<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM F-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------------
ALCATEL
(Exact name of Registrant as specified in its charter)
------------------------------------
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<S> <C> <C>
REPUBLIC OF FRANCE 4813 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
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54, RUE LA BOETIE, 75008 PARIS, FRANCE 011-331-40-76-10-10
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------------
KRISH PRABHU, ALCATEL USA, 1000 COIT ROAD, PLANO, TX 75075, USA (972) 519-3000
(Name and address, including zip code, of agent for service)
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COPIES TO:
<TABLE>
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ALAN F. DENENBERG, ESQ JEFFREY SAPER, ESQ.
SAMI TOUTOUNJI, ESQ. STEVE CAMAHORT, ESQ.
SHEARMAN & STERLING KELLY BOYD, ESQ.
1550 El Camino Real, Suite 100 WILSON SONSINI GOODRICH & ROSATI
Menlo Park, CA 94025, USA PROFESSIONAL CORPORATION
(650) 330-2200 650 Page Mill Road
Palo Alto, CA 94304-1050, USA
(650) 493-9300
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING
PURSUANT TO RULE 462(b) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND
LIST THE SECURITIES ACT REGISTRATION 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(d)
UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR SAME OFFERING. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) SHARE PRICE FEE(2)
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Ordinary Shares, nominal value E 10 each of
Alcatel(3)................................ 11,037,908 N.A. N.A. $407,348
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</TABLE>
(1) The amount to be registered was computed by multiplying (i) 29,513,121, the
number of outstanding shares of common stock, no par value, of Genesys
Telecommunications Laboratories, Inc., assuming the exercise of all Genesys
warrants and vested options, times (ii) 1.87, the maximum exchange ratio
permitted by the merger agreement. The resulting maximum number of American
Depositary Shares was divided by five to compute the maximum number of
shares to be registered.
(2) The registration fee was computed pursuant to rule 457(f) under the
Securities Act of 1933, as amended, by multiplying $52 9/32, the average of
the high and low sales price of a share of Genesys common stock quoted on
the National Association of Securities Dealers Automated Quotations system
National Market System, on December 13, 1999 as reported in published
financial sources, times (ii) 29,513,121, the number of outstanding shares
of Genesys common stock, assuming the exercise of all warrants and vested
options. The result was then multiplied by 0.000264.
(3) These shares may be represented by the Registrant's American Depositary
Shares, each of which represents one-fifth of a share. A separate
Registration Statement on Form F-6 (Registration No. 333-10578) has been
filed for the registration of American Depositary Shares evidenced by
American Depositary Receipts issuable upon deposit of shares.
------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
LOGO
TO THE SHAREHOLDERS OF GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
On September 27, 1999, Genesys Telecommunications Laboratories, Inc.'s
board of directors approved a merger agreement between Alcatel and Genesys. The
merger agreement provides for the merger of Genesys with a newly formed, wholly
owned subsidiary of Alcatel.
You will receive either Alcatel ADSs or cash in exchange for your Genesys
common stock in the merger. The number of Alcatel ADSs or the amount of cash
into which each share of your Genesys common stock will be converted depends on
the average closing price of an Alcatel ADS during the 10-trading-day period
ending 2 trading days prior to the special meeting of Genesys shareholders. That
price is referred to as the "average closing price." If the average closing
price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average
closing price;
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average
closing price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of Alcatel ADSs.
Each Alcatel ADS represents one-fifth of a share of Alcatel common stock.
Alcatel ADSs are listed on the New York Stock Exchange under the trading symbol
"ALA," and on December 17, 1999 Alcatel ADSs closed at $40.625 per ADS.
The merger cannot be completed unless the holders of a majority of Genesys
common stock entitled to vote adopt the merger agreement. Only shareholders who
hold their shares of Genesys common stock at the close of business on December
16, 1999 will be entitled to vote at the special meeting.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS DETERMINED THE MERGER
TO BE FAIR TO YOU AND IN YOUR BEST INTERESTS AND DECLARED THE MERGER ADVISABLE.
GENESYS' BOARD OF DIRECTORS APPROVED THE MERGER AGREEMENT AND RECOMMENDS ITS
ADOPTION BY YOU.
This proxy statement/prospectus provides you with detailed information
concerning Alcatel, Genesys and the merger. Please give all of the information
contained in the proxy statement/prospectus your careful attention. IN
PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION IN THE SECTION ENTITLED
"RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROXY STATEMENT/PROSPECTUS.
Please use this opportunity to take part in the affairs of Genesys by
voting on the adoption of the merger agreement. Whether or not you plan to
attend the meeting, please complete, sign, date and return the accompanying
proxy in the enclosed self-addressed stamped envelope. Returning the proxy does
NOT deprive you of your right to attend the meeting and to vote your shares in
person. YOUR VOTE IS VERY IMPORTANT.
<PAGE> 3
We appreciate your interest in Genesys and consideration of this matter.
Ori Sasson
President and Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF ALCATEL COMMON STOCK OR
THE ALCATEL ADSS TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED
WHETHER THIS PROXY STATEMENT/PROSPECTUS IS ADEQUATE OR ACCURATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated December 20, 1999 and was first
mailed to shareholders on or about December 21, 1999.
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, CA 94103
Telephone: (415) 437-1171
Facsimile: (415) 437-1260
<PAGE> 4
LOGO
Notice of Special Meeting
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, California 94103
Notice of Special Meeting of Shareholders
Date: January 21, 2000
Time: 11:00 AM
Place: 1155 Market Street
San Francisco, CA 94103
------------------------
At the meeting you will be asked:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger and Reorganization, dated as of September 27, 1999, by and among Eden
Merger Corp., a wholly owned subsidiary of Alcatel, Alcatel and Genesys
Telecommunications Laboratories, Inc., pursuant to which Eden Merger Corp. will
merge with and into Genesys and Genesys will survive the merger as a wholly
owned subsidiary of Alcatel. You will receive either Alcatel ADSs or cash in
exchange for your Genesys common stock in the merger. The number of Alcatel ADSs
or the amount of cash into which each share of your Genesys common stock will be
converted depends on the average closing price of an Alcatel ADS during the
10-trading-day period ending 2 trading days prior to the special meeting of
Genesys shareholders. That price is referred to as the "average closing price."
If the average closing price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average
closing price;
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average
closing price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of Alcatel ADSs.
Adoption of the merger agreement will also constitute approval of the
merger and the other transactions contemplated by the merger agreement.
2. To transact such other business as may properly come before the special
meeting or any adjournment of the special meeting.
<PAGE> 5
The attached proxy statement/prospectus contains a more complete
description of these items of business. Only holders of record of Genesys common
stock at the close of business on December 16, 1999, the record date, are
entitled to vote on the matters listed in this notice of special meeting. You
may vote in person at the Genesys Special Meeting even if you have returned a
proxy.
By Order of the Board of Directors
of Genesys Telecommunications
Laboratories, Inc.
Richard DeGolia
Senior Vice President, Business
Development & Strategic Planning, Acting
General Counsel and Corporate Secretary
San Francisco, California
December 20, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ENFORCEABILITY OF CIVIL LIABILITIES
AGAINST FOREIGN PERSONS.............. 1
PRESENTATION OF FINANCIAL
INFORMATION........................ 1
SUMMARY.............................. 2
The Companies...................... 2
The Special Meeting................ 2
The Merger......................... 3
SELECTED HISTORICAL FINANCIAL DATA... 7
Alcatel............................ 7
Genesys............................ 9
RISK FACTORS......................... 10
FORWARD-LOOKING INFORMATION.......... 13
EXCHANGE RATE INFORMATION............ 14
COMPARATIVE PER SHARE DATA........... 15
COMPARATIVE STOCK PRICES AND
DIVIDENDS.......................... 16
THE COMPANIES........................ 18
Alcatel............................ 18
Genesys............................ 24
Eden Merger Corp................... 25
THE SPECIAL MEETING.................. 26
Date, Time and Place............... 26
Purpose............................ 26
Record Date........................ 26
Quorum and Required Vote........... 26
Abstentions and Broker Nonvotes.... 26
Security Ownership of Management... 26
Solicitation of Proxies and
Expenses........................ 27
Dissenters' Rights................. 27
Availability of Independent
Accountants..................... 29
THE MERGER........................... 30
General............................ 30
Background of the Merger........... 30
Alcatel's Reasons for the Merger... 32
Genesys' Reasons for the Merger.... 32
Opinion of Genesys' Financial
Advisor......................... 34
Recommendation of Genesys' Board of
Directors....................... 39
Interests of Certain Persons in the
Merger.......................... 39
Material U.S. Federal Income Tax
Consequences.................... 42
Accounting Treatment............... 45
Regulatory Approvals............... 45
Certain Securities Laws
Considerations.................. 45
Dividends.......................... 45
Stock Exchange Listing............. 46
</TABLE>
<TABLE>
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PAGE
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CERTAIN PROVISIONS OF THE MERGER
AGREEMENT.......................... 47
Closing and Effective Time of the
Merger.......................... 47
Merger Consideration............... 47
Fractional Shares.................. 48
Dissenting Shares.................. 48
Employee Stock Options, Restricted
Stock and Employee Benefit
Matters......................... 48
Exchange of Share Certificates..... 48
Representations and Warranties..... 49
No Solicitation.................... 50
Certain Filings.................... 51
Conditions to the Consummation of
the Merger...................... 51
Termination of the Merger
Agreement....................... 53
Fees and Expenses.................. 54
Conduct of Business by Genesys..... 55
Conduct of Business by Alcatel..... 56
Amendments; Modifications and
Waiver.......................... 56
Indemnification.................... 56
THE VOTING AGREEMENT................. 58
Agreement to Vote in Favor of the
Merger.......................... 58
Representations and Warranties of
the Individual Shareholders..... 58
Representations and Warranties of
Alcatel......................... 59
DESCRIPTION OF ALCATEL SHARES........ 60
General............................ 60
Changes in Capital Stock........... 60
Form, Holding and Transfer of
Alcatel Shares.................. 61
Holdings Exceeding Certain
Percentages..................... 61
Liquidation Rights................. 62
DESCRIPTION OF ALCATEL AMERICAN
DEPOSITARY SHARES.................. 63
American Depositary Receipts....... 63
Deposit and Withdrawal of Alcatel
Shares.......................... 63
Pre-release of ADRs................ 63
Dividends, Other Distributions and
Rights.......................... 64
Record Dates....................... 65
Notices and Reports................ 65
Voting of the Underlying Alcatel
Shares.......................... 65
Inspection of Transfer Books....... 66
Changes Affecting Deposited
Securities...................... 66
Charges of The Bank of New York.... 66
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Amendment and Termination of the
Deposit Agreement.................... 67
Transfer of ADRs................... 67
NATURE OF TRADING MARKET............. 69
Trading Practices and Procedures on
the Paris Bourse................ 69
Alcatel Share Price Information.... 70
Trading on the New York Stock
Exchange........................ 70
Trading by Alcatel in its Shares... 70
COMPARISON OF SHAREHOLDER RIGHTS..... 72
Size of the Board; Term of
Office.......................... 72
Nomination and Election of
Directors....................... 72
Qualifications of Directors and
Employee Directors.............. 73
Duties and Powers of the Board and
Board Voting.................... 73
Removal of Directors and Filling of
Vacancies....................... 74
Liability of Directors............. 74
Limitation on Directors' Liability
and Indemnification of Officers
and Directors................... 75
Loans to Directors................. 76
Shareholders' Meetings............. 76
Shareholder Action by Written
Consent......................... 78
Shareholders' Proposals............ 78
</TABLE>
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Shareholder Suits.................. 79
Appraisal Rights................... 79
Preferential Subscription Rights... 79
Stock Repurchases.................. 80
Antitakeover Statutes.............. 80
Conflict-of-interest
Transactions.................... 81
Dividends.......................... 81
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF SECURITIES............ 83
LEGAL MATTERS........................ 84
EXPERTS.............................. 84
WHERE TO FIND MORE INFORMATION....... 85
INDEX TO ALCATEL'S UNAUDITED INTERIM
CONSOLIDATED FINANCIAL
STATEMENTS......................... F-1
ANNEXES
Annex A -- Agreement and Plan of
Merger and Reorganization dated as
of September 27, 1999.............. A-1
Annex B -- Opinion of Goldman Sachs &
Co................................. B-1
Annex C -- Voting Agreement dated as
of September 27, 1999.............. C-1
Annex D -- Dissenters' Rights under
the California Corporation Code.... D-1
</TABLE>
ii
<PAGE> 8
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 is
located outside the United States. As a result, it may be difficult for
investors to effect service of process within the United States upon these
persons or to realize against them upon judgments of courts of the United States
predicated upon any civil liability provisions of the U.S. federal securities
laws. If an original action is brought in France, predicated solely upon the
U.S. federal securities laws, French courts may not have the requisite
jurisdiction to grant the remedies sought. Actions brought in France for
enforcement of judgments of U.S. courts rendered against French persons referred
to in the second sentence of this paragraph would require these French persons
to waive their right to be sued in France only under Article 15 of the French
Civil Code. Alcatel believes that none of these French persons have waived their
right with respect to actions predicated solely upon U.S. federal securities
laws. In addition, actions in the United States under the U.S. federal
securities laws could be affected under certain circumstances by the French law
of July 16, 1980, which may preclude or restrict the obtaining of evidence in
France or from French persons in connection with those actions.
PRESENTATION OF FINANCIAL INFORMATION
In connection with the introduction of a single European currency (the
"euro" or "E") on January 1, 1999, Alcatel converted its share capital into euro
and has begun publishing its consolidated financial statements in euro,
beginning with its consolidated financial statements for the year ended December
31, 1998. Alcatel published its consolidated financial statements for the years
ended December 31, 1994 through 1997 in French francs ("francs" or "FF"). Solely
for the reader's convenience, Alcatel's consolidated financial statements for
these years have been translated into euro using the fixed exchange rate of
E 1.00 = FF 6.55957. Solely for the reader's convenience, this proxy
statement/prospectus presents translations of certain euro amounts into U.S.
dollars ("dollars" or "$") at 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 for December 30, 1999 of E 0.9934 = $1.00 ($ 1.0066 =
E 1.00). On June 30, 1999, the date of the Unaudited Interim Consolidated
Financial Statements, the Noon Buying Rate was E 0.97 = $1.00 ($1.0310 =
E 1.00). You should not consider these translations as representations that the
euro amounts actually represent such U.S. dollar amounts or could be converted
into U.S. dollars at the rate indicated. See "EXCHANGE RATE INFORMATION" for
information concerning the French franc to dollar exchange rate from January 1,
1994 through December 31, 1998 and the euro to dollar exchange rate from January
1, 1999 through December 15, 1999.
1
<PAGE> 9
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all of the information that is
important to you. To better understand the merger and for a more complete
description of the legal terms of the merger, you should read carefully this
entire document and the documents to which you have been referred. See "WHERE TO
FIND MORE INFORMATION."
THE COMPANIES
ALCATEL
54, rue La Boetie
75008 Paris
France
(33) 1-40-76-10-10
Alcatel is a world leader in providing telecommunications equipment and
systems. Alcatel's businesses are organized into five segments, which provide:
- networking for full service network operators;
- high-speed Internet and optics for voice, data and multimedia
communications;
- systems and products for enterprises and consumers;
- telecom components; and
- cables and turnkey energy systems.
Alcatel had consolidated net sales of E 21.3 billion in 1998 and E 10.1 billion
in the first half of 1999. Alcatel has activities in 130 countries and employs
approximately 120,000 people. After a series of U.S. acquisitions in 1998 and
1999, the United States has become Alcatel's largest telecom market.
GENESYS
1155 Market Street
San Francisco, California 94103
United States
(415) 437-1100
Genesys is a leading provider of enterprise-wide interaction management
solutions for both traditional brick and mortar organizations and e-business.
Genesys' products are designed to allow an organization to optimally manage its
customer interactions and employee communications to increase productivity,
lower costs and achieve greater customer satisfaction and loyalty by extending
the capabilities of an organization's internet, computer, telecommunications and
database systems. With the ability to integrate multiple communications media,
the Genesys suite of products supports customer interactions via e-mail, the
Internet and traditional voice, thereby enabling consistent customer contact
regardless of the communications channel. As of November 30, 1999, Genesys had
licensed its products to approximately 650 end users worldwide.
EDEN MERGER CORP.
c/o Alcatel USA
1000 Coit Road
Plano, Texas 75075
United States
(972) 519-3000
Eden Merger Corp. was incorporated in the State of California in September
1999 for the purpose of consummating the merger. Eden Merger Corp. has limited
assets, has no operations and has not carried on any activities other than those
which are related to its formation and its execution of the merger agreement.
THE SPECIAL MEETING
TIME AND PLACE; PURPOSE
A special meeting of the shareholders of Genesys will be held at 11:00 AM
local time on January 21, 2000 at Genesys headquarters located at 1155 Market
Street, San Francisco, California 94103. At the special meeting, shareholders of
record of Genesys on December 16, 1999, 2000 will be asked to (i) consider and
vote upon a proposal to adopt the merger agreement and approve the merger and
(ii) transact such other business as may properly come before the special
meeting. See "THE SPECIAL MEETING -- Date, Time and Place; Purpose."
RECORD DATE; QUORUM
The record date established by the Genesys board of directors for the
special meeting is the close of business on December 16, 1999. Only
2
<PAGE> 10
holders of record of Genesys common stock at the close of business on the record
date are entitled to notice of, and to vote at, the special meeting. As of the
record date, there were 26,228,284 outstanding shares of Genesys common stock,
held by 227 holders of record. See "THE SPECIAL MEETING -- Record Date." Each
holder of a share of Genesys common stock outstanding on the record date is
entitled to cast one vote per share on the merger proposal. The presence at the
special meeting, either in person or by proxy, of a majority of the issued and
outstanding shares of Genesys common stock entitled to vote will constitute a
quorum at the special meeting. See "THE SPECIAL MEETING -- Quorum and Required
Vote."
