interest Payment
Date"), commencing February 1, 1998, at the rate of 7% per annum, until the
principal hereof is due, and at the rate of 7% per annum on any overdue
principal and premium, if any, and, to the extent permitted by law, on any
overdue interest. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the January 15 or July 15 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Except as
otherwise provided in the Indenture, any such interest not so punctually paid or
duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Company, notice whereof shall be given to Holders of Registered
Securities not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture. Payments of principal shall be made upon the surrender of this
Security at the option of the Holder at the Corporate Trust Office of the
Trustee, or at such other office or agency of the Company as may be designated
by it for such purpose in the Borough of Manhattan, The City of New York, in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, or at such
other offices or agencies as the Company may designate, by United States Dollar
check drawn on, or transfer to, a United States Dollar account (such a transfer
to be made only to a Holder of an aggregate principal amount of Registered
Securities in excess of U.S.$2,000,000, and only if such Holder shall have
furnished wire instructions in writing to the Trustee no later than 15 days
prior to the relevant payment date) maintained by the payee with a bank in the
Borough of Manhattan, The City of New York. Payment of interest on this Security
may be made by United States Dollar check drawn on a bank in the Borough of
Manhattan, The City of New York mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register, or, upon written
application by the Holder to the Security Registrar setting forth wire
instructions not later than the relevant Record Date, by transfer to a United
States Dollar account (such a transfer to be made only to a Holder of an
aggregate principal amount of Registered Securities in excess of U.S.$2,000,000
and only if such Holder shall have furnished wire
22
<PAGE> 39
instructions in writing to the Trustee no later than 15 days prior to the
relevant payment date) maintained by the payee with a bank in the Borough of
Manhattan, The City of New York.
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed.
ALCATEL USA, INC.
By:
----------------------------------
Name:
Title:
[Certificate of Authentication]
Dated: [Date of Authentication]
23
<PAGE> 40
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "7% Convertible Subordinated Notes due August 1, 2004"
(herein called the "Securities"), limited in aggregate principal amount to
U.S.$400,000,000, issued and to be issued under an Indenture, dated as of August
12, 1997 (the "Initial Indenture"), as supplemented by the First Supplemental
Indenture dated as of September 4, 1998, between the Company and The Bank of New
York (the "First Supplemental Indenture") and the Second Supplemental Indenture
dated as of April 1, 1999, between the Company, Alcatel and The Bank of New
York, as Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture) (the "Second Supplemental Indenture", together with
the Initial Indenture and the First Supplemental Indenture, the "Indenture"), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee, the holders of Senior
Indebtedness and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture and subject to certain limitations therein set forth, Registered
Securities are exchangeable for a like aggregate principal amount of Registered
Securities of any authorized denominations as requested by the Holder
surrendering the same upon surrender of the Registered Security or Registered
Securities to be exchanged, at the Corporate Trust Office of the Trustee. The
Trustee upon such surrender by the Holder will issue the new Registered
Securities in the requested denominations.
No sinking fund is provided for the Securities. The Securities are
subject to redemption at the option of the Company at any time on or after
August 1, 2000, in whole or in part, upon not less than 30 nor more than 60
days' notice to the Holders prior to the Redemption Date at the following
Redemption Prices (expressed as percentages of the principal amount) for the
twelve-month period beginning on August 1 of the following years:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 104.0%
2001 103.0%
2002 102.0%
2003 101.0%
</TABLE>
and thereafter at a Redemption Price equal to 100% of the principal amount,
together, in each case, with accrued interest to the Redemption Date; provided,
however, that interest installments on Registered Securities whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.
24
<PAGE> 41
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Registered Securities for a
period of 15 days immediately preceding the date notice is given identifying the
serial numbers of the Securities called for such redemption or (b) to register
the transfer or exchange of any Registered Security, or portion thereof, called
for redemption.
Notice to the Holders will be given not less than 30 nor more than 60
days prior to the Redemption Date as provided in the Indenture.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion, as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date fixed for redemption or repurchase, or by such last
day for conversion, and no interest shall accrue on the amount so payable for
the period after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or after
90 days after the last original issue date of the Notes and on or before the
close of business on August 1, 2004, or in case this Security or a portion
hereof is called for redemption or the Holder hereof has exercised his right to
require the Company to repurchase this Security or such portion hereof, then in
respect of this Security until and including, but (unless the Company defaults
in making the payment due upon redemption or repurchase, as the case may be) not
after, the close of business on the fifth Trading Pay prior to Redemption Date
or the second Trading Day prior to Repurchase Date, as the case may be, to
convert this Security (or any portion of the principal amount hereof that is an
integral multiple of U.S.$1,000, provided that the unconverted portion of such
principal amount is U.S.$1,000 or any integral multiple of U.S.$1,000 in excess
thereof) into Alcatel ADSs at an initial Conversion Price of U.S. $61.012 for
each Alcatel ADS (or at the current adjusted Conversion Price if an adjustment
has been made as provided in the Indenture) by surrender of this Security, duly
endorsed or assigned to the Company or in blank and, in case such surrender
shall be made during the period from the close of business on any Regular Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date (except if this Security has been called for redemption on
a Redemption Date or is repurchasable on a Repurchase Date occurring, in either
case, during such period and is surrendered for such conversion during such
period), also accompanied by payment in New York Clearing House or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of this Security then being
converted, and also the conversion notice hereon duly executed, to the Company
at the Corporate Trust Office of the Trustee, or at such other office or agency
of the Company, subject to any laws or
25
<PAGE> 42
regulations applicable thereto and subject to the right of the Company to
terminate the appointment of any Conversion Agent (as defined below) as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York, or at such other offices or agencies as the Company may designate (each a
"Conversion Agent"), provided, further, that if this Security or portion hereof
has been called for redemption on a Redemption Date or is repurchasable on a
Repurchase Date occurring, in either case, during the period from the close of
business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such succeeding Interest Payment Date and is
surrendered for conversion during such period, then the Holder of this Security
who converts this Security or a portion hereof during such period will be
entitled to receive the interest accruing hereon from the Interest Payment Date
next preceding the date of such conversion to such succeeding Interest Payment
Date and shall not be required to pay such interest upon surrender of this
Security for conversion. Subject to the provisions of the preceding sentence
and, in the case of a conversion after the close of business on the Regular
Record Date next preceding any Interest Payment Date and on or before the close
of business on such Interest Payment Date, to the right of the Holder of this
Security (or any Predecessor Security of record as of such Regular Record Date)
to receive the related installment of interest to the extent and under the
circumstances provided in the Indenture, no cash payment or adjustment is to be
made on conversion for interest accrued hereon from the Interest Payment Date
next preceding the day of conversion, or for dividends on the Alcatel ADSs
issued on conversion hereof. The Company shall thereafter deliver to the Holder
the fixed number of Alcatel ADSs (together with any cash adjustment, as provided
in the Indenture) into which this Security is convertible and such delivery will
be deemed to satisfy the Company's obligation to pay the principal amount of
this Security. No fractions of Alcatel ADSs or scrip representing fractions of
Alcatel ADSs will be delivered on conversion, but instead of any fractional
interest (calculated to the nearest 1/100th of an Alcatel ADS) the Company shall
pay a cash adjustment as provided in the Indenture. The Conversion Price is
subject to adjustment as provided in the Indenture. In addition, the Indenture
provides that in case of certain consolidations or mergers to which Alcatel is a
party or the conveyance, transfer, sale or lease of all or substantially all of
the property and assets of Alcatel, the Indenture shall be amended, without the
consent of any Holders of Securities, so that this Security, if then
Outstanding, will be convertible thereafter, during the period this Security
shall be convertible as specified above, only into the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, transfer, sale or lease by a holder of the number of Alcatel ADSs
into which this Security could have been converted immediately prior to such
consolidation, merger, conveyance, transfer, sale or lease (assuming such holder
of Alcatel ADSs is not a Constituent Person, failed to exercise any rights of
election and received per Alcatel ADS the kind and amount received per Alcatel
ADS by a plurality of Non-electing Alcatel ADSs and further assuming, if such
consolidation, merger, conveyance, transfer, sale or lease occurs prior to 90
days following the last original issue date of the Securities, that the Security
was convertible at the time of such occurrence at the Conversion Price specified
above as adjusted from the issue date of such Security to such time as provided
in the Indenture). No adjustment in the Conversion Price will be made until such
adjustment would require an increase or decrease of at least one percent of such
price, provided that any adjustment that would otherwise be made will be carried
forward and taken into account in the computation of any subsequent adjustment.
26
<PAGE> 43
Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Restricted
Security or the holder of Alcatel ADSs delivered upon conversion thereof, the
Company will promptly furnish or cause to be furnished Rule 144A Information (as
defined below) to such Holder of Restricted Securities or such holder of Alcatel
ADSs delivered upon conversion of Restricted Securities, or to a prospective
purchaser of any such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the United States Securities Act of 1933, as amended
(the "Securities Act"), in connection with the resale of any such security.
"Rule 144A Information" shall be such information as is specified pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto).
If this Security is a Registrable Security, then the Holder of this
Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-- (including any
Person that has a beneficial interest in this Security)] and the Alcatel ADSs
deliverable upon conversion hereof is entitled to the benefits of a Registration
Rights Agreement, dated as of August 7, 1997 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Registered Securities and the Alcatel ADSs deliverable upon conversion
thereof, in each case, that are Registrable Securities, at the Company's
expense, (a) to file within 90 days after the first date of original issuance of
the Securities, a shelf registration statement (the "Shelf Registration
Statement") with the Commission with respect to resales of the Registrable
Securities, (b) thereafter to use reasonable efforts to cause such Shelf
Registration Statement to be declared effective by the Commission within 90 days
after the filing of such Shelf Registration Statement, and (c) to use reasonable
efforts to maintain such Shelf Registration Statement continuously effective
under the Securities Act until a period of the two years from the last date of
original issuance of the Securities or, if earlier, until (1) there are no
outstanding Registrable Securities or (2) when, in the written opinion of
independent counsel to the Company, all outstanding Registrable Securities held
by persons that are not "affiliates" of the Company (as defined in Rule
144(a)(1) under the Securities Act) may be resold without registration under the
Securities Act pursuant to Rule 144(k) under the Securities Act (or any
successor provision thereto) and the Company has removed all legends from the
Registrable Securities restricting the transfer thereof (other than any
Registrable Security held by an affiliate).
If (i) on or prior to 90 days following the date of original issuance
of the Registered Securities, a Shelf Registration Statement has not been filed
with the Commission, or (ii) on or prior to the 90th day following such filing,
such Shelf Registration Statement is not declared effective (each, a
"Registration Default"), additional interest ("Liquidated Damages") will accrue
on this Security from and including the day following such Registration Default
to but excluding the day on which such Registration Default has been cured.
Liquidated Damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first interest payment date in respect of the
Registered Securities following the date on which such Liquidated Damages begin
to accrue, and will accrue at a
27
<PAGE> 44
rate per annum equal to an additional one-quarter of one percent (.25%) of the
principal amount of the Registered Securities to and including the 90th day
following such Registration Default and at a rate per annum equal to one-half of
one percent (.50%) thereof from and after the 91st day following such
Registration Default. In the event that the Shelf Registration Statement ceases
to be effective (or the Holders are otherwise prevented or restricted by the
Company from effecting sales pursuant thereto) prior to the third annual
anniversary of the initial effective date of the Shelf Registration Statement or
such earlier date as is provided in the Registration Rights Agreement for a
period in excess of 60 days, whether or not consecutive, during any 12-month
period (an "Effectiveness Failure"), then the interest rate borne by the
Registered Securities shall increase by an additional one-half of one percent
(.50%) per annum from the 61st day of the applicable 12-month period such Shelf
Registration Statement ceases to be effective (or the Holders are otherwise
prevented or restricted by the Company from effecting sales pursuant thereto) to
but excluding the day on which the Effectiveness Failure is cured. For purposes
of determining an Effectiveness Failure, days on which the Company has been
obligated to pay Liquidated Damages in respect of a prior Effectiveness Failure
within the applicable 12 month period will not be included.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the preceding paragraph to the extent
that, in such context, Liquidated Damages are, were or would be payable in
respect of this Security pursuant to such paragraph, and an express mention of
the payment of Liquidated Damages (if applicable) in any provisions of this
Security shall not be construed as excluding Liquidated Damages in those
provisions of this Security where such express mention is not made.
[If this Security is a Registrable Security and the Holder of this
Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-- (including any
Person that has a beneficial interest in this Security)] elects to sell this
Security pursuant to the Shelf Registration Statement then, by its acceptance
hereof, such Holder of this Security agrees to be bound by the terms of the
Registration Rights Agreement relating to the Registrable Securities which are
the subject of such election.]
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is an integral multiple of $1,000, provided
that the portion of the principal amount of this Security to be Outstanding
after such repurchase is at least equal to U.S.$5,000) for cash at a Repurchase
Price equal to 100% of the principal amount thereof plus interest accrued to the
Repurchase Date. At the option of the Company, the Repurchase Price may be paid
in cash or, subject to the conditions provided in the Indenture, by delivery of
Alcatel ADSs having a fair market value equal to the Repurchase Price. For
purposes of this paragraph, the fair market value of Alcatel ADSs shall be
determined by the Company and shall be equal to 95% of the average of the
Closing Prices Per Alcatel ADS for the five consecutive Trading Days ending on
the third Trading Day immediately preceding the Repurchase Date. Whenever in
this Security
28
<PAGE> 45
there is a reference, in any context, to the principal of any Security as of any
time, such reference shall be deemed to include reference to the Repurchase
Price payable in respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Security shall not be construed as
excluding the Repurchase Price so payable in those provisions of this Security
when such express mention is not made; provided, however, that, for the purposes
of the second succeeding paragraph, such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH REGISTERED SECURITY THAT
IS NOT A GLOBAL SECURITY:
In the event of redemption, repurchase or conversion of this Security
in part only, a new Registered Security or Registered Securities for the
unredeemed, unrepurchased or unconverted portion hereof will be issued in the
name of the Holder hereof.]
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH GLOBAL SECURITY:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Indebtedness of the Company,
and this Security is issued subject to such provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities, together with accrued interest to the date of declaration,
may be declared due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with either (a) the written consent of
the Holders of a majority in principal amount of the Securities at the time
Outstanding, or (b) by the adoption of a resolution, at a meeting of
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<PAGE> 46
Holders of the Outstanding Securities at which a quorum is present, by the
Holders of (i) 66-2/3% in aggregate principal amount of the Outstanding
Securities represented and entitled to vote at such meeting or (ii) a majority
in principal amount of the Outstanding Securities. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all the
Securities, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security or such other
Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity and the
Trustee shall not have received from the Holders of a majority in principal
amount of the Securities Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof, premium, if any, or interest hereon
(including Liquidated Damages or additional interest) on or after the respective
due dates expressed herein or for the enforcement of the right to convert this
Security as provided in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, premium, if any, and
interest on (including Liquidated Damages and additional interest) this Security
at the times, places and rate, and in the coin or currency, herein prescribed or
to convert this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Registered Securities is registrable on the Security
Register upon surrender of a Registered Security for registration of transfer at
the Corporate Trust Office of the Trustee or at such other office or agency of
the Company as may be designated by it for such purpose in the Borough of
Manhattan, The City of New York, or at such other offices or agencies as the
Company may designate, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing, and
thereupon one or more new Registered Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. No service charge shall be made for
any such registration of transfer or exchange, but the Company may
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<PAGE> 47
require payment of a sum sufficient to recover any tax or other governmental
charge payable in connection therewith.
Prior to due presentation of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered, as
the owner thereof for all purposes, whether or not such Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
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<PAGE> 48
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 14.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay it
or __________________ an amount in cash or, at the Company's election, Alcatel
ADSs valued as set forth in the Indenture, equal to 100% of the principal amount
to be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.
Dated:
---------------------------------------
---------------------------------------
Signature
---------------------------------------
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Principal amount to be repurchased
(an integral multiple of U.S.$1,000): ______________________
Remaining principal amount following
such repurchase (not less than U.S.$5,000): ______________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
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SECTION 2.3. Form of Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially
the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
The Bank of New York
as Trustee
By: ______________________________________
Authorized Signature
Dated: _________________________
SECTION 2.4. Form of Conversion Notice.
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of U.S.$1,000, provided that the
unconverted portion of such principal amount is U.S.$1,000 or any integral
multiple of U.S.$1,000 in excess thereof) below designated, into Alcatel ADSs in
accordance with the terms of the Indenture referred to in this Security, and
directs that such Alcatel ADSs, together with a check in payment for any
fractional Alcatel ADS and any Securities representing any unconverted principal
amount hereof, be delivered to and be registered in the name of the undersigned
unless a different name has been indicated below. If Alcatel ADSs or Securities
are to be registered in the name of a Person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated: _________________________
_________________________
Signature
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<PAGE> 50
If Alcatel ADSs or Registered Securities If only a portion of the Securities is
to be are to be registered in the name of a Person converted, please indicate:
other than the Holder, please print such
Person's name and address:
1. Principal amount to be
converted:
U.S.$ ___________
____________________________
Name 2. Principal amount and
denomination of Registered
Securities representing
unconverted principal amount
____________________________ to be issued:
Address
Amount: U.S.$________
____________________________ Denominations:
Social Security or other U.S.$______
Taxpayer Identification Number, if any (any integral multiple of
U.S.$1,000, provided that the
unconverted portion of such principal
amount is U.S. $1,000 or any integral
multiple of U.S.$1,000 in excess thereof)
__________________________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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<PAGE> 51
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to U.S.$400,000,000, except for
Securities authenticated and delivered in exchange for, or in lieu of, other
Securities pursuant to Section 3.4, 3.5, 3.6, 8.5, 11.8, 12.2 or 14.3(f).
The Securities shall be known and designated as the "7% Convertible
Subordinated Notes due August 1, 2004" of the Company. Their Stated Maturity
shall be August 1, 2004 and they shall bear interest on their principal amount
from August 12, 1997, payable semi-annually in arrears on February 1 and August
1 in each year, commencing February 1, 1998, at the rate of 7% per annum until
the principal thereof is due and at the rate of 7% per annum on any overdue
principal and, to the extent permitted by law, on any overdue interest;
provided, however, that payments shall only be made on Business Days as provided
in Section 1.12.
The principal of, premium, if any, and interest on the Securities shall
be payable as provided in the form of Securities set forth in Section 2.2, and
the Repurchase Price, whether payable in cash or in Alcatel ADSs, shall be
payable at such places as are identified in the Company Notice given pursuant to
Section 14.3 (any city in which any Paying Agent is located being herein called
a "Place of Payment").
The Registrable Securities are entitled to the benefits of a
Registration Rights Agreement as provided by Sections 2.2 and 10.12. The
Securities are entitled to the payment of Liquidated Damages and additional
interest as provided by Section 10.12.
The Securities shall be redeemable at the option of the Company at any
time on or after August 1, 2000, in whole or in part, as provided in Article
Eleven and in the form of Securities set forth in Section 2.2.
The Securities shall be convertible as provided in Article Twelve (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior
Indebtedness of the Company as provided in Article Thirteen.
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in Article Fourteen.
SECTION 3.2. Denominations.
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<PAGE> 52
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples of U.S.$1,000 in
excess thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President, its Chief Financial Officer or one of its Vice
Presidents. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee or to its order for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 3.4. Global Securities.
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently to cease business or does in fact do so or
(ii) there shall have occurred and be continuing an Event of Default with
respect to such Global Security.
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<PAGE> 53
(c) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Trustee, as Security Registrar, for exchange or cancellation,
as provided in this Article Three. If any Global Security is to be exchanged for
other Securities or canceled in part, or if another Security is to be exchanged
in whole or in part for a beneficial interest in any Global Security, in each
case, as provided in Section 3.5, then either (i) such Global Security shall be
so surrendered for exchange or cancellation, as provided in this Article Three,
or (ii) the principal amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or canceled, or equal to the
principal amount of such other Security to be so exchanged for a beneficial
interest therein, as the case may be, by means of an appropriate adjustment made
on the records of the Trustee, as Security Registrar, whereupon the Trustee, in
accordance with the Applicable Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Security, the Trustee shall,
subject to Section 3.5(c) and as otherwise provided in this Article Three,
authenticate and deliver any Securities issuable in exchange for such Global
Security (or any portion thereof) to or upon the order of, and registered in
such names as may be directed by, the Depositary or its authorized
representative. Upon the request of the Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph, the
Company shall promptly make available to the Trustee a reasonable supply of
Securities that are not in the form of Global Securities. The Trustee shall be
entitled to rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this Article Three
if such order, direction or request is given or made in accordance with the
Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article Three or otherwise, shall be
authenticated and delivered in the form of, and shall be, a registered Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof, in which case such
Registered Security shall be authenticated and delivered in definitive, fully
registered form, without interest coupons.
(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Registered Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof.
SECTION 3.5. Registration, Registration of Transfer and Exchange; Restrictions
on Transfer.
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<PAGE> 54
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 10.2 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Registered Securities and of transfers of Registered
Securities. The Trustee is hereby appointed "Security Registrar" for the purpose
of registering Registered Securities and transfers and exchanges of Registered
Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 10.2 for such
purpose, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of any authorized denominations and of a like
aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 3.5, Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this Section 3.5, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive. Every Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and subject to the other provisions of this Section 3.5, entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities except as provided in Section 3.6, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 3.4, 8.5, 11.8,
12.2 or 14.3 (other than where Alcatel ADSs are to be delivered in a name other
than that of the Holder of the Security) not involving any transfer and other
than any stamp and other duties, if any, which may be imposed in connection with
any such transfer or exchange by the United States or any political subdivision
thereof or therein, which shall be paid by the Company.
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer of or exchange Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such
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<PAGE> 55
redemption or (b) to register the transfer of or exchange any Security, or
portion thereof, called for redemption.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 3.5(b) shall be made only in accordance with this Section
3.5(b).
(i) Restricted Global Security to Regulation S Global Security. If the
owner of a beneficial interest in the Restricted Global Security wishes at any
time to transfer such interest to a Person who wishes to acquire the same in the
form of a beneficial interest in the Regulation S Global Security, such transfer
may be effected only in accordance with the provisions of this Clause (b)(i) and
Clause (b)(v) below and subject to the Applicable Procedures. Upon receipt by
the Trustee, as Security Registrar, of (A) an order given by the Depositary or
its authorized representative directing that a beneficial interest in the
Regulation S Global Security in a specified principal amount be credited to a
specified Agent Member's account and that a beneficial interest in the
Restricted Global Security in an equal principal amount be debited from another
specified Agent Member's account and (B) a Regulation S Certificate,
satisfactory to the Trustee and duly executed by the owner of such beneficial
interest in the Restricted Global Security or his attorney duly authorized in
writing, then the Trustee, as Security Registrar but subject to Clause (b)(v)
below, shall reduce the principal amount of the Restricted Global Security and
increase the principal amount of the Regulation S Global Security by such
specified principal amount as provided in Section 3.4(A)(c).
(ii) Regulation S Global Security to Restricted Global Security. If the
owner of a beneficial interest in the Regulation S Global Security wishes at any
time to transfer such interest to a Person who wishes to acquire the same in the
form of a beneficial interest in the Restricted Global Security, such transfer
may be effected only in accordance with this Clause (b)(ii) and subject to the
Applicable Procedures. Upon receipt by the Trustee, as Security Registrar, of
(A) an order given by the depositary or its authorized representative directing
that a beneficial interest in the Restricted Global Security in a specified
principal amount be credited to a specified Agent Member's account and that a
beneficial interest in the Regulation S Global Security in an equal principal
amount be debited from another specified Agent Member's account and (B) if such
transfer is to occur during the Restricted Period, a Restricted Securities
Certificate, satisfactory to the Trustee and duly executed by the owner of such
beneficial interest in the Regulation S Global Security or his attorney duly
authorized in writing, then the Trustee, as Security Registrar, shall reduce the
principal amount of the Regulation S Global Security and increase the principal
amount of the Restricted Global Security by such specified principal amount as
provided in Section 3.4(A)(c).
(iii) Restricted Non-Global Security to Restricted Global Security or
Regulation S Global Security. If the Holder of a Restricted Security (other than
a Global Security) wishes at any time to transfer all or any portion of such
Restricted Security to a Person who wishes to take delivery thereof in the form
of a beneficial interest in the Restricted Global Security or the Regulation S
Global Security, such transfer may be effected only in accordance with the
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<PAGE> 56
provisions of this Clause (b)(iii) and Clause (b)(v) below and subject to the
Applicable Procedures. Upon receipt by the Trustee, as Security Registrar, of
(A) such Restricted Security as provided in Section 3.5(a) and instructions
satisfactory to the Trustee directing that a beneficial interest in the
Restricted Global Security or Regulation S Global Security in a specified
principal amount not greater than the principal amount of such Security be
credited to a specified Agent Member's account and (B) a Restricted Securities
Certificate, if the specified account is to be credited with a beneficial
interest in the Restricted Global Security, or a Regulation S Certificate, if
the specified account is to be credited with a beneficial interest in the
Regulation S Global Security, in either case satisfactory to theTrustee and duly
executed by such Holder or his attorney duly authorized in writing, then the
Trustee, as Security Registrar but subject to Clause (b)(v) below, shall cancel
such Restricted Security (and issue a new Restricted Security in respect of any
untransferred portion thereof) as provided in Section 3.5(a) and increase the
principal amount of the Restricted Global Security or the Regulation S Global
Security, as the case may be, by the specified principal amount as provided in
Section 3.4(c).
(iv) Exchanges between Global Security and Non-Global Security. A
beneficial interest in a Global Security may be exchanged for a Security that is
not a Global Security as provided in Section 3.4, provided that, if such
interest is a beneficial interest in the Restricted Global Security, or if such
interest is a beneficial interest in the Regulation S Global Security and such
exchange is to occur during the Restricted Period, then such interest shall be
exchanged for a Restricted Security (subject in each case to Section 3.5(c)). A
Security that is not a Global Security may be exchanged for a beneficial
interest in a Global Security only if (A) such exchange occurs in connection
with a transfer effected in accordance with Clause (b)(iii) above.