REQUIRED VOTE
Approval of the merger proposal requires the affirmative vote of
shareholders holding a majority of shares of Genesys common stock outstanding
and entitled to vote as of the record date. All of the directors and executive
officers of Genesys holding Genesys common stock are contractually obligated to
vote their shares of common stock in favor of the merger proposal. As of the
record date, members of the Genesys board, executive officers of Genesys and
their respective affiliates owned approximately 27.4% of the shares of Genesys
common stock entitled to vote on the merger proposal. See "THE SPECIAL MEETING
- -- Quorum and Required Vote."
SOLICITATION OF PROXIES AND EXPENSES
Shares of Genesys common stock represented by properly executed proxies
received in time for the Genesys special meeting will be voted at the special
meeting in the manner specified in the proxy. Proxies that are properly executed
but do not contain instructions will be voted "FOR" approval and adoption of the
merger proposal. It is not expected that any matter other than approval and
adoption of the merger proposal will be brought before the Genesys special
meeting, but, if other matters are properly presented, the persons named in such
proxy will have authority, unless authority to do so is withheld in the proxy,
to vote in accordance with their judgment on any other matter, including without
limitation, any proposal to adjourn or postpone the special meeting or otherwise
concerning the conduct of the special meeting. A shareholder may revoke a proxy
at any time prior to its exercise by (i) delivering, prior to the special
meeting, to the Secretary of Genesys, a written notice of revocation bearing a
later date or time than the proxy; (ii) delivering to the Secretary of Genesys a
duly executed proxy bearing a later date or time than the revoked proxy; or
(iii) attending the special meeting and voting in person. Attendance at the
special meeting will not by itself constitute a revocation of a proxy. See "THE
SPECIAL MEETING -- Solicitation of Proxies and Expenses."
Genesys will bear the cost of the solicitation of proxies from its
shareholders and the cost of printing and mailing this proxy statement/
prospectus. In addition to the solicitation by mail, Genesys' directors,
officers and employees may solicit proxies from its shareholders in person or by
telephone, telegram or electronically. See "THE SPECIAL MEETING -- Solicitation
of Proxies and Expenses."
THE MERGER
GENERAL
Upon consummation of the merger, Eden Merger Corp., a wholly owned
subsidiary of Alcatel, will be merged with and into Genesys, with Genesys
continuing as the surviving corporation and a wholly owned subsidiary of
Alcatel. A copy of the merger agreement is attached hereto as Annex A. You
should read it completely.
MERGER CONSIDERATION
Genesys shareholders will receive either Alcatel ADSs or cash in exchange
for their Genesys common stock in the merger. The number of Alcatel ADSs into
which each share of Genesys common stock will be converted, or whether each
share of Genesys common stock will be converted into cash, depends on the
average closing price of an Alcatel ADS during the 10-trading-day period ending
2 trading days prior to the special meeting of Genesys shareholders. That price
is sometimes referred to as the "average closing price" in this proxy statement/
prospectus. If the average closing price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
3
<PAGE> 11
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average closing
price; or
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average closing
price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of any Alcatel ADSs.
Whichever of these ratios is ultimately used to determine what each share
of Genesys common stock is converted into as a result of the merger is referred
to throughout this proxy statement/ prospectus as the "exchange ratio."
Alcatel will not issue fractional ADSs in the merger. Instead, all
fractional Alcatel ADSs will be aggregated and sold. You will be paid cash,
without interest, equal to your proportionate interest in the net proceeds of
the sale of the aggregated fractional ADSs.
RECOMMENDATION OF THE GENESYS BOARD
The Genesys board of directors has unanimously determined that the merger
agreement and the transactions contemplated thereby, including the merger, are
fair to and in the best interest of the Genesys shareholders. Accordingly, the
Genesys board of directors has unanimously approved the merger proposal and
recommends that Genesys shareholders vote to approve and adopt the merger
proposal. In considering the Genesys board of directors' recommendation,
shareholders should be aware that certain members of the Genesys board may be
deemed to have interests in the merger that are in addition to or different from
the interests of Genesys shareholders generally. See "THE MERGER -- Interests of
Certain Persons in the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Shareholders of Genesys should be aware that certain directors and officers
of Genesys have interests in the merger that may be deemed to be different from
or in addition to their interests solely as shareholders of Genesys. For
example, options held by Genesys' executives may become vested following the
merger upon the termination of their employment under specified circumstances.
In addition, certain executives may be entitled to severance payments upon their
termination of employment following the merger. See "THE MERGER -- Interests of
Certain Persons in the Merger."
OPINION OF GENESYS' FINANCIAL ADVISOR
Goldman, Sachs & Co. delivered an opinion to the board of directors of
Genesys to the effect that, as of September 27, 1999, the consideration to be
received by the holders of outstanding shares of Genesys common stock pursuant
to the merger agreement was fair from a financial point of view to those
holders. The opinion of Goldman Sachs does not constitute a recommendation as to
how any holder of Genesys common stock should vote with respect to the
transaction contemplated by the merger agreement. The full text of the written
opinion of Goldman Sachs is attached to this proxy statement/prospectus as Annex
B. You should read it completely.
CONDITIONS TO THE MERGER
The consummation of the merger depends upon the satisfaction of several
conditions, including:
- approval of the merger by Genesys shareholders;
- approval of the listing on the New York Stock Exchange of the Alcatel
ADSs to be issued in connection with the merger;
- expiration of any waiting period under the antitrust laws of the United
States;
- receipt by Genesys and Alcatel of opinions regarding the tax-free nature
of the merger, provided Alcatel does not exercise its option to deliver
cash to Genesys shareholders instead of Alcatel ADSs;
- employment agreements with each of Christopher Brennan, Alec Miloslavsky
and Ori Sasson being in full force and effect; and
4
<PAGE> 12
- all foreign laws regulating competition, antitrust, investment or
exchange control have been complied with, and all approvals required
under those foreign laws have been received.
See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT -- Conditions to the
Consummation of the Merger" for further description of all the conditions to the
consummation of the merger.
REGULATORY APPROVALS
Under the antitrust laws of the United States, the merger cannot be
consummated until certain filings are submitted to the Antitrust Division of the
United States Department of Justice and the Federal Trade Commission and certain
waiting periods have expired.
Governmental or regulatory bodies in certain other jurisdictions may need
to approve the merger as well. In addition, Genesys and Alcatel will seek
material consents, approvals, orders and other governmental authorizations
necessary or advisable to complete the merger. While Genesys and Alcatel believe
that they will receive the requisite regulatory approvals, there can be no
assurance that this will occur. See "THE MERGER -- Regulatory Approvals" and
"CERTAIN PROVISIONS OF THE MERGER AGREEMENT -- Certain Filings."
U.S. TAX TREATMENT
Assuming Alcatel does not exercise its option under certain circumstances
to convert shares of Genesys common stock into cash, it is expected that the
merger will qualify as a tax-free reorganization for U.S. federal income tax
purposes.
Generally, if the merger qualifies as a reorganization for U.S. federal
income tax purposes and you are a U.S. person, you will not recognize gain or
loss with respect to the Genesys common stock you exchange for Alcatel ADSs in
the merger. You may recognize gain or loss with respect to cash received in lieu
of fractional interests. The aggregate tax basis of the Genesys common stock you
surrender will become the aggregate tax basis of the Alcatel ADSs you receive
adjusted to take into account any cash paid in lieu of fractional interests.
If you receive all cash consideration for your Genesys shares, or if the
merger otherwise does not qualify as a reorganization for U.S. federal income
tax purposes, you will be treated as having sold your Genesys common stock in a
taxable sale. You will recognize capital gain or loss attributable to the sale
equal to the difference between the cash or fair market value of the Alcatel
ADSs received and your tax basis in the Genesys common stock surrendered.
To review tax consequences of the Merger in greater detail, see "THE MERGER
- -- Material U.S. Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The merger will be accounted for as a pooling of interests under French
generally accepted accounting principles. Under generally accepted accounting
principles in the United States, the merger will be accounted for under the
purchase method.
TERMINATION OF THE MERGER AGREEMENT
Either Genesys or Alcatel may terminate the merger agreement for various
reasons, including if:
- both parties consent in writing;
- the merger is not completed by May 31, 2000 through no fault of the
party seeking to call off the merger;
- there exist legal restraints preventing the merger;
- the Genesys shareholders do not approve the merger; or
- the other party breaches in a material way its representations,
warranties, covenants or agreements and that breach is not remedied
within 30 days.
In addition, Alcatel may terminate the merger agreement if the Genesys
board of directors withdraws or adversely modifies its approval or
recommendation of the merger, recommends an alternative acquisition transaction
with a third party or violates its obligations not to solicit alternative
acquisition transactions, as well as in certain other situations. See "CERTAIN
PROVISIONS OF THE MERGER AGREEMENT -- Termination of the Merger Agreement" for
further discussion of the termination provisions of the merger agreement.
5
<PAGE> 13
Under certain of these circumstances, Genesys may be required to pay
Alcatel a termination fee of $45 million. See "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT -- Fees and Expenses" for further discussion of fees and expenses
connected with the merger.
DISSENTERS' RIGHTS
If the merger proposal is approved by Genesys shareholders, holders of
Genesys common stock who elect to dissent from the approval may, under certain
circumstances, be entitled to have their shares purchased by Genesys for their
fair market value.
To exercise dissenters' rights, Genesys shareholders must carefully follow
the procedures set forth in Chapter 13 of the California Corporations Code.
These procedures include:
- sending notice to Genesys on or prior to the date of the special
meeting; and
- voting against the approval of the merger.
Failure to send notice or to vote against the merger or to follow any other
required procedures will result in waiver of dissenters' rights. Additionally,
dissenters' rights will only be available if holders of 5% or more of Genesys
common stock outstanding as of the record date elect to dissent. See "THE
SPECIAL MEETING -- Dissenters' Rights." Annex D contains the full text of
Chapter 13 of the California Corporations Code regarding dissenters' rights.
VOTING AGREEMENT
Certain Genesys shareholders have entered into an agreement with Alcatel to
vote their shares in favor of the merger at the special meeting of Genesys
shareholders. For further discussion of the voting agreement, see "THE VOTING
AGREEMENT." A copy of the voting agreement is attached hereto as Annex C.
COMPARATIVE RIGHTS OF SHAREHOLDERS OF ALCATEL AND GENESYS
As a result of the merger, your Genesys common stock may be converted into
the right to receive Alcatel ADSs. Because Genesys is a corporation organized
under the laws of California and Alcatel is a corporation organized under the
laws of the Republic of France, there are differences between the rights of
Genesys shareholders and the rights of holders of Alcatel ADSs and Alcatel
shares. For a discussion of certain of these differences, see "COMPARISON OF
SHAREHOLDER RIGHTS," "DESCRIPTION OF ALCATEL SHARES" and "DESCRIPTION OF ALCATEL
AMERICAN DEPOSITARY SHARES."
EXCHANGE PROCEDURES
If the merger is consummated, a letter of transmittal will be mailed to you
with instructions for exchanging your shares of Genesys common stock for the
merger consideration paid by Alcatel. See "CERTAIN PROVISIONS OF THE MERGER
AGREEMENT -- Exchange of Share Certificates" for further discussion of exchange
procedures.
6
<PAGE> 14
SELECTED HISTORICAL FINANCIAL DATA
ALCATEL
The following table presents selected consolidated financial data for
Alcatel as of and for each of the years in the five-year period ended December
31, 1998 and as of and for the six-month periods ended June 30, 1998 and 1999.
The selected consolidated financial data for Alcatel for each of the years in
the five-year period ended December 31, 1998 are derived from the Audited
Consolidated Financial Statements of Alcatel. The selected consolidated
financial data for Alcatel as of and for the six-month periods ended June 30,
1998 and 1999 are derived from the Unaudited Interim Consolidated Financial
Statements of Alcatel included herein. Interim results are not necessarily
indicative of results which may be expected for any other period or for the full
year. Alcatel's consolidated financial statements for periods ending prior to
January 1, 1999 have been prepared in French francs and translated into euro at
the fixed exchange rate of E 1.00 = FF 6.55957 (see Note 1(r) to the
Consolidated Financial Statements included in Alcatel's Annual Report on Form
20-F for the year ended December 31, 1998). All such data should be read in
conjunction with the Consolidated Financial Statements and the accompanying
Notes incorporated by reference herein. Financial data for 1994 through 1997
have been restated to reflect the reorganization described in Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in Alcatel's Annual Report on Form 20-F for the year ended December 31,
1998.
Alcatel's consolidated financial statements were prepared in accordance
with French GAAP, which differs in some material respects from 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 12 to the Unaudited Interim Consolidated Financial Statements and
Notes 31 and 32 to the Consolidated Financial Statements included in Alcatel
Annual Report on Form 20-F for the year ended December 31, 1998 quantify these
differences and present 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.
7
<PAGE> 15
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED
JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------------- ----------------------------------------------------
NOTE* 1999(A) 1999 1998 1998 1997 1996 1995 1994
-------- ------- -------- ------- -------- -------- -------- -------- --------
(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........................ $10,158 E 10,091 E 9,391 E 21,259 E 28,335 E 24,712 E 24,455 E 25,557
Income from operations........... (4) 313 311 351 997 1,220 443 97 1,226
Restructuring costs.............. (21) (142) (141) (8) (406) (186) (71) (2,046) (442)
Amortization of goodwill......... (9) (194) (193) (151) (424) (356) (339) (2,052) (390)
Other revenue (expense)(2)....... (6) 375 373 2,160 2,207 302 486 268 115
Gains on disposal of Alcatel
shares owned by group
subsidiaries (after tax)........ -- -- -- -- 36 -- -- 1
Net income (loss)................ 224 223 2,318 2,340 711 415 (3,900) 552
EARNINGS PER SHARE:
Basic(3)......................... (8) 1.22 1.21 14.59 13.83 4.53 2.66 (27.10) 3.92
Diluted(4)....................... (8) 1.21 1.20 13.45 13.16 4.44 2.66 (27.10) 3.92
Dividends per share(5)........... -- -- 2.00 1.75 1.52 1.22 2.29
Dividends per ADS(5)(6).......... -- -- .40 .35 .30 .24 .46
APPROXIMATE AMOUNTS IN ACCORDANCE
WITH U.S. GAAP
NET SALES(7)..................... (32)(a) 10,158 10,091 9,391 21,259 28,335 24,794 24,472 25,535
Net income....................... (32)(a) (307) (305) 2,810 1,179 446 (183) (3,255) 724
Basic earnings per share:
Income before extraordinary
items......................... (1.67) (1.66) 17.68 6.97 2.84 (1.17) (22.62) 5.42
Net income...................... (1.67) (1.66) 17.68 6.97 2.84 (1.17) (22.62) 5.15
Diluted earnings per share(4):
Income before extraordinary
items........................... (1.67) (1.66) 16.29 6.63 2.81 -- -- 5.34
Net income....................... (1.67) (1.66) 16.29 6.63 2.81 -- -- 5.09
Basic earnings per ADS(6):
Income before extraordinary
items......................... 0.33 0.33 3.54 1.39 .57 (.23) 4.52 1.08
Net income...................... 0.33 0.33 3.54 1.39 .57 (.23) 4.52 1.03
Diluted earnings per ADS:
Income before extraordinary
items......................... 0.33 0.33 3.26 1.33 .56 -- -- 1.07
Net income...................... 0.33 0.33 3.26 1.33 .56 -- -- 1.02
BALANCE SHEET DATA (AT PERIOD
END):
AMOUNTS IN ACCORDANCE WITH FRENCH
GAAP
Total assets..................... 33,003 32,787 28,784 29,640 38,382 37,848 38,977 41,762
Short-term investments and cash
and cash equivalents............ (17) 3,221 3,200 4,285 3,813 4,241 4,471 5,327 6,031
Short-term debt.................. (22) n.a. n.a. n.a. 1,787 2,714 2,905 4,086 3,094
Long-term debt................... (22) n.a. n.a. n.a. 2,318 3,341 3,571 4,287 4,783
Minority interests............... (20) 458 455 453 438 271 227 489 893
Shareholders' equity............. 10,503 10,434 9,954 9,913 6,701 5,971 5,030 9,114
AMOUNTS IN ACCORDANCE WITH U.S.
GAAP(7)
Shareholders' equity............. (32(b)), 14,735 14,638 12,624 14,514 8,448 7,895 7,550 11,085
(32(c))
Total assets(8).................. n.a. n.a. n.a. 34,272 40,637 41,082 41,907 44,668
Long-term debt................... n.a. n.a. n.a. 2,325 3,366 3,735 4,309 4,805
</TABLE>
- ---------------
* Notes to the Consolidated Financial Statements included in Alcatel's Annual
Report on Form 20-F for the year ended December 31, 1998.
(1) Translated solely for convenience into dollars at the Noon Buying Rate of
E 1.00 = $1.0066 on December 15, 1999.
(2) Other revenue (expense) mainly includes net capital gains on disposal of
fixed assets.
(3) Based on the weighted average number of Alcatel shares issued after
deduction of the weighted average number of Alcatel shares owned by
consolidated subsidiaries, without adjustment for any share equivalent:
184,254,037 at June 30, 1999, 158,921,794 at June 30, 1998, 169,142,442 in
1998, 156,937,952 in 1997, 155,902,458 in 1996, 143,890,505 in 1995 and
140,665,635 in 1994.
(4) 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 Alcatel's consolidated 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
8
<PAGE> 16
of Alcatel shares taken into account is as follows: French GAAP: 185,845,601
at June 30, 1999, 173,122,559 at June 30, 1998, 178,188, 744 in 1998,
171,489,939 in 1997, 157,431,310 in 1996, 143,890,505 in 1995, and
140,665,635 in 1994. U.S. GAAP: 184,254,037 at June 30, 1999, 173,122,559 at
June 30, 1998, 177,763,681 in 1998, 159,244,088 in 1997 and 153,152,678 in
1994. Not applicable in 1996 and 1995 due to loss position.
(5) Year to which dividend relates. Under French corporation law, payment of
annual dividends must be made within nine months following the end of the
fiscal year to which they relate.
(6) Adjusted for the one-to-five ratio of Alcatel shares to Alcatel ADSs.
Alcatel first issued shares represented by ADSs in 1990.
(7) For information concerning the differences between French GAAP and U.S.
GAAP, see Note 12 to the Unaudited Interim Consolidated Financial Statements
included elsewhere herein and Notes 31 and 32 to the Consolidated Financial
Statements included in Alcatel's Annual Report on Form 20-F for the year
ended December 31, 1998.
(8) Advance payments received from customers are not deducted from the amount of
total assets. See Note 31(m) to the Consolidated Financial Statements
included in Alcatel's Annual Report on Form 20-F for the year ended December
31, 1998.
GENESYS
The following table presents selected consolidated financial data for
Genesys as of and for each of the years in the five-year period ended June 30,
1999 and as of and for the three-month periods ended September 30, 1998 and
1999. The selected consolidated financial data for Genesys for each of the years
in the five-year period ended June 30, 1999 are derived from the Audited
Consolidated Financial Statements of Genesys incorporated by reference herein.
The selected consolidated financial data for the three months ended September
30, 1999 and 1998 have been derived from Genesys' Unaudited Consolidated
Financial Statements incorporated herein by reference and reflect, in the
opinion of management of Genesys, all adjustments necessary to present fairly
Genesys' financial position and results of operations. The adjustments are of a
recurring nature unless otherwise disclosed therein. Interim results are not
necessarily indicative of results which may be expected for any other period or
the full fiscal year. All such data should be read in conjunction with Genesys'
Consolidated Financial Statements and the accompanying notes incorporated by
reference herein.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED JUNE 30,
----------------- -----------------------------------------------
1999 1998 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... 45,878 29,008 139,108 84,668 37,538 12,029 4,480
Gross Profit............................... 38,152 23,901 115,367 70,772 32,042 8,913 3,167
Operating income (loss).................... 9,112 5,392 6,137 10,392 1,186 (3,993) 160
Net income (loss).......................... 6,278 3,819 (2,623) 7,934 774 (4,108) 154
Basic income (loss) per share.............. $ 0.25 $ 0.17 $ (0.11) $ 0.37 $ 0.05 $ (0.39) $ 0.03
Diluted income (loss) per share............ $ 0.21 $ 0.15 $ (0.11) $ 0.30 $ 0.04 $ (0.39) $ 0.03
Average shares used in per share
computation:
Basic...................................... 25,178 22,628 23,328 21,590 14,148 10,484 4,668
Diluted.................................... 29,936 25,779 23,328 26,747 20,299 10,484 4,668
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, AS OF JUNE 30,
----------------- -----------------------------------------------
1999 1998 1999 1998 1997 1996 1995
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and marketable securities............. 72,709 52,740 61,697 47,241 47,160 5,900 213
Working capital (deficiency)............... 89,180 55,302 77,255 52,585 47,028 2,251 (1,990)
Property and equipment, net................ 16,679 17,625 17,026 14,675 7,383 1,224 327
Total assets............................... 165,439 114,280 147,507 104,700 79,945 12,632 2,931
Long-term debt, including current
maturities............................... 123 126 131 135 1,351 74 80
</TABLE>
9
<PAGE> 17
RISK FACTORS
By voting in favor of the merger, you will be choosing to invest in
Alcatel ADSs. An investment in Alcatel ADSs involves a high degree of risk. In
addition to the other information contained in or incorporated by reference into
this proxy statement/prospectus, you should carefully consider the following
risk factors in deciding whether to vote for the merger.
THE CONSIDERATION THAT GENESYS SHAREHOLDERS WILL RECEIVE IN THE MERGER
MAY DECREASE IN VALUE IF THE ALCATEL ADSS DECREASE IN VALUE.
The exchange ratio will be set based upon the average closing price of an
Alcatel ADS on the New York Stock Exchange during the ten trading days ending
two trading days prior to the date of the special meeting. That price is
sometimes referred to in this proxy statement/prospectus as the "average closing
price."
The adjustments are designed so that you will receive $55.00 worth of
Alcatel ADSs (based on the average closing price) for each share of Genesys
common stock exchanged in the merger, if the average closing price is greater
than or equal to $33.00. You will receive $45.00 worth of Alcatel ADSs (based on
the average closing price) for each share of Genesys common stock exchanged in
the merger, if the average closing price is $27.00 or less, but greater than
$24.00. You will receive $45.00 in value of Alcatel ADSs (based on the average
closing price) or $45.00 in cash, at Alcatel's option, for each share of Genesys
common stock exchanged in the merger, if the average closing price is $24.00 or
less. If the average closing price is less than $33.00 and greater than $27.00,
the exchange ratio will be fixed at 1.667 Alcatel ADSs per Genesys share, so
that the value of the Alcatel ADSs you receive in exchange for each Genesys
share will be between $45.00 and $55.00 (based on the average closing price).
At the time of the special meeting, you will not know the exact value of
the Alcatel ADSs you will receive when the merger is completed, because the
price of Alcatel ADSs at the time the merger is completed is likely to be
different from the average closing price used to determine the exchange ratio.
This could increase or decrease the actual value of the Alcatel ADSs you receive
from the value that was calculated based on the average closing price. The price
of Alcatel ADSs may change as a result of changes in the business, operations or
prospects of Alcatel or Genesys, market assessments of the likelihood that the
merger will be consummated and the timing of the consummation, regulatory
considerations, general market and economic conditions, factors affecting the
telecommunications industry in general and other factors. We urge you to obtain
current market quotations for the Alcatel ADSs and Genesys common stock and to
call the Department of Investor Relations of Alcatel at (972) 519-4213 or Erica
Abrams at Morgen Walke Associates, Genesys' investor relations firm, at (415)
439-4532 for current information on the average closing price and the exchange
ratio.
ALCATEL COULD ELECT TO DELIVER TO YOU CASH INSTEAD OF ALCATEL ADSS, WHICH
WOULD CAUSE THE MERGER TO BE TAXABLE.
The merger agreement provides that, if the average closing price of an
Alcatel ADS is $24.00 or less, Alcatel may, at its option, deliver $45.00 in
cash for each share of Genesys common stock instead of Alcatel ADSs. In such
case, the merger would be taxable, and you will recognize gain to the extent
that the cash you receive exceeds the tax basis in your Genesys common stock.
See "THE MERGER -- Material U.S. Federal Income Tax Consequences."
ALTHOUGH ALCATEL EXPECTS THAT THE MERGER WILL RESULT IN CERTAIN BENEFITS,
ALCATEL MAY NOT REALIZE THOSE BENEFITS.
Alcatel has entered into the merger agreement with the expectation that
the merger would result in certain benefits to Alcatel, including providing
Alcatel with a leading worldwide position in computer telephony integration and
enterprise interaction management solutions and enhancing its existing position
in the call center business. Other benefits Alcatel expects to achieve from the
merger are described in "THE MERGER -- Alcatel's Reasons for the Merger."
Achieving the benefits of the merger will depend in
10
<PAGE> 18
part upon the efficient integration of the businesses of Genesys with those of
Alcatel. Alcatel cannot ensure that this will occur. The integration will
require substantial attention from, and pose challenges to, the managements of
Alcatel and Genesys. The integration process could interrupt or disrupt the
companies' businesses and result in material negative effects on the combined
operations of Alcatel and Genesys. There can be no assurance that the combined
company will realize any of the anticipated benefits of the merger.
ALCATEL'S TELECOMMUNICATIONS BUSINESS MAY FAIL TO KEEP PACE WITH RAPID
CHANGES IN TECHNOLOGY.
The telecommunications industry is subject to rapid and significant
changes in technology, particularly in the field of data processing and
transmission. Alcatel's failure to respond to these changes, including changes
relating to digital technology, wireline and wireless transmission and switching
technologies, would adversely affect its business. In addition, Alcatel cannot
predict the effect of the recent consolidation trend in the telecommunications
industry.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH EXISTING OR NEW COMPETITORS,
ALCATEL'S RESULTING LOSS OF COMPETITIVE POSITION COULD RESULT IN REDUCED
REVENUES, REDUCED MARGINS, REDUCED LEVELS OF PROFITABILITY AND LOSS OF MARKET
SHARE.
Alcatel operates in highly competitive markets. Alcatel's competitors
include other manufacturers and distributors of telecommunications equipment, 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. Most of Alcatel's arrangements with large customers do
not provide Alcatel with guarantees that customer purchases will be maintained
at any level. In addition, Alcatel's customers could reduce or cease their use
of Alcatel's products as a result of:
- manufacture of products similar to those of Alcatel by competitors;
- efforts by Alcatel's customers to develop their own products; or
- further consolidations in the telecommunications industry involving
Alcatel's customers.
ALCATEL HAS RECENTLY MADE A SIGNIFICANT SERIES OF ACQUISITIONS IN THE
UNITED STATES AND IT MAY BE UNABLE TO OBTAIN THE BENEFITS IT EXPECTS IF IT
EXPERIENCES DIFFICULTY IN INTEGRATING THESE ACQUISITIONS.
In addition to Alcatel's acquisition of Genesys, since December 1998,
Alcatel has acquired four U.S. telecommunications companies in acquisitions with
a combined purchase price of approximately $2.8 billion, and Alcatel continually
reviews potential acquisitions of companies in the United States and other
jurisdictions. These acquisitions have required and will require Alcatel to
integrate businesses which have previously been operated separately and which
together are substantial in scope and size relative to Alcatel's historic
activities. Alcatel cannot ensure that these operations will be successfully
integrated or that the acquisitions will ultimately have a positive impact on
Alcatel's results of operations. The integration process involves inherent
uncertainties, such as:
- the availability of management to oversee the operations;
- the inability to retain qualified management of the acquired companies;
- the inability to retain customers of the acquired companies; and
- the assumption of potential liabilities, disclosed or undisclosed,
associated with acquired companies which may exceed the amount of
indemnification available from sellers.
Any material delays or unexpected costs incurred in connection with this
integration process could prevent Alcatel from obtaining the benefits it
expected from these acquisitions.
11
<PAGE> 19
ALCATEL'S FAILURE OR THE FAILURE OF ITS BUSINESS PARTNERS AND CUSTOMERS
TO BE YEAR 2000 COMPLIANT COULD CAUSE DISRUPTION TO ALCATEL'S BUSINESS AND COULD
HARM SALES.
Older computer programs often identify years with two digits instead of
four. This may cause problems because the programs may recognize the year 2000
as the year 1900. This could result in malfunctioning or failure of certain
hardware and software produced by Alcatel. If Alcatel fails to identify and
solve Year 2000 problems in its products, telecommunications services for users
of Alcatel telecommunications products could be interrupted for extended periods
of time. In addition, purchasers of other Alcatel products could experience
operational interruptions. A major failure of Alcatel products could adversely
impact the operations of Alcatel's customers and could cause Alcatel to incur
significant costs and require Alcatel to dedicate many employees to remedy the
problems.
Year 2000 problems may also affect Alcatel's internal information systems.
Computer miscalculations could cause disruption of Alcatel's operations,
including interruptions in manufacturing, customer billing, payroll, accounts
payable and similar normal business activities. Year 2000 problems could have an
adverse effect not only directly on Alcatel's products and information systems,
but also indirectly through an effect on Alcatel's suppliers, its resellers and
distributors and its customers. If important suppliers fail to achieve Year 2000
readiness, Alcatel could experience interruptions in the supply of raw materials
and components, which could interrupt the manufacture and delivery of Alcatel's
products. Similarly, Year 2000 problems may impact the ability of Alcatel's
resellers and distributors to service Alcatel, to accurately invoice for
services rendered, and to accurately process payments received. Further, Year
2000 problems could disrupt the ability of Alcatel's customers to collect from
their own customers and to pay Alcatel for services and products received. The
result of problems related to Year 2000, if they occur, could adversely affect
Alcatel's financial results.
EXCHANGE RATE FLUCTUATIONS MAY HAVE A SIGNIFICANT IMPACT ON ALCATEL'S
FINANCIAL RESULTS.
Alcatel owns properties and conducts operations throughout the world. As a
result, a substantial portion of Alcatel's assets, liabilities, revenues and
expenses are denominated in various currencies other than the euro, principally
the U.S. dollar, and to a lesser extent, the British pound. Because Alcatel's
financial statements are denominated in euro, fluctuations in currency exchange
rates, especially the dollar against the euro, could have a material impact on
Alcatel's reported results. Appreciation of the euro versus the dollar would
also reduce the competitiveness of the products Alcatel produces in Europe
against products Alcatel produces in, or exports from, the United States and
other dollar zones, and reduce the euro value of Alcatel's sales and earnings
made in dollars. Alcatel may not be able to protect itself adequately against
exchange rate risks.
ALCATEL'S INTERNATIONAL OPERATIONS ARE SUBJECT TO PARTICULAR RISKS.
Alcatel conducts international operations through wholly owned
subsidiaries, majority owned subsidiaries, joint ventures, equity interests,
agents and independent contractors, located in Europe, North and South America,
the Far East, the Middle East and Africa. In addition to general business risks
and the risks described above, Alcatel's international operations are subject to
a variety of potential risks, including:
- political and economic instability,
- foreign currency fluctuations,
- lack of complete operating control,
- lack of local business experience,
- difficulty in enforcing intellectual property rights, and
- language and other cultural barriers.
12
<PAGE> 20
FORWARD-LOOKING INFORMATION
Certain statements contained in or incorporated by reference into this
proxy statement/prospectus are "forward-looking statements" within the meaning
of the United States Private Securities Litigation Reform Act of 1995. All
forward-looking statements involve risks and uncertainties. In particular, any
statements regarding the benefits of the merger, as well as expectations with
respect to future sales, operating efficiencies and product expansions, are
subject to known and unknown risks, uncertainties and contingencies, many of
which are beyond the control of Alcatel and Genesys, that may cause actual
results, performance or achievements to differ materially from anticipated
results, performance or achievements. Factors that might affect these
forward-looking statements include, among other things:
- the ability to integrate Genesys into Alcatel's operations;
- overall economic and business conditions;
- the demand for Alcatel's and Genesys' goods and services;
- competitive factors in the industries in which Alcatel and Genesys
compete;
- changes in government regulation;
- changes in tax requirements, including tax rate changes, new tax laws
and revised tax law interpretations;
- interest rate fluctuations, foreign currency rate fluctuations and
other capital market conditions;
- economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer
capital across borders; and
- the ability of Alcatel and Genesys, and the ability of their respective
customers and suppliers, to replace, modify or upgrade computer
programs in order to adequately address the Year 2000 issue.
For a description of some of the factors or uncertainties that exist in
Alcatel's operations and business environment that could cause actual results to
differ, you should consult Alcatel's Annual Report on Form 20-F for the year
ended December 31, 1998 and Alcatel's Reports of Foreign Private Issuer on Form
6-K dated September 30, November 12 and November 18 1999.
13
<PAGE> 21
EXCHANGE RATE INFORMATION
Under the provisions of the Treaty on European Union negotiated at
Maastricht in 1991 and signed by the then 12 member states of the European Union
in early 1992, a European Monetary Union, known as "EMU," was implemented on
January 1, 1999 and a single European currency, known as the "euro," was
introduced. The following 11 member states participate in EMU and have adopted
the euro as their national currency: Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. The legal rate
of conversion between French francs and euro was fixed on December 31, 1998 at
FF 6.55957 = E 1.00.
Since January 1, 1999, the euro has been the lawful currency of the 11 EMU
states, although euro banknotes and coins are not expected to enter circulation
until January 1, 2002. New public debt will be issued in euro. Outstanding
obligations denominated in national currencies will be converted at the legal
rates established on January 1, 1999, unless specific contracts provide for an
alternative conversion rate. During a transitional phase, which is planned to
begin on January 1, 2002 and end by July 1, 2002, national currencies, including
banknotes and coins, will subsist as non-decimal denominations of the euro.
There can be no assurance that these events will take place on time or otherwise
as currently expected.
Alcatel's ADSs trade in dollars. As the principal trading market for the
shares underlying the ADSs is the Paris Bourse, where the shares trade in euro,
the value of the ADSs in dollars will fluctuate as the dollar/euro exchange rate
fluctuates. Additionally, since any dividends Alcatel may declare are expected
to be denominated in euro, exchange rate fluctuations will affect the dollar
value of dividends received by holders of ADSs.
The following table shows, for the periods and dates indicated, certain
information concerning the French franc/dollar Noon Buying Rate for 1994 through
1998 (expressed in French francs per $1.00) and, for 1999 and 2000, the
euro/dollar Noon Buying Rate (expressed in euro per $1.00). These rates are
provided solely for the convenience of the reader and are not necessarily the
rates Alcatel used in the preparation of its financial statements. Alcatel makes
no representation that French francs or euro could have been converted into
dollars at the rates shown or at any other rate for such periods or at such
dates.
<TABLE>
<CAPTION>
YEAR PERIOD-END RATE AVERAGE RATE(1) HIGH LOW
- ---- --------------- --------------- --------- ---------
<S> <C> <C> <C> <C>
EURO/DOLLAR
1999 (through December 15)......... E 0.99 E 0.94 E 1.00 E 0.85
FRENCH FRANC/DOLLAR
1998............................... FF 5.59 FF 5.90 FF 6.21 FF 5.39
1997............................... 6.02 5.85 6.35 5.19
1996............................... 5.19 5.12 5.29 4.90
1995............................... 4.90 4.96 5.39 4.78
1994............................... 5.34 5.51 5.98 5.11
</TABLE>
- ---------------
(1) The average of the Noon Buying Rate for French francs or euro, as the case
may be, on the last business day of each month during the relevant period.