(v) Regulation S Global Security to be Held Through Euroclear or CEDEL
during Restricted Period. The Company shall use its best efforts to cause the
Depositary to ensure that, until the expiration of the Restricted Period,
beneficial interests in the Regulation S Global Security may be held only in or
through accounts maintained at the Depositary by Euroclear or CEDEL (or by Agent
Members acting for the account thereof), and no person shall be entitled to
effect any transfer or exchange that would result in any such interest being
held otherwise than in or through such an account; provided that this Clause
(b)(v) shall not prohibit any transfer or exchange of such an interest in
accordance with Clause (b)(ii) or (iv) above.
(c) Securities Act Legends. Rule 144A Securities, Regulation D
Securities and their respective Successor Securities shall bear the applicable
Restricted Securities Legend, and the Regulation S Securities and their
Successor Securities shall bear a Regulation S Legend, subject to the following:
(i) subject to the following Clauses of this Section 3.5(c), a Security
or any portion thereof which is exchanged, upon transfer or otherwise, for a
Global Security or any portion thereof shall bear the Securities Act Legend
borne by such Global Security while represented thereby;
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<PAGE> 57
(ii) subject to the following Clauses of this Section 3.5(c), a new
Security which is not a Global Security and is issued in exchange for another
Security (including a Global Security) or any portion thereof, upon transfer or
otherwise, shall bear the Securities Act Legend borne by such other Security,
provided that, if such new Security is required pursuant to Section 3.5(b)(iv)
to be issued in the form of a Restricted Security, it shall bear a Restricted
Securities Legend and, if such new Security is so required to be issued in the
form of a Regulation S Security, it shall bear a Regulation S Legend;
(iii) any Securities which are sold or otherwise disposed of pursuant
to an effective registration statement under the Securities Act (including the
Shelf Registration Statement), together with their Successor Securities shall
not bear a Securities Act Legend; the Company shall inform the Trustee in
writing of the effective date of any such registration statement registering the
Securities under the Securities Act and shall notify the Trustee at any time
when prospectuses may not be delivered with respect to Securities to be sold
pursuant to such registration statement. The Trustee shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
aforementioned registration statement;
(iv) at any time after the Securities may be freely transferred without
registration under the Securities Act or without being subject to transfer
restrictions pursuant to the Securities Act, a new Security which does not bear
a Securities Act Legend may be issued in exchange for or in lieu of a Security
(other than a Global Security) or any portion thereof which bears such a legend
if the Trustee has received an Unrestricted Securities Certificate, satisfactory
to the Trustee and duly executed by the Holder of such legended Security or his
attorney duly authorized in writing, and after such date and receipt of such
certificate, the Trustee shall authenticate and deliver such a new Security in
exchange for or in lieu of such other Security as provided in this Article
Three; (v) a new Security which does not bear a Securities Act Legend may be
issued in exchange for or in lieu of a Security (other than a Global Security)
or any portion thereof which bears such a legend if, in the Company's judgment,
placing such a legend upon such new Security is not necessary to ensure
compliance with the registration requirements of the Securities Act, and the
Trustee, at the direction of the Company, shall authenticate and deliver such a
new Security as provided in this Article Three; and
(vi) notwithstanding the foregoing provisions of this Section 3.5(c), a
Successor Security of a Security that does not bear a particular form of
Securities Act Legend shall not bear such form of legend unless the Company has
reasonable cause to believe that such Successor Security is a "restricted
security" within the meaning of Rule 144, in which case the Trustee, at the
direction of the Company, shall authenticate and deliver a new Security bearing
a Restricted Securities Legend in exchange for such Successor Security as
provided in this Article Three.
(d) Neither the Trustee, the Paying Agent nor any of their agents shall
(1) have any duty to monitor compliance with or with respect to any federal or
state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
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SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or theft of
any Security, and
(2) such security or indemnity as may be satisfactory to the Company
and the Trustee to save each of them and any agent of either of them harmless,
then, in the absence of actual notice to the Company or the Trustee
that such Security has been acquired by a bona fide purchaser, the
Company shall execute and the Trustee shall authenticate and deliver,
in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this Section 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7. Payment of Interest; Interest Rights Preserved.
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Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security, the date of the
proposed payment and the Special Record Date, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. The Special Record Date for the payment of such Defaulted Interest
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at such Holder's address as it
appears in the Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
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Interest on any Security which is converted in accordance with Section
12.2 during a Record Date Period shall be payable in accordance with the
provisions of Section 12.2.
SECTION 3.8. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of, premium, if any,
and (subject to Section 3.7) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.9. Cancellation.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section 3.9. The Trustee shall return all canceled
Securities to the Company.
SECTION 3.10. Computation of Interest.
Interest on the Securities (including any Liquidated Damages and
additional interest) shall be computed on the basis of a 360-day year of twelve
30-day months.
SECTION 3.11. [Reserved].
SECTION 3.12. CUSIP Numbers.
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers, in which case the Trustee shall
use such CUSIP numbers in addition to serial numbers in notices of redemption
and repurchase as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
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This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer or
exchange, or replacement of Securities herein expressly provided for and any
right to receive Liquidated Damages as provided in the form of Securities set
forth in Section 2.2 and the Company's obligations to the Trustee pursuant to
Section 6.7), and the Trustee, at the expense of the Company, shall execute
proper instruments in form and substance satisfactory to the Trustee
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than
(i) Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 3.6 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the Trustee or its
agent for cancellation (other than Securities referred to in clauses (i) and
(ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their Stated Maturity within
one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company, and the Company,
in the case of clause (i), (ii) or (iii) above, has deposited or caused to be
deposited with the Trustee as trust funds (immediately available to the Holders
in the case of clause (i) in trust for the purpose an amount sufficient to pay
and discharge the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal, premium, if any, and
interest (including any Liquidated Damages) to the date of such deposit (in the
case of Securities which have become due and payable) or to the Stated Maturity
or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
the Company to any Authenticating Agent under Section 6.12, the obligation of
the Company to pay Liquidated Damages, if money shall have been deposited with
the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations of
the Trustee under Section 4.2 and the last paragraph of
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Section 10.3 and the obligations of the Company and the Trustee under Section
3.5 and Article Twelve shall survive. Funds held in trust pursuant to this
Section are not subject to the provisions of Article Thirteen.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the Persons entitled
thereto, of the principal, premium, if any, and interest for whose payment such
money has been deposited with the Trustee.
All monies deposited with the Trustee pursuant to Section 4.1 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon Company Request.
ARTICLE FIVE
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of the principal of or premium, if any, on
any Security at its Maturity; or
(2) default in the payment of any interest (including any Liquidated
Damages) upon any Security when it becomes due and payable, and continuance of
such default for a period of 30 days; or
(3) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
the performance or breach of which is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 10% in
principal amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
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(4) a default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or under any mortgage, indenture
or instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company with a principal
amount then outstanding in excess of U.S.$20,000,000, whether such indebtedness
now exists or shall hereafter be created, which default shall have resulted in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been rescinded
or annulled, within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 10% in principal amount of the
Outstanding Securities a written notice specifying such default and requiring
the Company to cause such indebtedness to be discharged or cause such default to
be cured or waived or such acceleration to be rescinded or annulled and stating
that such notice is a "Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or similar relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 5.1(5) or 5.1(6)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less
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than 25% in principal amount of the Outstanding Securities may, subject to the
provisions of Article Thirteen, declare the principal of all the Securities to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by the Holders), and upon any such declaration such
principal and all accrued interest thereon shall become immediately due and
payable. If an Event of Default specified in Section 5.1(5) or 5.1(6) occurs,
the principal of, and accrued interest on, all the Securities shall, subject to
the provisions of Article Thirteen, ipso facto become immediately due and
payable without any declaration or other Act of the Holder or any act on the
part of the Trustee.
At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article Five provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest on all Securities,
(B) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate borne by the Securities,
(C) to the extent permitted by applicable law, interest upon
overdue interest at a rate of 7% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default, other than the nonpayment of the principal
of, and any premium and interest on, Securities which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 5.13.
No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it becomes due and payable and such
default continues for a period of 30 days, or
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(2) default is made in the payment of the principal of or premium, if
any, on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee but subject to the
provisions of Article Thirteen, pay to it, for the benefit of the
Holders of such Securities the whole amount then due and payable on
such Securities for principal and interest (including any Liquidated
Damages) and interest on any overdue principal and premium, if any,
and, to the extent permitted by applicable law, on any overdue interest
(including any Liquidated Damages), at a rate of 7% per annum, and in
addition thereto, such further amount as shall be sufficient to cover
the reasonable costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
monies adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Securities and
take such other actions, including participating as a member, voting or
otherwise, of any official committee of creditors appointed in such matter, and
to file such other papers or documents, in each of the foregoing cases, as may
be necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the
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Trustee, its agents and counsel) and of the Holders of Securities allowed in
such judicial proceeding, and
(2) to collect and receive any monies or other property payable or
deliverable on any such claim and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder of
Securities to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders of
Securities to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel and any other amounts due the Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
election of a trustee in bankruptcy or similar official.
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 5.6. Application of Money Collected.
Subject to Article Thirteen, any money collected by the Trustee
pursuant to this Article Five shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal, premium, if any, or interest, upon presentation
of the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 6.7;
SECOND: To the payment of the amounts then due and unpaid for principal
of, premium, if any, or interest on, the Securities in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such
Securities for principal, premium, if any, and interest, respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
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SECTION 5.7. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities; it being understood and intended
that no one or more of such Holders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other of such Holders, or to obtain or
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert.
Notwithstanding any other provision in this Indenture, but subject to
the provisions of Article Thirteen, the Holder of any Security shall have the
right, which is absolute and unconditional, to receive payment of the principal
of, premium, if any, and (subject to Section 3.7) interest on such Security on
the respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Security in accordance with Article Twelve, and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company,
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the Trustee and the Holders of Securities shall be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Trustee and such Holders shall continue as though no such
proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or (subject to the
limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12. Control by Holders of Securities.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults.
The Holders, either (a) through the written consent of not less than a
majority in principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of (i) at least 66-2/3% in
principal amount of the Outstanding Securities represented at such meeting or
(ii) a majority in principal amount of the Outstanding Securities, may on
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behalf of the Holders of all the Securities waive any past default hereunder and
its consequences, except a default (1) in the payment of the principal of,
premium, if any, or interest on any Security (including any Liquidated Damages),
or (2) in respect of a covenant or provision hereof which under Article Eight
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.14 shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted by any Holder of
any Security for the enforcement of the payment of the principal of, premium, if
any, or interest on any Security on or after the respective Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption or
repurchase, on or after the Redemption Date or Repurchase Date, as the case may
be) or for the enforcement of the right to convert any Security in accordance
with Article Twelve.
SECTION 5.15. Waiver of Stay, Usury or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, usury or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede by reason of such law the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted. The
Company acknowledges and agrees that the Liquidated Damages and the other
additional interest contemplated by Section 10.12 are a reasonable estimate of
the economic harm that would be suffered by Holders of Securities as a result of
the Company's failure to comply with its obligations as set forth in The
Registration Rights Agreement and do not constitute a penalty. The Company
further agrees, to the extent permitted by law, to waive, and not assert, any
claim that the Liquidated Damages or other additional interest is a penalty.
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ARTICLE SIX
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustee shall be as provided
by this Indenture and the Trust Indenture Act.
(b) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Indenture, but not to verify the contents thereof.
(c) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(d) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this paragraph (d) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
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(4) no provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder as to
which the Trustee has received written notice, the Trustee shall give to all
Holders of Securities, in the manner provided in Section 1.6, notice of such
default, unless such default shall have been cured or waived; provided, however,
that, except in the case of a default in the payment of the principal of,
premium, if any, or interest on any Security, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of directors or Responsible Officers of the
Trustee in good faith determine that the withholding of such notice is in the
interest of the Holders; and provided, further, that in the case of any default
of the character specified in Section 5.1(3), no such notice to Holders of
Securities shall be given until at least 30 days after the occurrence thereof.
For the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in
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respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities pursuant to this Indenture, unless such Holders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon, other evidence of indebtedness or other paper or document, but the
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(8) the permissive right of the Trustee to take or refrain from taking
any actions enumerated in this Indenture shall not be construed as a duty and
the Trustee shall not be answerable in such actions other than for its own
negligence or willful misconduct; and
(9) the Trustee shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by the
Indenture.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture, of the Securities or of the Alcatel ADSs deliverable upon the
conversion of the Securities. The Trustee shall not be accountable for the use
or application by the Company of Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures.
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent or such other agent.
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The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee (and its directors, officers, employees
and agents) for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of this trust, including the
reasonable costs, expenses and reasonable attorneys' fees of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 5.1(5) or Section 5.1(6), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or state bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having a
combined capital and surplus of at least U.S.$10,000,000 in the case of the
initial Trustee hereunder and US$50,000,000 in the
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case of any successor Trustee, subject to supervision or examination by federal
or state authority, in good standing and having an established place of business
in the Borough of Manhattan, The City of New York. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article and a
successor shall be appointed pursuant to Section 6.9.
SECTION 6.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.10.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by Section 6.10 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of removal, the removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 6.8 and shall
fail to resign after written request therefor by the Company or by any Holder of
a Security who has been a bona fide Holder of a Security for at least six
months, or
(2) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 5.14, any Holder of a Security
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board
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Resolution, shall promptly appoint a successor Trustee and shall comply with the
applicable requirements of this Section and Section 6.10. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities delivered to the
Company and the retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 6.10, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no successor
Trustee shall have been so appointed by the Company or the Holders of Securities
and accepted appointment in the manner required by this Section and Section
6.10, any Holder of a Security who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee
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then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
SECTION 6.12. Authenticating Agents.
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.
Securities authenticated by an Authenticating Agent shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.12, such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
Section 6.12.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 6.12.
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The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.12.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
The Bank of New York,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ______________________________________
Authorized Signature
Dated: __________________________________
SECTION 6.13. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
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SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease all its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease all or
substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged, or the Person which acquires by conveyance or transfer,
or which leases the properties and assets of the Company substantially as an
entirety, shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of, premium, if any, and interest (including Liquidated
Damages, if any, payable pursuant to Section 10.12) on all of the Securities as
applicable, and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Article Twelve;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with, together with any documents required under
Section 8.3.
SECTION 7.2. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company in accordance with
Section 7.1, the successor Person formed by such consolidation or into or with
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE EIGHT
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SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of Holders of Securities.
Without the consent of any Holders of Securities the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants and obligations of the Company
herein and in the Securities as permitted by this Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of Holders
of Securities pursuant to Section 12.11; or
(5) to make any changes or modifications to this Indenture necessary in
connection with the registration of any Registrable Securities under the
Securities Act as contemplated by Section 10.12, provided, such action pursuant
to this clause (5) shall not adversely affect the interests of the Holders of
Securities; or
(6) to comply with the requirements of the Trust Indenture Act or the
rules and regulations of the Commission thereunder in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act, as
contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee; or
(8) to make any change in Article Thirteen that would limit or
terminate the benefits available to any holder of Senior Indebtedness under such
Article; or
(9) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which is
otherwise defective, or to make any other provisions with respect to matters or
questions arising under this Indenture as the Company and the Trustee may deem
necessary or desirable, provided such action pursuant to this clause (9) shall
not adversely affect the interests of the Holders of Securities in any material
respect.
Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee
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of the documents described in Section 8.3 hereof, the Trustee shall join with
the Company in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained.
SECTION 8.2. Supplemental Indentures With Consent of Holders of Securities.
With either (a) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of (i) 66-2/3% in principal amount of the
outstanding Securities represented at such meeting or (ii) a majority in
principal amount of the Outstanding Securities, the Company, when authorized by
a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent or affirmative vote of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount or the rate of
interest payable thereon or any premium payable upon redemption or mandatory
repurchase thereof, or change the obligation of the Company to pay Liquidated
Damages pursuant to Section 10.12 in a manner adverse to the Holders, or change
the coin or currency in which any Security or the interest or any premium
thereon or any other amount in respect thereof is payable, or impair the right
to institute suit for the enforcement of any payment in respect of any Security
on or after the Stated Maturity thereof (or, in the case of redemption or any
repurchase, on or after the Redemption Date or Repurchase Date, as the case may
be) or, except as permitted by Section 12.11, adversely affect the right to
convert any Security as provided in Article Twelve, or modify the provisions of
this Indenture with respect to the subordination of the Securities in a manner
adverse to the Holders of Securities; or
(2) reduce the requirements of Section 9.4 for quorum or voting, or
reduce the percentage in principal amount of the Outstanding Securities the
consent of whose Holders is required for any such supplemental indenture or the
consent of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture; or
(3) modify the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York, pursuant to Section
10.2; or
(4) modify any of the provisions of this Section or Section 5.13 or
10.13, except to increase any percentage contained herein or therein or to
provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security affected
thereby; or
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(5) modify the provisions of Article Fourteen in a manner adverse to
the Holders; or
(6) modify any of the provisions of Section 10.10 or 10.11.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
Indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 8.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 8.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
appertaining thereto shall be bound thereby.
SECTION 8.5. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company and the
Trustee, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 8.6. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE NINE
MEETINGS OF HOLDERS OF SECURITIES
SECTION 9.1. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.
SECTION 9.2. Call, Notice and Place of Meetings.
(a) The Trustee may at any time call a meeting of Holders of Securities
for any purpose specified in Section 9.1, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of Holders of Securities, setting forth the
time and the place of such meeting and in general terms the action proposed to
be taken at such meeting, shall be given, in the manner provided in Section 1.6,
not less than 21 nor more than 180 days prior to the date fixed for the meeting.
(b) In case at any time the Company, pursuant to a Board Resolution, or
the Holders of at least 10% in principal amount of the Outstanding Securities
shall have requested the Trustee to call a meeting of the Holders of Securities
for any purpose specified in Section 9.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Company or the Holders
of Securities in the amount specified, as the case may be, may determine the
time and the place in the Borough of Manhattan, The City of New York, for such
meeting and may call such meeting for such purposes by giving notice thereof as
provided in paragraph (a) of this Section.
SECTION 9.3. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 9.4. Quorum; Action.
The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the
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time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities, be dissolved. In any other case, the meeting
may be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the absence
of a quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period not less than 10 days as determined by the chairman of
the meeting prior to the adjournment of such adjourned meeting (subject to
repeated applications of this sentence). Notice of the reconvening of any
adjourned meeting shall be given as provided in Section 9.2(a), except that such
notice need be given only once not less than five days prior to the date on
which the meeting is scheduled to be reconvened. Notice of the reconvening of an
adjourned meeting shall state expressly the percentage of the principal amount
of the Outstanding Securities which shall constitute a quorum.
Subject to the foregoing, at the reconvening of any meeting adjourned
for a lack of a quorum, the Persons entitled to vote 25% in principal amount of
the Outstanding Securities at the time shall constitute a quorum for the taking
of any action set forth in the notice of the original meeting.
At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by the proviso to Section 8.2 and except to the extent Section 10.13
requires a different vote) shall be effectively passed and decided if passed or
decided by the Persons entitled to vote not less than 66-2/3% in principal
amount of Outstanding Securities represented and entitled to vote at such
meeting.
Any resolution passed or decisions taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities whether or not present or represented at the meeting. The
Trustee shall, in the name and at the expense of the Company, notify all the
Holders of Securities of any such resolutions or decisions pursuant to Section
1.6.
SECTION 9.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.
(a) Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting of
Holders of Securities in regard to proof of the holding of Securities and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall be proved in
the manner specified in Section 1.4 and the appointment of any proxy shall be
proved in the manner specified in Section 1.4 or by having the signature of the
Person executing the proxy guaranteed by any bank, broker or other eligible
institution participating in a recognized medallion signature guarantee program.
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(b) The Trustee shall, by an instrument in writing, appoint a temporary
chairman (which may be the Trustee) of the meeting, unless the meeting shall
have been called by the Company or by Holders of Securities as provided in
Section 9.2(b), in which case the Company or the Holders of Securities calling
the meeting, as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a majority in principal amount
of the Outstanding Securities represented at the meeting.
(c) At any meeting, each Holder of a Security or proxy shall be
entitled to one vote for each U.S.$1,000 principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.
(d) Any meeting of Holders of Securities duly called pursuant to
Section 9.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.
SECTION 9.6. Counting Votes and Recording Action of Meetings.
The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amounts at Stated Maturity and serial numbers of the Outstanding
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Holders of Securities shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more Persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was given as provided in
Section 9.2 and, if applicable, Section 9.4. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
ARTICLE TEN
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
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The Company covenants and agrees that it will duly and punctually pay
the principal of and premium, if any, and interest on the Securities in
accordance with the terms of the Securities and this Indenture. The Company will
deposit or cause to be deposited with the Trustee, no later than one Business
Day prior to the date of the Stated Maturity of any Security or no later than
one Business Day prior to the due date for any installment of interest, all
payments so due, which payments shall be in immediately available funds on the
date of such Stated Maturity or due date, as the case may be.
SECTION 10.2. Maintenance of Offices or Agencies.
The Company hereby appoints the Corporate Trust Office of the Trustee
as its agent in the Borough of Manhattan, The City of New York, where Securities
may be presented or surrendered for payment, where Securities may be surrendered
for registration of transfer or exchange, where Securities may be surrendered
for conversion, and where notices and demands to or upon the Company in respect
of the Securities and this Indenture may be served.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; provided, however, that until all of the Securities have been
delivered to the Trustee for cancellation, or monies sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 10.3, the Company will maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment and conversion, where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee, and
notice to the Holders in accordance with Section 1.6, of the appointment or
termination of any such agents and of the location and any change in the
location of any such office or agency.
If at any time the Company shall fail to maintain any such required
office or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee.
SECTION 10.3. Money for Security Payments To Be Held in Trust.
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and the Company will promptly notify the Trustee of its
action or failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will, no
later than one Business Day prior to each due date of the principal of, premium,
if any, or interest on any Securities, deposit with the Trustee a sum sufficient
to pay the principal, premium, if any, or interest so becoming due, such sum to
be held for the benefit of the Persons entitled to such principal, premium, if
any, or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal, premium,
if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held by
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 10.4. [Reserved].
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SECTION 10.5. Existence.
Subject to Article Seven, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and corporate power and authority; provided,
however, that the Company shall not be required to preserve any such right or
franchise if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 10.6. Maintenance of Properties.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 10.7. Payment of Taxes and Other Claims.
The Company will pay or discharge, or cause to be paid or discharged,
before the same may become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, (2) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Subsidiary, and (3) all
stamps and other duties, if any, which may be imposed by the United States or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Securities or with respect to this
Indenture; provided, however, that, in the case of clauses (1) and (2), the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (a) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(b) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 10.8. Registration and Listing.
Prior to the Exchange Date, the Company (i) will effect all
registrations with, and obtain all approvals by, all governmental authorities
that may be necessary under any United States Federal or state law (including
the Securities Act, the Exchange Act and state securities and Blue Sky laws)
before the Alcatel ADSs deliverable upon conversion of Securities may be
lawfully delivered, and qualified or listed as contemplated by clause (ii) (it
being understood that the Company shall not be required to register the
Securities under the
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Securities Act, except pursuant to the Registration Rights Agreement referred to
in Section 10.12); and (ii) will qualify the Alcatel ADSs required to be
delivered upon conversion of Securities, prior to such delivery, for quotation
on the Nasdaq National Market or, if the Alcatel ADSs are not then quoted on the
Nasdaq National Market, list the Alcatel ADSs on each national securities
exchange on which outstanding Alcatel ADSs are listed or quoted at the time of
such delivery. Nothing in this Section 10.8 will limit the application of
Section 10.12.
SECTION 10.9. Statement by Officers as to Default.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this Section 10.9 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 10.10. Delivery of Certain Information.
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a Holder of a Restricted Security or the
holder of Alcatel ADSs delivered upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder of Restricted Securities or such holder of Alcatel ADSs
delivered upon conversion of Restricted Securities, or to a prospective
purchaser of any such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the Securities Act (or any successor provision
thereto) in connection with the resale of any such security; provided, however,
that the Company shall not be required to furnish such information in connection
with any request made on or after the date which is two years from the later of
(i) the date such a security (or any such predecessor security) was last
acquired from the Company or (ii) the date such a security (or any such
predecessor security) was last acquired from an "affiliate" of the Company
within the meaning of Rule 144 under the Securities Act (or any successor
provision thereto). "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto).
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SECTION 10.11. Resale of Certain Securities; Reporting Issuer.
During the period beginning on the last date of original issuance of
the Securities and ending on the date that is two years from such date, the
Company will not, and will not permit any of its subsidiaries or other
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) controlled by it to, resell (x) any Securities
which constitute "restricted securities" under Rule 144 or (y) any securities
into which the Securities have been converted under this Indenture which
constitute "restricted securities" under Rule 144, that in either case have been
reacquired by any of them. The Trustee shall have no responsibility in respect
of the Company's performance of its agreement in the preceding sentence.
SECTION 10.12. Registration Rights.
The Company agrees that the Holders from time to time of Registrable
Securities (as defined below) are entitled to the benefits of a Registration
Rights Agreement, dated as of August 7, 1997 (the "Registration Rights
Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Registrable Securities, at the Company's expense, (i) to file within 90
calendar days after the first date of original issuance of the Securities, a
shelf registration statement (the "Shelf Registration Statement") with the
Commission with respect to resales of the Registrable Securities, (ii)
thereafter use reasonable efforts to cause such Shelf Registration Statement to
be declared effective by the Commission within 90 days after the filing of such
Shelf Registration Statement, and (iii) to use reasonable efforts to maintain
such Shelf Registration Statement continuously effective under the Securities
Act of 1933, as amended, until a period of two years from the last date of
original issuance of the Securities or, if earlier, until (1) there are no
outstanding Registrable Securities or (2) when, in the written opinion of
independent counsel to the Company, all outstanding Registrable Securities held
by persons that are not "affiliates" of the Company (as defined in Rule
144(a)(1) under the Securities Act) may be resold without registration under the
Securities Act pursuant to Rule 144(k) under the Securities Act (or any
successor provision thereto) and the Company has removed all legends from the
Registrable Securities restricting the transfer thereof (other than any
Registrable Security held by an affiliate).