14
<PAGE> 22
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of
Alcatel and Genesys. The Genesys equivalent per share data are calculated by
multiplying the actual Alcatel per share data by the hypothetical exchange ratio
of 1.667. The exchange ratio may vary depending on the market price of Alcatel
ADSs prior to the merger. See "CERTAIN PROVISIONS OF THE MERGER AGREEMENT." This
data should be read in conjunction with the selected historical financial data
that are included elsewhere herein and the historical financial statements of
Alcatel and Genesys and the notes thereto.
<TABLE>
<CAPTION>
ALCATEL HISTORICAL GENESYS HISTORICAL GENESYS EQUIVALENT
-------------------- ------------------ ------------------
E $ (1) $ $
<S> <C> <C> <C> <C>
AMOUNTS IN ACCORDANCE WITH U.S. GAAP
SIX MONTHS ENDED JUNE 30, 1999
Income from continuing operations per
ADS/share:
Basic.................................. (1.66) (1.67) .10 (2.78)
Diluted................................ (1.66) (1.67) .09 (2.78)
Cash dividends per ADS/share............. -- -- -- --
Book value per ADS/share(2).............. 15.89 15.99 2.45 26.66
YEAR ENDED DECEMBER 31, 1998
Income from continuing operations per
ADS/share:
Basic.................................. 6.97 7.02 (.03) 11.70
Diluted................................ 6.63 6.67 (.03) 11.12
Cash dividends per ADS/share............. .40 .40 -- .67
Book value per ADS/share(2).............. 15.74 15.84 1.87 26.41
</TABLE>
- ---------------
(1) Translated solely for convenience into dollars at the Noon Buying Rate of E
1.00 = $1.0066 on December 15, 1999.
(2) Computed by dividing total stockholders' equity by the number of shares of
common stock outstanding at the end of the periods indicated.
15
<PAGE> 23
COMPARATIVE STOCK PRICES AND DIVIDENDS
The following table sets forth, for the periods indicated, the high and
low closing price per Alcatel ADS, as reported on the New York Stock Exchange
Composite Tape, and per share of Genesys common stock on the Nasdaq National
Market. Genesys common stock was first traded on the Nasdaq National Market on
June 16, 1997.
<TABLE>
<CAPTION>
ALCATEL GENESYS
ADSS COMMON STOCK
------------------ ------------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
1997
First Quarter...................................... 24 1/8 15 1/2 -- --
Second Quarter..................................... 25 15/16 21 1/8 31 1/2 26
Third Quarter...................................... 28 1/2 24 38 5/8 25 5/8
Fourth Quarter..................................... 28 1/4 21 1/2 36 25 1/4
1998
First Quarter...................................... 38 1/2 24 1/4 38 24 3/4
Second Quarter..................................... 44 1/2 34 1/8 39 27 23/32
Third Quarter...................................... 47 1/8 16 7/8 34 3/4 17 5/8
Fourth Quarter..................................... 27 1/8 15 15/16 29 3/4 11 1/2
1999
First Quarter...................................... 29 15/16 20 3/8 26 11/16 11 7/16
Second Quarter..................................... 28 11/16 22 7/8 25 12
Third Quarter...................................... 31 5/8 26 1/16 45 11/16 24 11/16
Fourth Quarter (through December 17)............... 44 9/16 27 1/2 52 7/8 45 1/8
</TABLE>
On December 17, 1999, the last reported price for an Alcatel ADS on the
New York Stock Exchange was $40.625, and the last reported price for a share of
Genesys common stock on the Nasdaq National Market was $52.5625.
Set forth below is a table containing the closing price per Alcatel ADS
and per share of Genesys common stock, as reported on the New York Stock
Exchange Composite Tape and Nasdaq National Market, respectively, and the
equivalent price per share of Genesys common stock as of:
(i) September 27, 1999, the date preceding public announcement of the
Merger; and
(ii) December 17, 1999, the last practicable trading day prior to the
effective date of the registration statement of which this proxy
statement/prospectus forms a part.
Assuming an exchange ratio of 1.667 Alcatel ADSs per share of Genesys
common stock, the equivalent price per share of Genesys common stock as of a
given date equals the closing price per Alcatel ADS multiplied by 1.667. If the
exchange ratio does not equal 1.667 Alcatel ADS per share of Genesys common
stock, but instead equals the quotient obtained by dividing $55.00 by the
Alcatel ADS average closing price, the equivalent price per share will be
$55.00. If the exchange ratio equals the quotient obtained by dividing $45.00 by
the Alcatel ADS average closing price, the equivalent price per share will be
$45.00. The actual exchange ratio will be determined two trading days prior to
the special meeting of Genesys' shareholders.
16
<PAGE> 24
<TABLE>
<CAPTION>
ALCATEL GENESYS GENESYS
HISTORICAL HISTORICAL EQUIVALENT
--------------- -------------- --------------
<S> <C> <C> <C>
On September 27, 1999
Closing price per ADS/common
share........................... $ 25.3125 $ 40.875 $ 42.20
Market value of ADS/common
shares(1)....................... $25,197,772,486 $1,037,168,176 $1,070,788,919
On December 17, 1999
Closing price per ADS/common
share........................... $ 40.625 $ 52.5625 $ 55
Market value of ADS/common
shares(1)....................... $40,530,253,359 $1,378,624,178 $1,442,555,620
</TABLE>
- ---------------
(1) Market value based on 199,093,511 Alcatel shares and 25,374,145 shares of
Genesys common stock outstanding as of September 27, 1999 and 199,533,555
Alcatel shares outstanding as of November 30, 1999 and 26,228,284 shares of
Genesys common stock outstanding as of December 16, 1999, excluding shares
held in treasury. Because the closing price of Alcatel ADSs on December 17,
1999 was greater than $33.00, the equivalent price per share of Genesys
common stock on that date would have been $55.00. See "CERTAIN PROVISIONS OF
THE MERGER AGREEMENT -- Merger Consideration."
Because the exchange ratio depends on the market price of an Alcatel ADS,
a change in the market price of Alcatel ADSs before the special meeting will
affect the market value of the Alcatel ADSs that Genesys shareholders receive in
the merger in exchange for their Genesys common stock. There can be no assurance
as to the market price of the Alcatel ADSs at any time before, at or after the
consummation of the merger. Genesys shareholders are urged to obtain current
market quotations for both Alcatel ADSs and Genesys common stock.
Following the merger, the Genesys common stock will no longer be listed on
the Nasdaq National Market. Alcatel ADSs issued in connection with the merger
will be listed on the New York Stock Exchange. See "THE MERGER -- Stock Exchange
Listing."
The table below sets forth, for the years indicated, the amount of
dividends paid per Alcatel share, without including the French avoir fiscal, and
the amount of dividends paid per Alcatel share, including the French avoir
fiscal (before deduction of any French withholding tax). The amount of dividends
per Alcatel ADS has been translated into dollars and adjusted for the
one-to-five ratio of Alcatel shares to Alcatel ADSs. Alcatel first issued
Alcatel shares represented by ADSs in 1991. An annual dividend is paid in each
year in respect of the prior year. Genesys has never paid any dividends.
<TABLE>
<CAPTION>
DIVIDEND PER DIVIDEND PER
DIVIDEND SHARE INCLUDING DIVIDEND ADS INCLUDING
YEAR TO WHICH DIVIDEND RELATES(1) PER SHARE(2) AVOIR FISCAL (3) PER ADS(4) AVOIR FISCAL (3)(4)
- --------------------------------- ------------ ---------------- ---------- -------------------
<S> <C> <C> <C> <C>
1994............................. E 2.29 E 3.43 $0.56 $0.84
1995............................. 1.22 1.83 0.33 0.49
1996............................. 1.52 2.29 0.34 0.51
1997............................. 1.76 2.63 0.38 0.57
1998............................. 2.00 3.00 0.39 0.58
</TABLE>
- ---------------
(1) Under French corporation law, payment of annual dividends must be made
within nine months following the end of the year to which they relate.
(2) The amount of dividends per share have been translated into euro using the
fixed exchange rate of E 1.00 = FF 6.55957.
(3) Payment equivalent to the French avoir fiscal, or tax credit, less
applicable French withholding tax, will be made by the French State only
after receipt of a claim for such payment and, in any event, not before
January 15 of the year following the calendar year in which the dividend is
paid. Certain U.S. tax-exempt holders of ADRs will not be entitled to full
payments of avoir fiscal. See "THE MERGER -- Material U.S. Federal Income
Tax Consequences."
(4) Translated solely for convenience into dollars at the Noon Buying Rate on
the respective dividend payment dates, or on the following business day if
such date was not a business day in the United States. Avoir fiscal amounts
have been converted into dollars at the Noon Buying Rate on such dates
although such amounts are paid subsequent to such payment dates. The Noon
Buying Rate may differ from the rate that may be used by the Depositary to
convert francs to dollars for purposes of making payments to holders of
ADRs.
17
<PAGE> 25
THE COMPANIES
ALCATEL
GENERAL
Alcatel, a French company headquartered in Paris, together with its
consolidated subsidiaries and associated companies, is a world leader in
providing telecommunications solutions equipment and systems. In 1998, Alcatel
had consolidated net sales of E 21.3 billion (approximately $21.4 billion) in
1998 and E 10.1 billion (approximately $10.2 billion) for the six months ended
June 30, 1999. While Alcatel has operations in 130 countries, it has a
particularly strong market base in Europe, where it currently generates
approximately 59% of its consolidated net sales. In 1998, however, the United
States became Alcatel's largest telecom market, accounting for approximately 18%
of Alcatel's total net sales (including DSC Communications Corporation's 1998
full year pro forma results). Based on market capitalization, Alcatel is one of
the largest French companies listed on the Paris Bourse. In January 1999,
Alcatel converted its share capital into euro and has begun publishing its
consolidated financial statements in euro beginning with its consolidated
financial statements for the year ended December 31, 1998.
Alcatel was established in 1898 as a publicly owned company, under its
former name Compagnie Generale d'Electricite -- CGE. Alcatel was nationalized by
the French State in 1982 and re-entered the private sector in May 1987. In
January 1991, Alcatel changed its official name to Alcatel Alsthom Compagnie
Generale d'Electricite, or Alcatel Alsthom. On September 1, 1998, Alcatel
changed its official name to Alcatel.
In 1998, Alcatel significantly reorganized its activities in order to
focus on its telecommunications businesses and position itself in markets with
high growth potential. Alcatel carried out this reorganization by reducing its
engineering activities through the sale of Cegelec to ALSTOM and the reduction
of its stake in ALSTOM from 50% to 24%, restructuring its space activities, and
making a series of acquisitions of telecommunications companies in the United
States.
Set forth below is a description of Alcatel's five segments reflected in
its consolidated financial statements for the year ended December 31, 1998.
NETWORKING -- The Networking segment is comprised of the Switching Systems
division and the Mobile Communications division. The Networking segment
produces a comprehensive array of switching systems and switch-based
networking solutions for fixed and mobile telephony, data communication
and multimedia applications, and provides presales and aftersales services
aimed at building a long-term relationship with its customers. The
Networking segment works with other Alcatel units and divisions, as well
as strategic partners, to offer complete networking solutions which are
deployed by public and private operators for national and international
telecommunications systems. Networking segment operations accounted for
26.2% of Alcatel's consolidated net sales in 1998.
TRANSPORT AND ACCESS -- The Transport and Access segment is comprised of
the Transmission Systems division, the Submarine Networks division, the
Radio Communications division, the Access Systems division and the
Satellites division. The Transport and Access segment produces a broad
range of systems for the transport of voice, data and multimedia
communications, products and solutions which connect consumer and business
users to fixed, wireless and cable TV networks. The segment comprises
Alcatel's transmission, access, submarine networks and space activities.
Transport and Access segment operations accounted for 29.2% of Alcatel's
consolidated net sales in 1998.
ENTERPRISE AND CONSUMER -- The Enterprise and Consumer segment is
comprised of the Enterprise Systems division and the GSM Mobile Phones
division. The Enterprise and Consumer segment produces, supplies and
implements a broad range of business and consumer products, including
private branch exchange switches, or "PBXs," data communication equipment
and end-
18
<PAGE> 26
user terminals for business and residential use. Enterprise and Consumer
segment operations accounted for 14.8% of Alcatel's consolidated net sales
in 1998.
TELECOM COMPONENTS -- The Telecom Components segment is comprised of the
Telecom Components Division and the Batteries division. The Telecom
components segment manufactures a wide variety of cables and sub-systems
for telecommunications and batteries for telecommunications, industrial
and advanced technology applications. The Telecom Components segment's
operations accounted for 18.0% of Alcatel's consolidated net sales in
1998.
ENERGY CABLES -- The Energy Cables segment is comprised of the Special
Cables division and the Metallurgy division. The Energy Cables segment
manufactures high voltage cables for power transmission, medium and low
voltage cables for the distribution of electricity, industrial and
building cables, and special cables (fire resistant, halogen-free,
anti-corrosion submarine cables). The Energy Cables segment's operations
accounted for 13.9% of Alcatel's consolidated net sales in 1998.
In March 1999, Alcatel further modified the organization of its
activities, retaining the organization's five segments, but transferring certain
activities between segments. In addition, Alcatel renamed the Transport and
Access segment the Internet and Optics Group. This new segment is organized into
three divisions: Internet Access, which includes the ADSL, fiber networks and
coaxial cables operations; Optical Systems, which includes ground and submarine
transmission systems operations; and Space. The remaining Access activities were
transferred to the Networking segment (voice access nodes), and to the Radio
Communications division in the Networking segment (wireless access and Hertzian
transmission). In the Networking segment, Alcatel formed a new division, the
Network Applications division. In addition, the Batteries division was moved
from the Telecom Components segment to the Energy Cables segment. Under the new
organization, the Networking segment now includes the Switching/Routing
division, the Radio Communications division and the Network Applications
division. The Telecom Components segment is now comprised of the Telecom
Products division and the Components division. The Energy and Cables segment now
includes the Energy Cables division, the Metallurgy division and the Batteries
division. The Enterprise and Consumer segment is made up of the Enterprise
Solutions division, the GSM Mobile Phones division and the Distribution &
Services division. The organizational chart below sets forth Alcatel's segment
structure in effect following this reorganization and the contribution of each
segment to Alcatel's consolidated net sales for the six-month period ended June
30, 1999.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------- ------------------- ------------------- ------------------- ---
INTERNET AND ENTERPRISE AND TELECOM COMPONENTS
NETWORKING OPTICS CONSUMER
- ------------------- ------------------- ------------------- ------------------- ---
- - Internet Access - Enterprise - Telecom Products
Switching/routing - Optical Systems Solutions - Components
- Radio - Ground - GSM Mobile
Communications - Submarine Phones
- Network - Space - Distribution &
Applications Services
- ------------------- ------------------- ------------------- ------------------- ---
30.5% of 1999 23.3% of 1999 15.2% of 1999 13.1% of 1999
first half sales first half sales first half sales first half sales
- ------------------- ------------------- ------------------- ------------------- ---
<S> <C> <C>
ENERGY CABLES
- -------------------
- Energy Cables
- Metallurgy
- Batteries
- -------------------
17.1% of 1999
first half sales
- -------------------
</TABLE>
Alcatel owns approximately 24% of ALSTOM, a manufacturer of equipment for
power transmission and distribution and railway support. Prior to its initial
public offering in June 1998, ALSTOM was a joint venture, named GEC Alsthom
N.V., between Alcatel and The General Electric Company, plc ("GEC"). GEC owns
approximately 24% of ALSTOM, and the remainder is owned by the public. Alcatel
owns approximately 16% of Thomson-CSF, a manufacturer of professional
electronics for commercial and defense markets, and will share research and
development efforts with Thomson-CSF in the areas of telecommunications and
electronics. In addition, Alcatel owns approximately 44% of Framatome, a
manufacturer of equipment for nuclear power stations and specialized electronic
connectors in which French state-owned entities hold the majority interest. On
November 5, 1999, Alcatel announced that it
19
<PAGE> 27
had reached an agreement with the French State pursuant to which Alcatel will
exchange a portion of its interest in Framatome to the French State in exchange
for a portion of the French State's interest in Thomson-CSF. Under the
agreement, the French State will transfer to Alcatel a block of Thomson-CSF
shares representing 9.45% of its capital, bringing Alcatel's participation to
25.3%. The price for each Thomson-CSF share will be E 36 per share, representing
a premium of approximately 10% over the average price of Thomson-CSF shares on
the Paris Bourse prior to the announcement. The purchase will be financed by the
sale to the French State of a block of Framatome shares equal in value to the
Thomson-CSF shares to be received by Alcatel. The transaction valued Framatome,
in its current scope of activities, at approximately E 2.5 billion. The closing
of the transaction is expected to take place before the end of 1999, and is
subject to approval of the French privatization commission. Following the
closing of these transactions, Alcatel will have sold approximately 75% of its
interest in Framatome and will retain approximately 10% of Framatome's share
capital following a related restructuring of Framatome's capital. The
transaction will result in a one-time after-tax capital gain for Alcatel in 1999
of approximately E 300 million.
RECENT EVENTS
Liquidity and Capital Resources for the First Nine Months of 1999
Alcatel's discussion and analysis of its unaudited results of operations
for the first six months of 1999 and the first nine months of 1999 are available
in the Current Reports on Form 6-K which Alcatel has incorporated by reference
into this proxy statement/prospectus.
Alcatel's main source of cash during the first nine months of 1999 was net
cash provided by financing activities, which amounted to E 2,614 million during
the first nine months of 1999, compared with E (2,411) million during the first
nine months of 1998. Alcatel increased its short-term debt by E 1,738 million
during the first nine months of 1999, principally through the issuance of
E 1,756 million of commercial paper under its euro commercial paper program, and
increased its long-term debt by E 1,226 million, principally through the
issuance of E 1,000 million in 4.375% convertible bonds, maturing on February
17, 2009. Proceeds from the issuance of shares amounted to E 39 million during
the nine-month period ended September 30, 1999, and mainly consisted of the
issuance of shares in connection with capital increases reserved for employees
and shares issued upon the exercise of stock options.
Alcatel used E (2,432) million for investing activities during the first
nine months of 1999, compared with E 2,269 million provided by investing
activities during the first nine months of 1998. Cash provided by investing
activities during the first nine months of 1998 was elevated due principally to
cash proceeds, net of cash sold, from dispositions of previously consolidated
and unconsolidated companies, which amounted to E 2,868 million and were due
principally to the dispositions of Cegelec and ALSTOM (E 2,742 million). Cash
proceeds from dispositions amounted to E 343 million during the first nine
months of 1999. Cash expenditures for acquisitions of consolidated companies,
net of cash acquired, and for acquisition of unconsolidated companies increased
significantly to E (2,048) million during the first nine months of 1999 compared
with E (45) million during the first nine months of 1998. The increase in
expenditures was due principally to the acquisitions of Assured Access
Technology, Inc., Xylan Corporation and Internet Devices, Inc. in 1999. Capital
expenditures for new plant and equipment (including intangible assets but
excluding goodwill) amounted to E (763) million for the first nine months of
1999, compared with E (604) million for the first nine months of 1998.
Net cash provided by operating activities amounted to E 123 million for
the first nine months of 1999, compared to E (180) million used in the first
nine months of 1998. This change was due principally to an increase in working
capital provided by operations to E 837 million from E 521 million during the
corresponding periods. 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 nine months of 1999 and 1998 is not
representative of full year results.
Alcatel's cash and cash equivalents amounted to E 4,146 million at
September 30, 1999, compared with E 3,813 million at the end of 1998. The net
increase in cash and cash equivalents amounted to
20
<PAGE> 28
E 333 million in the first nine months of 1999, due principally to the proceeds
of the debt issuances described above. At September 30, 1999, Alcatel had
approximately E 1.8 billion in unused committed credit lines with numerous
banks, denominated in francs and various other currencies. Total financial debt
at September 30, 1999 amounted to E 7,396 million, compared with E 4,105 million
at December 31, 1998. Alcatel's ratio of net debt (short-term and long-term
debt, net of short-term investments and cash and cash equivalents, and
receivables from the disposal of assets) to shareholders' equity was 2.9%, 27.1%
and 33.6% at December 31, 1998, 1997 and 1996, respectively and increased to
30.7% at September 30, 1999. This increase was due principally to the debt
issuances described above.
Change in accounting policy
On June 22, 1999, the French Ministry of the Economy, Finance and Industry
approved Regulation No. 99-02, proposed by the Comite de Reglementation
Comptable, the French governmental agency responsible for regulating accounting
standards. Regulation No. 99-02 sets forth new accounting standards for the
preparation of consolidated financial statements under French GAAP. Adoption of
the new standards is optional for financial statements for the year ending
December 31, 1999, and will be compulsory for financial statements for all
French companies (other than certain financial institutions) for periods ending
after January 1, 2000. As Alcatel announced on September 9, 1999, its board of
directors has opted to apply these new standards for Alcatel's financial
statements for the year ending December 31, 1999. The adoption of these
standards will not affect Alcatel's results of operations or shareholders'
equity as reported under U.S. GAAP. These new standards impact Alcatel's
financial statements in four principal ways:
(1) adoption of "pooling of interests" accounting treatment for
stock-for-stock acquisitions. In its Consolidated Financial
Statements for the year ended December 31, 1998, Alcatel accounted for
its acquisition of DSC Communications Corporation under the purchase
accounting method. Under the new method, Alcatel will account for
future stock-for-stock acquisitions, as well as the DSC acquisition,
under the pooling of interests accounting method.
(2) goodwill will no longer be charged to shareholders' equity. For
periods ending prior to December 31, 1999, Alcatel charged immediate
write-offs of goodwill in connection with stock-for-stock acquisitions
against shareholders' equity. Under the new method, such acquisitions
will be accounted for with recognition of goodwill as an asset.
(3) new method for accounting for similar asset exchanges. For periods
ending prior to December 31, 1999, Alcatel accounted for exchanges of
similar assets at book value. Under the new method, Alcatel will
account for such exchanges as the disposal of one asset and the
acquisition of another. The principal effect of the adoption of this
point will be on the treatment of Alcatel's investment in Thomson-CSF
in 1998.
(4) one time income statement impact of "purchased R&D" related to the
cash acquisitions. For periods ending prior to December 31, 1999,
Alcatel considered research and development in process as goodwill.
Under the new method, a portion of the purchase price will be
allocated to purchased research and development.
Alcatel expects that the adoption of these new accounting standards will
cause its net income for the year ending December 31, 1999 to be approximately
E (360) million less than it would have been under Alcatel's former accounting
standards, due principally to the purchased R&D standard (E (330) million). The
adoption will also cause Alcatel's shareholders' equity to be approximately
E 0.9 billion greater. Alcatel's unaudited interim results for the six months
ended June 30, 1999 and the nine months ended September 30, 1999, included or
incorporated by reference into this proxy statement/prospectus, were prepared
under Alcatel's former accounting standards and do not reflect this new
treatment. Alcatel does not expect to restate its financial statements for
periods ending prior to December 31, 1999, but expects to
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detail the effect of the adoption of new accounting standards in the notes to
the consolidated financial statements for the year ending December 31, 1999.
Alcatel's estimates of the financial impact of the adoption these accounting
standards are forward-looking statements which are based on Alcatel's current
expectations, estimates and assumptions regarding its full year results. These
estimates are subject to change due to variations in exchange rates and other
external factors and may be revised in connection with the preparation and audit
of Alcatel's consolidated financial statement for the year ending December 31,
1999.
Alcatel's board of directors has also adopted a change in valuation and
presentation of pension accounting to conform its policies to U.S. GAAP. Under
the change, certain charges which were previously recorded under income from
operations are now recorded under financial income (loss). This adjustment
increased Alcatel's income from operations for the first half of 1999 by E 26
million, and increased its restated income from operations for the first half of
1998 by E 23 million. The change in valuation of pension accounting increased
Alcatel's other revenue by E 67 million. These changes are detailed in Notes
1(b), 3, 4 and 5 to the Unaudited Interim Consolidated Financial Statements.
Year 2000 Readiness Update
Alcatel 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. This plan is described in detail in Alcatel's 1998
Annual Report on Form 20-F, which is incorporated by reference into this proxy
statement/prospectus. The following paragraph updates the information provided
in the 1998 Annual Report on Form 20-F:
During the first quarter of 1999, Alcatel completed its product assessment
program and, by the end of the third quarter of 1999, completed implementation
of its solutions at locations where required by customers, except where
customers required later implementation. Alcatel currently estimates that the
total cost of implementing Year 2000 solutions for Alcatel products will be
approximately E 137 million from the beginning of 1998, of which approximately
85% had been spent by September 30, 1999. Alcatel's Information Systems staff
completed its repair or replacement of Alcatel's principal internally-developed
information systems in the second quarter of 1999. Alcatel tests all systems
prior to redeployment of upgraded systems into production, and completed
substantially all of such testing in the third quarter of 1999. Alcatel
estimates that additional costs to update its internal information systems will
be approximately E 50 million, of which approximately 85% had been spent by
September 30, 1999. At September 30, 1999, approximately 3% of Alcatel's staff
of approximately 20,000 software engineers was dedicated to the Year 2000 issue.
LEGAL PROCEEDINGS
Alcatel is involved in a number of legal proceedings incidental to the
normal conduct of its business. Management does not believe that aggregate
liabilities relating to such proceedings are likely to be material to the
business of Alcatel taken as a whole. In addition, Alcatel is involved in the
following legal proceedings. Alcatel's management has not judged it necessary to
create provisions in its financial statements for these legal proceedings.
France Telecom. Alcatel CIT, a subsidiary of Alcatel, has been since 1993
the subject of an investigation by a French investigative magistrate of alleged
"overbillings" of France Telecom based on audits of production costs which were
incurred in 1988 in the Transmission Systems division and in 1991 in the
Switching Systems division. Following an independent audit, Alcatel CIT paid
France Telecom E 9.5 million in 1993 in settlement of the alleged overbilling by
the Transmission Systems division. On October 26, 1994, France Telecom filed a
civil complaint with the investigative magistrate in connection with the alleged
overbilling by the Switching Systems division, without quantifying the amount of
the alleged damages. The investigation on alleged overbillings is ongoing. In
April 1999, Alcatel learned that the
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investigation has been extended to determine whether corporate funds of Alcatel
CIT and Alcatel were misused. Both Alcatel CIT and Alcatel have filed civil
complaints to preserve their rights in this respect. Alcatel has not, however,
totally excluded the possibility that these proceedings could have an impact on
its consolidated financial position or results of operations. The future impact,
if any, is not presently quantifiable.
Certain former officers of Alcatel, investigated in connection with
alleged abuse of corporate funds and other charges, were found by the Court of
Appeals to be guilty. They have filed an appeal with the Cour de Cassation, the
highest court of justice in France.
DSC. Following an announcement by Alcatel that its 1998 operating margin
would fall short of expectations, the market price of Alcatel's stock on the
Paris Bourse dropped 38% on September 17, 1998. Since September 18, 1998, at
least twenty-seven purported class action lawsuits (the "Actions") have been
filed against Alcatel challenging the accuracy of certain public disclosures
made by Alcatel regarding its financial condition during the first nine months
of 1998. Twenty-five of the Actions were filed in various United States District
Courts, and one was filed in the Delaware Court of Chancery (the "Chancery
Action"). These twenty-six Actions asserted various claims under the federal
securities laws (the "Federal Actions") and sought damages in unspecified
amounts. In addition, one Action, entitled Alaimo, et al. v. Alcatel Alsthom, et
al., No. 296-1469-98, was filed in the District Court of Collin County, Texas
(the "Alaimo Action") against Alcatel, two of its subsidiaries, Alcatel USA Inc.
and Alcatel Network Systems, Inc. ("ANS"), and two of ANS's officers. The Alaimo
Action asserts claims under the common law of Texas and the Texas Securities Act
and seeks damages in an unspecified amount as well as injunctive relief. On
October 15, 1998, defendants in the Alaimo Action removed the case to the United
States District Court for the Eastern District of Texas. On October 21, 1998,
plaintiffs moved to remand the Alaimo Action back to the District Court of
Collin County. The motion to remand was denied on May 3, 1999.
Twenty-three of the Actions purport to be brought on behalf of a class
consisting of persons who acquired Alcatel ADSs in connection with Alcatel's
acquisition of DSC in September 1998 (the "DSC Class"). In addition, three
Actions purport to have been brought on behalf of a class consisting of persons
who purchased Alcatel ADSs from March 19, 1998 through September 17, 1998 (the
"Alcatel Class") and one Action purports to have been brought on behalf of
persons who acquired call and put options on Alcatel ADSs between March 19, 1998
and September 17, 1998.
On February 11, 1999, the Judicial Panel on Multidistrict Litigation
ordered that the Alaimo Action and the Federal Actions, with the exception of
the Chancery Action, be consolidated for all pretrial proceedings in the United
States District Court for the Eastern District of Texas (the "Consolidated
Action"). On May 3, 1999, the Court appointed Reynold M. Sachs, Atalanta
Investment Company, Inc. and ABC Arbitrage as co-lead plaintiffs for the
purported DSC Class in the Consolidated Action. Also on May 3, 1999, the Court
appointed Donald Austen, Dye Van (David) Vu and Katama Trading, L.L.C. as
co-lead plaintiffs for the purported Alcatel Class (including persons who
acquired call and put options) in the Consolidated Action.
On May 24, 1999, two consolidated amended class action complaints were
filed in the Consolidated Action, one by the lead plaintiffs for the purported
DSC Class and one by the lead plaintiffs for the purported Alcatel Class.
Defendants in the Consolidated Action moved to dismiss the DSC Class
consolidated amended complaint of the purported DSC Class (the "DSC Class
Complaint") on June 23, 1999 and the consolidated amended complaint of the
purported Alcatel Class (the "Alcatel Class Complaint") on July 12, 1999 on the
grounds that the complaints fail to state a claim upon which relief may be
granted and for failure to plead fraud with particularity. On November 18, 1999,
the Court issued a Memorandum Opinion and Order granting the motion to dismiss
the Alcatel Class Complaint and granting the plaintiffs leave to file an amended
complaint by December 17, 1999. Also on November 18, 1999, the Court issued a
Memorandum Opinion and Order granting in part and denying in part the motion to
dismiss the DSC Class Complaint and granting the plaintiffs leave to file an
amended complaint by December 17, 1999.
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On May 10, 1999, defendants in the Chancery Action moved to dismiss that
action for lack of personal jurisdiction over the defendants and under
principles of forum non conveniens. Alternatively, defendants requested that the
Chancery Action be stayed in favor of the Consolidated Action.
On December 10, 1999, the Court of Chancery dismissed the claims against
Alcatel's officers and directors for lack of personal jurisdiction and stayed
the action as against Alcatel pending the outcome of the Consolidated Action.
Eutelsat. Alcatel is defending a claim made by Eutelsat for approximately
E 200 million in damages arising from the failure to deliver a satellite on a
timely basis. This failure occurred as a result of the satellite's destruction
during testing at a French facility prior to the acquisition of such facility
from Aerospatiale. The destruction of the satellite allegedly occurred as a
consequence of gross negligence. If damages are awarded on this basis, Alcatel
intends to pursue remedies against Aerospatiale. This action is being heard in
an ICC arbitration proceeding in Paris.
Packet Engines. Alcatel, certain of its U.S. subsidiaries and certain of
its senior officers (including Messrs. Tchuruk and Halbron) are defending
actions in the United States Federal District Court in Spokane, Washington
brought by certain former officers of Packet Engines. In a first action,
fourteen former employees of Packet Engines are seeking unspecified damages as a
result of alleged misrepresentations made regarding Alcatel's business plan for
Packet Engines at the time of its acquisition by Alcatel. This action also
alleges wrongful termination of employment of the plaintiffs. A second action
has been brought by the former Chief Executive Officer of Packet Engines and
makes allegations similar to those made in the first action. Damages sought in
this second action total $350 million. Certain ancillary claims are also
pending.
* * *
Alcatel is vigorously defending each of the actions to which it is a
party, and, in the opinion of Alcatel, the actions lack merit. However, no
assurance can be given that these actions will be decided in favor of the
defendants. Adverse judgment in all or any of these actions could have a
material adverse effect on Alcatel's financial position and results of
operations.
GENESYS
Genesys is a leading provider of enterprise-wide interaction management
solutions for both traditional brick and mortar organizations and e-Businesses.
Genesys' products are designed to allow an organization to optimally manage its
customer interactions and employee communications to increase productivity,
lower costs and achieve greater customer satisfaction and loyalty. Genesys
believes that successful, long-term customer relationships are the result of
managing and optimizing the individual interactions that transpire between an
organization and its customers. To accomplish this, Genesys' software solutions,
rooted in computer telephony and integration technology, extend the capabilities
of an organization's internet, computer, telecommunications and database
systems, bringing together what were once disparate technologies. Genesys
anticipates that as customer interactions are increasingly viewed as strategic
to an organization's mission, contact center capabilities will be extended
beyond traditional agent, site and switch boundaries, transforming the entire
enterprise into a customer interaction center.
The Genesys Suite is made up of two integrated elements: an open,
scalable, standards-based framework, and a broad integrated suite of
applications, which enable Internet and telephony-based interactions, enterprise
routing, network routing, outbound dialing, workforce management capabilities
and monitoring and reporting applications. With the ability to integrate
multiple communications media, the Genesys Suite supports customer interactions
via e-mail, the Internet and traditional voice, thereby enabling consistent
customer contact regardless of the communications channel. The open, standards-
based nature of Genesys' framework product allows an organization to leverage
its investments in its
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existing telecommunications and computing infrastructure, software applications
and employee training. Genesys' products support the integration of internally
developed or commercially available business applications, such as help desk or
sales force automation. In order to assist customers in realizing the maximum
benefit from its solutions, Genesys augments its software products with a range
of professional service offerings, including implementation, training and
support services. As of June 30, 1999, Genesys has licensed its products to
approximately 650 end-users worldwide.
EDEN MERGER CORP.
Eden Merger Corp. was incorporated in the State of California in September
1999 for the purpose of consummating the merger. Eden Merger Corp. has limited
assets, has no operations and has not carried on any activities other than those
which are related to its formation and its execution of the merger agreement.
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THE SPECIAL MEETING
DATE, TIME AND PLACE
The enclosed proxy is solicited by and on behalf of Genesys' board of
directors for use at the special meeting of Genesys shareholders, which will be
held at 11:00 AM local time on January 21, 2000, at 1155 Market Street, San
Francisco, CA 94103. That meeting may be referred to as the "special meeting" in
this proxy statement/prospectus.
PURPOSE
At the special meeting, Genesys shareholders of record will be asked to
consider and vote upon the merger proposal and transact such other business as
may properly come before the special meeting.
RECORD DATE
Genesys' board of directors has fixed the close of business on December
16, 1999 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the special meeting. Only holders of record of
Genesys common stock at the close of business on the record date are entitled to
notice of and to vote at the special meeting. As of the record date, there were
26,228,284 outstanding shares of Genesys common stock held by 227 holders of
record.