If (i) on or prior to 90 days following the date of original issuance
of the Registered Securities, a Shelf Registration Statement has not been filed
with the Commission, or (ii) on or prior to the 90th day following such filing,
such Shelf Registration Statement is not declared effective (each, a
"Registration Default"), additional interest ("Liquidated Damages") will accrue
on the Registered Securities from and including the day following such
Registration Default to but excluding the day on which such Registration Default
has been cured. Liquidated Damages will be paid semi-annually in arrears, with
the first semi-annual payment due on the first Interest Payment Date in respect
of the Registered Securities following the date on which such Liquidated Damages
begin to accrue, and will accrue at a rate per annum equal to an additional
one-quarter of one percent (.25%) of the principal amount of the Registered
Securities to and including the 90th day following such Registration Default and
at a rate per annum equal to one-half of one percent (.50%) thereof
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from and after the 91st day following such Registration Default. In the event
that the Shelf Registration Statement ceases to be effective (or the Holders are
otherwise prevented or restricted by the Company from effecting sales pursuant
thereto) prior to the third annual anniversary of the initial effective date of
the Shelf Registration Statement or such earlier date as is provided in the
Registration Rights Agreement for a period in excess of 60 days, whether or not
consecutive, during any 12-month period (an "Effectiveness Failure"), then the
interest rate borne by the Registered Securities shall increase by an additional
one-half of one percent (.50%) per annum on the 61st day of the applicable
12-month period such Shelf Registration Statement ceases to be effective (or the
Holders are otherwise prevented or restricted by the Company from effecting
sales pursuant thereto) to but excluding the day on which the Effectiveness
Failure is cured. For the purposes of determining an Effectiveness Failure, days
on which the Company has been obligated to pay Liquidated Damages in respect of
a prior Effectiveness Failure within the applicable 12 month period will not be
included.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Registered Security, such mention shall be deemed to include mention of the
payment of Liquidated Damages provided for in this Section to the extent that,
in such context, Liquidated Damages are, were or would be payable in respect
thereof pursuant to the provisions of this Section, and express mention of the
payment of Liquidated Damages (if applicable) in any provisions hereof shall not
be construed as excluding Liquidated Damages in those provisions hereof where
such express mention is not made.
For the purposes of the Registration Rights Agreement, "Registrable
Securities" means all or any portion of the Registered Securities issued from
time to time under this Indenture and the Alcatel ADSs deliverable upon
conversion of such Securities provided, however, that a Security or the Alcatel
ADSs deliverable upon conversion of a Security ceases to be a Registrable
Security when it (i) has been effectively registered under the Securities Act
and sold in a manner contemplated by the Shelf Registration Statement or (ii)
has been transferred in compliance with Rule 144 under the Securities Act (or
any successor provisions thereto).
If a Security, or the Alcatel ADSs deliverable upon conversion of a
Security, is a Registrable Security, and the Holder thereof elects to sell such
Registrable Security pursuant to the Shelf Registration Statement then, by its
acceptance thereof, the Holder of such Registrable Security will have agreed to
be bound by the terms of the Registration Rights Agreement relating to the
Registrable Securities which are the subject of such election.
For the purposes of the Registration Rights Agreement, the term
"Holder" includes any Person that has a beneficial interest in any Global
Security or any beneficial interest in a global security representing Alcatel
ADSs deliverable upon conversion of a Security.
SECTION 10.13. Waiver of Certain Covenants.
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The Company may omit in any particular instance to comply with any
covenant or conditions set forth in Sections 10.5 to 10.7, inclusive (other than
a covenant or condition which under Article Eight cannot be modified or amended
without the consent of the Holder of each Outstanding Security affected), if
before the time for such compliance the Holders shall, through the written
consent of, or the adoption of a resolution at a meeting of Holders of the
Outstanding Securities at which a quorum is present by, not less than a majority
in principal amount of the Outstanding Securities, either waive such compliance
in such instance or generally waive compliance with such covenant or condition,
but no such waiver shall extend to or affect such covenant or condition except
to the extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the Trustee or any
Paying or Conversion Agent in respect of any such covenant or condition shall
remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.1. Right of Redemption.
The Securities may be redeemed in accordance with the provisions of the
forms of Securities set forth in Section 2.2.
SECTION 11.2. Applicability of Article.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of the Securities or this Indenture
(other than a redemption upon a Change in Control), shall be made in accordance
with such provision and this Article Eleven.
SECTION 11.3. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of any of the Securities, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Company which is subject to a condition specified in the form of Securities set
forth in Section 2.2, the Company shall furnish the Trustee with an Officers'
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred.
SECTION 11.4. Selection by Trustee of Securities To Be Redeemed.
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If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within two Business
Days after it receives the notice described in 11.3, from the Outstanding
Securities not previously called for redemption by such method as the Trustee
may deem fair and appropriate.
If any Registered Security selected for partial redemption is converted
in part before termination of the conversion right with respect to the portion
of the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption. Securities
which have been converted during a selection of Securities to be redeemed may be
treated by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.5. Notice of Redemption.
Notice of redemption shall be given in the manner provided in Section
1.6 to the Holders of Securities to be redeemed not less than 30 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed and the aggregate
principal amount of Securities which will be outstanding after such partial
redemption,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,
(5) the Conversion Price, the date on which the right to convert the
Securities to be redeemed will terminate and the places where such Securities,
may be surrendered for conversion, and
(6) the place or places where such Securities, are to be surrendered
for payment of the Redemption Price and accrued interest, if any.
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In case of a partial redemption, the first notice given shall specify
the last date on which exchanges or transfers of Securities may be made pursuant
to Section 3.5 and the second notice shall specify the serial and CUSIP numbers
(if any) and the portions thereof called for redemption.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 11.6. Deposit of Redemption Price.
Not less than one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount
of money (which shall be in immediately available funds on such Redemption Date)
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date other than any Securities called for redemption
on that date which have been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or so segregated and held in trust for the redemption of such
Security shall (subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 3.7) be paid to the Company on Company Request or, if then held by the
Company, shall be discharged from such trust.
SECTION 11.7. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; provided, however, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of 7% per
annum and such Security shall remain convertible until the principal of such
Security (or portion thereof, as the case may be) shall have been paid or duly
provided for.
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SECTION 11.8. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Registered Security or Securities, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
CONVERSION OF SECURITIES
SECTION 12.1. Conversion Privilege and Conversion Price.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security may be converted into Alcatel
ADSs (calculated as to each conversion to the nearest 1/100th of an Alcatel ADS)
at the Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. Such conversion right shall commence on the 90th day after
the last original issue date of the Notes and expire at the close of business on
August 1, 2004, subject, in the case of conversion of any Global Security, to
any Applicable Procedures. In case a Security or portion thereof is called for
redemption at the election of the Company or the Holder thereof exercises his
right to require the Company to repurchase the Security, such conversion right
in respect of the Security, or portion thereof so called, shall expire at the
close of business on the fifth Trading Day preceding the Redemption Date or the
second Trading Day preceding the Repurchase Date, as the case may be, unless the
Company defaults in making the payment due upon redemption or repurchase, as the
case may be (in each case subject as aforesaid to any Applicable Procedures with
respect to any Global Security).
The price at which Alcatel ADSs shall be delivered upon conversion
(herein called the "Conversion Price") shall be initially U.S.$61.012 per
Alcatel ADS. The Conversion Price shall be adjusted in certain instances as
provided in this Article Twelve.
SECTION 12.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to Section 10.2, accompanied by a duly
signed conversion notice substantially in the form set forth in Section 2.5
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted, the portion thereof to be
converted. Each Security surrendered for conversion (in whole or in part) during
the period from the close of
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business on any Regular Record Date next preceding any Interest Payment Date to
the opening of business on such Interest Payment Date shall (except in the case
of any Security or portion thereof which has been called for redemption or is to
be repurchased and, as a result, the right to convert such Security would
terminate during such period) be accompanied by payment in New York Clearing
House funds or other funds acceptable to the Company of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of such
Security (or part thereof, as the case may be) being surrendered for conversion.
The interest so payable on such Interest Payment Date with respect to any
Security (or portion thereof, if applicable) which has been called for
redemption, or is to be repurchased, and as a result the right to convert such
Security (or portion thereof, if applicable) would terminate during the period
from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date, which
Security (or portion thereof, if applicable) is surrendered for conversion
during such period, shall be paid to the Holder of such Security being converted
in an amount equal to the interest that would have been payable on such Security
if such Security had been converted as of the close of business on such Interest
Payment Date. The interest so payable on such Interest Payment Date in respect
of any Security (or portion thereof, as the case may be) which has not been
called for redemption on a Redemption Date, or is not eligible for repurchase on
a Repurchase Date, that, in either case, would cause the right to convert such
Security to terminate during the period from the close of business on any Record
Date next preceding any Interest Payment Date to the opening of business on such
Interest Payment Date, which Security (or portion thereof, as the case may be)
is surrendered for conversion during such period, shall be paid to the Holder of
such Security as of such Regular Record Date. Interest payable in respect of any
Security surrendered for conversion on or after an Interest Payment Date shall
be paid to the Holder of such Security as of the next preceding Regular Record
Date, notwithstanding the exercise of the right of conversion. Except as
provided in this paragraph and subject to the last paragraph of Section 3.7, no
cash payment or adjustment shall be made upon any conversion on account of any
interest accrued from the Interest Payment Date next preceding the conversion
date, in respect of any Security (or part thereof, as the case may be)
surrendered for conversion, or on account of any dividends on the Alcatel ADSs
delivered upon conversion. The Company's delivery to the Holder of the number of
Alcatel ADSs (and cash in lieu of fractions thereof, as provided in this
Indenture) into which a Security is convertible will be deemed to satisfy the
Company's obligation to pay the principal amount of the Security.
Securities shall be deemed to have been converted immediately prior to
the close of business on the day of surrender of such Securities for conversion
in accordance with the foregoing provisions, and at such time the rights of the
Holders of such Securities as Holders shall cease, and the Person or Persons
entitled to receive the Alcatel ADSs deliverable upon conversion shall be
treated for all purposes as the record holder or holders of such Alcatel ADSs at
such time. As promptly as practicable on or after the conversion date, the
Company shall issue and deliver to the Trustee, for delivery to the Holder, a
certificate or certificates for the number of full Alcatel ADSs deliverable upon
conversion, together with payment in lieu of any fraction of an Alcatel ADS, as
provided in Section 12.3.
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All Alcatel ADSs delivered upon such conversion of Restricted
Securities shall bear restrictive legends substantially in the form of the
legends required to be set forth on the Restricted Securities pursuant to
Section 3.5 and shall be subject to the restrictions on transfer provided in
such legends. Neither the Trustee nor any agent maintained for the purpose of
such conversion shall have any responsibility for the inclusion or content of
any such restrictive legends on such Alcatel ADSs; provided, however, that the
Trustee or any agent maintained for the purpose of such conversion shall have
provided, to the Company or to the Company's transfer agent for such Alcatel
ADSs, prior to or concurrently with a request to the Company to deliver such
Alcatel ADSs, written notice that the Securities delivered for conversion are
Restricted Securities.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Registered
Security or Securities of authorized denominations in an aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security. A Security may be converted in part, but only if the principal amount
of such Security to be converted is any integral multiple of U.S.$1,000 and the
principal amount of such security to remain Outstanding after such conversion is
equal to U.S.$1,000 or any integral multiple of $1,000 in excess thereof.
If Alcatel ADSs to be delivered upon conversion of a Restricted
Security, or Registered Securities to be issued upon conversion of a Restricted
Security in part only, are to be registered in a name other than that of the
beneficial owner of such Restricted Security, then such Holder must deliver to
the Conversion Agent a Surrender Certificate, dated the date of surrender of
such Restricted Security and signed by such beneficial owner, as to compliance
with the restrictions on transfer applicable to such Restricted Security.
Neither the Trustee nor any Conversion Agent, Registrar or Transfer Agent shall
be required to register in a name other than that of the beneficial owner,
Alcatel ADSs or Securities delivered upon conversion of any such Restricted
Security not so accompanied by a properly completed Surrender Certificate.
SECTION 12.3. Fractions of Alcatel ADSs.
No fractional Alcatel ADSs shall be delivered upon conversion of any
Security or Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full Alcatel ADSs which
shall be deliverable upon conversion thereof shall be computed on the basis of
the aggregate principal amount of the Securities (or specified portions thereof)
so surrendered. Instead of any fractional Alcatel ADSs which would otherwise be
deliverable upon conversion of any Security or Securities (or specified portions
thereof), the Company shall calculate and pay a cash adjustment in respect of
such fraction (calculated to the nearest 1/100th of an Alcatel ADS) in an amount
equal to the same fraction of the Closing Price Per Alcatel ADS at the close of
business on the day of conversion.
SECTION 12.4. Adjustment of Conversion Price.
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The Conversion Price shall be subject to adjustments from time to time
as follows:
(1) In case Alcatel shall pay or make a dividend or other
distribution on any class of capital stock of Alcatel payable in shares
of Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately
after the opening of business on the day following the date fixed for
such determination. If, after any such date fixed for determination,
any dividend or distribution is not in fact paid, the Conversion Price
shall be immediately readjusted, effective as of the date the
determination is made not to pay such dividend or distribution, to the
Conversion Price that would have been in effect if such determination
date had not been fixed. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of Alcatel but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of such shares. Alcatel will not pay any dividend or make any
distribution on shares held in the treasury of Alcatel.
(2) In case Alcatel shall issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock such that the price per Alcatel ADS
would be less than the current market price per Alcatel ADS (determined
as provided in paragraph (8) of this Section 12.4) on the date fixed
for the determination of stockholders entitled to receive such rights,
options or warrants (other than any rights, options or warrants that by
their terms will also be issued to any Holder upon conversion of a
Security into Alcatel ADSs without any action required by the Company
or any other Person), the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. If, after any such
date fixed for determination, any such rights, options or warrants are
not in fact issued, the Conversion Price shall be immediately
readjusted, effective as of the date the determination is made not to
issue such rights, options or warrants, to the Conversion Price that
would have been in effect if such determination date had not been
fixed. For the purposes of this paragraph (2), the number of shares of
Common
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Stock at any time outstanding shall not include shares held in the
treasury of Alcatel but shall include shares issuable in respect of
scrip certificates issued in lieu of fractions of shares of Common
Stock. Alcatel will not issue any rights, options or warrants in
respect of shares of Common Stock held in the treasury of Alcatel.
(3) In case the ratio of Alcatel ADSs to shares of Common
Stock shall be modified such that each Alcatel ADS no longer represents
one-fifth of one ordinary share of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon
which such modification becomes effective shall be proportionally
adjusted, such adjustment to become effective immediately after the
opening of business on the day following the day upon which such
modification becomes effective.
(4) In case Alcatel shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class of capital stock, or other property
(including securities, but excluding (i) any rights, options or
warrants referred to in paragraph (2) of this Section, (ii) any
dividend or distribution paid exclusively in cash, (iii) any dividend
or distribution referred to in paragraph (1) of this Section and (iv)
any merger or consolidation to which Section 12.11 applies), the
Conversion Price shall be adjusted so that the same shall equal the
price determined by dividing the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by a fraction of
which the numerator shall be the current market price per Alcatel ADS
(determined as provided in paragraph (8) of this Section 12.4) on the
date fixed for such determination less the then fair market value (as
determined by the authorized officer of Alcatel, whose determination
shall be conclusive and filed with the Trustee) of the portion of the
assets, shares or evidences of indebtedness so distributed applicable
to one Alcatel ADS and the denominator shall be such current market
price per Alcatel ADS, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination, any such
distribution is not in fact made, the Conversion Price shall be
immediately readjusted, effective as of the date the determination is
made not to make such distribution, to the Conversion Price that would
have been in effect if such determination date had not been fixed.
(5) In case Alcatel shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a merger or consolidation to which Section
12.11 applies or as part of a distribution referred to in paragraph (4)
of this Section) in an aggregate amount that, combined together with
(I) the aggregate amount of any other cash distributions to all holders
of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) has been made and
(II) the aggregate of any cash plus the fair market value (as
determined by the authorized officer of Alcatel, whose determination
shall be conclusive) of consideration payable in respect of any tender
offer by Alcatel or any
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of its subsidiaries for all or any portion of the Alcatel ADSs
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to
paragraph (6) of this Section 12.4 has been made (the "combined cash
and tender amount") exceeds 12.5% of the product of the current market
price per Alcatel ADS (determined as provided in paragraph (8) of this
Section 12.4) on the date for the determination of holders of shares of
Common Stock entitled to receive such distribution times the number of
Alcatel ADSs which would have to be issued to reflect all shares of
Common Stock outstanding on such date (the "aggregate current market
price"), then, and in each such case, immediately after the close of
business on such date for determination, the Conversion Price shall be
adjusted so that the same shall equal the price determined by dividing
the Conversion Price in effect immediately prior to the close of
business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (i) the numerator
of which shall be equal to the current market price per Alcatel ADS
(determined as provided in paragraph (8) of this Section) on the date
fixed for such determination less an amount equal to the quotient of
(x) the excess of such combined cash and tender amount over such
aggregate current market price divided by (y) the number of Alcatel
ADSs which would have to be issued to reflect all shares of Common
Stock outstanding on such date for determination and (ii) the
denominator of which shall be equal to the current market price per
Alcatel ADS (determined as provided in paragraph (8) of this Section
12.4) on such date for determination.
(6) In case a tender offer made by Alcatel or any Subsidiary
for all or any portion of the Common Stock shall expire and such tender
offer (as amended upon the expiration thereof) shall require the
payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market
value (as determined by the authorized officer of Alcatel, whose
determination shall be conclusive) that combined together with (I) the
aggregate of the cash plus the fair market value (as determined by the
authorized officer of Alcatel, whose determination shall be
conclusive), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offer by Alcatel
or any Subsidiary for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has
been made and (II) the aggregate amount of any cash distributions to
all holders of Alcatel's Common Stock within 12 months preceding the
expiration of such tender offer and in respect of which no adjustment
pursuant to paragraph (5) of this Section has been made (the "combined
tender and cash amount") exceeds 12.5% of the product of the current
market price per Alcatel ADS (determined as provided in paragraph (8)
of this Section 12.4) as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as it may
be amended) times the number of Alcatel ADSs which would have to be
issued to reflect all shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Price shall be adjusted so
that the same shall equal the price determined by dividing the
Conversion Price
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immediately prior to close of business on the date of the Expiration
Time by a fraction (i) the numerator of which shall be equal to (A) the
product of (I) the current market price per Alcatel ADS (determined as
provided in paragraph (8) of this Section 12.4) on the date of the
Expiration Time multiplied by (II) the number of Alcatel ADSs which
would have to be issued to reflect all shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time less
(B) the combined tender and cash amount, and (ii) the denominator of
which shall be equal to the product of (A) the current market price per
Alcatel ADS (determined as provided in paragraph (8) of this Section
12.4) as of the Expiration Time multiplied by (B) the number of Alcatel
ADSs which would have to be issued to reflect all shares of Common
Stock outstanding (including any tendered shares) as of the Expiration
Time less the number of Alcatel ADSs which would have to be issued to
represent all shares of Common Stock validly tendered and not withdrawn
as of the Expiration Time (the shares deemed so accepted up to any such
maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities other
than Common Stock (other than a reclassification upon a consolidation
or merger to which Section 12.11 applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and "the date fixed for such determination" within the meaning of
paragraph (4) of this Section), and (b) a subdivision or combination,
as the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date
of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
paragraph (3) of this Section 12.4).
(8) For the purpose of any computation under paragraphs (2),
(4), (5) or (6) of this Section 12.4, the current market price per
Alcatel ADS on any date shall be calculated by the Company and be
deemed to be the average of the daily Closing Prices Per Alcatel ADS
for the five consecutive Trading Days selected by the Company
commencing not more than 10 Trading Days before, and ending not later
than, the earlier of the day in question and the day before the "ex"
date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when
used with respect to any issuance or distribution, means the first date
on which the Alcatel ADSs trade in a regular way in the applicable
securities market or on the applicable securities exchange without the
right to receive such issuance or distribution.
(9) No adjustment in the Conversion Price shall be required
unless such adjustment (plus any adjustments not previously made by
reason of this paragraph (9)) would require an increase or decrease of
at least one percent in such rate;
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provided, however, that any adjustments which by reason of this
paragraph (9) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Article shall be made to the nearest cent or to the nearest
one-hundredth of an Alcatel ADS or share, as the case may be.
(10) The Company may make such reductions in the Conversion
Price, for the remaining term of the Securities or any shorter term, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and
(6) of this Section 12.4, as it considers to be advisable in order to
avoid or diminish any income tax to any holders of Alcatel ADSs
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes. The Company shall have the
power to resolve any ambiguity or correct any error in this paragraph
(10) and its actions in so doing shall, absent manifest error, be final
and conclusive.
SECTION 12.5. Notice of Adjustments of Conversion Price.
Whenever the Conversion Price is adjusted as herein provided:
(1) The Company shall compute the adjusted Conversion Price in
accordance with Section 12.4 and shall prepare a certificate signed by the Chief
Financial Officer of the Company setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall promptly be filed with the Trustee and with each
Conversion Agent; and (2) upon each such adjustment, a notice stating that the
Conversion Price has been adjusted and setting forth the adjusted Conversion
Price shall be required, and as soon as practicable after it is required, such
notice shall be provided by the Company to all Holders in accordance with
Section 1.6. Neither the Trustee nor any Conversion Agent shall be under any
duty or responsibility with respect to any such certificate or the information
and calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 12.6. Notice of Certain Corporate Action.
In case:
(a) Alcatel shall declare a dividend (or any other distribution) on its
Common Stock payable (i) otherwise than exclusively in cash or (ii) exclusively
in cash in an amount that would require any adjustment pursuant to Section 12.4;
or
(b) Alcatel shall authorize the granting to the holders of its Common
Stock of rights, options or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of Alcatel, or of any
consolidation, merger or share exchange to which Alcatel is a party and for
which approval of any
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stockholders of Alcatel is required, or of the conveyance, sale, transfer or
lease of all or substantially all of the assets of Alcatel; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of Alcatel ;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, at least 20
days (or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice or the notice
referred to in the following paragraph nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (a) through (d) of
this Section 12.6. If at the time the Trustee shall not be the conversion agent,
a copy of such notice shall also forthwith be filed by the Company with the
Trustee.
The Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to Section 10.2, and shall
cause to be provided to all Holders in accordance with Section 1.6, notice of
any tender offer by Alcatel or any Subsidiary for all or any portion of the
Common Stock at or about the time that such notice of tender offer is provided
to the public generally.
SECTION 12.7. Company to Reserve Common Stock.
[Deleted Intentionally]
SECTION 12.8. Taxes on Conversions.
Except as provided in the next sentence, the Company will pay any and
all taxes and duties that may be payable in respect of the delivery of Alcatel
ADSs on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax or duty which may be payable in respect of
any transfer involved in the delivery of Alcatel ADSs in a name other than that
of the Holder of the Security or Securities to be converted, and no such
delivery shall be made unless and until the Person requesting such delivery has
paid to the Company the amount of any such tax or duty, or has established to
the satisfaction of the Company that such tax or duty has been paid.
SECTION 12.9. Covenant as to Alcatel ADSs
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The Company agrees that all Alcatel ADSs which may be delivered upon
conversion of Securities will have been duly purchased on the open market and,
except as provided in Section 12.8, the Company will pay all taxes, liens and
charges with respect to the delivery thereof.
SECTION 12.10. Cancellation of Converted Securities.
All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
SECTION 12.11. Provision in Case of Consolidation, Merger or Sale of Assets.
In case of any consolidation or merger of Alcatel with or into any
other Person, any merger of another Person with or into Alcatel (other than a
merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of Alcatel) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
Alcatel, the Person formed by such consolidation or resulting from such merger
or which acquires such assets, as the case may be, shall execute and deliver to
the Trustee a supplemental indenture providing that the Holder of each Security
then Outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 12.1, to convert such
Security only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by a holder of the number of Alcatel ADSs into which such Security might have
been converted immediately prior to such consolidation, merger, conveyance,
sale, transfer or lease, assuming such holder of Alcatel ADSs (i) is not a
Person with which Alcatel consolidated or merged with or into or which merger
into or with Alcatel or to which such conveyance, sale, transfer or lease was
made, as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease (provided that
if the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease is not the same
for each Alcatel ADS held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Alcatel ADSs"), then for the purpose of this
Section 12.11 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer or lease
by the holders of each Non-electing Alcatel ADS shall be deemed to be the kind
and amount so receivable per share by a plurality of the Non-electing Alcatel
ADSs), and further assuming, if such consolidation, merger, conveyance,
transfer, sale or lease occurs prior to the 90th day following the last original
issue date of the Securities, that the Security was convertible at the time of
such occurrence at the Conversion Rate specified in Section 12.1 as adjusted
from the issue date of such Security to such time as provided in this Article
Twelve. Such supplemental indenture shall provide for adjustments which, for
events subsequent to the effective date of such supplemental indenture, shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article. The
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above provisions of this Section 12.11 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases. Notice of the
execution of such a supplemental indenture shall be given by the Company to the
Holder of each Security as provided in Section 1.6 promptly upon such execution.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, an Opinion of Counsel with respect thereto,
which the Company shall cause to be furnished to the Trustee upon request.
SECTION 12.12. Responsibility of Trustee for Conversion Provisions.
The Trustee, subject to the provisions of Section 6.1, and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need be entered into. Neither the
Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent
shall be accountable with respect to the validity or value (or the kind or
amount) of any Alcatel ADSs, or of any other securities or property or cash,
which may at any time be delivered upon the conversion of any Security; and it
or they do not make any representation with respect thereto. Neither the
Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent
shall be responsible for any failure of the Company to make or calculate any
cash payment or to issue, transfer or deliver any Alcatel ADSs or Alcatel ADS
certificates or other securities or property or cash upon the surrender of any
Security for the purpose of conversion; and the Trustee, subject to the
provisions of Section 6.1, and any Conversion Agent shall not be responsible for
any failure of the Company to comply with any of the covenants of the Company
contained in this Article.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
Article Four), the indebtedness represented by the Securities and the payment of
the principal of (and premium, if any) and interest on,
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and any payment of the Repurchase Price with respect to, each and all of the
Securities are hereby expressly made subordinate and subject in right of payment
to the prior payment in full of all Senior Indebtedness.