QUORUM AND REQUIRED VOTE
The presence, in person or by proxy, of the holders of at least a majority
of the shares entitled to vote at the special meeting is necessary to constitute
a quorum. Pursuant to the California Corporations Code, or the CCC, and Genesys'
restated articles of incorporation and bylaws, approval of the merger agreement
requires the affirmative vote of at least a majority of the outstanding shares
of Genesys common stock entitled to vote at the special meeting. It is expected
that all 7,431,335 of the shares of Genesys common stock beneficially owned by
Genesys' directors and executive officers on the record date (representing
approximately 27.4% of the total number of shares of Genesys common stock
outstanding on such date) will be voted for approval and adoption of the merger
agreement. Genesys' officers and directors are contractually obligated to vote
in favor of the merger a total of 6,505,916 shares beneficially owned by them,
which represents approximately 26.2% of the outstanding shares of Genesys common
stock.
ABSTENTIONS AND BROKER NONVOTES
Only shares affirmatively voted for approval of the merger agreement,
including shares represented by properly executed proxies that do not contain
voting instructions, will be counted as votes "for" the merger agreement.
Brokers who hold shares of Genesys common stock in street name for a
customer who is the beneficial owner of those shares may not give a proxy to
vote the customer's shares without specific instructions from the customer.
These nonvoted shares are referred to as broker nonvotes. Genesys common stock
held in street name will only be voted if the broker receives a completed voter
instruction form from the beneficial owner of those shares. A voter instruction
form has been sent to Genesys shareholders with this proxy statement/prospectus.
Abstentions and broker nonvotes will be included in determining the
presence of a quorum, but will have the same effect as voting against the merger
agreement.
SECURITY OWNERSHIP OF MANAGEMENT
As of the record date, Genesys' directors and executive officers and their
affiliates owned 7,437,335 shares of Genesys common stock (approximately 27.4%
of the Genesys common stock outstanding).
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SOLICITATION OF PROXIES AND EXPENSES
Shares of Genesys common stock represented by properly executed proxies
received in time for the special meeting will be voted at the special meeting in
the manner specified in the proxy. Proxies that are properly executed but do not
contain instructions will be voted "FOR" approval and adoption of the merger
proposal. It is not expected that any matter other than approval and adoption of
the merger proposal will be brought before the special meeting, but, if other
matters are properly presented, the persons named in such proxy will have
authority, unless authority to do so is withheld in the proxy, to vote in
accordance with their judgment on any other matter, including without
limitation, any proposal to adjourn or postpone the special meeting or otherwise
concerning the conduct of the special meeting.
A shareholder may revoke a proxy at any time prior to its exercise by (i)
delivering, prior to the special meeting, to Genesys' Corporate Secretary, a
written notice of revocation bearing a later date or time than the proxy; (ii)
delivering to Genesys' Corporate Secretary, a duly executed proxy bearing a
later date or time than the revoked proxy; or (iii) attending the special
meeting and voting in person. Attendance at the special meeting will not by
itself constitute a revocation of a proxy.
Genesys will bear the cost of the solicitation of proxies from its
shareholders and the cost of printing and mailing this proxy
statement/prospectus. In addition to the solicitation by mail, Genesys'
directors, officers and employees may solicit proxies from its shareholders in
person or by telephone, telegram or electronically. Those directors, officers
and employees will not be additionally compensated for that solicitation but may
be reimbursed for out-of-pocket expenses in connection therewith. Genesys has
also retained a proxy solicitation firm, Corporate Investor Communications,
Inc., to aid it in the solicitation process. Genesys will pay that firm a fee of
$6,500, plus reasonable expenses. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of shares held of record by such
persons. Genesys will reimburse those custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses in connection therewith.
DISSENTERS' RIGHTS
If the merger is approved and consummated, dissenters' rights may be
available to holders of Genesys common stock who exercise those rights in
accordance with Chapter 13 of the California Corporations Code. THE PROCEDURE
SET FORTH IN CHAPTER 13 MUST BE FOLLOWED EXACTLY OR ANY DISSENTERS' RIGHTS MAY
BE LOST. THE INFORMATION SET FORTH BELOW IS A GENERAL SUMMARY OF DISSENTERS'
RIGHTS AND, AS A SUMMARY, IS QUALIFIED AND NOT A SUBSTITUTE FOR THE PROVISIONS
OF CHAPTER 13, A COPY OF WHICH IS ATTACHED HERETO AS ANNEX D. SHAREHOLDERS
SHOULD READ ANNEX D IN ITS ENTIRETY FOR MORE COMPLETE INFORMATION CONCERNING
DISSENTERS' RIGHTS.
Chapter 13 requires, among other things, that:
- the dissenting shareholder send a demand for the purchase of his or her
shares of Genesys common stock to Genesys;
- the demand specifies the number of shares held of record by the
shareholder which the shareholder demands be purchased and contains a
statement of what the shareholder believes to be the fair market value
of those shares as of September 27, 1999. The statement of fair market
value constitutes an offer by the shareholder to sell the shares at
that price;
- Genesys, or Genesys' transfer agent, receives the demand on or before
the date of the special meeting;
- demands for payment are filed with respect to 5% or more of the
outstanding shares of Genesys common stock; and
- the shareholder seeking dissenters' rights vote against the merger
proposal.
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If dissenters' rights are available, a dissenting Genesys shareholder will
be entitled to receive a cash payment equal to the fair market value of his or
her Genesys common stock. The fair market value will be determined as of
September 27, 1999, the day before the public announcement of the merger
agreement (excluding any appreciation or depreciation as a consequence of the
proposed merger, but adjusted for any stock split, reverse stock split or share
dividend which becomes effective after that date).
In order to be entitled to exercise dissenters' rights, a shareholder of
Genesys must vote "against" the merger proposal. Thus, any shareholder who
wishes to dissent and executes and returns a proxy in the accompanying form must
specify that such holder's shares are to be voted "against" the merger proposal.
If the shareholder returns a proxy without voting instructions or with
instructions to vote "for" or to "abstain" from voting on the merger proposal,
such holder's shares will not be voted against the merger proposal and the
shareholder will lose his or her dissenters' rights.
If the merger agreement is approved by Genesys' shareholders and the
number of dissenting shares is greater than 5% of the outstanding shares of
Genesys stock, Genesys will have ten days to mail notice of such approval to
each Genesys shareholder, together with a copy of Sections 1300 to 1304 of
Chapter 13 of the California Corporations Code, a statement of the price
determined by Genesys to represent the fair market value of the dissenting
shares as of September 27, 1999, and a brief description of the procedure to be
followed if the shareholder desires to exercise his or her dissenters' rights.
The statement of fair market value constitutes an offer by Genesys to buy the
shares at that price.
Within 30 days after the date on which notice of the approval of the
merger agreement is mailed, the dissenting shareholder must surrender to
Genesys, at its principal office or at the office of Genesys' transfer agent,
the certificates representing the dissenting shares to be stamped or endorsed
with a statement that they are dissenting shares or to be exchanged for
certificates of appropriate denomination so stamped or endorsed. Any shares of
Genesys stock that are transferred prior to their submission for endorsement
lose their status as dissenting shares.
If Genesys and the dissenting shareholder agree that the surrendered
shares are dissenting shares and agree upon the price of the shares, the
dissenting shareholder will be entitled to the agreed price with interest
thereon at a rate of 10% per year. Payment by Genesys of the fair market value
of the dissenting shares shall be made by the later of:
- 30 days after the fair market value has been agreed upon; or
- 30 days after any statutory or contractual conditions to the merger
have been satisfied.
Any Payment by Genesys in respect of the dissenting shares is subject to:
- the restrictions imposed under California law on the ability of Genesys
to purchase its outstanding shares; and
- the surrender of the certificates representing the dissenting shares of
Genesys' common stock, unless provided otherwise by agreement.
If Genesys and the dissenting shareholder disagree on whether the shares
surrendered are dissenting shares or on the fair market value of the dissenting
shares, the dissenting shareholder may file a complaint in the Superior Court of
San Francisco County, California, or in another proper county, requesting that
the court resolve either or both of these issues. The complaint must be filed
within six months of the date notice of the approval of the merger proposal is
mailed by Genesys. If the complaint is not filed within the specified six-month
period, the shareholder's dissenters' rights will be lost. If the fair market
value of the dissenting shares is at issue, the court will determine, or will
appoint one or more impartial appraisers to determine, the fair market value.
Any such determination of the fair market value may be more than, less than or
equal to the fair market value of the shares of Genesys common stock as of the
date of the special meeting or as of the effective time of the merger.
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No dissenting shareholder who has elected to proceed under Chapter 13 of
the California Corporations Code may withdraw his or her dissent or demand for
payment unless Genesys consents to such withdrawal.
Alcatel's transfer agent is Societe Generale, and the transfer agent's
address is Issuers Division, Securities Department, B.P. 81236, 44312 Nantes,
France.
AVAILABILITY OF INDEPENDENT ACCOUNTANTS
Representatives of Arthur Andersen LLP, independent auditors of Genesys,
will be present at the Special Meeting, will have the opportunity to make a
statement should they desire to do so and are expected to be available to
respond to appropriate questions.
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THE MERGER
GENERAL
Upon consummation of the merger, Eden Merger Corp., a newly organized and
wholly owned subsidiary of Alcatel, will be merged with and into Genesys, with
Genesys continuing as the surviving corporation and a wholly owned subsidiary of
Alcatel.
BACKGROUND OF THE MERGER
Since late 1997, Alcatel and Genesys have had a commercial relationship
with one another. Since that time, Genesys and Alcatel, acting directly or
through its subsidiaries, have entered into a series of customary commercial
contracts.
In July, 1999, Alcatel contacted Genesys to propose a meeting to discuss
the possibility of a strategic alliance between Alcatel and Genesys involving
co-development, co-marketing and co-branding of Genesys call center products.
On July 22, 1999, Ori Sasson, Genesys' President and Chief Executive
Officer, Chris Brennan, Genesys' Chief Financial Officer, and Gregory Shenkman,
Genesys' Chairman of the Board, met with representatives from Genesys' financial
advisors, Goldman Sachs & Co., to discuss Genesys' strategic alternatives and
the possibility of structuring a business combination. From early August 1999
until early September 1999, discussions were held with several other companies
which had been identified by Genesys as potential business combination
candidates. These companies expressed either no interest or varying degrees of
interest in pursuing further discussions with Genesys with respect to a possible
business combination with Genesys. None of the discussions with these companies
resulted in a definitive proposal for such a business combination.
On August 5, 1999, Mr. Brennan and Alec Miloslavsky, Genesys' Chief
Technology Officer, met with Alan Mottram, President of Alcatel's Network
Application Division, Olivier Baujard, President of Alcatel's Enterprise Systems
Division, and Ludo Gys, Alcatel's Vice President of Business Development for
Alcatel's Network Application Division, at Alcatel's Paris office to discuss the
possibility of a strategic alliance between Alcatel and Genesys. At that
meeting, the merits of combining the companies also were discussed. The parties
agreed to reflect upon the discussions and meet at a later date to pursue the
matter further.
On August 17, 1999, both companies signed nondisclosure agreements, and,
on August 18, 1999, Mr. Mottram and Peter Campbell, Financial Analyst of
Alcatel, along with representatives from Alcatel's financial advisors, JP
Morgan, met with Messrs. Sasson, Miloslavsky and Brennan of Genesys and
representatives from Goldman Sachs. Messrs. Sasson, Miloslavsky and Brennan made
a presentation to Messrs. Mottram and Campbell, and representatives of both
companies discussed Genesys' business operations and strategy and how a business
combination could benefit both companies by creating important product
synergies.
On September 13, 1999, Alcatel submitted an acquisition proposal to
Genesys whereby Alcatel would acquire all of the outstanding common stock of
Genesys in exchange for Alcatel ADSs, subject to additional terms and conditions
to be negotiated. The proposal indicated that the Genesys research and
development function and its management would remain largely unmodified and that
the United States sales and solutions marketing would stay under Genesys' full
control. International sales would be carried out through Genesys' or Alcatel's
international sales force.
On September 14, 1999, Genesys' board of directors met telephonically
along with representatives from Goldman Sachs and Wilson Sonsini Goodrich &
Rosati, Genesys' outside legal counsel, to discuss the proposed acquisition. The
board determined that management should continue to pursue and evaluate the
proposed acquisition.
From September 16 through September 19, 1999, representatives of both
companies met to discuss further the business combination and to negotiate the
terms of the transaction. Genesys
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management made presentations regarding aspects of Genesys' products, strategy
and future prospects. During this period, Alcatel also began legal and financial
due diligence of Genesys, which continued through September 27.
On September 19, 1999, Genesys' board of directors held a special
telephonic meeting to discuss the status of the proposed transaction with
Genesys' management and its legal and financial advisors. The board of directors
considered the proposed transaction and determined that management should
continue to pursue and evaluate the proposed business combination.
During the period from September 20 through September 27, 1999:
- Genesys conducted legal and financial due diligence of Alcatel;
- Genesys' and Alcatel's financial advisors continued to analyze the
proposed transaction;
- management of Genesys and Alcatel met to discuss combining the
operations of the two companies, including (a) intellectual property
issues, (b) business and sales cycles, (c) sales forecast methodology
and (d) channel management;
- negotiations continued on the terms and conditions of the merger
agreement and other ancillary agreements; and
- management of Genesys and Alcatel discussed employee retention issues,
including Alcatel's request that employment contracts with certain key
individuals be signed to ensure their continued employment with Genesys
following the merger. Both parties agreed that they would seek to have
Mr. Sasson, Mr. Miloslavsky and Mr. Brennan sign employment agreements.
On September 26, 1999, Genesys' board of directors met again. At this
meeting, Wilson Sonsini Goodrich & Rosati made a presentation to Genesys' board
of directors regarding the merger agreement and ancillary agreements governing
the proposed transaction, and Goldman Sachs made a financial presentation to
Genesys' board of directors. In addition, Wilson Sonsini Goodrich & Rosati
reviewed with Genesys' board of directors their fiduciary duties. Genesys
management, along with its financial, accounting and legal advisors, updated the
directors on their respective due diligence investigations of Alcatel and
reviewed the terms of the proposed transaction, based upon the proposed merger
agreement and other materials previously circulated to the board of Genesys.
This meeting included a discussion with Genesys management and Genesys' legal
and accounting advisors of the material terms of the proposed transaction,
including corporate governance and the tax and accounting treatment of the
contemplated transaction. The board of directors discussed the proposed
transaction and determined to pursue and evaluate the proposed transaction
further.
On September 27, all outstanding issues with respect to Genesys' due
diligence review of Alcatel were resolved. Also on September 27, all outstanding
transaction issues were finalized. Alcatel's board of directors met in Paris and
approved the transaction with Genesys.
Genesys' board of directors met again to consider the proposed transaction
on September 27. Goldman Sachs delivered an oral opinion, subsequently confirmed
in writing as described below, to Genesys' board of directors to the effect
that, as of September 27, 1999, the consideration to be received by the holders
of outstanding shares of Genesys common stock pursuant to the merger agreement
was fair from a financial point of view to those holders. This meeting concluded
with the board of directors of Genesys unanimously voting to approve the
acquisition and the merger agreement and related documents and to recommend that
Genesys' shareholders adopt the merger agreement and approve the merger.
Following the approval by Genesys' board of directors, Genesys, Alcatel
and Eden Merger Corp. entered into the merger agreement on September 27, 1999. A
press release stating the general terms of the merger agreement was released
before the markets opened in Paris and New York on September 28, 1999.
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<PAGE> 39
ALCATEL'S REASONS FOR THE MERGER
Alcatel has identified several potential benefits of the merger. These
include:
- providing Alcatel with a leading worldwide position in computer
telephony integration and enterprise interaction management solutions;
- enhancing Alcatel's existing position in the call center business by
providing Genesys' software-based interaction management technology to
existing Alcatel customers;
- in the field of intelligent network systems, facilitating the
development of end-to-end networked customer contact solutions that
Internet service providers and worldwide carriers can offer to their
enterprise clients; and
- complementing Alcatel's recent acquisitions in the United States and
further positioning Alcatel to capitalize on growth in the demand for
Internet protocol-based voice-data integration in the U.S.
Additionally, Alcatel considered various other matters, including industry
trends towards voice-data convergence, recent consolidation among industry
participants, Genesys' financial condition, the recent trading history of
Genesys common stock and the specific terms of the merger agreement. In light of
the wide variety of factors considered in evaluating the merger, Alcatel did not
find it practical to and did not quantify or otherwise assign relative weights
to the specific factors it considered.
GENESYS' REASONS FOR THE MERGER
Genesys' board of directors has unanimously determined that the merger
agreement and the transactions contemplated thereby, including the merger, are
fair to and in the best interests of the Genesys shareholders. In the course of
reaching its decision to approve the merger agreement and the merger, Genesys'
board of directors consulted with Genesys' management and Genesys' outside legal
counsel and financial advisors as described above, and considered the following
factors:
- the financial condition, results of operations, businesses and
prospects of Genesys before and after giving effect to the merger and
the nature of its industry;
- historical information concerning the businesses operations, positions
and results of operations, technology and management style, competitive
position, industry trends and prospects of Genesys and Alcatel;
- current and historical market prices, volatility and trading data for
Genesys and Alcatel;
- information and advice based on the respective due diligence
investigations by members of Genesys' board of directors and management
and Genesys' legal, financial and accounting advisors concerning the
business, technology, services, operations, properties, assets,
financial condition, operating results and prospects of Alcatel, trends
in Alcatel's business and financial results and capabilities of
Alcatel's management team;
- possible alternatives to the merger, including, without limitation,
merging with another company or continuing to operate Genesys as an
independent entity, and the risks associated therewith;
- Genesys' competition, the relative sizes of other participants in the
industry in which it operates and the available capital and other
resources of such other participants as compared to the available
capital and other resources of Genesys. In particular, several of these
competitors have longer operating histories, significantly greater
resources, greater name recognition and a larger customer base than
Genesys. Genesys' board of directors considered the fact that as the
market for its products develops, companies with greater resources may
attempt to increase their presence in the market by acquiring or
forming strategic alliances with Genesys' competitors;
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<PAGE> 40
- rapid technological change, frequent new product introductions and
changes in customer requirements characterize the market for Genesys'
products. Genesys' board of directors considered the fact that Genesys'
future success will depend, in part, on its ability to develop and
market, on a timely and cost-effective basis, new products or new
product enhancements that respond to technological change, evolving
industry standards and the increasingly sophisticated needs of its
customers;
- the strategic fit between and complementary nature of the businesses of
Genesys and Alcatel. Through the purchase of Genesys, Alcatel will
acquire a leading, worldwide position in computer telephony integration
and interaction management solutions, providing a strong strategic fit
with its existing call center and intelligent network businesses.
Following the close of the transaction, Genesys will immediately gain
greater access to the carrier and Internet service provider market
segments, due to Alcatel's products and commercial presence in these
segments. Genesys will also benefit from easier access to the
medium-sized enterprise market, which is a core component of Alcatel's
enterprise business and for which the two companies plan to develop
optimized solutions. In addition, the two companies will further
develop Internet protocol converged voice and data solutions,
leveraging Genesys' infrastructure-independent position;
- the consideration to be received by Genesys' shareholders in the
merger; in particular the fact that upon consummation of the merger,
Genesys' shareholders will have an ongoing equity interest in a much
larger company with the prospects for improved long-term growth
potential and investment liquidity;
- Goldman Sachs' delivery of an opinion to the Genesys board of directors
to the effect that, as of September 27, 1999, the consideration to be
received by the holders of outstanding shares of Genesys common stock
pursuant to the merger agreement was fair from a financial point of
view to those holders, as described below;
- the impact of the merger on Genesys' customers and employees; and
- the fairness to Genesys of the terms of the merger agreement and
related agreements, which were the product of extensive arm's length
negotiations. In particular, Genesys' board of directors considered the
events triggering payment of the termination fee, the amount of the
termination fee and the limitations on the ability of Genesys to
negotiate with other companies regarding an alternative transaction,
and the potential effect these provisions would have on Genesys
receiving alternative proposals that could be superior to the merger.
Because Genesys' board of directors conducted an extensive review of
its strategic alternatives prior to entering into the merger agreement,
and because these provisions were required by Alcatel in order for it
to enter into the merger agreement, Genesys' board of directors
determined that the value for Genesys shareholders represented by the
merger justified these requirements.
Genesys' board of directors also identified and considered a number of
uncertainties and risks in its deliberations concerning the merger, including
the following:
- the risk that the potential benefits sought in the merger might not be
fully realized, if at all;
- the possibility that the merger might not be consummated and the effect
of the public announcement of the merger;
- the effect on Genesys' ability to retain and continue to develop
important relationships with certain of its strategic partners,
particularly Siemens, Lucent, Rockwell, NEC and other
telecommunications manufacturers;
- the effect on Genesys' ability to attract and retain key management,
sales and marketing and technical personnel; and
- the other risks associated with the businesses of Alcatel, Genesys and
the merged companies and the merger described in this proxy
statement/prospectus under "RISK FACTORS."
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<PAGE> 41
In view of the wide variety of factors considered by Genesys' board of
directors in its evaluation of the merger and the complexity of such matters,
Genesys' board of directors did not consider it practicable to, nor did it
attempt to, quantify, rank or otherwise assign relative weights to the specific
factors it considered in reaching its decision. Rather than assigning any
particular weight to any factor, Genesys' board of directors evaluated each of
the factors described above and reached a general consensus that the merger was
advisable and in the best interests of Genesys and its shareholders and other
constituencies. In considering the factors described above, individual members
of Genesys' board of directors may have given different weight to different
factors.
OPINION OF GENESYS' FINANCIAL ADVISOR
On September 27, 1999, Goldman Sachs delivered its oral opinion to the
board of directors of Genesys to the effect that, as of that date, the
consideration to be received by the holders of outstanding shares of Genesys
common stock pursuant to the merger agreement was fair from a financial point of
view to those holders. Goldman Sachs subsequently confirmed its oral opinion by
delivery of its written opinion dated September 27, 1999.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED SEPTEMBER 27,
1999, WHICH IDENTIFIES ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED AS ANNEX B AND
IS INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS. YOU SHOULD READ
THE OPINION IN ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other
things,
- the merger agreement;
- the Registration Statement on Form S-1, dated June 12, 1997, and the
prospectus, dated June 16, 1997, relating to the initial public
offering of Genesys;
- Annual Reports to Shareholders and Annual Reports on Form 10-K of
Genesys for the two fiscal years ended June 30, 1998;
- Annual Reports to Shareholders and Annual Reports on Form 20-F of
Alcatel for the five years ended December 31, 1998;
- selected interim reports to shareholders and Quarterly Reports on Form
10-Q of Genesys;
- selected Reports of Foreign Private Issuer on Form 6-K of Alcatel;
- selected other communications from Genesys and Alcatel to their
respective shareholders; and
- internal financial analyses and forecasts for Genesys prepared by its
management.
Goldman Sachs also held discussions with members of the senior management
of Genesys and Alcatel regarding the strategic rationale for, and the potential
benefits of, the transaction contemplated by the merger agreement and the past
and current business operations, financial condition and future prospects of
their respective companies. In addition, Goldman Sachs:
- reviewed the reported price and trading activity for Genesys common
stock and Alcatel ADSs and shares;
- compared selected financial and stock market information for Genesys
and Alcatel with similar information for other companies the securities
of which are publicly traded;
- reviewed the financial terms of recent business combinations in the
telecommunications industry specifically and in other industries
generally; and
- performed other studies and analyses Goldman Sachs considered
appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed this accuracy and
completeness for purposes of rendering its
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<PAGE> 42
opinion. Alcatel declined Goldman Sachs' request to make available Alcatel's
projections of expected future performance. Accordingly, Goldman Sachs' review
of Alcatel's estimated future financial performance for the purpose of rendering
Goldman Sachs' opinion was limited to discussions with senior managers of
Alcatel regarding certain research analysts' estimates of Alcatel's future
financial performance. Goldman Sachs did not make an independent evaluation or
appraisal of the assets and liabilities of Genesys or Alcatel or any of their
respective subsidiaries and was not furnished with any such evaluation or
appraisal. The advisory services referred to in this proxy statement/prospectus
and the opinion of Goldman Sachs were provided for the information and
assistance of the board of directors of Genesys in connection with its
consideration of the transaction contemplated by the merger agreement, and the
opinion does not constitute a recommendation as to how any holder of Genesys
common stock should vote with respect to the transaction.
The following is a summary of the material financial analyses used by
Goldman Sachs in connection with providing its opinion to the board of directors
of Genesys on September 27, 1999.
THE FOLLOWING SUMMARIES OF FINANCIAL ANALYSES INCLUDE INFORMATION
PRESENTED IN TABULAR FORMAT. YOU SHOULD READ THESE TABLES TOGETHER WITH THE TEXT
OF EACH SUMMARY.
(1) Historical Stock Trading Analysis. Goldman Sachs reviewed the
historical trading prices and volumes for Genesys common stock and Alcatel ADSs.
In addition, Goldman Sachs analyzed the per share consideration to be received
by holders of Genesys common stock pursuant to the merger agreement using the
implied price of $45.11 per share of Genesys common stock based on the September
24, 1999 closing price of $27.06 per Alcatel ADS, as compared to the market
price of Genesys common stock at specific dates. This analysis indicated that
the implied per share consideration of $45.11 would represent the following
premiums to recent market prices:
<TABLE>
<CAPTION>
RECENT PRICES PREMIUM
- ------------- -------
<S> <C>
Market Price as of September 24, 1999....................... 12%
Market Price One Week Prior to September 24, 1999........... 22%
Market Price One Month Prior to September 24, 1999.......... 42%
52-week high................................................ 9%
</TABLE>
(2) Historical Exchange Ratio Analysis. Goldman Sachs calculated the
ratio of the average market price of Genesys common stock to the average market
price of Alcatel ADSs during selected periods ending on September 24, 1999 as
follows:
<TABLE>
<CAPTION>
AVERAGE
PERIOD EXCHANGE RATIO
- ------ --------------
<S> <C>
1 Week ending September 24, 1999............................ 1.39
1 Month ending September 24, 1999........................... 1.18
3 Months ending September 24, 1999.......................... 1.05
6 Months ending September 24, 1999.......................... 0.90
1 Year ending September 24, 1999............................ 0.93
</TABLE>
(3) Selected Companies Analysis. Goldman Sachs reviewed and compared
selected financial information for Genesys and Alcatel to corresponding
financial information, ratios and public market multiples for the following six
publicly traded systems companies: Cisco Systems, Inc.; Telefonaktiebolaget LM
Ericsson; Lucent Technologies Inc.; Nokia Corporation; Nortel Networks
Corporation; and Siemens A.G.; and for the following three publicly traded
mid-tier telecommunications companies: ADC Telecommunications, Inc.; CIENA
Corporation; and Tellabs, Inc.; and for the following five publicly traded other
communications/technology companies: Aspect Telecommunications Corporation;
Comverse Technology, Inc.; International Business Machines Corporation; NCR
Corporation; and Rockwell International Corporation.
Goldman Sachs calculated and compared various financial multiples and
ratios for the selected companies. The multiples and ratios were calculated, as
applicable, using the closing price for Genesys
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<PAGE> 43
common stock, the Alcatel ADSs and the common stock or ADSs of each of the
selected companies on September 24, 1999 and were based on the most recent
publicly available information. Goldman Sachs' analyses of the selected
companies compared the following to the results for Genesys and Alcatel:
- estimated price/earnings multiples, or P/E Multiples, for calendar
years 1999 and 2000 (based on earnings estimates provided by
Institutional Brokers Estimate System, or IBES);
- estimated five-year per share/ADS growth rate (provided by IBES);
- ratio of 1999 price/earnings ratio to IBES estimated five-year per
share/ADS growth rate; and
- levered market capitalization, which is the market value of common
equity plus the book value of debt less the book amount of cash, as a
multiple of latest 12 months revenue.
The results of these analyses are summarized as follows:
<TABLE>
<CAPTION>
MID-TIER OTHER
TELE- COMMUNICATIONS/
SYSTEMS COMMUNICATIONS TECHNOLOGY
COMPANIES COMPANIES COMPANIES
-------------- -------------- ----------------
RATIO/MULTIPLE MEAN MEDIAN MEAN MEDIAN MEAN MEDIAN GENESYS ALCATEL
- -------------- ----- ------ ----- ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Estimated P/E Multiple for Calendar Year 1999... 48.3x 43.2x 36.3x 36.3x 26.7x 24.1x 47.4x 31.8x
Estimated P/E Multiple for Calendar Year 2000... 39.2x 34.7x 38.8x 35.0x 22.4x 21.3x 34.4x 22.0x
IBES Estimated 5-Year Per Share/ADS Growth
Rate.......................................... 21% 20% 28% 30% 19% 20% 50% 20%
1999 Price/Earnings Ratio to IBES Estimated
5-Year Per Share/ADS Growth Rate.............. 2.3x 2.2x 1.3x 1.2x 1.4x 1.2x 0.9x 1.6x
Levered Market Capitalization as a Multiple of
Latest 12 Months Revenue...................... 6.9x 4.3x 9.0x 10.7x 3.9x 2.9x 8.4x 1.4x
</TABLE>
(4) Selected Transactions Analysis. Goldman Sachs, using the implied
price of $45.11 per share of Genesys common stock based on the September 24,
1999 closing price of $27.06 per Alcatel ADS, compared certain information for
24 selected transactions in the communications technology industry that were
announced since 1996 with deal values in excess of $500 million to similar
information for the proposed merger, including:
- aggregate levered consideration as a multiple of latest 12 months
sales;
- aggregate equity consideration as a multiple of latest 12 months net
income; and
- aggregate equity consideration as a multiple of forward net income.
The results of these analyses are summarized below:
<TABLE>
<CAPTION>
COMMUNICATIONS
TECHNOLOGY INDUSTRY GENESYS/ALCATEL
------------------------------- ---------------
MULTIPLE RANGE MEAN MEDIAN
- -------- -------------- ----- ------
<S> <C> <C> <C> <C>
Aggregate Levered Consideration as a Multiple of
Latest 12 Months Sales.......................... 0.8x - 41.4x 9.1x 9.1x 9.6x
Aggregate Equity Consideration as a Multiple of
Latest 12 Months Net Income................... 16.7x - 189.1x 64.8x 54.3x 72.0x
Aggregate Equity Consideration as a Multiple of
Forward Net Income............................ 18.0x - 114.2x 41.4x 36.1x 48.4x
</TABLE>
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(5) Contribution Analysis. Goldman Sachs analyzed the relative
contribution of Genesys and Alcatel to the combined company resulting from the
merger, using Genesys' management's projections for Genesys, projections for
Genesys based on recently published research estimates, or Consensus
Projections, and projections for Alcatel based on recently published research
estimates, and compared the implied exchange ratios based upon these
contributions to the exchange ratio in the merger.
The results of these analyses using Genesys' management's projections are
summarized as follows:
<TABLE>
<CAPTION>
ALCATEL CONTRIBUTION GENESYS CONTRIBUTION
TO COMBINED TO COMBINED IMPLIED
COMPANY COMPANY EXCHANGE RATIO(1)
-------------------- -------------------- -----------------
<S> <C> <C> <C>
Estimated Sales for Calendar Year
1999(2)................................. 99.3% 0.7% 0.407
Estimated Sales for Calendar Year
2000(2)............................... 99.0% 1.0% 0.520
Estimated Earnings Before Interest and
Taxes, or EBIT, for Calendar Year
1999(2)............................... 96.9% 3.1% 1.190
Estimated EBIT for Calendar Year
2000(2)............................... 96.2% 3.8% 1.430
Estimated Net Income for Calendar Year
1999(2)............................... 96.5% 3.5% 1.155
Estimated Net Income for Calendar Year
2000(2)............................... 96.0% 4.0% 1.293
Equity Market Capitalization --
diluted(3)............................ 95.6% 4.4% 1.487
Pro Forma Shareholder Ownership for
Proposed Transaction at $27.06 Price
for Alcatel........................... 95.1% 4.9% 1.667
Pro Forma Shareholder Ownership for
Proposed Transaction at $21.00 Price
for Alcatel........................... 93.7% 6.3% 2.143
Pro Forma Shareholder Ownership for
Proposed Transaction at $39.00 Price
for Alcatel........................... 95.8% 4.2% 1.411
</TABLE>
- ---------------
(1) Implied exchange ratios calculated assuming Genesys valued at Alcatel
multiple.
(2) Financial data for Alcatel based on Credit Suisse First Boston's research,
dated August 30, 1999. Financial data for Genesys per Genesys' management.
(3) Assumes 100% stock transaction with tax-free roll-over of options.
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<PAGE> 45
The results of these analyses using Consensus Projections are summarized
as follows:
<TABLE>
<CAPTION>
ALCATEL CONTRIBUTION GENESYS CONTRIBUTION
TO COMBINED TO COMBINED IMPLIED EXCHANGE
COMPANY COMPANY RATIO(1)
-------------------- -------------------- ----------------
<S> <C> <C> <C>
Estimated Sales for Calendar Year
1999(2)................................. 99.3% 0.7% 0.399
Estimated Sales for Calendar Year
2000(2)............................... 99.1% 0.9% 0.486
Estimated EBIT for Calendar Year
1999(2)............................... 97.3% 2.7% 1.059
Estimated EBIT for Calendar Year
2000(2)............................... 97.1% 2.9% 1.142
Estimated Net Income for Calendar Year
1999(2)............................... 97.0% 3.0% 1.014
Estimated Net Income for Calendar Year
2000(2)............................... 97.0% 3.0% 1.018
Equity Market Capitalization --
diluted(3)............................ 95.6% 4.4% 1.487
Pro Forma Shareholder Ownership for
Proposed Transaction at $27.06 Price
for Alcatel........................... 95.1% 4.9% 1.667
Pro Forma Shareholder Ownership for
Proposed Transaction at $21.00 Price
for Alcatel........................... 93.7% 6.3% 2.143
Pro Forma Shareholder Ownership for
Proposed Transaction at $39.00 Price
for Alcatel........................... 95.8% 4.2% 1.411
</TABLE>
- ---------------
(1) Implied exchange ratios calculated assuming Genesys valued at Alcatel
multiple.
(2) Financial data for Alcatel based on Credit Suisse First Boston's research,
dated August 30, 1999. Financial data for Genesys per research analyst
projections compiled by Genesys' management.
(3) Assumes 100% stock transaction with tax-free roll-over of options.
(6) Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses
of the financial impact of the merger to holders of Alcatel ADSs. For calendar
year 2000, Goldman Sachs compared, using Genesys' management's projections and
IBES estimates, the estimated earnings per Alcatel ADS on a stand-alone basis to
the estimated earnings per ADS of the combined company on a pro forma basis.
Goldman Sachs performed this analysis excluding any of the possible operational
synergies that may be realized following the merger. Based on such analyses, the
merger on a pro forma basis would be dilutive to holders of Alcatel ADSs on an
earnings per ADS basis in calendar year 2000.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all these analyses. No company or
transaction used in the above analyses as a comparison is directly comparable to
Genesys or Alcatel or the contemplated transaction.
Goldman Sachs prepared these analyses solely for purposes of providing an
opinion to the board of directors of Genesys as to the fairness from a financial
point of view of the consideration to be received by the holders of outstanding
shares of Genesys common stock pursuant to the merger agreement. The analyses do
not purport to be appraisals or necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by these analyses.