SECTION 13.2. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, or (b) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness in cash before the Holders of the Securities are entitled to
receive any payment on account of principal of (or premium, if any) or interest
(including any Liquidated Damages) on the Securities or on account of the
purchase, redemption or other acquisition of Securities, and to that end the
holders of Senior Indebtedness shall be entitled to receive, for application to
the payment thereof, any payment or distribution of any kind or character,
whether in cash, property or securities, which may be payable or deliverable in
respect of the Securities in any such case, proceeding, dissolution, liquidation
or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, securities or other property, before all Senior Indebtedness is
paid in full, and if such fact shall, at or prior to the time of such payment or
distribution, have been made known to the Trustee or, as the case may be, such
Holder, then and in such event such payment or distribution shall be paid over
or delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "cash, securities or other
property" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, which shares of stock
or securities are subordinated in right of payment to all then outstanding
Senior Indebtedness to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Seven shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshaling of assets and liabilities of the Company
for the purposes of this Section if the Person formed by such consolidation or
into which the
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Company is merged or which acquires by conveyance or transfer such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
set forth in Article Seven.
SECTION 13.3. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on (including a default
under any redemption or repurchase obligation with respect to) any Senior
Indebtedness beyond any applicable grace period with respect thereto or in the
event that any other event of default with respect to any Senior Indebtedness
shall have occurred and be continuing which would then permit the holders of
such Senior Indebtedness to declare such Senior Indebtedness due and payable
prior to the date on which it would otherwise have become due and payable,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist after written notice to the Company and the Trustee by any
holder of such Senior Indebtedness, or any trustee, agent or representative
therefor or (b) in the event any judicial proceeding shall be pending with
respect to any such default in payment or event of default, then no payment
shall be made by the Company on account of principal of (or premium, if any) or
interest (including Liquidated Damages) on the Securities or on account of the
purchase, redemption or other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company, in the case of the Trustee, or the Trustee,
in the case of such Holder.
The provisions of this Section shall not apply to any payment with
respect to which Section 13.2 would be applicable.
SECTION 13.4. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshaling of assets and
liabilities of the Company referred to in Section 13.2 or under the conditions
described in Section 13.3, from making payments at any time of principal of (and
premium, if any) or interest on the Securities, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on account
of the principal of (and premium, if any) or interest on the Securities or the
retention of such payment by the Holders, if, at the time of such application by
the Trustee, it did not have knowledge that such payment would have been
prohibited by the provisions of this Article.
SECTION 13.5. Subrogation to Rights of Holders of Senior Indebtedness.
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Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated to the extent of the payments or
distributions made to the holders of such Senior Indebtedness pursuant to the
provisions of this Article to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of (and
premium, if any) and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of the
Senior Indebtedness of any cash, property or securities to which the Holders of
the Securities or the Trustee would be entitled except for the provisions of
this Article, and no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 13.6. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Securities the principal of (and premium, if any) and interest on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.7. Trustee to Effectuate Subordination.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 13.8. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder of any Senior
Indebtedness, or by any non-compliance by the Company with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
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Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness, or otherwise amend or supplement in any manner Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise
deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; and (iv) exercise or refrain from exercising any rights
against the Company and any other Person.
SECTION 13.9. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Indebtedness or from any trustee, agent or
representative therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 6.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 13.9
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purpose for which
such money was received and shall not be affected by any notice to the contrary
which may be received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee, agent or
representative therefor) to establish that such notice has been given by a
holder of Senior Indebtedness (or a trustee, agent or representative therefor).
In the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to this
Article, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
such Person under this Article, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
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SECTION 13.10. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 13.11. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
or otherwise.
SECTION 13.12. Reliance by Holders of Senior Indebtedness on Subordination
Provisions.
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness.
SECTION 13.13. Rights of Trustee as Holder of Senior Indebtedness; Preservation
of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness which
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 13.14. Article Applicable to Paying Agents.
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In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 13.13 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 13.15. Certain Conversions and Repurchases Deemed Payment.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article
Twelve or upon the repurchase of Securities in accordance with Article Fourteen
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of the principal of
such Security. For the purposes of this Section, the term "junior securities"
means (a) Alcatel ADSs and any cash, property or securities into which the
Securities are convertible pursuant to Article Twelve and (b) securities of the
Company which are subordinated in right of payment to all Senior Indebtedness
which may be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article Twelve or to exchange such Security for Alcatel ADSs in
accordance with Article Fourteen if the Company elects to satisfy the
obligations under Article Fourteen by the delivery of Alcatel ADSs.
ARTICLE FOURTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 14.1. Right to Require Repurchase.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 14.2, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S.$5,000 or any integral multiple of
U.S.$1,000 in excess thereof (provided that no single Security may be
repurchased in part unless the portion of the principal amount of such Security
to be Outstanding after such repurchase is equal to U.S.$5,000 or integral
multiples of U.S.$1,000 in excess thereof), on the date (the "Repurchase Date")
that is 45 days after the date of the Company Notice (as
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defined in Section 14.3) at a purchase price equal to 100% of the principal
amount of the Securities to be repurchased plus interest accrued to the
Repurchase Date (the "Repurchase Price"); provided, however, that installments
of interest on Securities whose Stated Maturity is on or prior to the Repurchase
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of Section 3.7. Such right to require the
repurchase of the Securities shall not continue after a discharge of the Company
from its obligations with respect to the Securities in accordance with Article
Four, unless a Change in Control shall have occurred prior to such discharge. At
the option of the Company, the Repurchase Price may be paid in cash or, subject
to the fulfillment by the Company of the conditions set forth in Section 14.2,
by delivery of Alcatel ADSs having a fair market value equal to the Repurchase
Price. Whenever in this Indenture (including Sections 2.2, 3.1, 5.1(1) and 5.8)
there is a reference, in any context, to the principal of any Security as of any
time, such reference shall be deemed to include reference to the Repurchase
Price payable in respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and express mention of the
Repurchase Price in any provision of this Indenture shall not be construed as
excluding the Repurchase Price in those provisions of this Indenture when such
express mention is not made; provided, however, that for the purposes of Article
Thirteen such reference shall be deemed to include reference to the Repurchase
Price only to the extent the Repurchase Price is payable in cash.
SECTION 14.2. Conditions to the Company's Election to Pay the Repurchase Price
in Alcatel ADSs.
The Company may elect to pay the Repurchase Price by delivery of
Alcatel ADSs pursuant to Section 14.1 if and only if the following conditions
shall have been satisfied:
(a) The Alcatel ADSs deliverable in payment of the Repurchase Price
shall have a fair market value as of the Repurchase Date of not less than the
Repurchase Price. For purposes of Section 14.1 and this Section 14.2, the fair
market value of Alcatel ADSs shall be determined by the Company and shall be
equal to 95% of the average of the Closing Prices Per Alcatel ADS for the five
consecutive Trading Days immediately preceding the second Trading Day prior to
the Repurchase Date;
(b) The Repurchase Price shall be paid only in cash in the event
Alcatel ADS to be delivered upon repurchase of Securities hereunder (i) require
registration under any federal securities law before such shares may be freely
transferrable without being subject to any transfer restrictions under the
Securities Act upon repurchase and if such registration is not completed or does
not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such Alcatel ADSs may be validly delivered upon
repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
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(c) Payment of the Repurchase Price may not be made in Alcatel ADSs
unless such Alcatel ADSs are, or shall have been, approved for quotation on the
Nasdaq National Market or listed on a national securities exchange, in either
case, prior to the Repurchase Date; and
(d) All Alcatel ADSs which may be delivered upon repurchase of
Securities will be purchased by the Company on the open market.
If all of the conditions set forth in this Section 14.2 are not
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
SECTION 14.3. Notices; Method of Exercising Repurchase Right, Etc.
(a) Unless the Company shall have theretofore called for redemption all
of the Outstanding Securities, on or before the 30th day after the occurrence of
a Change in Control, the Company or, at the request and expense of the Company
on or before the 15th day after such occurrence, the Trustee, shall give to all
Holders of Securities, in the manner provided in Section 1.6, notice (the
"Company Notice") of the occurrence of the Change of Control and of the
repurchase right set forth herein arising as a result thereof. The Company shall
also deliver a copy of such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of Alcatel ADSs,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Securities, are
to be surrendered for payment of the Repurchase Price and accrued interest, if
any,
(5) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Security designated
by the Holder to be repurchased, and that interest thereon shall cease to accrue
on and after said date,
(6) the Conversion Rate then in effect, the date on which the right to
convert the principal amount of the Securities to be repurchased will terminate
and the place or places where such Securities may be surrendered for conversion,
and
(7) the place or places that the certificate required by Section 2.2
shall be delivered, and the form of such certificate and the place or places
that the Surrender Certificate required by Section 14.3(i) shall be delivered.
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In addition, at least two Business Days preceding the Repurchase Date,
the Company shall give to all Holders of the Securities, in the manner provided
in Section 1.6, notice specifying whether the Repurchase Price will be payable
in cash or Alcatel ADSs and shall deliver a copy of such notice to the Trustee.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article
Fourteen are inconsistent with applicable law, such law shall govern.
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in Alcatel ADSs, the name or names (with addresses) in which
the certificate or certificates for Alcatel ADSs shall be issued, and (ii) the
Securities with respect to which the repurchase right is being exercised. Such
written notice shall be irrevocable, except that the right of the Holder to
convert the Securities with respect to which the repurchase right is being
exercised shall continue until the close of business on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or Alcatel ADSs, as provided above, for payment to
the Holder on the Repurchase Date or, if Alcatel ADSs are to be paid, as
promptly after the Repurchase Date as practicable, together with accrued and
unpaid interest to the Repurchase Date payable with respect to the Securities as
to which the purchase right has been exercised; provided, however, that
installments of interest that mature on or prior to the Repurchase Date shall be
payable in cash to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Record Date.
(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 7% per annum, and each Security shall remain convertible into
Alcatel ADSs until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by,
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the Holder thereof or his attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and make available for
delivery to the Holder of such Security without service charge, a new Security
or Securities, containing identical terms and conditions, each in an authorized
denomination in aggregate principal amount equal to and in exchange for the
unrepurchased portion of the principal of the Security so surrendered.
(f) Any delivery of Alcatel ADSs in respect of the Repurchase Price
shall be deemed to have been effected immediately prior to the close of business
on the Repurchase Date and the Person or Persons in whose name or names any
certificate or certificates for Alcatel ADSs shall be issuable upon such
repurchase shall be deemed to have become on the Repurchase Date the holder or
holders of record of the Alcatel ADSs represented thereby; provided, however,
that any surrender for repurchase on a date when the stock transfer books of the
Company shall be closed shall constitute the Person or Persons in whose name or
names the certificate or certificates for such Alcatel ADSs are to be issued as
the record holder or holders thereof for all purposes at the opening of business
on the next succeeding day on which such stock transfer books are open. No
payment or adjustment shall be made for dividends or distributions on any
Alcatel ADSs delivered upon repurchase of any Security declared prior to the
Repurchase Date.
(g) No fractions of Alcatel ADSs shall be delivered upon repurchase of
Securities. If more than one Security shall be repurchased from the same Holder
and the Repurchase Price shall be payable in Alcatel ADSs, the number of full
Alcatel ADSs which shall be deliverable upon such repurchase shall be computed
on the basis of the aggregate principal amount of the Securities so repurchased.
Instead of any fractional Alcatel ADSs which would otherwise be deliverable on
the repurchase of any Security or Securities, the Company will deliver to the
applicable Holder its check for the current market value of such fractional
Alcatel ADSs . The current market value of a fraction of an Alcatel ADS is
determined by multiplying the current market price of a full Alcatel ADS by the
fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of an Alcatel ADS is the Closing Price Per
Alcatel ADS on the Trading Day immediately preceding the Repurchase Date.
(h) Any issuance and delivery of certificates for Alcatel ADSs on
repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for Alcatel ADSs in a name other than that of the Holder of the Securities being
repurchased, and no such issuance or delivery shall be made unless and until the
Person requesting such issuance or delivery has paid to the Company the amount
of any such tax or duty or has established, to the satisfaction of the Company,
that such tax or duty has been paid.
(i) If Alcatel ADSs to be delivered upon repurchase of a Security are
to be registered in a name other than that of the beneficial owner of such
Security, then such Holder must deliver to the Trustee a Surrender Certificate,
dated the date of surrender of such Restricted Security and signed by such
beneficial owner, as to compliance with the restrictions on
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<PAGE> 115
transfer applicable to such Restricted Security. Neither the Trustee nor any
Registrar or Transfer Agent or other agents shall be required to register in a
name other than that of the beneficial owner of Alcatel ADSs delivered upon
repurchase of any such Restricted Security not so accompanied by a properly
completed Surrender Certificate.
(j) All Securities delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 3.9.
SECTION 14.4. Certain Definitions.
For purposes of this Article Fourteen,
(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;
(b) a "Change in Control" shall be deemed to have occurred at the time,
after the original issuance of the Securities, of:
(i) the acquisition by any person of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock of the Company entitling such
person to exercise 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the elections of
directors (any shares of voting stock of which such person or group is the
beneficial owner that are not then outstanding being deemed outstanding for
purposes of calculating such percentage), other than any such acquisition by the
Company or Alcatel, any Subsidiary of the Company or Alcatel or any employee
benefit plan of the Company or Alcatel existing on the date of this Indenture;
or
(ii) any consolidation or merger of the Company with or into, any other
person, any merger of another person with or into the Company, or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company to another person (other than (a) any such transaction (x) which
does not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of Common stock of the Company or (y) pursuant to which
holders of Common stock of the Company immediately prior to such transaction
have the entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled to vote generally in
the election of directors of the continuing or surviving person immediately
after such transaction and (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common stock of the Company into
solely shares of Common stock);
Provided, however, that a Change in Control shall not be deemed to have
occurred if either (x) the Closing Price Per Alcatel ADS on any five Trading
Days within the period of 10 consecutive Trading Days ending immediately after
the later of the date of the Change in
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<PAGE> 116
Control or the date of the public announcement of the Change in Control (in the
case of a Change in Control under Clause (i) above) or the period of 10
consecutive Trading Days ending immediately prior to the date of the Change in
Control (in the case of a Change in Control under Clause (ii) above) shall equal
or exceed 105% of the Conversion Price of the Securities in effect on each such
Trading Day or (y) in the event that the Change of Control is effected through
the acquisition of the Common Stock of Alcatel, all the consideration (excluding
cash payments for fractional shares) to be paid for the Common Stock in the
transaction or transactions constituting the change in Control consists of
shares of common stock traded on a national securities exchange or quoted on the
Nasdaq National Market and as a result of such transaction or transactions the
Securities become convertible solely into such common stock; and
(c) for purposes of Section 14.4(b)(i), the term "person" shall include
any syndicate or group which would be deemed to be a "person" under Section
13(d)(3) of the Exchange Act, as in effect on the date of the original execution
of this Indenture.
ARTICLE FIFTEEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY;
NON-RECOURSE
SECTION 15.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record Date,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of such Regular Record Date, and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the
time such list is furnished; excluding from any such list names and addresses
received by the Trustee in its capacity as Security Registrar.
SECTION 15.2. Preservation of Information.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 15.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 15.1 upon receipt of a new list so furnished.
(b) After this Indenture has been qualified under the Trust Indenture
Act, the rights of Holders to communicate with other Holders with respect to
their rights under this Indenture
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or under the Securities, and the corresponding rights and duties of the Trustee,
shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 15.3. No Recourse Against Others.
An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 15.4. Reports by Trustee.
(a) After this Indenture has been qualified under the Trust Indenture
Act, the Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b) After this Indenture has been qualified under the Trust Indenture
Act, a copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
SECTION 15.5. Reports by Company.
After this Indenture has been qualified under the Trust Indenture Act,
the Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 shall be filed with
the Trustee within 15 days after the same is so required to be filed with the
Commission.
ARTICLE 16
THE GUARANTY
SECTION 16.1. Guaranty.
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<PAGE> 118
Alcatel has, pursuant to the Guaranty dated as of September 17, 1998, a
copy of which is attached hereto as Exhibit I, fully and unconditionally
guaranteed the due and punctual payment of the principal of, premium, if any,
and interest (including Liquidated Damages) on the Securities. In case of a
failure of the Company to pay or cause to be paid punctually any such amounts in
accordance with the terms of this Indenture, Alcatel hereby agrees, upon written
notice from the Trustee, to pay or cause to be paid punctually any such amounts
when and as the same become due and payable in accordance with the Guaranty.
---------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
102
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, as of the day and year first above written.
Alcatel USA, Inc.
THE BANK OF NEW YORK, Trustee
As Guarantor, ALCATEL
103
<PAGE> 120
ANNEX A -- Form of Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to ss. 3.5(b)(i), (iii) and (v) of the Indenture)
The Bank of New York
as Trustee
101 Barclay St., Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: 7% Convertible Subordinated Notes due August 1, 2004 of Alcatel USA, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of August 12, 1997 (the
"Initial Indenture"), as supplemented by the First Supplemental Indenture dated
as of September 4, 1998, between the Company and The Bank of New York (the
"First Supplemental Indenture") and the Second Supplemental Indenture dated as
of April 1, 1999, between the Company, Alcatel and The Bank of New York, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture) (the "Second Supplemental Indenture", together with the
Initial Indenture and the First Supplemental Indenture, the "Indenture"). Terms
used herein and defined in the Indenture or in Regulation S or Rule 144 under
the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Regulation S
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
904 or Rule 144 under the Securities Act and with all applicable
A-1
<PAGE> 121
securities laws of the states of the United States and other jurisdictions.
Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in accordance
with Rule 904:
(A) the Owner is not a distributor of the Securities, an affiliate of
the Company or any such distributor or a person acting on behalf of any of the
foregoing;
(B) the offer of the Specified Securities was not made to a person in
the United States;
(C) either:
(i) at the time the buy order was originated, the Transferee was
outside the United States or the Owner and any person acting on its behalf
reasonably believed that the Transferee was outside the United States, or
(ii) the transaction is being executed in, on or through the facilities
of the Eurobond market, as regulated by the Association of International Bond
Dealers, or another designated offshore securities market and neither the Owner
nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United States by
or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a selling
concession, fee or other remuneration in respect of the Specified Securities,
and the transfer is to occur during the Restricted Period, then the requirements
of Rule 904(c)(1) have been satisfied; and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(A) the transfer is occurring after a holding period of at least two
years (computed in accordance with paragraph (d) of Rule 144) has elapsed since
the date the Specified Securities were acquired from the Company or from an
affiliate (as such term is defined in Rule 144) of the Company, whichever is
later, and is being effected in accordance with the applicable amount, manner of
sale and notice requirements of paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a period of at least three years
has elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144) of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company.
A-2
<PAGE> 122
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchaser.
Dated:
_________________________________________________
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:
_________________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
_________________________________________________
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-3
<PAGE> 123
ANNEX B -- Form of Restricted Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to ss. 3.5(b)(ii), (iii), (iv) and (v)
of the Indenture)
The Bank of New York
as Trustee
101 Barclay St., Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: 7% Convertible Subordinated Notes due August 1, 2004 of Alcatel USA, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of August 12, 1997 (the
"Initial Indenture"), as supplemented by the First Supplemental Indenture dated
as of September 4, 1998, between the Company and The Bank of New York (the
"First Supplemental Indenture") and the Second Supplemental Indenture dated as
of April 1, 1999, between the Company, Alcatel and The Bank of New York, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture) (the "Second Supplemental Indenture", together with the
Initial Indenture and the First Supplemental Indenture, the "Indenture"). Terms
used herein and defined in the Indenture or in Regulation S or Rule 144 under
the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
B-1
<PAGE> 124
Such beneficial owner or owners are referred to herein collectively as
the "Owner". If the Specified Securities are represented by a Global Security,
they are held through the Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to
a person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant
to an effective registration statement under the Securities Act, it is being
effected in accordance with Rule 144A or Rule 144 under the Securities Act and
all applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person that the
Owner and any person acting on its behalf reasonably believe is a "qualified
institutional buyer" within the meaning of Rule 144A, acquiring for its own
account or for the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have taken reasonable
steps to ensure that the Transferee is aware that the Owner may be relying on
Rule 144A in connection with the transfer; and (2) Rule 144 Transfers. If the
transfer is being effected pursuant to Rule 144:
(A) the transfer is occurring after a holding period of at least two
years (computed in accordance with paragraph (d) of Rule 144) has elapsed since
the date the Specified Securities were acquired from the Company or from an
affiliate (as such term is defined in Rule 144) of the Company, whichever is
later, and is being effected in accordance with the applicable amount, manner of
sale and notice requirements of paragraphs (e), (f) and (h) of Rule 144; or
(B) the transfer is occurring after a period of at least two years has
elapsed since the date the Specified Securities were acquired from the Company
or from an affiliate (as such term is defined in Rule 144) of the Company,
whichever is later, and the Owner is not, and during the preceding three months
has not been, an affiliate of the Company.
B-2
<PAGE> 125
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchaser.
Dated:
_________________________________________________
(Print the name of the Undersigned, as such term
is defined in the second paragraph of this
certificate.)
By: _____________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership
or fiduciary, the title of the person signing on
behalf of the Undersigned must be stated.)
_________________________________________________
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-3
<PAGE> 126
ANNEX C -- Form of Unrestricted Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
For removal of Securities Act Legends pursuant to ss. 3.5(c))
The Bank of New York
as Trustee
101 Barclay St., Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Re: 7% Convertible Subordinated Notes due August 1, 2004 of Alcatel USA, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of August 12, 1997 (the
"Initial Indenture"), as supplemented by the First Supplemental Indenture dated
as of September 4, 1998, between the Company and The Bank of New York (the
"First Supplemental Indenture") and the Second Supplemental Indenture dated as
of April 1, 1999, between the Company, Alcatel and The Bank of New York, as
Trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture) (the "Second Supplemental Indenture", together with the
Initial Indenture and the First Supplemental Indenture, the "Indenture"). Terms
used herein and defined in the Indenture or in Regulation S or Rule 144 under
the U.S. Securities Act of 1933 (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_____________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein collectively as
the "Owner". If the Specified Securities are represented by a Global Security,
they are held through the Depositary or an Agent Member in the name of the
Undersigned, as or on behalf of the Owner. If the Specified Securities are not
represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
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<PAGE> 127
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 3.5(c) of the
Indenture. In connection with such exchange, the Owner hereby certifies that the
exchange is occurring after a period of at least two years has elapsed since the
date the Specified Securities were acquired from the Company or from an
affiliate (as such term is defined in Rule 144) of the Company, whichever is
later, and the Owner is not, and during the preceding three months has not been,
an affiliate of the Company. The Owner also acknowledges that any future
transfers of the Specified Securities must comply with all applicable securities
laws of the states of the United States and other jurisdictions.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and the Initial Purchaser.
Dated:
_________________________________________________
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By: _____________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of
the person signing on behalf of the Undersigned must be stated.)
_________________________________________________
Signature Guaranteed
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the [Registrar], which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the [Registrar] in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
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<PAGE> 128
ANNEX D - Form of Surrender Certificate
In connection with the certification contemplated by Section 12.2 or
14.3(i) relating to compliance with certain restrictions relating to transfers
of Restricted Securities, such certification shall be provided substantially in
the form of the following certificate, with only such changes thereto as shall
be approved by the Company and Goldman, Sachs & Co.:
CERTIFICATE
ALCATEL USA, INC.
7% CONVERTIBLE SUBORDINATED NOTES DUE AUGUST 1, 2004
This is to certify that as of the date hereof with respect to
U.S.$________ principal amount (as defined in the Indenture) of the
above-captioned securities surrendered on the date hereof (the "Surrendered
Securities") for registration of transfer, or for conversion or repurchase where
the securities issuable upon such conversion or repurchase are to be registered
in a name other than that of the undersigned Holder (each such transaction being
a "transfer"), the undersigned Holder (as defined in the Indenture) certifies
that the transfer of Surrendered Securities associated with such transfer
complies with the restrictive legend set forth on the face of the Surrendered
Securities for the reason checked below:
________ The transfer of the Surrendered Securities complies with Rule
144 under the United States Securities Act of 1933, as amended (the
"Securities Act"); or
________ The transfer of the Surrendered Securities complies with Rule
144A under the Securities Act; or
________ The transfer of the Surrendered Securities complies with Rule
904 under the Securities Act.
________ The transfer of the Surrendered Securities has been made to an
institution that is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act in a transaction
exempt from the registration requirements of the Securities Act.
[Name of Holder]
_________________________________________________
Dated: ____________, ____
To be dated the date
of surrender
D-1
<PAGE> 1
Exhibit 4.3
- - -------------------------------------------------------------------------------
ALCATEL USA, INC., Issuer,
(formerly, DSC Communications Corporation)
ALCATEL, Guarantor
and
THE BANK OF NEW YORK, Trustee
------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of April 1, 1999
Supplementing the Indenture dated as of August 12, 1997, as
supplemented by the First Supplemental Indenture
dated as of September 4, 1998
------------------------
U.S.$400,000,000
7% Convertible Subordinated Notes
due August 1, 2004
- - -------------------------------------------------------------------------------
<PAGE> 2
SECOND SUPPLEMENTAL INDENTURE, dated as of April 1, 1999 (this "Second
Supplemental Indenture"), between ALCATEL USA, INC., formerly DSC COMMUNICATIONS
CORPORATION, a Delaware corporation (the "Company"), ALCATEL, a French societe
anonyme ("Alcatel" or the "Guarantor"), and THE BANK OF NEW YORK, a New York
banking corporation, as Trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of August 12, 1997 (the "Initial Indenture"),
providing for the creation and issuance by the Company of 7% Convertible
Subordinated Notes due August 1, 2004 (the "Securities" or "Security"), which
has been supplemented by the First Supplemental Indenture, dated as of September
4, 1998, between the Company and the Trustee (the "First Supplemental
Indenture", together with the Initial Indenture, the "Indenture");
WHEREAS, following the acquisition of 100% of the outstanding shares of
common stock of the Company by Alcatel through a merger in September 1998,
Alcatel provided the Guaranty, dated as of September 17, 1998, a copy of which
is attached hereto as Annex I (the "Guaranty");
WHEREAS, in addition to the modification of the conversion rights
provided for in Article Two of the First Supplemental Indenture, the parties
hereto wish to make certain further modifications to the Initial Indenture to
reflect the convertibility of the Securities into Alcatel ADSs and to reflect
the Guaranty;
WHEREAS, Section 8.1(4) of the Initial Indenture provides that the
parties hereto may execute this Second Supplemental Indenture without the
consent of Holders of Securities;
NOW, THEREFORE, the Company and the Trustee, acting for itself and the
Holders, agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Relation to Indenture
This Second Supplemental Indenture constitutes part of the Indenture
for all purposes.
SECTION 1.02. Definitions
In this Second Supplemental Indenture, unless the context otherwise
requires:
(i) terms defined in the Indenture have the same meaning when used
in this Second Supplemental Indenture unless otherwise defined
in this Second Supplemental Indenture; and
<PAGE> 3
(ii) all references to "the Second Supplemental Indenture" or "this
Second Supplemental Indenture" are to this Second Supplemental
Indenture as modified, supplemented or amended from time to
time.
ARTICLE 2
AMENDMENTS
Upon the execution hereof, without further agreement, the Indenture
shall be amended as follows:
SECTION 2.01. Substitution of "Alcatel USA, Inc." for "DSC Communications
Corporation"
At each place in the Indenture where the name "DSC Communications
Corporation" appears, such name shall be deleted and replaced with "Alcatel USA,
Inc.".
SECTION 2.02. Definition of Alcatel and Alcatel ADSs
The following definitions shall be added to Section 1.1 of the
Indenture:
(i) "Alcatel" means Alcatel, a company organized under the laws of
the Republic of France, and the parent of the Company.
(ii) "Alcatel ADSs" means the American depositary shares issued
under the depositary agreement, dated as of March 1, 1991 and
amended and restated as of March 15, 1992, as amended by
Amendment No. 1 dated as of January 3, 1997 and as further
amended and restated as of March 10, 1997, among Alcatel, The
Bank of New York, as depositary, and holders of American
depositary receipts evidencing such American depositary
shares, each representing one-fifth of one ordinary share of
Alcatel.
SECTION 2.03. Definition of Common Stock
The definition of "Common Stock" in Section 1.1 shall be deleted and
replaced in its entirety by the text below:
"Common Stock", unless otherwise stated, means the Common Stock of
Alcatel, nominal value EUR 10 per share.
SECTION 2.04. Substitution of "Alcatel" for "the Company"
At each place in the Indenture listed below, unless otherwise stated in
this Second Supplemental Indenture, the words "the Company" shall be deleted and
replaced with "Alcatel":
(i) SECTION 1.1: in the definition of "Closing Price Per Share";
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<PAGE> 4
(ii) The second to last sentence of sixth paragraph of the Form of
Reverse under Section 2.2, which begins: "In addition, the
Indenture provides that in the case of certain consolidations
or mergers".
(iii) SECTION 12.6(a), (b), (c) and (d) and the second mention of
"the Company" in the last paragraph of Section 12.6.
SECTION 2.05. Substitution of "Alcatel ADSs" for "Share", "Common Stock"
and "Common Stock of the Company"
At each place in the Indenture listed below, unless otherwise stated in
this Second Supplemental Indenture, the words "Share", "Common Stock", "share of
Common Stock", "Common Stock of the Company", "fully paid and non-assessable
shares of Common Stock of the Company" and words of similar import, as the
context may require, shall be deleted and replaced with "Alcatel ADS" or
"Alcatel ADSs", as the case may be, and the words "share certificate" shall be
deleted and replaced with "American Depositary Receipt evidencing American
Depositary Shares".
(i) SECTION 1.1: in the definitions of "Closing Price Per Share",
"Non-electing Shares" and "Trading Days", 1.12;
(ii) SECTIONS 2.2, 2.4;
(iii) SECTION 3.1;
(iv) SECTION 10.8;
(v) SECTIONS 12.1, 12.2, 12.3, 12.9, 12.12;
(vi) SECTION 13.15;
(vii) SECTION 14.1, 14.2, 14.3 and clause (x) of the proviso at the
end of Section 14.4(b).
SECTION 2.06. Substitution of "Alcatel ADSs deliverable" for "Shares of
Common Stock issuable"
At each place in the Indenture where reference is made to the issuance
and/or delivery of Common Stock (including, for illustrative purposes only and
without limitation, references to shares of Common Stock "issuable", "issued" or
"required to be issued and delivered") such reference shall be deleted and
replaced with a reference to the delivery of Alcatel ADSs (including for
illustrative purposes only and without limitation, references to Alcatel ADSs
"deliverable", "delivered" or "required to be delivered").
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SECTION 2.07. Notices, Etc., to Trustee and Company
(i) The heading shall be modified to read "Notices, Etc., to
Trustee, Company and Alcatel".
(ii) Section 1.5(1) shall be modified by inserting the following
text at the end of the paragraph: "facsimile no. (212)
815-5915".
(iii) Section 1.5(2) shall be deleted and replaced in its entirety
by the text below:
(2) the Company or Alcatel by the Trustee or by any Holder
of Securities shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing,
mailed, first-class postage prepaid, or telecopied and
confirmed by mail, first-class postage prepaid, or delivered
by hand or overnight courier, addressed (i) if to the Company,
to Alcatel USA, Inc. at 1000 Coit Road, Plano, Texas 75075,
Attention: Treasurer; facsimile no. (972) 519-2688, or at any
other address previously furnished in writing to the Trustee
by the Company; and (ii) if to Alcatel, to Alcatel at 54,
rue la Boetie, Paris, France, 75008, Attention: Chief
Financial Officer; facsimile no. (331) 40.76.14.91.
SECTION 2.08. Form of Security
The first sentence of the Form of Reverse under Section 2.2, and
Annexes A, B and C, shall be modified by replacing the reference to the
Indenture, dated as of August 12, 1997, with the following text: "Indenture,
dated as of August 12, 1997 (the "Initial Indenture"), as supplemented by the
First Supplemental Indenture dated as of September 4, 1998, between the Company
and The Bank of New York (the "First Supplemental Indenture") and the Second
Supplemental Indenture dated as of April 1, 1999, between the Company, Alcatel
and The Bank of New York, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture) (the "Second Supplemental
Indenture", together with the Initial Indenture and the First Supplemental
Indenture, the "Indenture")".
SECTION 2.09. No Reserve of Common Stock to be held by the Company
Section 12.7 of the Indenture shall be deleted in its entirety and
replaced by the words "Deleted Intentionally".
SECTION 2.10. Conversion Price
In Sections 2.2 and 12.1 of the Indenture, the Conversion Price of
"U.S.$ 49.725" shall be deleted and replaced by "U.S.$ 61.012".
SECTION 2.11. Adjustment of Conversion Price
Section 12.4 of the Indenture shall be deleted and replaced in its
entirety by the text below.
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The Conversion Price shall be subject to adjustments from time to time
as follows:
(1) In case Alcatel shall pay or make a dividend or other
distribution on any class of capital stock of Alcatel payable in shares
of Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately
after the opening of business on the day following the date fixed for
such determination. If, after any such date fixed for determination,
any dividend or distribution is not in fact paid, the Conversion Price
shall be immediately readjusted, effective as of the date the
determination is made not to pay such dividend or distribution, to the
Conversion Price that would have been in effect if such determination
date had not been fixed. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of Alcatel but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of such shares. Alcatel will not pay any dividend or make any
distribution on shares held in the treasury of Alcatel.
(2) In case Alcatel shall issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock such that the price per Alcatel ADS
would be less than the current market price per Alcatel ADS (determined
as provided in paragraph (8) of this Section 12.4) on the date fixed
for the determination of stockholders entitled to receive such rights,
options or warrants (other than any rights, options or warrants that by
their terms will also be issued to any Holder upon conversion of a
Security into Alcatel ADSs without any action required by the Company
or any other Person), the Conversion Price in effect at the opening of
business on the day following the date fixed for such determination
shall be reduced by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. If, after any such
date fixed for determination, any such rights, options or warrants are
not in fact issued, the Conversion Price shall be immediately
readjusted, effective as of the date the determination is made not to
issue such rights, options or warrants, to the Conversion Price that
would have been in effect if such determination date had not been
fixed. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in
the treasury of Alcatel but shall include shares issuable in respect of
scrip certificates issued in lieu of
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fractions of shares of Common Stock. Alcatel will not issue any rights,
options or warrants in respect of shares of Common Stock held in the
treasury of Alcatel.
(3) In case the ratio of Alcatel ADSs to shares of Common
Stock shall be modified such that each Alcatel ADS no longer represents
one-fifth of one ordinary share of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon
which such modification becomes effective shall be proportionally
adjusted, such adjustment to become effective immediately after the
opening of business on the day following the day upon which such
modification becomes effective.
(4) In case Alcatel shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its
indebtedness, shares of any class of capital stock, or other property
(including securities, but excluding (i) any rights, options or
warrants referred to in paragraph (2) of this Section, (ii) any
dividend or distribution paid exclusively in cash, (iii) any dividend
or distribution referred to in paragraph (1) of this Section and (iv)
any merger or consolidation to which Section 12.11 applies), the
Conversion Price shall be adjusted so that the same shall equal the
price determined by dividing the Conversion Price in effect immediately
prior to the close of business on the date fixed for the determination
of stockholders entitled to receive such distribution by a fraction of
which the numerator shall be the current market price per Alcatel ADS
(determined as provided in paragraph (8) of this Section 12.4) on the
date fixed for such determination less the then fair market value (as
determined by the authorized officer of Alcatel, whose determination
shall be conclusive and filed with the Trustee) of the portion of the
assets, shares or evidences of indebtedness so distributed applicable
to one Alcatel ADS and the denominator shall be such current market
price per Alcatel ADS, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination, any such
distribution is not in fact made, the Conversion Price shall be
immediately readjusted, effective as of the date the determination is
made not to make such distribution, to the Conversion Price that would
have been in effect if such determination date had not been fixed.
(5) In case Alcatel shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash
that is distributed upon a merger or consolidation to which Section
12.11 applies or as part of a distribution referred to in paragraph (4)
of this Section) in an aggregate amount that, combined together with
(I) the aggregate amount of any other cash distributions to all holders
of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) has been made and
(II) the aggregate of any cash plus the fair market value (as
determined by the authorized officer of Alcatel, whose determination
shall be conclusive) of consideration payable in respect of any tender
offer by Alcatel or any of its subsidiaries for all or any portion of
the Alcatel ADSs concluded within the 12 months preceding the date of
payment of such distribution and in respect of which no adjustment
pursuant to paragraph (6) of this Section 12.4 has been made (the
"combined cash and tender amount") exceeds 12.5% of the product of the
current market price per Alcatel ADS (determined as
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<PAGE> 8
provided in paragraph (8) of this Section 12.4) on the date for the
determination of holders of shares of Common Stock entitled to receive
such distribution times the number of Alcatel ADSs which would have to
be issued to reflect all shares of Common Stock outstanding on such
date (the "aggregate current market price"), then, and in each such
case, immediately after the close of business on such date for
determination, the Conversion Price shall be adjusted so that the same
shall equal the price determined by dividing the Conversion Price in
effect immediately prior to the close of business on the date fixed for
determination of the stockholders entitled to receive such distribution
by a fraction (i) the numerator of which shall be equal to the current
market price per Alcatel ADS (determined as provided in paragraph (8)
of this Section) on the date fixed for such determination less an
amount equal to the quotient of (x) the excess of such combined cash
and tender amount over such aggregate current market price divided by
(y) the number of Alcatel ADSs which would have to be issued to reflect
all shares of Common Stock outstanding on such date for determination
and (ii) the denominator of which shall be equal to the current market
price per Alcatel ADS (determined as provided in paragraph (8) of this
Section 12.4) on such date for determination.
(6) In case a tender offer made by Alcatel or any Subsidiary
for all or any portion of the Common Stock shall expire and such tender
offer (as amended upon the expiration thereof) shall require the
payment to stockholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as
defined below)) of an aggregate consideration having a fair market
value (as determined by the authorized officer of Alcatel, whose
determination shall be conclusive) that combined together with (I) the
aggregate of the cash plus the fair market value (as determined by the
authorized officer of Alcatel, whose determination shall be
conclusive), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offer by Alcatel
or any Subsidiary for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has
been made and (II) the aggregate amount of any cash distributions to
all holders of Alcatel's Common Stock within 12 months preceding the
expiration of such tender offer and in respect of which no adjustment
pursuant to paragraph (5) of this Section has been made (the "combined
tender and cash amount") exceeds 12.5% of the product of the current
market price per Alcatel ADS (determined as provided in paragraph (8)
of this Section 12.4) as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as it may
be amended) times the number of Alcatel ADSs which would have to be
issued to reflect all shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Price shall be adjusted so
that the same shall equal the price determined by dividing the
Conversion Price immediately prior to close of business on the date of
the Expiration Time by a fraction (i) the numerator of which shall be
equal to (A) the product of (I) the current market price per Alcatel
ADS (determined as provided in paragraph (8) of this Section 12.4) on
the date of the Expiration Time multiplied by (II) the number of
Alcatel ADSs which would have to be issued to reflect all shares of
Common Stock outstanding (including any tendered shares) on the
Expiration Time less (B) the combined tender and cash amount, and (ii)
the denominator of which shall be equal to the product of (A) the
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<PAGE> 9
current market price per Alcatel ADS (determined as provided in
paragraph (8) of this Section 12.4) as of the Expiration Time
multiplied by (B) the number of Alcatel ADSs which would have to be
issued to reflect all shares of Common Stock outstanding (including any
tendered shares) as of the Expiration Time less the number of Alcatel
ADSs which would have to be issued to represent all shares of Common
Stock validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted up to any such maximum, being referred to as
the "Purchased Shares").
(7) The reclassification of Common Stock into securities other
than Common Stock (other than a reclassification upon a consolidation
or merger to which Section 12.11 applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such distribution"
and "the date fixed for such determination" within the meaning of
paragraph (4) of this Section), and (b) a subdivision or combination,
as the case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date
of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective", as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
paragraph (3) of this Section 12.4).
(8) For the purpose of any computation under paragraphs (2),
(4), (5) or (6) of this Section 12.4, the current market price per
Alcatel ADS on any date shall be calculated by the Company and be
deemed to be the average of the daily Closing Prices Per Alcatel ADS
for the five consecutive Trading Days selected by the Company
commencing not more than 10 Trading Days before, and ending not later
than, the earlier of the day in question and the day before the "ex"
date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when
used with respect to any issuance or distribution, means the first date
on which the Alcatel ADSs trade in a regular way in the applicable
securities market or on the applicable securities exchange without the
right to receive such issuance or distribution.
(9) No adjustment in the Conversion Price shall be required
unless such adjustment (plus any adjustments not previously made by
reason of this paragraph (9)) would require an increase or decrease of
at least one percent in such rate; provided, however, that any
adjustments which by reason of this paragraph (9) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Article shall be
made to the nearest cent or to the nearest one-hundredth of an Alcatel
ADS or share, as the case may be.
(10) The Company may make such reductions in the Conversion
Price, for the remaining term of the Securities or any shorter term, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and
(6) of this Section 12.4, as it considers to be advisable in order to
avoid or diminish any income tax to any holders of Alcatel ADSs
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase
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<PAGE> 10
or subscribe for stock or from any event treated as such for income tax
purposes. The Company shall have the power to resolve any ambiguity or
correct any error in this paragraph (10) and its actions in so doing
shall, absent manifest error, be final and conclusive.
SECTION 2.12. Covenant as to Alcatel ADSs
Section 12.9 of the Indenture shall be deleted and replaced in its
entirety by the text below.
The Company agrees that all Alcatel ADSs which may be
delivered upon conversion of Securities will have been duly purchased
on the open market and, except as provided in Section 12.8, the Company
will pay all taxes, liens and charges with respect to the delivery
thereof.
SECTION 2.13. Provision in Case of Consolidation, Merger or Sale of Assets
Section 12.11 of the Indenture shall be deleted and replaced in its
entirety by the text below.
In case of any consolidation or merger of Alcatel with or into
any other Person, any merger of another Person with or into Alcatel
(other than a merger which does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common
Stock of Alcatel) or any conveyance, sale, transfer or lease of all or
substantially all of the assets of Alcatel, the Person formed by such
consolidation or resulting from such merger or which acquires such
assets, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
Outstanding shall have the right thereafter, during the period such
Security shall be convertible as specified in Section 12.1, to convert
such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease by a holder of the number of Alcatel ADSs into
which such Security might have been converted immediately prior to such
consolidation, merger, conveyance, sale, transfer or lease, assuming
such holder of Alcatel ADSs (i) is not a Person with which Alcatel
consolidated or merged with or into or which merger into or with
Alcatel or to which such conveyance, sale, transfer or lease was made,
as the case may be ("Constituent Person"), or an Affiliate of a
Constituent Person and (ii) failed to exercise his rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance, sale, transfer
or lease (provided that if the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance,
sale, transfer or lease is not the same for each Alcatel ADS held
immediately prior to such consolidation, merger, conveyance, sale,
transfer or lease by others than a Constituent Person or an Affiliate
thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Alcatel ADSs"), then for the purpose of
this Section 12.11 the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by the holders of each Non- electing Alcatel ADS
shall be deemed to be the kind and amount so receivable per share
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<PAGE> 11
by a plurality of the Non-electing Alcatel ADSs), and further assuming,
if such consolidation, merger, conveyance, transfer, sale or lease
occurs prior to the 90th day following the last original issue date of
the Securities, that the Security was convertible at the time of such
occurrence at the Conversion Rate specified in Section 12.1 as adjusted
from the issue date of such Security to such time as provided in this
Article Twelve. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article. The above
provisions of this Section 12.11 shall similarly apply to successive
consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given
by the Company to the Holder of each Security as provided in Section
1.6 promptly upon such execution.
Neither the Trustee nor any Conversion Agent shall be under
any responsibility to determine the correctness of any provisions
contained in any such supplemental indenture relating either to the
kind or amount of shares of stock or other securities or property or
cash receivable by Holders of Securities upon the conversion of their
Securities after any such consolidation, merger, conveyance, transfer,
sale or lease or to any such adjustment, but may accept as conclusive
evidence of the correctness of any such provisions, and shall be
protected in relying upon, an Opinion of Counsel with respect thereto,
which the Company shall cause to be furnished to the Trustee upon
request.
SECTION 2.14. Conditions to the Company's Election to Pay the Repurchase
Price in Alcatel ADSs
Section 14.2(d) of the Indenture shall be deleted and replaced in its
entirety by the text below.
14.2. (d) All Alcatel ADSs which may be delivered upon
repurchase of Securities will be purchased by the Company on the open
market.
SECTION 2.15. Certain Definitions
(i) Section 14.4(b)(i) shall be modified by inserting the words
"or Alcatel" directly after the last three mentions of "the
Company";
(ii) Section 14.4(b)(ii) shall be modified by replacing the words
"Common Stock" with "common stock of the Company";
(iii) The proviso at the end of Section 14.4(b) of the Indenture
shall be modified by inserting the following text at the
beginning of clause (y): "in the event that the Change of
Control is effected through the acquisition of the Common
Stock of Alcatel,".
SECTION 2.16. Guaranty
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<PAGE> 12
The text below shall be inserted immediately following Section 15.5 of
the Indenture.
ARTICLE 16
THE GUARANTY
SECTION 16.1. Guaranty.
Alcatel has, pursuant to the Guaranty dated as of September
17, 1998, a copy of which is attached hereto as Annex I, fully and
unconditionally guaranteed the due and punctual payment of the
principal of, premium, if any, and interest (including Liquidated
Damages) on the Securities. In case of a failure of the Company to pay
or cause to be paid punctually any such amounts in accordance with the
terms of this Indenture, Alcatel hereby agrees, upon written notice
from the Trustee, to pay or cause to be paid punctually any such
amounts when and as the same become due and payable in accordance with
the Guaranty.
ARTICLE 3
MISCELLANEOUS
SECTION 3.01. Ratification of Indenture
Except as expressly modified or amended by this Second Supplemental
Indenture, the Indenture continues in full force and effect and is in all
respects confirmed and preserved.
SECTION 3.02. Headings
Headings of the Articles and Sections in this Second Supplemental
Indenture are for convenience of reference only and do no affect interpretation.
SECTION 3.03. Severability Clause
In case any provision in this Second Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 3.04. Benefits of Supplemental Indenture: Binding Effect
Nothing in this Second Supplemental Indenture, express or implied,
shall give any Person, other than the parties hereto and their successors
hereunder, any Paying Agent and the Holders, any benefit of any legal or
equitable right, remedy, or claim under this Second Supplemental Indenture. This
Second Supplemental Indenture shall be binding upon the successors of the
Company and the Trustee and on each Holder.
SECTION 3.05. Governing Law
This Second Supplemental Indenture shall be governed by, and construed
in accordance with, the laws of the State of New York.
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<PAGE> 13
<PAGE> 14
SECTION 3.06. Counterparts
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, as of the day and year first above written.
ALCATEL USA, INC.
By: /s/ George B. Brunt
__________________________________
Name: George B. Brunt
Title: Senior Vice President, General
Counsel and Secretary
Attest:
/s/ Christopher A. Cole
___________________________________
Name: Christopher A. Cole
Title: Assistant Secretary
THE BANK OF NEW YORK, Trustee
By /s/ Van K. Brown
___________________________________
Name: Van K. Brown
Title: Assistant Vice-President
12
<PAGE> 15
STATE OF TEXAS)
):ss.:
COUNTY OF COLIN )
On the 8th of January 1999, before me personally came George B. Brunt,
to me known, who, being by me duly sworn, did depose and say that he is the
Sr. Vice President, General Counsel and Secy of Alcatel USA, Inc., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
/s/ Margie D. Schwartz
_______________________________________
Margie D. Schwartz
Notary Public
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<PAGE> 16
As Guarantor,
ALCATEL
By: /s/ Jean-Pierre Halbron
___________________________________
Name: Jean-Pierre Halbron
Title: Senior Executive Vice President
<PAGE> 17
Annex I
GUARANTY, dated as of September 17, 1998, made by Alcatel, a corporation
organized under the laws of the Republic of France (the "Guarantor"), in favor
of DSC Communications Corporation, a Delaware corporation ("DSC").
WITNESSETH
WHEREAS, The Bank of New York (the "Trustee"), and DSC are parties to the
Indenture, dated as of August 12, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Indenture"), providing for the creation and
issuance by DSC of 7% Convertible Subordinated Notes due August 1, 2004 (the
"Securities").
WHEREAS, DSC has entered into an Agreement and Plan of Merger, dated as of June
3, 1998, as amended, with the Guarantor and Net Acquisition, Inc., a Delaware
corporation and direct subsidiary of Alcatel ("Newco") pursuant to which Newco
will be merged with and into DSC, and DSC will continue as the surviving
corporation and wholly owned subsidiary of the Guarantor;
NOW, THEREFORE, in consideration of the agreements herein, the Guarantor hereby
agrees with DSC as follows:
SECTION 1. DEFINITIONS. Reference is hereby made to the Indenture for a
statement of the terms thereof. All terms used in this Guaranty which are
defined therein and not otherwise defined herein shall have the same meanings
herein as set forth herein.
SECTION 2. GUARANTY. The Guarantor shall fully and unconditionally guarantee the
due and punctual payment of the principal of, premium, if any, and interest
(including Liquidated Damages) on the Securities (the "Obligations").
SECTION 3. GUARANTOR'S OBLIGATIONS. This guaranty is a continuing guaranty and
shall remain in full force and effect until such date on which all of the
Obligations shall have been satisfied in full.
SECTION 4. SUBROGATION. The Guarantor hereby agrees it will not exercise any
rights which it may acquire by way of subrogation, reimbursement, exoneration,
contribution and/or indemnity hereunder, by operation of law or otherwise, by
any payment made by it hereunder or otherwise, until the Obligations shall have
been satisfied in full.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants as follows:
(a) The Guarantor (i) a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation as set forth on
the first page hereof, (ii) is qualified to do business, and is in good
standing, in the Republic of France, and (iii) has all requisite power and
authority to execute, deliver and perform this Guaranty.
<PAGE> 18
(b) The execution, delivery and performance by the Guarantor of this Guaranty
(i) have been duly authorized by all the necessary corporate action, (ii) do not
and will not contravene its by-laws or any applicable law or any material
contractual restriction binding on or otherwise affecting the Guarantor or any
of its properties, and (iii) do not and will result in or require the creation
of any lien upon or with respect to any of its properties, and (iv) do not and
will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties except where such suspension, revocation,
impairment, forfeiture or nonrenewal is not reasonably likely to have a material
adverse effect upon the business, operations, properties, assets, prospects or
condition (financial or otherwise) of the Guarantor.
(c) No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body is required in
connection with the due execution, delivery and performance by the Guarantor of
this Guaranty.
(d) This Guaranty is a legal, valid and binding obligation of the Guarantor in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect affecting generally
enforcement of creditors' rights and by general principles of equity.
(e) There is no pending or, to the best knowledge of the Guarantor, threatened
action, suit or proceeding against the Guarantor is subject, before any court or
other governmental authority or any arbitrator (i) which challenges the validity
or enforceability of this Guaranty, or (ii) in which there is a reasonable
possibility of an adverse decision which may have a material adverse effect upon
the business, operations, properties, assets, prospects or condition (financial
or otherwise) of the Guarantor.
SECTION 6. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, telegraphed, teletexed or
delivered, if to the Guarantor, to it at its address at 56 rue La Boetie, Paris,
France 75008; if to DSC, to it at its address set forth in the Indenture, or, to
such other address as shall be designated by any party in a written notice to
the other party hereto complying as to delivery with the terms of this Section
6.
SECTION 7. GOVERNING LAW. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by an
officer thereunto duly authorized, as of the date first above written.
ALCATEL
By: /s/ Serge Tchuruk
-----------------------
Name: Serge Tchuruk
Title: Chairman & Chief
Executive Officer
-2-
<PAGE> 1
Exhibit 4.4
ALCATEL
GUARANTY, dated as of September 17, 1998, made by Alcatel, a corporation
organized under the laws of the Republic of France (the "Guarantor"), in favor
of DSC Communications Corporation, a Delaware corporation ("DSC").
WITNESSETH
WHEREAS, The Bank of New York (the "Trustee"), and DSC are parties to the
Indenture, dated as of August 12, 1997 (as amended, supplemented or otherwise
modified from time to time, the "Indenture"), providing for the creation and
issuance by DSC of 7% Convertible Subordinated Notes due August 1, 2004 (the
"Securities").
WHEREAS, DSC has entered into an Agreement and Plan of Merger, dated as of June
3, 1998, as amended, with the Guarantor and Net Acquisition, Inc., a Delaware
corporation and direct subsidiary of Alcatel ("Newco") pursuant to which Newco
will be merged with and into DSC, and DSC will continue as the surviving
corporation and wholly owned subsidiary of the Guarantor;
NOW, THEREFORE, in consideration of the agreements herein, the Guarantor hereby
agrees with DSC as follows:
SECTION 1. DEFINITIONS. Reference is hereby made to the Indenture for a
statement of the terms thereof. All terms used in this Guaranty which are
defined therein and not otherwise defined herein shall have the same meanings
herein as set forth herein.
SECTION 2. GUARANTY. The Guarantor shall fully and unconditionally guarantee the
due and punctual payment of the principal of, premium, if any, and interest
(including Liquidated Damages) on the Securities (the "Obligations").
SECTION 3. GUARANTOR'S OBLIGATIONS. This guaranty is a continuing guaranty and
shall remain in full force and effect until such date on which all of the
Obligations shall have been satisfied in full.
SECTION 4. SUBROGATION. The Guarantor hereby agrees it will not exercise any
rights which it may acquire by way of subrogation, reimbursement, exoneration,
contribution and/or indemnity hereunder, by operation of law or otherwise, by
any payment made by it hereunder or otherwise, until the Obligations shall have
been satisfied in full.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants as follows:
(a) The Guarantor (i) a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation as set forth on
the first page hereof, (ii) is qualified to do business, and is in good
standing, in the Republic of France, and (iii) has all requisite power and
authority to execute, deliver and perform this Guaranty.
<PAGE> 2
(b) The execution, delivery and performance by the Guarantor of this Guaranty
(i) have been duly authorized by all the necessary corporate action, (ii) do not
and will not contravene its by-laws or any applicable law or any material
contractual restriction binding on or otherwise affecting the Guarantor or any
of its properties, and (iii) do not and will result in or require the creation
of any lien upon or with respect to any of its properties, and (iv) do not and
will not result in any suspension, revocation, impairment, forfeiture or
nonrenewal of any permit, license, authorization or approval applicable to its
operations or any of its properties except where such suspension, revocation,
impairment, forfeiture or nonrenewal is not reasonably likely to have a material
adverse effect upon the business, operations, properties, assets, prospects or
condition (financial or otherwise) of the Guarantor.
(c) No authorization, approval or other action by, and no notice to or filing
with, any governmental authority or other regulatory body is required in
connection with the due execution, delivery and performance by the Guarantor of
this Guaranty.
(d) This Guaranty is a legal, valid and binding obligation of the Guarantor in
accordance with its terms, except to the extent that the enforceability thereof
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws from time to time in effect affecting generally
enforcement of creditors' rights and by general principles of equity.
(e) There is no pending or, to the best knowledge of the Guarantor, threatened
action, suit or proceeding against the Guarantor is subject, before any court or
other governmental authority or any arbitrator (i) which challenges the validity
or enforceability of this Guaranty, or (ii) in which there is a reasonable
possibility of an adverse decision which may have a material adverse effect upon
the business, operations, properties, assets, prospects or condition (financial
or otherwise) of the Guarantor.
SECTION 6. NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing and shall be mailed (by certified mail, postage
prepaid and return receipt requested), telecopied, telegraphed, telexed or
delivered, if to the Guarantor, to it at its address at 56 rue La Boetie, Paris,
France 75008; if to DSC, to it at its address set forth in the Indenture, or, to
such other address as shall be designated by any party in a written notice to
the other party hereto complying as to delivery with the terms of this Section
6.
SECTION 7. GOVERNING LAW. This Guaranty shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by an
officer thereunto duly authorized, as of the date first above written.
ALCATEL
By: /s/ Serge Tchuruk
-----------------------
Name: Serge Tchuruk
Title: Chairman and Chief
Executive Officer
-2-
<PAGE> 1
Exhibit 4.7
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ALCATEL USA, INC.
Alcatel USA, Inc., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is Alcatel USA, Inc.
2. The Corporation was originally incorporated under the name Digital
Switch Corporation on September 20, 1976.
3. This Amended and Restated Certificate of Incorporation was duly
adopted in accordance with Sections 242 and 245 and all other applicable
provisions of the General Corporation Law of the State of Delaware (the "DGCL").
4. The certificate of incorporation of the Corporation is hereby
amended and restated to read in its entirety as set forth in Exhibit A attached
hereto.
5. All of the shares of the Common Stock, par value $0.01 per share, of
the Corporation issued and outstanding immediately prior to the time when this
Amended and Restated Certificate of Incorporation becomes effective in
accordance with the DGCL are hereby reclassified and converted into 100,000
shares, in the aggregate, of the Class A Common Stock, par value $0.01 per
share, of the Corporation, without any action by any holder thereof.
This Amended and Restated Certificate of Incorporation shall become
effective at 11:50 p.m. (Delaware time) on December 31, 1998.
<PAGE> 2
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been executed by the Corporation on December 18, 1998.
ALCATEL USA, INC.
By: /s/ Krish A. Prabhu
---------------------------
Krish A. Prabhu, President
2
<PAGE> 3
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ALCATEL USA, INC.
ARTICLE I
NAME
The name of the Corporation is Alcatel USA, Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
ARTICLE IV
STOCK
Section 1. Authorized Stock. The total number of shares of stock which
the Corporation shall have authority to issue is 200,000 shares, 100,000 of
which shall be Class A Common Stock, the par value of each of which is $0.01
("Class A Common Stock"), and 100,000 of which shall be Class B Common Stock,
the par value of each of which is $0.01 ("Class B Common Stock").
Section 2. Voting Rights. (a) Each share of Class A Common Stock shall
be entitled to one vote with respect to all matters on which stockholders of the
Corporation are entitled to vote under the DGCL.
(b) Each share of Class B Common Stock shall be entitled to 1/5th of
one vote with respect to all matters on which stockholders of the Corporation
are entitled to vote under the
<PAGE> 4
DGCL, provided, however, that (i) such shares, voting as a class, shall have the
right to elect one director of the Corporation, and (ii) no such shares shall
have any right to vote on the election of any other director of the Corporation.
Section 3. Other Powers, Preferences and Rights. Except as provided in
Section 2 of this Article IV, each share of Class A Common Stock and each share
of Class B Common Stock shall have identical powers, preferences and rights,
including without limitation dividend rights and rights on liquidation or
dissolution of the Corporation.
ARTICLE V
BOARD OF DIRECTORS
The business of the Corporation shall be managed by or under the
direction of a board of directors (the "Board of Directors"). The number of
directors comprising the Board of Directors shall not be less than five, and
each of such directors shall (a) exercise those powers that are traditionally
exercised by boards of directors of corporations organized under the DGCL and
(b) have equal voting rights on all matters that the Board of Directors may
consider. Hereafter, within such limits, the number of directors shall be fixed
by the bylaws of the Corporation (the "Bylaws"), and such number may from time
to time be increased or decreased in such manner as is provided by the Bylaws.
The number of directors comprising the current Board of Directors shall be five.
ARTICLE VI
BYLAWS
The Board of Directors shall have the power to adopt, amend and repeal
any Bylaw, provided, however, that the stockholders of the Corporation shall
have the power to amend or repeal any Bylaw adopted by the Board of Directors.
ARTICLE VII
LIABILITY OF DIRECTORS
No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (a) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (b) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) under Section 174 of the DGCL or (d) for any
transaction from which the director derived an improper personal benefit.
2
<PAGE> 5
ARTICLE VIII
AMENDMENT
The Corporation reserves the right to amend or repeal any provision
contained in this certificate of incorporation, in the manner now or hereafter
prescribed by the DGCL, any other applicable statute or the certificate of
incorporation of the Corporation, and all rights conferred upon stockholders
herein are granted subject to this reservation.
3
<PAGE> 1
Exhibit 4.8
- - -------------------------------------------------------------------------------
AMENDED AND RESTATED BYLAWS
OF
ALCATEL USA, INC.
(a Delaware corporation)
December 31, 1998
- - -------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
OFFICES
1.1. Registered Office...................................................1
1.2. Other Offices.......................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1. Annual Meetings.....................................................1
2.2. Special Meetings....................................................1
2.3. Notices.............................................................2
2.4. Record Date.........................................................2
2.5. Stock Ledger........................................................2
2.6. Quorum and Adjournments.............................................2
2.7 Organization........................................................3
2.8 Vote................................................................3
2.9. Proxies.............................................................3
2.10. Action Without Meeting..............................................4
ARTICLE III
DIRECTORS
3.1. Election............................................................4
3.2. Chairman of the Board...............................................4
3.3. Powers..............................................................5
3.4. First Meeting.......................................................5
3.5. Regular Meetings....................................................5
3.6. Special Meetings....................................................5
3.7. Quorum..............................................................5
3.8. Organization........................................................5
3.9. Meeting by Conference Telephone.....................................5
3.10. Action Without Meeting..............................................6
3.11. Compensation........................................................6
ARTICLE IV
COMMITTEES
4.1. Designation.........................................................6
4.2. Members.............................................................6
4.3. Powers..............................................................6
<PAGE> 3
4.4. Rules...............................................................7
4.5. Minutes.............................................................7
4.6. Action Without Meeting..............................................7
4.7. Compensation........................................................7
ARTICLE V
NOTICES
5.1. Method..............................................................7
5.2. Waiver..............................................................7
ARTICLE VI
OFFICERS
6.1. Election............................................................8
6.2. President...........................................................8
6.3. Vice Presidents.....................................................8
6.4. Treasurer...........................................................9
6.5. Assistant Treasurers................................................9
6.6 Secretary...........................................................9
6.7. Assistant Secretaries...............................................9
6.8. Compensation........................................................9
ARTICLE VII
CERTIFICATES OF STOCK
7.1. Certificates.......................................................10
7.2. Facsimile Signatures...............................................10
7.3. Lost Certificates..................................................10
7.4. Transfers of Stock.................................................10
7.5. Closing of Transfer Books..........................................11
7.6. Registered Stockholders............................................11
ARTICLE VIII
INDEMNIFICATION
8.1. Power..............................................................11
8.2. Authorization......................................................12
8.3. Good Faith.........................................................12
8.4. Indemnification by a Court.........................................13
8.5. Payment in Advance.................................................13
8.6. Non-exclusivity....................................................13
8.7. Insurance..........................................................13
ii
<PAGE> 4
8.8. Certain Definitions................................................14
8.9. Survival...........................................................14
8.10. Limitations........................................................14
8.11. Employees and Agents...............................................14
ARTICLE IX
MISCELLANEOUS
9.1. Dividends..........................................................14
9.2. Reserves...........................................................15
9.3. Books and Records..................................................15
9.4. Fiscal Year........................................................15
9.5. Seal...............................................................15
9.6. Amendments.........................................................15
iii
<PAGE> 5
AMENDED AND RESTATED BYLAWS
OF
ALCATEL USA, INC.
These Amended and Restated Bylaws (these "Bylaws") of Alcatel USA,
Inc., a Delaware corporation (the "Corporation"), have been adopted by the
Corporation effective as of the date set forth on the cover page hereof and are
subject to the applicable provisions of the certificate of incorporation of the
Corporation, as in effect from time to time (the "Certificate of
Incorporation"), and the General Corporation Law of the State of Delaware (the
"DGCL").
ARTICLE I
OFFICES
1.1. Registered Office. The registered office of the Corporation in the
State of Delaware shall be designated from time to time by the board of
directors of the Corporation (the "Board of Directors").
1.2. Other Offices. The Corporation may maintain offices other than its
registered office at such places, within or without the State of Delaware, as
the Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1. Annual Meetings. An annual meeting of the stockholders of the
Corporation (the "Stockholders") shall be held (a) on the second Tuesday in the
month of February at 9:00 a.m. at the principal place of business of the
Corporation or (b) on such other date and at such other time and place, within
or without the State of Delaware, as shall be stated in the notice of such
meeting or in a duly executed waiver of notice thereof. At each annual meeting
of the Stockholders, the Stockholders shall elect the Board of Directors and
transact such other business as may properly be brought before such meeting.
2.2. Special Meetings. Special meetings of the Stockholders, for any
purpose or purposes, (a) may be called by the Chief Executive Officer and (b)
shall be called by the Secretary upon the receipt of a written request stating
the purpose or purposes of such meeting from (i) a majority of the Board of
Directors or (ii) the Stockholders that own a majority of the shares of the
stock of the Corporation issued and outstanding and entitled to vote thereon.
Business transacted at any special meeting of the Stockholders shall be limited
to the purpose or purposes stated in the notice of such meeting. Any special
meeting of the Stockholders may be held on such date and at such time and place,
within or without the State of Delaware, as shall be stated in the notice of
such meeting or in a duly executed waiver of notice thereof.
<PAGE> 6
2.3. Notices. (a) Written notice of the annual meeting of the
Stockholders stating the date, time and place thereof shall be given to each
Stockholder entitled to vote thereat at least 10 days but not more than 60 days
before the date of such meeting.
(b) Written notice of a special meeting of the Stockholders stating the
date, time, place and purpose thereof, shall be given to each Stockholder
entitled to vote thereat at least 10 days but not more than 60 days before the
date of such meeting. If such notice is mailed, then such notice shall be deemed
to be given to any Stockholder when deposited in the mail, postage prepaid,
directed to such Stockholder at such Stockholder's address as it appears on the
records of the Corporation.
2.4. Record Date. In order that the Corporation may determine the
Stockholders entitled to notice of, or to vote at, any meeting of the
Stockholders or any adjournment thereof, or to express written consent to
corporate action without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be (a) more than 60 nor less than 10
days before the date of such meeting or (b) more than 60 days prior to any other
action. If no record date is fixed, then (a) the record date for determining the
Stockholders entitled to notice of, or to vote at, any meeting of the
Stockholders shall be (i) at the close of business on the day next preceding the
day on which notice is given or (ii) if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held, and (b)
the record date for determining the Stockholders for any other purpose shall be
at the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of the Stockholders of record
entitled to notice of, or to vote at, any meeting of the Stockholders shall
apply to any adjournment of such meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
2.5. Stock Ledger. The Secretary shall prepare and make, at least 10
days before every meeting of the Stockholders, a complete list of the
Stockholders entitled to vote at such meeting, arranged in alphabetical order,
showing the address of each Stockholder and the number of shares registered in
the name of each Stockholder. Such list shall be open to the examination of any
Stockholder for any purpose germane to the relevant meeting during ordinary
business hours for a period of at least 10 days prior to such meeting either (a)
at a place within the city where such meeting is to be held and which place
shall be specified in the notice of such meeting or (b) if not specified, at the
place where such meeting is to be held. Such list shall also be produced and
kept at the time and place of the relevant meeting during the whole time thereof
and may be inspected by any Stockholder who is present. The stock ledger shall
be the only evidence as to the identity of the Stockholders entitled to examine
the stock ledger, the list of the Stockholders or the books of the Corporation,
or to vote in person or by proxy at any meeting of the Stockholders.
2
<PAGE> 7
2.6. Quorum and Adjournments. The holders of a majority of the shares
of the stock of the Corporation issued and outstanding and entitled to vote at
any meeting of the Stockholders, present in person or represented by proxy,
shall constitute a quorum at such meeting for the transaction of business,
except as otherwise provided by the Certificate of Incorporation or the DGCL.
If, however, such quorum shall not be present or represented at any meeting of
the Stockholders, then the Stockholders entitled to vote thereat, present in
person or represented by proxy, shall have power by majority vote to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. Shares of the stock of
the Corporation that are held by the Corporation or any affiliate of the
Corporation shall not be entitled to vote or be counted for the purposes of
determining a quorum. At any adjourned meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If any adjournment is for more than 30 days,
or if after any adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each Stockholder of
record entitled to vote at such meeting.
2.7. Organization. Each meeting of the Stockholders shall be presided
over by (a) the Chairman of the Board, if any, (b) the President, in the absence
of the Chairman of the Board, (c) a chairman designated by the Board of
Directors, in the absence of the Chairman of the Board and the President, or (d)
a chairman chosen at such meeting, in the absence of the Chairman of the Board,
the President and such designation. The Secretary, or any Assistant Secretary,
in the absence of the Secretary, shall act as the secretary of each meeting of
the Stockholders; provided, however, that if the Secretary and all Assistant
Secretaries are absent, then the chairman of such meeting may appoint any person
to act as the secretary of such meeting.
2.8. Vote. Each Stockholder entitled to vote at any meeting of the
Stockholders shall be entitled to one vote for each share of stock held by such
Stockholder which has voting power upon the matter in question. Voting at
meetings of the Stockholders need not be by written ballot and need not be
conducted by inspectors unless the holders of a majority of the shares of all
classes of stock of the Corporation issued and outstanding and entitled to vote
thereon present in person or by proxy at such meeting shall so determine. At all
meetings of the Stockholders for the election of directors a plurality of the
votes cast shall be sufficient to elect any director. All other elections and
questions shall, unless otherwise provided by the Certificate of Incorporation,
the DGCL or these Bylaws, be decided by the vote of the holders of majority of
the shares of stock of the Corporation issued and outstanding and entitled to
vote thereon, present in person or represented by proxy, at the meeting;
provided, however, that (except as otherwise required by the Certificate of
Incorporation or the DGCL) the Board of Directors may require a larger vote upon
any election or question.
2.9. Proxies. Each Stockholder entitled to vote at any meeting of the
Stockholders may authorize another person or persons to act for such Stockholder
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless such proxy provides for a longer period of effectiveness. A
duly executed proxy shall be irrevocable if it states that it is
3
<PAGE> 8
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. Any Stockholder may revoke
any proxy which is not irrevocable by attending the meeting and voting in
person or by filing with the Secretary an instrument in writing revoking the
proxy or another duly executed proxy bearing a later date.
2.10. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Stockholders may be taken without a meeting, without prior
notice and without a vote, if a written consent thereto is signed by the holders
of the shares of the stock of the Corporation having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares of the stock of the Corporation issued and
outstanding and entitled to vote thereon were present and voted. Prompt notice
of the taking of any action without a meeting by less than unanimous written
consent shall be given to those Stockholders who have not consented to such
action in writing.
ARTICLE III
DIRECTORS
3.1. Election. (a) The number of directors comprising the Board of
Directors shall not be less than five or more than 10. The number of directors
comprising the current Board of Directors shall be five. Hereafter, within such
limits, the number of directors shall be determined by the Board of Directors.
(b) The directors shall be elected at the annual meeting of the
Stockholders, except as provided in Section 3.1(c), and each director elected by
such Stockholders shall hold office, at the discretion of the Stockholders,
until the earlier of (i) such director's resignation, removal or death or (ii)
the due election and qualification of such director's successor. Directors need
not be Stockholders. Any director or the entire Board of Directors may be
removed, with or without cause, at any time by the holders of a majority of the
shares of the stock of the Corporation issued and outstanding and entitled to
vote thereon.
(c) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office (even though the number of such directors may be
less than a quorum), by the sole remaining director, or by the Stockholders at
any meeting. Each director so elected shall hold office, at the discretion of
the Stockholders, until the earlier of (i) such director's resignation, removal
or death or (ii) the due election and qualification of such director's
successor. If, at any time, there are no directors in office, then an election
of directors may be held in the manner provided by the DGCL.
3.2. Chairman of the Board. There may be a chairman of the Board of
Directors (the "Chairman of the Board") elected by the Board of Directors from
their members at any meeting of the Board of Directors. The Chairman of the
Board shall preside at all meetings of the Board of Directors and perform such
other duties as may be directed by the Board of Directors.
4
<PAGE> 9
3.3. Powers. The business of the Corporation shall be managed by or
under the direction of the Board of Directors. The Board of Directors may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not required by the Certificate of Incorporation, the DGCL or
these Bylaws to be exercised or done by the Stockholders.
3.4. First Meeting. The first meeting of each newly elected Board of
Directors shall be held promptly after and at the same place as the annual
meeting of the Stockholders, and any such meeting may be held without notice to
any director. At the first meeting of each newly elected Board of Directors, the
Board of Directors shall elect the officers of the Corporation and transact such
other business as may properly be brought before such meeting.
3.5. Regular Meetings. Regular meetings of the Board of Directors may
be held, without notice, on such date and at such time and place, within or
without the State of Delaware, as shall be determined by the Board of Directors.
3.6. Special Meetings. Special meetings of the Board of Directors (a)
may be called by the President on not less than two, or, in the case of notice
given by mail, not less than three, days' notice to each director and (b) shall
be called by the Secretary on like notice on the written request of two
directors, unless the Board of Directors consists of only one director, in which
case special meetings shall be called by the Secretary on like notice on the
written request of the sole director. Any special meeting of the Board of
Directors may be held on such date and at such time and place, within or without
the State of Delaware, as shall be stated in the notice of such meeting or in a
duly executed waiver of notice thereof.
3.7. Quorum. At all meetings of the Board of Directors, a majority of
the directors shall constitute a quorum for the transaction of business, and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by the Certificate of Incorporation or the DGCL. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
3.8. Organization. Each meeting of the Board of Directors shall be
presided over by (a) the Chairman of the Board, if any, (b) the President, in
the absence of the Chairman of the Board, or (c) a chairman chosen at such
meeting, in the absence of the Chairman of the Board and the President. The
Secretary, or any Assistant Secretary, in the absence of the Secretary, shall
act as the secretary of each meeting of the Board of Directors; provided,
however, if the Secretary and all Assistant Secretaries are absent, then the
chairman of such meeting may appoint any person to act as the secretary of such
meeting.
3.9. Meeting by Conference Telephone. Unless otherwise restricted by
the Certificate of Incorporation, directors may participate in any meeting of
the Board of Directors by means of conference telephone or similar
communications equipment by means of which all persons
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<PAGE> 10
participating in such meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
3.10. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting if a written consent thereto is signed by all of the directors, and such
written consent is filed with the minutes of the proceeding of the Board of
Directors.
3.11. Compensation. The Board of Directors may fix the compensation,
including fees and reimbursement of expenses, paid to directors for attendance
at regular or special meetings of the Board of Directors.
ARTICLE IV
COMMITTEES
4.1. Designation. The Board of Directors may, by resolution passed by a
majority of the whole board, designate one or more committees of the Board of
Directors (a "Committee"). Each Committee shall have such name as may be
determined from time to time by the Board of Directors.
4.2. Members. Each Committee shall consist of one or more of the
directors of the Corporation. The Board of Directors may designate one or more
directors as alternate members of any Committee, who may replace any absent or
disqualified member at any meeting of such Committee. In the absence or
disqualification of any member of any Committee, the member or members of such
Committee present at any meeting and not disqualified from voting, whether or
not such members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at such meeting in place of any such absent or
disqualified member.
4.3. Powers. To the extent provided in the relevant resolution, any
Committee shall have and may exercise the powers of the Board of Directors in
the management of the business and affairs of the Corporation and may authorize
the seal of the Corporation to be affixed to all papers which may require it;
provided, however, that (a) no Committee shall have power or authority in
reference of (i) amending the Certificate of Incorporation (except that any
Committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
as provided in Section 151(a) of the DGCL, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemptions,
dissolution, any distribution of assets of the Corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or authorize the
increase or decrease of the shares of any series), (ii) adopting an agreement of
merger or consolidation of the Corporation under Section 251 or 252 of the DGCL,
(iii) recommending to the Stockholders the sale, lease or exchange of all or
substantially all of
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the Corporation's property and assets, (iv) recommending to the Stockholders a
dissolution of the Corporation or a revocation of dissolution or (v) amending
these Bylaws, and (b) unless the resolution expressly so provides, no Committee
shall have the power or authority to declare a dividend or to authorize the
issuance of stock.
4.4. Rules. Unless the Board of Directors otherwise provides, each
Committee may adopt, amend or repeal rules for the conduct of its business. In
the absence of such rules, each Committee shall conduct its business in the
same manner as the Board of Directors conducts its business pursuant to
Article III of these Bylaws.
4.5. Minutes. Each Committee shall keep regular minutes of its meetings
and report such minutes to the Board of Directors when required.
4.6. Action Without Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of any Committee may be taken without a meeting if a
written consent thereto is signed by all of the members of such Committee, and
such written consent is filed with the minutes of the proceeding of such
Committee.
4.7. Compensation. The Board of Directors may fix the compensation,
including fees and reimbursement of expenses, paid to directors for attendance
at meetings of any Committee.
ARTICLE V
NOTICES
5.1. Method. Notices to directors and Stockholders shall be in writing
and delivered personally or mailed to the directors or Stockholders at their
respective addresses as they appear on the records of the Corporation. Notice to
directors may also be given by telephone or facsimile.
5.2. Waiver. Whenever any notice is required to be given under any
provision of the Certificate of Incorporation, the DGCL or these Bylaws, a
written waiver thereof, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Attendance of any person at any meeting shall constitute a waiver of
notice of such meeting, except when such person attends any meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because such meeting has not been lawfully called or
convened. Neither the business to be transacted at, nor the purpose of any
regular or special meeting of the Stockholders, directors or members of any
Committee need be specified in any written waiver of notice.
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ARTICLE VI
OFFICERS
6.1. Election. (a) The officers of the Corporation shall be elected by
the Board of Directors, shall include a president (the "President"), a treasurer
(the "Treasurer") and a secretary (the "Secretary") and may include one or more
vice presidents (the "Vice Presidents"), assistant treasurers (the "Assistant
Treasurers") or assistant secretaries (the "Assistant Secretaries"). Two or more
offices may be held by the same person. The Board of Directors may elect such
other officers of the Corporation as the Board of Directors may deem necessary,
desirable or appropriate, and of such officers shall hold office for such term
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
(b) Each officer of the Corporation shall hold office, at the
discretion of the Board of Directors, until the earlier of (i) such officer's
resignation, removal or death or (ii) the due election and qualification of such
officer's successor. Any officer may be removed, with or without cause, at any
time by a majority of the Board of Directors; provided, however, that no such
removal shall prejudice the contractual rights of such officer, if any, with the
Corporation.
(c) Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors or by appointment of the President.
6.2. President. (a) The President shall be the chief executive officer
of the Corporation and may be designated by the Board of Directors as the "Chief
Executive Officer" of the Corporation. The President shall, under the direction
of the Board of Directors, be responsible for the management of the business of
the Corporation. The President shall, in the absence of the Chairman of the
Board, if any, preside at all meetings of the Stockholders and the Board of
Directors, and have the powers and duties assigned to the President in the DGCL
and these Bylaws and such other powers and duties as may be assigned to the
President from time to time by the Board of Directors.
(b) The President may, on behalf of the Corporation, execute and
deliver such agreements, instruments and documents, and take such other actions,
as the President may deem necessary, desirable or appropriate to effect any
transaction authorized by the Board of Directors.
6.3. Vice Presidents. (a) Each Vice President shall, in the absence of
the President and in the order of seniority determined by the Board of
Directors, have the powers and duties of the President. Any Vice President shall
have such powers and duties as may be assigned to such Vice President from time
to time by the Board of Directors or the President.
(b) If any Vice President is designated by the Board of Directors as
the "Chief Operating Officer" of the Corporation, then such Vice President shall
be deemed to be the most senior Vice President of the Corporation. If any Vice
President is designated by the Board of
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Directors as the "Chief Financial Officer" of the Corporation, then such Vice
President shall, in the absence of the Chief Operating Officer of the
Corporation, if any, be deemed to be the most senior Vice President of the
Corporation.
6.4. Treasurer. The Treasurer shall, in the absence of any Vice
President designated as the Chief Financial Officer of the Corporation, be the
chief financial officer of the Corporation. The Treasurer shall (a) maintain
custody of the funds and securities of the Corporation, (b) keep full and
accurate accounts of receipts and disbursements in the records of the
Corporation and (c) deposit all funds and other valuable effects of the
Corporation in the name and for the benefit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer shall
have the powers and duties assigned to the Treasurer in the DGCL and these
Bylaws and such other powers and duties as may be assigned to the Treasurer from
time to time by the Board of Directors, the President or any Vice President.
6.5. Assistant Treasurers. Each Assistant Treasurer shall, in the
absence of the Treasurer and in the order of seniority determined by the Board
of Directors, have the powers and duties of the Treasurer. Any Assistant
Treasurer shall have such powers and duties as may be assigned to such Assistant
Treasurer from time to time by the Board of Directors, the President, any Vice
President or the Treasurer.
6.6. Secretary. The Secretary shall keep the seal of the Corporation in
safe custody and, when authorized by the Board of Directors, affix such seal to
any agreement, instrument or document that requires it. The Secretary shall have
the powers and duties assigned to the Secretary in the DGCL and these Bylaws and
such other powers and duties as may be assigned to the Secretary from time to
time by the Board of Directors, the President or any Vice President.
(b) The Secretary may, on behalf of the Corporation, execute and
deliver such certificates as the Secretary may deem necessary, desirable or
appropriate to certify any record of the Corporation in connection with any
transaction authorized by the Board of Directors.
6.7. Assistant Secretaries. Each Assistant Secretary shall, in the
absence of the Secretary and in the order of seniority determined by the Board
of Directors, have the powers and duties of the Secretary. Any Assistant
Secretary shall have such powers and duties as may be assigned to such Assistant
Secretary from time to time by the Board of Directors, the President, any Vice
President or the Secretary.
6.8. Compensation. The Board of Directors may fix the compensation paid
to each officer of the Corporation or delegate the power to fix such
compensation to the President.
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ARTICLE VII
CERTIFICATES OF STOCK
7.1. Certificates. Every Stockholder shall be entitled to have a
certificate, signed by the President or any Vice President and the Treasurer or
any Assistant Treasurer, or the Secretary or any Assistant Secretary, certifying
the number of shares of the stock of the Corporation owned by such Stockholder
(a "Certificate"). If the Corporation is authorized to issue more than one class
of stock, or more than one series of any class, the designations, preferences
and relative participating, optional or other special rights of each class of
stock or series thereof and the qualifications, limitations or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of each Certificate that the Corporation shall issue to represent such
class of stock; provided, however, that except as otherwise provided in Section
202 of the DGCL, in lieu of the foregoing requirements, there may be set forth
on the face or back of such Certificate a statement that the Corporation will
furnish without charge to each Stockholder who so requests the designations,
preferences and relative participating, optional or other special rights of each
class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences or rights.
7.2. Facsimile Signatures. If any Certificate is signed by any transfer
agent or any assistant transfer agent or by any transfer clerk acting on behalf
of the Corporation and any registrar, then the signature on such Certificate of
the President, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or Assistant Secretary may be a facsimile signature. If any officer of
the Corporation who has signed, or whose facsimile signature has been used on,
any Certificate shall cease to be an officer of the Corporation before such
Certificate has been delivered by the Corporation, then such Certificate may
nevertheless be adopted by the Corporation and be issued and delivered as though
the person who signed such Certificate or whose facsimile signature has been
used thereon had not ceased to be an officer of the Corporation.
7.3. Lost Certificates. The Board of Directors may direct that a new
Certificate be issued in place of any Certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of such fact by the person claiming the Certificate to be lost,
stolen or destroyed. When authorizing the issue of such a new Certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the holder of such lost, stolen or destroyed
Certificate, or such holder's legal representative, to advertise such fact in
such manner as the Board of Directors may require or to give the Corporation a
bond in such sum as the Board of Directors may direct as indemnity against any
claim that may be made against the Corporation with respect to such lost, stolen
or destroyed Certificate or the issuance of such new Certificate.
7.4. Transfers of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of any Certificate duly endorsed or
accompanied by proper evidence of succession,
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assignment or authority to transfer, the Corporation shall issue a new
Certificate to the person entitled thereto, cancel the old Certificate and
record the transaction upon the records of the Corporation.
7.5. Closing of Transfer Books. The Board of Directors may close the
stock transfer books of the Corporation (a) for a period of not more than 60 nor
less than 10 days preceding (i) the date of any meeting of the Stockholders,
(ii) the date for payment of any dividend, (iii) the date for the allotment of
rights or (iv) the date when any change or conversion or exchange of stock shall
go into effect or (b) for a period of not more than 60 nor less than 10 days in
connection with obtaining the consent of the Stockholders for any purpose.
7.6. Registered Stockholders. The Corporation shall be entitled to
recognize the exclusive right of any person registered on the records of the
Corporation as the owner of shares of the stock of the Corporation (a) to
receive dividends, (b) to vote as such owner and (c) to hold liable for calls
and assessments. The Corporation shall not be bound to recognize any equitable
or other claim to or interest in any such share on the part of any other person,
whether or not the Corporation shall have any notice thereof, except as
otherwise provided by the DGCL.
ARTICLE VIII
INDEMNIFICATION
8.1. Power. (a) Subject to Section 8.2, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was a
director or officer of the Corporation, or is or was a director or officer of
the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding if such person (i) acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation and (ii) with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement or conviction
or upon a plea of nolo contendere or its equivalent shall not, of itself, create
a presumption that any person (i) did not act in good faith or in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the Corporation or (ii) with respect to any criminal action or proceeding had
reasonable cause to believe that such person's conduct was unlawful.
(b) Subject to Section 8.2, the Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or was
a director or officer of the Corporation, or is or was a director or officer of
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the Corporation serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation; provided, however, that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
8.2. Authorization. Any indemnification under this Article VIII (unless
ordered by any court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the relevant director
or officer is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Section 8.1. Such determination
shall be made, with respect to any person who is a director or officer at the
time of such determination, (i) by a majority vote of the directors who are not
parties to such action, suit or proceeding, even though less than a quorum, (ii)
by a Committee of such directors designated by a majority vote of such
directors, even though less than a quorum, (iii) if there are no such directors,
or if such directors so direct, by independent legal counsel in a written
opinion or (iv) by the Stockholders. Such determination shall be made,
with respect to former directors and officers, by any person or persons having
the authority to act on the matter on behalf of the Corporation. To the extent,
however, that a present or former director or officer of the Corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described above, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection therewith, without
the necessity of authorization in the specific case.
8.3. Good Faith. For purposes of any determination under Section 8.2, a
person shall be deemed to have acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Corporation or, with respect to any criminal action or proceeding, to have had
no reasonable cause to believe such person's conduct was unlawful, if such
person's action is based on (a) the records or books of account of the
Corporation or another enterprise, (b) information supplied to such person by
the officers of the Corporation or another enterprise in the course of their
duties, (c) the advice of legal counsel for the Corporation or another
enterprise or (d) information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant,
an appraiser or other expert selected with reasonable care by the Corporation or
another enterprise. The term "another enterprise" as used in this Section 8.3
shall mean any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise of which such person is or was serving
at the request of the Corporation as a director, officer, employee or agent. The
provisions of this
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Section 8.3 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 8.1.
8.4. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 8.2, and notwithstanding the
absence of any determination thereunder, any director or officer may apply to
the Court of Chancery in the State of Delaware for indemnification to the extent
otherwise permissible under Section 8.1. The basis of such indemnification by a
court shall be a determination by such court that indemnification of the
director or officer is proper in the circumstances because such person has met
the applicable standards of conduct set forth in Section 8.1. Neither a contrary
determination in the specific case under Section 8.2 nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director or officer seeking indemnification has not met any
applicable standard of conduct. Notice of any application for indemnification
pursuant to this Section 8.4 shall be given to the Corporation promptly upon the
filing of such application. If successful, in whole or in part, the director or
officer seeking indemnification shall also be entitled to be paid the expense of
prosecuting such application.
8.5. Payment in Advance. Expenses incurred by a director or officer in
defending any civil, criminal, administrative or investigative action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director of officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Article VIII.
8.6. Non-exclusivity. The indemnification and advancement of expenses
provided by or granted pursuant to this Article VIII shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of Incorporation,
any Bylaw, agreement, vote of the Stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office, it being the policy of the
Corporation that indemnification of the persons specified in Section 8.1 shall
be made to the fullest extent permitted by law. The provisions of this Article
VIII shall not be deemed to preclude the indemnification of any person who is
not specified in Section 8.1 but whom the Corporation has the power or
obligation to indemnify under the provisions of the DGCL or otherwise.
8.7. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was a director or officer of the Corporation serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power or the obligation to indemnify such
person against such liability under the provisions of this Article VIII.
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8.8. Certain Definitions. For purposes of this Article VIII, references
to "the Corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors or
officers, so that any person who is or was a director or officer of such
constituent corporation, or is or was a director or officer of such constituent
corporation serving at the request of such constituent corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, shall stand in the
same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as such person would have with respect to
such constituent corporation if its separate existence had continued. For
purposes of this Article VIII, (a) references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan, (b)
references to "serving at the request of the Corporation" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan, its participants or beneficiaries, and (c)
a person who acted in good faith and in a manner such person reasonably believed
to be in the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article VIII.
8.9. Survival. The indemnification and advancement of expenses provided
by, or granted pursuant to, this Article VIII shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such a person.
8.10. Limitations. Notwithstanding anything contained in this Article
VIII to the contrary, except for proceedings to enforce rights to
indemnification (which shall be governed by Section 8.4 hereof), the Corporation
shall not be obligated to indemnify any director or officer in connection with a
proceeding (or part thereof) initiated by such person unless such proceeding (or
part thereof) was authorized or consented to by the Board of Directors.
8.11. Employees and Agents. The Corporation may, to the extent
authorized from time to time by the Board of Directors, provide rights to
indemnification and to the advancement of expenses to employees and agents of
the Corporation similar to those conferred in this Article VIII to directors and
officers of the Corporation.
ARTICLE IX
MISCELLANEOUS
9.1. Dividends. Subject to the provisions of the Certificate of
Incorporation and the DGCL, (a) the Board of Directors may declare dividends
upon the stock of the Corporation at any regular or special meeting of the Board
of Directors, and (b) dividends may be paid in cash, property or shares of the
stock of the Corporation.
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9.2. Reserves. The Board of Directors may set aside out of any funds of
the Corporation legally available therefor such reserves as the Board of
Directors, in its discretion, may consider necessary, desirable or appropriate
(a) to meet contingencies, (b) for equalizing dividends, (c) for repairing or
maintaining any property of the Corporation or (d) for such other purposes as
the Board of Directors may deem necessary, advisable or appropriate. The Board
of Directors may modify or abolish any such reserves in the manner in which such
reserves were created.
9.3. Books and Records. The Corporation shall keep, at the principal
place of business of the Corporation or such other office of the Corporation as
the Board of Directors may deem necessary, desirable or appropriate, correct and
complete books and records of account, minutes of the proceedings of meetings of
the Stockholders, the Board of Directors and each Committee, if any, and the
names and addresses of the Stockholders.
9.4. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year unless otherwise fixed by the Board of Directors.
9.5. Seal. The seal of the Corporation shall be fixed by the Board of
Directors. Such seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
9.6. Amendments. The Board of Directors may amend or repeal any of
these Bylaws at any regular or special meeting of the Board of Directors, and
the Stockholders may amend or repeal any of these Bylaws at any annual or
special meeting of the Stockholders.
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Exhibit 4.10
(Unofficial English translation)
ALCATEL
ARTICLES OF ASSOCIATION AND BY-LAWS
PART I
FORMATION OF THE COMPANY
PURPOSE - COMPANY NAME - REGISTERED OFFICE - TERM
ARTICLE 1
The Company, made up of holders of existing shares and shares that may be
issued in the future, is a societe anonyme governed by the provisions of the
law of July 24, 1966, all other statutory provisions in effect and the present
articles of association and bylaws.
ARTICLE 2
The purpose of the Company in France and all other countries shall be:
To carry out all activities in the electrical, electronic and related
industries, provide all services and pursue all activities which for technical,
industrial or commercial reasons may relate to the above mentioned industries
or services or contribute to their development.
Within the sphere of activity defined above, the Company may in particular
carry on activities of all kinds regarding:
raw materials, prepared materials, components and units, parts and semi
finished products, finished products and devices, group of devices, all types
and sizes of assembly incorporating groups of devices, all works, all
techniques, all services.
The Company may carry out indirectly operations related to its technical,
industrial, commercial or service activities. To this end, the Company may
create all companies, associations, partnerships or other companies, acquire
interests in all companies limited by shares or private companies, make all
contributions and subscriptions, make all purchases or sales of securities,
equity interests or corporate rights.
In general, the Company may carry out all industrial, commercial, financial,
real estate or other operations directly or indirectly related to such
activities.
<PAGE> 2
The Company may also acquire an interest of any form whatsoever in all French
or foreign undertakings or organizations.
ARTICLE 3
The Company name is:
ALCATEL
ARTICLE 4
The registered office shall be situated at 54, rue la Boetie, 75008 Paris.
The Board of Directors may transfer the registered office within the same town
or to a neighbouring department subject to ratification by the next ordinary
Shareholders' meeting.
The transfer of the registered office to any other place may only be decided by
the extraordinary Shareholders' meeting.
ARTICLE 5
The term of the Company shall be ninety years as of July 1, 1987.
PART II
SHARE CAPITAL - SHARES - PAYMENT
ARTICLE 6
The share capital is set at EUR 1,987,145,960. It is made up of 198,714,596
shares with a nominal value of EUR 10 each.
ARTICLE 7
The share capital may be increased on one or more occasions through the
creation of new shares by contribution in kind, incorporation of company
reserves, premiums of profits or cash contribution pursuant to a resolution of
an extraordinary Shareholders' meeting deliberating under the statutory quorum
and majority conditions for such meetings.
However, any decision to create new shares following a capital increase by
incorporation of reserves, profits or issue premiums shall be made by the
extraordinary Shareholders' meeting under the statutory quorum and majority
conditions for ordinary Shareholders' meeting. Such
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meetings shall set the issue terms for new shares as required by law and to
this end shall grant the Board of Directors such powers as it may deem
necessary.
The extraordinary Shareholders' meeting may also resolve to increase the share
capital by issuing transferable securities giving entitlement to receive
securities representing a portion of the company's share capital under the
terms set out in Article 16. The ordinary Shareholders' meeting may also
resolve a capital increase following payment of dividend in shares under the
terms of Article 36. Such meetings shall set the issue terms for the
transferable securities as required by law and to this end shall grant the
Board of Directors such powers as it may deem necessary.
In the event of a capital increase by issue of cash shares or of transferable
securities giving entitlement to receive securities representing a portion of
the share capital, existing shareholders who have made the required payments
shall have an irreducible preferential subscription right to such new shares or
transferable securities in proportion to the nominal value of their shares,
except where the competent Shareholders' meetings decide otherwise under the
conditions laid down by law.
ARTICLE 8
Unless the Shareholders' meeting, or Board of Directors as the case may be,
decides otherwise, cash shares issued pursuant to a capital increase shall be
paid as follows: upon subscription, at least one quarter of the nominal value
and, where relevant, the entire issue premium the remainder, within the
statutory time limit, at such dates and in such proportions as the Board of
Directors shall decide.
Calls to pay in capital shall be published in one of the Paris journals of
legal notices at least ten days in advance.
ARTICLE 9
Late payment shall as of right incur interest of ten per cent per annum in
favour of the Company as of the due date without legal action being necessary.
ARTICLE 10
Shares shall be registered until fully paid up.
Fully paid up shares shall be registered or bearer shares as the shareholder
chooses, subject to the provisions of (2) below. Further to the statutory
requirement to notify the Company of certain percentage share holdings, any
shareholder, natural or legal person holding a number of Company shares equal
to or in excess of:
(1) 0.5% of the total number of shares must, within 15 days of passing such
threshold, notify the Company by letter, fax or telex of the total number
of shares owned. This requirement applies to each successive 0.5%
threshold up to 2.5% inclusive.
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(2) 3% of total shares must, within five trading days of reaching such
threshold, apply to register all his shares. This registration
requirement applies to all shares already held and to such shares as may
be acquired subsequently in excess of the above mentioned threshold. A
copy of the registration application sent to the Company by letter or fax
within fifteen days of passing such threshold shall be deemed equivalent
to a declaration that the statutory threshold has been reached. The same
procedure shall be followed each time a further 0.5% threshold is passed
up to a maximum of 50%.
Calculation of the thresholds in (1) and (2) above shall include indirectly
held shares and shares equivalent to existing shares as defined in Article
356-1 and seq. of the law on companies.
Shareholders must certify that all securities owned or held as defined in the
preceding paragraph are included in each such declaration and must also
indicate the date(s) of acquisition.
Should shareholders not comply with the provisions set forth in (1) and (2)
above, voting rights for shares exceeding the declarable thresholds shall, at
the request of one or more shareholders holding at least 3% of share capital,
be withdrawn under the conditions and within the limits laid down by law.
Shareholders whose share holding falls below one of the thresholds provided in
(1) and (2) above must also notify the Company within fifteen days and under
the same terms.
Shares shall be materialized by registration in the owner's name in the books
of the issuing Company or of an authorized intermediary.
Transfers of registered securities shall be made from one account to another.
The registration, transfer and disposal of securities shall be carried out in
accordance with the laws and regulations in force.
Where the parties are not exempted from such formalities by law, the Company
may require certification of signed declarations, transfer or assignment orders
in accordance with the laws and regulations in force.
The Company may, in accordance with the laws and regulations in force, request
from all organizations or authorized intermediaries any information concerning
shareholders or holders of securities with immediate or future voting rights,
their identity and the number of securities they hold.
ARTICLE 11
Each share shall give entitlement to company assets and distribution of profits
in the proportions set out in Articles 35 and 39 below, with the exception of
rights attached to shares of different categories that may be created.
Tax charges shall be levied as a whole on all shares without distinction, such
that each share in a same category shall give entitlement to payment of the
same net amount on any distribution or reimbursement made during the Company's
term or on liquidation.
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Shareholders shall be liable only up to the nominal amount of each share held.
Any call to pay in capital in excess of such amount is prohibited.
ARTICLE 12
Dividends and income from shares issued by the Company shall be paid under the
conditions
authorized or provided for by the regulations in force and in such a way as the
Shareholders' meeting or, failing that, the Board of Directors, shall decide.
ARTICLE 13
Rights and obligations shall remain attached to a share regardless of who holds
the share.
Ownership of a share entails as of right acceptance of the Company articles of
association and bylaws and of resolutions of the Shareholders' meeting.
ARTICLE 14
Shares are indivisible with regard to the Company: joint owners of shares must
be represented by a single person. Shares with usufruct must be identified as
such in the share registration.
ARTICLE 15
Creditors of a shareholder may not, by whatsoever means, cause the goods or
assets of the Company to be placed under seal, divided or sold by auction and
may not interfere in any way with the Company's management. In the exercise of
their rights they must rely on company records and resolutions of Shareholders'
meeting.
PART III
COMPOSITE AND NON-COMPOSITE BONDS, WARRANTS, AND SECURITIES
ARTICLE 16
The Company may contract loans according to its needs by issuing short, medium
or long term bonds or warrants. Except where by law particular financial
products require the express decision or authorization of the Shareholders'
meeting, the decision shall be made by the ordinary Shareholders' meeting or
Board of Directors.
However, the Board of Directors, authorized by the Shareholders' meeting, may
be given the necessary powers to issue bonds on one or more occasions within a
five year period, to set the terms and conditions of issue, interest rate,
remuneration method, maturity and repayment amount of the bonds. Where
relevant, the Board shall grant all mortgage or other guarantees and shall
carry out issues in the best interests of the Company.
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The Board of Directors, duly authorized by the extraordinary Shareholders'
meeting, may be given the necessary powers to issue transferable securities
giving entitlement by conversion, exchange, reimbursement, presentation of a
warrant or by any other means to receive, at any time or at a given date,
securities representing a portion of share capital issued for that purpose.
Unless the Board of Directors or Shareholders' meeting decides otherwise, the
rules concerning the form and transfer of shares set out above shall apply to
all transferable securities of whatever kind issued by the Company with the
exception of securities redeemable by drawing of lots issues before November 3,
1984.
PART IV
COMPANY MANAGEMENT
ARTICLE 17
The Company shall be managed by a Board of Directors consisting of no less than
six and no more than eighteen members except where this number is exceeded as
in the event of a merger under the terms laid down by law. The Shareholders'
meeting shall appoint and dismiss Directors.
The Shareholders' meeting shall set the Directors' terms in such a way that
Board membership is renewed as far as possible in similar proportions.
Directors' terms may not exceed six years.
Without prejudice to statutory conditions pertaining to percentages of seats on
the Board and valid employment contracts, two of the Directors must at the time
of their appointment be both salaried employees of the Company or of an
affiliate and members of a mutual fund in accordance with the conditions set
out below.
All mutual funds meeting the conditions below may nominate candidates for
appointment to the Board of Directors.
With regard to the above provisions:
(1) An affiliate of the CGE Group shall be defined as any company in which
CGE directly or indirectly holds at least half of the voting rights or any
company in which a CGE affiliate directly or indirectly holds at least
half of the voting rights.
(2) The mutual funds referred to above are those formed as a result of a
company share holding scheme in which the Company or an affiliate is a
participant and having at least 75% of its portfolio in Company shares.
If for any reason one of the Directors appointed by the Shareholders' meeting
as provided above should no longer meet the joint conditions defined above
(employee of the Group or an affiliate and member of a mutual fund), he shall
automatically be deemed to have retired one calendar month after the joint
conditions are no longer met.
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Should the number of Directors meeting the joint conditions as defined above
(employment in the Group and membership of a mutual fund) fall below the number
set in the present article for any reason whatsoever, the Board of Directors
must make up its numbers within three months either by cooption or by calling a
Shareholders' meeting to appoint a Director meeting the required conditions.
Each Director must hold at least 10 Company shares.
ARTICLE 18
Directors may be re elected subject to the conditions below.
The maximum age for holding a directorship shall be 70. This age limit does
not apply if less than one third, rounded up to the nearest whole number, of
serving Directors have reached the age of 70. No Director over 70 may be
appointed if as a result more than one third of the serving Directors rounded
up as defined above, are over 70.
If for any reason whatsoever the number of serving Directors over 70 should
exceed one third as defined above, the oldest Director(s) shall automatically
be deemed to have retired at the ordinary Shareholders' meeting called to
approve the accounts of the financial year in which the proportion of Directors
over 70 years was exceeded, unless the proportion was re-established in the
interim.
Directors representing legal persons shall be taken into account when
calculating the number of Directors to which the age limit does not apply.
Directors representing legal persons must replace any 70 year old
representative at the latest at the ordinary Shareholders' meeting called to
approve the accounts of financial year in which such representative reached the
age of 70.
ARTICLE 19
A) DIRECTORS
Should one or more seats on the Board become vacant as a result of death or
resignation the Board may, subject to the provisions of Article 17, make
provisional appointments between two Shareholders' meetings up to the maximum
number of Directors set in Article 17.
A Director appointed to replace another Director shall hold office only for the
remainder of his predecessor's term of office.
Should the number of Directors fall below the statutory minimum the Directors
must immediately call an ordinary Shareholders' meeting to make up the number
of Directors on the Board.
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Should the number of Directors fall below the minimum defined in the Bylaws but
not below the statutory minimum the Board of Directors must make provisional
appointments to make up the number of Directors on the Board within three
months of the vacancy arising.
Appointments made by the Board pursuant to paragraphs 1 and 4 above shall be
submitted to the next ordinary Shareholders' meeting for ratification. If
ratification is withheld, the Board's previous acts and resolutions shall
nevertheless remain valid.
B) NON VOTING OBSERVERS
On the Chairman's recommendation, the Board of Directors may appoint one or two
observers.
The auditors shall be called to meetings of the Board of Directors and shall
participate in a consultative capacity.
They shall be appointed for a six year term which may be renewed or revoked at
any time.
They may or may not be shareholders and may receive a remuneration set annually
by the Board of Directors.
ARTICLE 20
The Board of Directors shall appoint from among its members a Chairman and, if
it so wishes, one or more Deputy Chairman who may be re-elected, and shall set
their term of office which may not exceed their term as Director.
Regardless of the appointed term, the Chairman's office shall terminate as of
right at the ordinary Shareholders' meeting called to approve the accounts for
the financial year in which he reaches the age of 68.
Should the Chairman and Deputy Chairman(men) be indisposed the Chairman or, in
his absence, the Board shall appoint a Director to chair the meeting.
The Board shall appoint a Secretary and may also appoint a Deputy Secretary
under the same terms.
The Board shall meet as often as the interests of the Company shall require at
the registered office or at such other place as the Chairman shall decide.
The Chairman shall call Board meetings by ordinary or recommended letter sent
to each Director at least 7 days in advance. In an emergency a Board meeting
may be called by any convenient means: telegram, telex, ordinary letter or
verbally. In such a case, the above time limit need not be respected.
Directors representing at least one third of the Board may call a Board
meeting, issuing the agenda, if the Board has not met for more than two months.
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An agenda clearly stating matters to be discussed shall be attached to each
notice of meeting.
Any Director, whether a natural person or the standing representative of a
legal person, may give another Director power of attorney to represent him at a
Board meeting; the authorized agent must show proof of his power of attorney at
the start of the meeting. Directors may hold only one power of attorney per
meeting which shall be valid for a specific meeting only.
At least half of the serving Directors must be present for the meeting to be
quorate.
Resolutions shall be adopted by majority vote. In the event of a tie, the
Chairman or the Director acting as Chairman shall have the casting vote.
Resolutions shall be recorded in minutes drawn up and kept as required by law.
Copies or extracts of the minutes may be validly certified by the Chairman of
the Board of Directors, a Chief Executive, a Director temporarily acting as
Chairman or a person with the appropriate official authorization.
Directors attending the Board of Directors' meeting shall sign the attendance
register.
The names of the Directors present, represented or absent recorded in the
minutes or extracts of minutes of each meeting shall be deemed sufficient proof
with regard to third parties of the number of serving Directors and of their
appointment.
Company executives may attend Board meetings at the Chairman's request.
ARTICLE 21
The Board of Directors shall have the widest powers without restriction or
reserve to act in all circumstances on the Company's behalf. The Board shall
exercise such powers within the limits of the purpose of the Company and without
prejudice to the powers expressly invested in shareholders meetings by law.
ARTICLE 22
The duties of the Chairman and Chief Executive shall be carried out as required
by law.
Without prejudice to the powers expressly invested in Shareholders' meetings by
law and the powers specifically invested in the Board of Directors by law and
within the limits of the purpose of the Company, the Chairman is invested as of
right with the fullest powers to act in all circumstances on the Company's
behalf.
The person or persons delegated to carry out the duties of Chief Executive
shall be appointed by the Board of Directors on the Chairman's recommendation.
In all events, the Chief Executive's term of office shall end at the end of the
ordinary Shareholders' meeting called to approve the accounts of the financial
year in which the person concerned reaches 65 years of age.
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The Board of Directors, with the Chairman's agreement, shall determine the
scope and duration of the powers of the Chief Executive(s). The Chief
Executive(s) shall have the same powers with regard to third persons as the
Chairman. The Chairman and Chief Executive(s) may be authorized to grant
powers of attorney.
If the Chairman dies or is temporarily indisposed, the Board of Directors may
delegate a Director to carry out the Chairman's duties. If the Chairman is
temporarily indisposed, such delegation is made for a limited period and may be
renewed. If the Chairman dies, it shall be valid until a new Chairman is
elected.
The Board of Directors on the Chairman's recommendation or the Chairman himself
may, within the limits set by law, delegate such powers as they or he deem fit,
either for the management or conduct of the Company's business or for one or
more specific purposes, to all authorized agents, whether members of the Board
or not or member of the Company or not, individually or as committees. Such
powers may be standing or temporary and may or may not be delegated to
deputies.
All or some of such authorized agents may also be authorized to authenticate
all copies or extracts of all documents for which certification procedures are
not laid down by law, and in particular all powers of attorney, company
accounts and bylaws, and to issue all certificates pertaining thereto.
Powers of attorney granted by the Board or Directors or Chairman pursuant to
the present
By-laws shall remain effective should the terms of office of the Chairman or
Directors expire at the time such powers of attorney were granted.
Should the Chairman die, resign or be dismissed, and unless the Board of
Directors should decide otherwise, the Chief Executive(s) shall continue in
their duties and in their office until the appointment of a new Chairman.
ARTICLE 23
Notwithstanding statutory provisions, particularly those concerning the
Chairman of the Board of Directors, Directors do not in the exercise of their
management enter into any personal or joint undertaking with regard to the
Company's commitments; within the limits set by the laws in force, they shall
only be liable for performance of their appointed duties.
Any agreements between the Company and one of its Directors or Chief Executives
or between the Company and another undertaking if a Company, Director or Chief
Executive is the owner, partner with unlimited liability, manager, Director,
Chief Executive, member of the Management Committee or Supervisory Board of
said undertaking shall be subject to the authorizations and approvals required
by law.
ARTICLE 24
The Shareholders' meeting may award and set Directors' fees which shall remain
unchanged until amended by a new resolution.
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The Board shall distribute said amount among the Directors as it sees fit and
as required by law.
Directors may not receive any standing or temporary remuneration from the
Company other than as provided by law or not contrary to law.
PART V
STATUTORY AUDITORS
ARTICLE 25
The ordinary Shareholders' meeting shall appoint at least two statutory
auditors to undertake the duties required by law. They shall be appointed for
six financial years. The Auditors may be reappointed.
The Shareholders' meeting shall appoint as many deputy auditors as statutory
auditors pursuant to paragraph 1 above.
The Auditors shall be called to the meeting of the Board of Directors closing
the accounts for the previous year and to all Shareholders' meetings.
The Auditors shall be entitled to remuneration in an amount set under the
conditions laid down by law.
PART VI
SHAREHOLDERS' MEETING
ARTICLE 26
Ordinary and extraordinary Shareholders' meetings deliberating under the quorum
and majority conditions laid down by law shall exercise the powers invested in
them by law.
Meetings shall be called according to the rules and procedures laid down by
law.
Meetings shall take place at the registered office or at any other place
specified by the Board of Directors within the department where the registered
office is located or in any other place on the territory of the French
Republic.
The agenda for Shareholders' meetings shall be drawn up by the Board of
Directors if the Board calls the meeting, or by the person calling the meeting
in other cases.
However, one or more shareholders meeting the conditions laid down by law may
require draft motions to be included on the agenda.
The Shareholders' meeting may not consider a motion that is not on the agenda.
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ARTICLE 27
An ordinary Shareholders' meeting shall be held annually during the first six
months of the year.
Shareholders' meetings, whether ordinary or extraordinary, shall consist of all
shareholders without distinction.
Owners of registered shares are entitled to attend any Shareholders' meeting
provided that the shares have been registered in their name at the latest five
days before the date of the meeting. Owners of bearer shares must, at least
five days before the date of the meeting, prove that their shares have been
deposited as required by law or produce one of the certificates referred to in
Article 136 of the decree of March 23, 1967.
These periods may be curtailed by a decision of the Board of Directors.
A shareholder may be represented by another shareholder or by his or her
spouse.
Shareholders may vote by post at a Shareholders' meeting under the conditions
laid down by law.
ARTICLE 28
Shareholders' meetings shall be chaired either by the Chairman or a Deputy
Chairman of the Board of Directors, or by a Director appointed by the Board of
Directors or by the Chairman.
The tellers shall be the two members of the meeting representing the largest
number of votes or, should they refuse, those who come after them in descending
order until the duties are accepted.
The officers of the meeting shall appoint a Secretary, who need not be a
shareholder.
ARTICLE 29
Without prejudice to the following provisions, each member of the Shareholders'
meeting has as many votes as shares that he owns or represents.
However, double voting rights are attached to all fully paid up registered
shares, registered in the name of the same holder for at least three years.
Double voting rights shall be cancelled as of right for any share that is
converted into a bearer share or whose ownership is transferred. However, the
period set here above shall not be interrupted, nor existing rights cancelled,
where ownership is transferred, the shares remaining in registered form, as a
result of intestate or testamentary succession, the division between spouses of
a common estate, or donation inter vivos in favour of a spouse or heirs.
Whatever number of shares a shareholder possesses, directly and/or indirectly,
he may not cast, as single votes in his own name or as a proxy, more than 8% of
the votes attached to the shares present or represented when any motion at a
Shareholders' meeting is put to the vote. This limit
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may be exceeded if such shareholder is further entitled to double votes, in his
own name or as a proxy, taking into account such additional voting rights only.
However, the total number of votes cast may not under any circumstances
whatsoever exceed 16% of the votes attached to the shares present or
represented. Indirectly held shares and shares treated in the same way as
owned shares as defined by the provisions of Article 356.1 and seq. of the law
on companies shall be taken into account when applying the above mentioned
limit.
The limitation instituted in the preceding paragraph automatically becomes null
and void from that time when an individual or a legal entity, acting alone or
in concert with one or more individuals or legal entities, comes to hold at
least 66,66% of the total number of the company's shares, as the result of a
public offering to purchase or exchange relating to all of the company's
shares. The Board of Directors agrees that at the announcement of such
offerings, such invalidation will take effect.
The limitation instituted in paragraph four above does not apply to the
chairman of the Shareholders' meeting casting a vote pursuant to proxies
received in accordance with the legal obligation deriving from Article 161(4)
of the law of July 24, 1966 on commercial companies.
Voting rights in all ordinary, extraordinary or special Shareholders' meeting
belong to the usufructuary.
ARTICLE 30
The proceedings of the Shareholders' meeting shall be recorded in minutes drawn
up and kept as required by law.
An attendance register shall be kept in which shall be recorded the name, first
name and address of shareholders attending the meeting or voting by post or
proxy, the name, first name and address of the proxies themselves, the number
of shares and the number of votes attached to them.
The register, duly signed by the shareholders present or their proxies, shall
be declared accurate by the officers of the meeting and filed at the registered
office. The register shall be made available to any shareholder as required by
law.
ARTICLE 31
Copies or extracts of the minutes may be authenticated by the chair of the
Board of Directors, the secretary of the Shareholders' meeting or the Director
appointed to chair the meeting.
ARTICLE 32
The duty constituted Shareholders' meeting shall represent all the
shareholders.
Its decisions are binding on all shareholders, including those not present or
dissenting.
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PART VII
FINANCIAL YEAR - INVENTORY
ARTICLE 33
The financial year shall begin on January 1 and end on December 31.
ARTICLE 34
At the end of each financial year, the Board of Directors shall draw up an
inventory of assets and liabilities existing at the date, and accounts for the
year pursuant to the provisions of Section 2, Book One of the Commercial Code.
As required by law, the Board shall also draw up a report on the management of
the company and the activity of its subsidiaries during the previous financial
year and, where relevant, consolidated accounts.
The inventory, balance sheet, profit and loss account and notes to the annual
accounts, annual report and consolidated accounts shall be made available to
the Auditors at the registered office within the time laid down by law.
Shareholders are entitled, under the conditions laid down by law, to exercise
their statutory right to information.
PART VIII
DEPRECIATION - PROVISION - LEGAL RESERVES
APPROPRIATION AND DISTRIBUTION OF PROFITS
ARTICLE 35
The proceeds of the financial year, after deduction of overheads, employers'
contributions, interest on previously issued bonds or participating securities,
depreciation and amortisation of corporate assets and all provisions for
commercial, industrial or other risks that the Board of Directors should deem
necessary, shall constitute the profits for the financial year.
The distributable profits shall be the profits for the financial year minus
previous losses and sums allocated to reserves as provided for by law and in
the Articles of Association plus income carried over.
Distributable profits shall be appropriated as follows:
1) The Shareholders' meeting, on a proposal of the Board, may decide to
carry over or allocate to reserves some or all the distributable profits,
particularly in application of tax regulations.
2) From the remainder, if any, shall be deducted the sum necessary to pay
the shareholders, as an initial dividend, 5% per annum of the amount in
which their shares are paid up and
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not redeemed. However, if year end profits are insufficient to make such
payment, a retroactive right may be exercised on the profits of subsequent
years.
3) From the remainder the Shareholders' meeting may, on a proposal of the
Board, deduct such sums as it deems fit and allocate them to reserves of
whatever kind or to a special fund for the redemption or reduction of the
share capital by reimbursement or purchase of company shares, or carry
them over.
The profit balance shall be divided between the shareholders in proportion to
the nominal amount of their shares.
ARTICLE 36
The dividend shall be paid, within the statutory time limit, on dates set by
the Shareholders' meeting or, failing that, by the Board of Directors which
may, without waiting for the Shareholders' meeting to approve the accounts,
distribute an interim dividend under the terms and conditions laid down by law.
The ordinary Shareholders' meeting is authorized to grant each shareholder the
option to receive payment of the dividend or interim dividend in shares under
the terms and conditions laid down by law.
PART IX
DISSOLUTION - LIQUIDATION
ARTICLE 37
The Shareholders' meeting, deliberating under the conditions required by law,
may at any time and for whatever reason decide to dissolve the Company before
its due date.
ARTICLE 38
If as a result of losses shown in accounting records, the Shareholders' equity
should fall to below half of the Capital Stock the Board of Directors is
required, within four months of approval of the accounts showing such loss, to
call an extraordinary Shareholders' meeting to decide whether the Company
should be dissolved.
If the Shareholders' meeting decides not to dissolve the Company, the Company
is required, at the latest by the end of the second financial year following
the financial year in which the losses were recorded, to reduce its capital by
an amount equal to the amount of losses that could not be charged to reserves
if, during such period, Shareholders' equity has not been reconstituted to a
value equal to at least half the share capital.
In both cases the resolution adopted by the Shareholders' meeting shall be
published as required by law.
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ARTICLE 39
When the Company reaches its due date, or in the event of early dissolution,
the Shareholders' meeting shall decide the manner of liquidation, appoint one
or more liquidators and set their remuneration.
In the event of the death, resignation or indisposition of the liquidators the
ordinary Shareholders' meeting, called under the condition laid down by law,
shall take steps to replace them.
The Shareholders' meeting shall retain the same powers during liquidation as in
the Company's course of business.
On completion of the liquidation the shareholders shall be called to approve
the liquidator's accounts and discharge him and to record the closing of the
liquidation.
The liquidator(s) shall carry out their duties under the conditions laid down
by law. In particular, they shall realize all the Company's movable and fixed
assets, including by private treaty, and extinguish all its liabilities. They
may also, with the authorization of the extraordinary Shareholders' meeting,
transfer the Company's entire assets or contribute them to another company, in
particular by way of a merger.
Assets remaining after all liabilities have been extinguished shall first be
used to pay shareholders a sum equal to the paid up and non redeemed capital.
Any surplus shall constitute profits and shall be divided between all the
shares in proportion to their nominal amount subject to the provisions of
Article 11 above.
PART X
DISPUTES
ARTICLE 40
Any disputes that may arise during the Company's term or at its liquidation,
whether between shareholders and the Company or between shareholders themselves
where they concern company matters, shall be subject to the jurisdiction of the
competent courts.
PART XI
NOTIFICATION
ARTICLE 41
Notification formalities for acts and amendments to the Articles of Association
and By-laws shall be carried out as required by law.
All powers are given to the bearers of documents to file them as required by
law.
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Exhibit 5.2
[Letterhead of Alcatel]
April 9, 1999
Ladies and Gentlemen:
I am General Counsel of Alcatel (the "Company"), a societe anonyme
organized under the laws of the Republic of France. Reference is made to the
Company's Registration Statement on Form F-3 (the "Registration Statement"),
filed with the Securities and Exchange Commission (the "Commission") on April 9,
1999, under the Securities Act of 1933, as amended (the "Act"), and to the
prospectus contained in the Registration Statement, covering the registration
under the Act of (i) 1,311,208 ordinary shares, nominal value EUR 10 per share,
of the Company (the "Shares"), in the form of Shares or American Depositary
Receipts evidencing American Depositary Shares, each representing one-fifth of a
Share, (ii) the Guaranty (the "Guaranty") by the Company in respect of the 7%
Convertible Subordinated Notes (the "Notes") issued by Alcatel USA, Inc.
(formerly, DSC Communications Corporation), a wholly-owned subsidiary of the
Company, and (iii) the Notes.
In connection with the foregoing, I have examined the originals, or
copies identified to my satisfaction, of such corporate records of the Company,
certificates of public officials, officers of the Company and other persons, and
such other documents, agreements and instruments, as I have deemed necessary as
a basis for the opinion hereinafter expressed. In my examination, I have assumed
the genuineness of all signatures, the authenticity of all documents presented
to me as originals and the conformity with the originals of all documents
submitted to me as copies. In rendering the opinion expressed below, I have
relied as to certain matters on information obtained from officers of the
Company and public officials.
My opinion set forth below is limited to the laws of the Republic of
France, and I do not express any opinion herein concerning any other laws.
Based upon the foregoing and having regard for such legal
considerations as I deemed relevant, I am of the opinion that (i) the Shares
which may be offered pursuant to the Registration Statement have been duly
authorized and validly issued by the Company and are fully-paid and
non-assessable, and (ii) the Guaranty, assuming its validity under the laws of
the State of New York, constitutes a legal, valid and binding obligation of the
Company, except as enforcement thereof may be limited by bankruptcy, insolvency
(including without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of my name under the caption "Legal
Matters" in the Prospectus constituting part of the Registration Statement. In
giving such consent, I do not concede that I am within the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder. This opinion is being delivered in
connection with the Registration Statement and is not to be used for any other
purpose without my prior authorization.
Very truly yours,
/s/ Pascal Durand-Barthez
--------------------------
Pascal Durand-Barthez
General Counsel
<PAGE> 1
Exhibit 5.3
[Letterhead of Shearman & Sterling]
April 9, 1999
Ladies and Gentlemen:
We are acting as U.S. counsel for Alcatel (the "Company"), a societe
anonyme organized under the laws of the Republic of France, in connection with
the Company's Registration Statement on Form F-3, combined with the
post-effective amendment to the Registration Statement on Form S-3 of Alcatel
USA, Inc. ("Alcatel USA"), a wholly-owned subsidiary of the Company, (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") on April 9, 1999, under the Securities Act of 1933, as
amended (the "Act"), covering the registration under the Act of (i) 1,311,208
ordinary shares, nominal value EUR 10 per share, of the Company (the "Shares"),
in the form of Shares or American Depositary Receipts evidencing American
Depositary Shares, each representing one-fifth of a Share, (ii) the Guaranty
(the "Guaranty") by the Company in respect of the 7% Convertible Subordinated
Notes (the "Notes") issued by Alcatel USA and (iii) the Notes.
In connection with the foregoing, we have examined the Registration
Statement and the Guaranty. We have also examined the originals, or copies
identified to our satisfaction, of such corporate records of the Company,
certificates of public officials, officers of the Company and other persons, and
such other documents, agreements and instruments, as we have deemed necessary as
a basis for the opinion hereinafter expressed. In our examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
presented to us as originals and the conformity with the originals of all
documents submitted to us as copies. In rendering the opinion expressed below,
we have relied as to certain matters on information obtained from officers of
the Company and public officials.
Our opinion set forth below is limited to the laws of the State of New
York, and we do not express any opinion herein concerning any other laws.
Based upon the foregoing and having regard for such legal
considerations as we deemed relevant, we are of the opinion that the Guaranty,
assuming its validity under the laws of the Republic of France, constitutes a
legal, valid and binding obligation of the Company, except as enforcement
thereof may be limited by bankruptcy, insolvency (including without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus constituting part of the Registration Statement. In
giving such consent, we do not concede that we are within the category of
persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder. This opinion is being delivered in
connection with the Registration Statement and is not to be used for any other
purpose without our prior authorization.
Very truly yours,
/s/ Shearman & Sterling
________________________________
Shearman & Sterling
<PAGE> 1
EXHIBIT 8
[Letterhead of Shearman & Sterling]
April 9, 1999
Ladies and Gentlemen:
We are acting as U.S. counsel for Alcatel (the "Company"), a societe
anonyme organized under the laws of the Republic of France, in connection with
the Company's Registration Statement on Form F-3, combined with the
post-effective amendment to the Registration Statement on Form S-3 of Alcatel
USA, Inc. ("Alcatel USA"), a wholly-owned subsidiary of the Company, (the
"Registration Statement"), filed with the Securities and Exchange Commission
(the "Commission") on April 9, 1999, under the Securities Act of 1933, as
amended (the "Act"), covering the registration under the Act of (i) 1,311,208
ordinary shares, nominal value EUR 10 per share, of the Company (the "Shares"),
in the form of Shares or American Depositary Receipts evidencing American
Depositary Shares, each representing one-fifth of a Share, (ii) the Guaranty
(the "Guaranty") by the Company in respect of the 7% Convertible Subordinated
Notes (the "Notes") issued by Alcatel USA and (iii) the Notes.
We are of the opinion that the material United States federal income
tax consequences to United States persons of the purchase, ownership and
disposition of Notes are as set forth under the caption "Taxation of U.S.
Holders" in the Prospectus constituting part of the Registration Statement. The
foregoing opinion is based upon the Internal Revenue Code of 1986, as amended,
Treasury regulations (including proposed regulations) promulgated thereunder,
rulings, official pronouncements and judicial decisions, all as in effect today
and all of which are subject to change, possibly with retroactive effect, or
different interpretations.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving such consent, we do not concede that we are
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Shearman & Sterling
--------------------------
Shearman & Sterling
<PAGE> 1
Exhibit 12.1
Computation of ratio of earnings to fixed charges of the Company
(in thousands of $, except ratio)
<TABLE>
<CAPTION>
Six months
ending June
1993 1994 1995 1996(1) 1997(2) 30, 1998 (3)
-------- -------- ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes 109,456 223,190 289,950 (12,186) 162,166 (55,230)
Fixed charges (less capitalized interest) 12,742 10,299 28,454 35,837 45,749 33,696
Adjusted income 122,198 233,489 318,404 23,651 207,915 (21,534)
-------- -------- -------- -------- -------- -------
Ratio of earnings to fixed charges 9.0 19.6 10.3 -- 4.2 --
-------- -------- -------- -------- -------- -------
Fixed charges:
Interest expense 6,256 2,075 18,599 26,356 34,068 26,701
Capitalized interest 895 1,640 2,557 2,492 3,767 1,716
Amortization of debt issuance costs 86 124 255 282 881 895
Rent expense 19,268 24,705 28,891 27,529 32,515 18,464
Approximately one third of rent expense 6,400 8,100 9,600 9,200 10,800 6,100
-------- -------- -------- -------- -------- -------
Total 13,637 11,939 31,011 38,329 49,516 35,412
</TABLE>
(1) Earnings were not sufficient to cover fixed charges for the year ended
December 31, 1996 by approximately $14.7 million.
(2) Includes in process R&D write-off of $135.0 million related to Celcore
acquisition, the asset write-down related to Airspan of $22.0 million and
litigation settlements of $161.5 million.
(3) Includes the second quarter 1998 gain for the sale of the interest in
Airspan Communications of $10.0 million. Earnings were not sufficient to
cover fixed charges for the six months ended June 30, 1998 by approximately
$56.9 million.
<PAGE> 1
EXHIBIT 12.2.
COMPUTATION OF RATIO OF EARNINGS TO
FIXED CHARGES OF ALCATEL
<TABLE>
<CAPTION>
RATIO OF EARNINGS TO FIXED CHARGES
Six months
ended
June 30,
1993 1994 1995(1) 1996 1997 1998(2)
------- -------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Pre tax income before income
in equity(a) 9,034 3,219 (26,048) 2,714 5,594 15,717
Distributed income of equity(b) 454 440 308 366 252 405
Fixed charges(c) 5,287 3,339 4,292 6,902 5,675 1,901
Rental expenses(d) 540 588 661 633 605 223
Pretax income+fixed charges
(e)=(a)+(b)+(c)+(d) 15,315 7,586 (20,787) 10,615 12,126 18,246
Fixed charges (included rental
expenses)(f)=(c)+(d) 5,827 3,927 4,953 7,535 6,280 2,124
Ratio(e)(f) 2.63 1.93 -- 1.41 1.93 8.59
</TABLE>
(1) Earnings were not sufficient to cover fixed charges for the year ended
December 31, 1995 by approximately FF25.7 billion
(2) Includes a FF13.7 billion gain from the disposal of non-core assets
(Cegelec and GEC ALSTHOM)
<PAGE> 1
Exhibit 23.1
We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference therein of our report dated January 26, 1998, with
respect to the consolidated financial statements and schedule of Alcatel USA,
Inc. (formerly DSC Communications Corporation) incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission and in the Registration Statement
(post-effective amendment No. 3 to Form S-3) and related Prospectus of Alcatel
USA, Inc. and Alcatel for the registration of 7% Convertible Subordinated Notes
of DSC Communications corporation and ordinary shares of Alcatel.
/s/ Ernst & Young LLP
___________________________________
Ernst & Young LLP
Dallas, Texas
April 8, 1999
<PAGE> 1
EXHIBIT 23.2
ALCATEL
Registration Statement, Form S-3/F-3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3/F-3 filed by Alcatel of our
report dated March 19, 1998 included or incorporated by reference in Alcatel's
Annual Report on Form 20-F for the fiscal year ended December 31, 1997 as filed
with the Securities and Exchange Commission.
/s/ Arthur Andersen LLP
____________________________
ARTHUR ANDERSEN LLP
Paris, France
April 8, 1999