Because these analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or their respective
advisors, none of Genesys, Alcatel, Goldman Sachs or any other person assumes
responsibility if future results are materially different from those forecast.
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<PAGE> 46
As described above, Goldman Sachs' opinion to the Genesys board of
directors was one of many factors taken into consideration by the Genesys board
of directors in making its determination to approve the merger agreement. This
summary does not purport to be a complete description of the analyses performed
by Goldman Sachs. You should read in its entirety the written opinion of Goldman
Sachs attached as Annex B to this proxy statement/prospectus.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with Genesys, having provided certain investment banking services to
Genesys from time to time, including having acted as lead managing underwriter
of Genesys' initial public offering in June 1997, and having acted as its
financial advisor in connection with, and having participated in certain of the
negotiations leading to, the merger agreement. Goldman Sachs also has provided
certain investment banking services to Alcatel from time to time, including
having acted as a joint global coordinator and a lead managing underwriter of
the initial public offering of ALSTOM, formerly a 50/50 joint venture between
Alcatel and GEC, in June 1998.
Goldman Sachs provides a full range of financial advisory and securities
services and, in the course of its normal trading activities, may from time to
time effect transactions and hold securities, including derivative securities,
of Genesys or Alcatel for its own account and for the accounts of customers.
Goldman Sachs may provide investment banking services to Alcatel and its
affiliates in the future.
Pursuant to a letter agreement dated August 14, 1999, Genesys engaged
Goldman Sachs to act as its financial advisor in connection with the possible
sale of all or a portion of the stock or assets of Genesys. Pursuant to the
terms of this letter agreement, Genesys has agreed to pay Goldman Sachs a
customary transaction fee. Genesys also has agreed to reimburse Goldman Sachs
for its reasonable out-of-pocket expenses, including reasonable attorneys' fees,
and to indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws.
RECOMMENDATION OF GENESYS' BOARD OF DIRECTORS
AFTER CAREFUL CONSIDERATION, GENESYS' BOARD OF DIRECTORS UNANIMOUSLY
DETERMINED THE MERGER TO BE FAIR TO YOU AND IN YOUR BEST INTEREST AND DECLARED
THE MERGER ADVISABLE. GENESYS' BOARD OF DIRECTORS APPROVED THE MERGER AGREEMENT
AND RECOMMENDS YOUR ADOPTION OF THE MERGER AGREEMENT.
In considering the recommendation of Genesys' board of directors with
respect to the merger agreement, you should be aware that some directors and
officers of Genesys have interests in the merger that are different from, or are
in addition to, the interests of Genesys shareholders generally. See "--
Interests of Certain Persons in the Merger" below.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
When considering the recommendation of Genesys' board of directors, you
should know that some of Genesys' directors and officers participate in
arrangements and have continuing indemnification against liabilities that would
provide them with interests in the merger that are different from, or in
addition to, your interests.
INDEMNIFICATION AGREEMENTS
Under the merger agreement, Alcatel has agreed to honor Genesys'
obligations under indemnification agreements between Genesys and its directors
and officers in effect before the completion of the merger and any
indemnification provisions of Genesys' Articles of Incorporation and Bylaws.
Alcatel has also agreed to cause Genesys, as the surviving corporation in the
merger, to indemnify Genesys' officers and directors as described in the
previous sentence for at least six years from the completion of the merger. In
addition, Alcatel has agreed to maintain directors' and officers' liability
insurance for six years
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from the completion of the merger, provided that Alcatel is not required to pay
more than 150% of the annual premium in effect at the time of the merger
agreement for that insurance.
CHANGE IN CONTROL ARRANGEMENTS
Genesys has in effect severance compensation agreements with the following
individuals. These individuals will benefit from a change in control as follows:
JOAN BEARDSLEY, VICE PRESIDENT, WORLD-WIDE PROFESSIONAL SERVICES. All of
Ms. Beardsley's unvested options will be fully and immediately accelerated upon
her involuntary termination occurring within 18 months following a change in
control, and she shall have one year in which to exercise such options. An
involuntary termination includes any involuntary dismissal or a voluntary
resignation following (a) a material reduction in operational responsibility;
(b) a reduction in compensation; or (c) a relocation by more than 50 miles,
provided such changes are without her consent. Further, in the event that Ms.
Beardsley is terminated other than for cause, Genesys or the surviving entity
will pay her base salary and COBRA continuation premiums for six months after
termination.
RICK C. DEGOLIA, SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT AND STRATEGIC
PLANNING, ACTING GENERAL COUNSEL AND CORPORATE SECRETARY. All of Mr. DeGolia's
unvested restricted shares, subject to certain agreements, shall vest in full
upon a change of control if the acquiror fails to provide Mr. DeGolia with both
cash compensation and operational responsibility that is at least equal to what
he had prior to the acquisition. All of Mr. DeGolia's unvested options will be
fully and immediately accelerated upon his involuntary termination within 18
months following a change in control, and he shall have one year in which to
exercise such options. An involuntary termination includes any involuntary
dismissal or a voluntary resignation following (a) a material reduction in
operational responsibility; (b) a reduction in compensation; or (c) a relocation
by more than 50 miles, provided such changes are without his consent.
DONALD HUNT, SENIOR VICE PRESIDENT, FIELD OPERATIONS, AMERICAS AND ASIA
PACIFIC. All of Mr. Hunt's unvested options will be fully and immediately
accelerated upon his involuntary termination within 18 months following a change
in control, and he shall have one year in which to exercise such options. An
involuntary termination includes any involuntary dismissal or a voluntary
resignation following (a) a material reduction in operational responsibility;
(b) a reduction in compensation; or (c) a relocation by more than 50 miles,
provided such changes are without his consent. If Mr. Hunt's employment is
terminated other than for cause, Genesys or the surviving entity will pay his
base salary and COBRA continuation premiums for six months after termination.
NOELLE LECA, SENIOR VICE PRESIDENT, WORLDWIDE MARKETING. All of Ms.
Leca's unvested shares will be fully and immediately accelerated upon her
involuntary termination within 18 months following a change in control, and she
shall have one year in which to exercise the options. An involuntary termination
includes any involuntary dismissal or a voluntary resignation following (a) a
material reduction in operational responsibility; (b) a reduction in
compensation; or (c) a relocation by more than 50 miles, provided such changes
are without her consent. If Ms. Leca's employment is terminated other than for
cause, Genesys or the surviving entity will pay her base salary and COBRA
continuation premiums for six months after termination.
AD NEDERLOF, SENIOR VICE PRESIDENT, FIELD OPERATIONS, EMEA. All of Mr.
Nederlof's unvested options will be fully and immediately accelerated upon his
involuntary termination within 18 months following a change in control, and he
shall have one year in which to exercise such options. An involuntary
termination includes any involuntary dismissal or a voluntary resignation
following (a) a material reduction in operational responsibility; (b) a
reduction in compensation; or (c) a relocation by more than 50 miles, provided
such changes are without his consent. If Mr. Nederlof's employment is terminated
other than for cause, Genesys or the surviving entity will pay his base salary
and COBRA continuation premiums for six months after termination.
MANSOUR SALAME, VICE PRESIDENT. Upon Mr. Salame's termination of
employment without cause or resignation for good cause on or prior to June 2001,
Genesys or the surviving entity will pay him
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(i) a lump sum equal to three times his monthly salary in effect at the date of
termination and (ii) continuation of health coverage until the third month
anniversary of such termination. Resignation for good cause includes a voluntary
resignation within 30 days of any of the following (a) reduction in base salary,
unless such reduction is pursuant to a change in Genesys' compensation policies
generally; (b) a substantial diminution of duties and responsibilities, not
including any changes due to Genesys' acquisition of Next Age; or (c) relocation
by more than 50 miles.
DAVID SCHREFFLER, VICE PRESIDENT, NORTH AMERICA SALES. All of Mr.
Schreffler's unvested options will be fully and immediately accelerated upon his
involuntary termination within 18 months following a change in control, and he
shall have one year in which to exercise such options. An involuntary
termination includes any involuntary dismissal or a voluntary resignation
following (a) a material reduction in operational responsibility; (b) a
reduction in compensation; or (c) a relocation by more than 50 miles, provided
such changes are without his consent. If Mr. Schreffler's employment is
terminated other than for cause, Genesys or the surviving entity will pay his
base salary and COBRA continuation premiums for six months after termination.
YURI SHTIVELMAN, SENIOR VICE PRESIDENT, PRODUCT DEVELOPMENT. In the event
of a change in control, the acquiror fails to provide Mr. Shtivelman with both
cash compensation and operational responsibility that is at least equal to what
he had prior to the acquisition, then all of his unvested restricted shares will
be accelerated as of the closing date of the acquisition and become fully vested
immediately prior to the closing of the acquisition. In addition, all of his
unvested options will be fully and immediately accelerated upon his involuntary
dismissal, within 18 months following a change in control, and he shall have one
year in which to exercise his option. An involuntary dismissal includes any
involuntary dismissal or a voluntary resignation following (a) a material
reduction in operational responsibility; (b) a reduction in compensation; or (c)
a relocation by more than 50 miles, provided that such changes are without his
consent.
OUTSIDE DIRECTORS
All shares granted to Genesys' outside directors under their respective
stock option agreements accelerate upon a change of control.
As a result of these interests, these directors and officer of Genesys
could be more likely to vote to approve the merger agreement than if they did
not hold these interests. Genesys' shareholders should consider whether these
interests may have influenced these directors and officers to support or
recommend the merger.
EMPLOYMENT AGREEMENTS FOLLOWING THE MERGER
In connection with the merger, Ori Sasson, Alec Miloslavsky, and
Christopher Brennan have entered into employment agreements whereby each has
agreed to remain employed by Genesys following the merger. These agreements
supersede agreements each individual previously made with Genesys which would
have provided for benefits to any of these individuals who was involuntarily
terminated within a specified time following a change in control.
ORI SASSON. Subsequent to the merger, he will be employed with Genesys as
Chief Executive Officer. For his work as Chief Executive Officer, he will be
provided: (a) a base salary of $300,000 per year, (b) an incentive bonus in a
target amount equal to 50% of his base salary, and (c) health, welfare,
retirement and disability benefits. In addition, on the effective date of the
merger, 450,000 shares of his existing stock options shall become vested and
exercisable on an accelerated basis. If he resigns because his responsibilities
are reduced, he no longer reports to the Board, he is relocated, or his salary
or bonus opportunity is reduced, or if he is terminated without cause, then (i)
all his stock options granted prior to the effective date of the employment
agreement will become fully vested and will remain exercisable for one year,
(ii) he will receive salary at the then-effective annual rate as well as bonus
at target for a period of two years following termination, and (iii) he will be
covered by health and welfare benefits for a period of eighteen (18) months.
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ALEC MILOSLAVSKY. Subsequent to the merger, he will be employed with
Genesys as Chief Technology Officer. For his work as Chief Technology Officer,
he will be provided: (a) a base salary of $300,000 per year, (b) an incentive
bonus in a target amount equal to 50% of his base salary, and (c) health,
welfare, retirement and disability benefits. If he resigns because his
responsibilities are reduced, he is relocated, or his salary or bonus
opportunity is reduced, or if he is terminated without cause, then (i) all his
stock options granted prior to the effective date of the employment agreement
will become fully vested, (ii) he will receive salary at the then-effective
annual rate as well as bonus at target for a period of two years following
termination, and (iii) he will be covered by health and welfare benefits for a
period of eighteen (18) months.
CHRISTOPHER BRENNAN. Subsequent to the merger, he will be employed with
Genesys as Chief Financial Officer. For his work as Chief Financial Officer, he
will be provided: (a) a base salary of $300,000 per year, (b) an incentive bonus
in a target amount equal to 40% of his base salary, and (c) health, welfare,
retirement and disability benefits. In addition, on the effective date of the
merger, all of the unvested shares of his existing stock options will become
fully vested and exercisable on an accelerated basis. If he resigns because his
responsibilities are reduced, he is relocated, or his salary or bonus
opportunity is reduced, or if he is terminated without cause, then (i) all his
stock options granted prior to the effective date of the employment agreement
will become fully vested, (ii) he will receive salary at the then-effective
annual rate as well as bonus at target for one year following termination, and
(iii) he will be covered by health and welfare benefits for a period of eighteen
(18) months.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material U.S. federal income
tax consequences of the merger that may be relevant to you if you hold Genesys
common stock as a capital asset and are:
- an individual citizen or resident of the United States;
- a corporation or other entity taxed as a corporation created or
organized in or under the laws of the U.S. or any political subdivision
thereof;
- an estate or trust whose income is subject to U.S. federal income
taxation; or
- a trust that is subject to the supervision of a U.S. court and the
control of one or more U.S. persons.
The discussion does not address all potential tax consequences that may be
relevant to you. Moreover, this discussion does not apply to you if you are
subject to special treatment under the Internal Revenue Code, including without
limitation, because you are:
- a foreign person or entity;
- an insurance company;
- a financial institution;
- a dealer in securities;
- a tax-exempt organization;
- a person who holds shares of Genesys common stock as part of a
"straddle" or a "conversion transaction" for U.S. federal income tax
purposes;
- a trader who elects to mark-to-market its securities; or
- an individual who received shares of Genesys common stock pursuant to
the exercise of employee stock options or otherwise as compensation.
In addition, this discussion does not address the tax consequences to you
if you will become a "5% shareholder" of Alcatel within the meaning of
applicable Treasury Regulations under Section 367 of the Internal Revenue Code.
In general, a "5% shareholder" is a person who owns, actually or constructively
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under attribution rules, at least five percent of either total voting power or
total value of the stock of Alcatel immediately after the merger.
No information is provided in this proxy statement/prospectus with respect
to the tax consequences, if any, of the merger under applicable foreign, state,
local and other tax laws. The following discussion is based on the provisions of
the U.S. Internal Revenue Code, applicable Treasury Regulations thereunder,
Internal Revenue Service rulings, judicial decisions and other administrative
pronouncements, all in effect as of the date of this proxy statement/prospectus.
There can be no assurance that future legislative, administrative or judicial
changes or interpretations will not affect the accuracy of the statements or
conclusions set forth below. Any future change or interpretation could apply
retroactively and could affect the accuracy of the following discussion.
YOU ARE STRONGLY ADVISED TO CONSULT YOUR OWN TAX ADVISORS AS TO THE U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER, INCLUDING THE PARTICULAR FACTS
AND CIRCUMSTANCES THAT MAY BE UNIQUE TO YOU, AND AS TO ANY ESTATE, GIFT, STATE,
LOCAL OR NON-U.S. TAX CONSEQUENCES, INCLUDING FRENCH TAX CONSEQUENCES, ARISING
OUT OF THE MERGER AND THE OWNERSHIP OF ALCATEL ADSS.
Certain Consequences of the Merger. If you receive Alcatel ADSs evidenced
by ADRs in the merger, you will be treated as an owner of the Alcatel shares
underlying those Alcatel ADSs for purposes of the Internal Revenue Code and for
purposes of the Convention Between the Government of the United States of
America and the Government of the French Republic for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
and Capital dated as of August 31, 1994, which went into force on December 30,
1995. The material French tax consequences and material U.S. federal income tax
consequences to beneficial owners of Alcatel ADSs are summarized in Alcatel's
Annual Report on Form 20-F for the year ended December 31, 1998.
If Alcatel does not pay cash for the Genesys common stock, the obligation
of Genesys to consummate the merger is conditioned upon the receipt by Genesys
of a tax opinion from Wilson Sonsini Goodrich & Rosati, Professional Corporation
(or from Shearman & Sterling if Wilson Sonsini Goodrich & Rosati, Professional
Corporation fails to give the opinion), in form and substance reasonably
satisfactory to Genesys, that on the basis of certain facts, representations and
assumptions, the merger will constitute a reorganization for U.S. federal income
tax purposes within the meaning of Section 368(a) of the Internal Revenue Code.
Additionally, if Alcatel does not pay cash for the Genesys common stock, the
obligation of Alcatel to consummate the merger is conditioned upon the receipt
by Alcatel of a tax opinion from Shearman & Sterling (or from Wilson Sonsini
Goodrich & Rosati, Professional Corporation if Shearman & Sterling fails to give
the opinion), in form and substance reasonably satisfactory to Alcatel, that on
the basis of certain facts, representations and assumptions, the merger will
constitute a reorganization for U.S. federal income tax purposes within the
meaning of Section 368(a) of the Internal Revenue Code. The tax opinions are not
binding on the Internal Revenue Service or any court and do not preclude the
Internal Revenue Service or a court from reaching a contrary conclusion.
Moreover, no rulings have been or will be sought from the Internal Revenue
Service concerning the tax consequences of the merger.
Assuming that the merger constitutes a reorganization for U.S. federal
income tax purposes under the meaning of Section 368(a) of the Internal Revenue
Code, if you receive Alcatel ADSs in exchange for Genesys common stock as a
result of the merger, you will not recognize gain or loss upon the exchange
(except with respect to cash received in lieu of a fractional interest in an
ADS). Accordingly:
- the aggregate tax basis of the Alcatel ADSs you receive in the merger
will be the same as the aggregate tax basis of the Genesys common stock
you surrender in exchange therefor (adjusted to take account of
fractional interests);
- the holding period of the Alcatel ADSs you receive in the merger will
include the holding period of the Genesys common stock you surrender;
and
- any cash you receive in lieu of a fractional Alcatel ADS will be
treated as a sale of that interest for cash. The amount of any capital
gain or loss attributable to that sale will be equal to the difference
between the cash received with respect to the fractional interest and
the ratable
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portion of the tax basis of the Genesys common stock surrendered that is
allocated to the fractional interest. If you are not a corporation, the
gain may be subject to U.S. federal income tax at a maximum rate of 20%
if your holding period in the Genesys common stock is more than 12
months at the time of the consummation of the merger. The deductibility
of capital losses is subject to limitations.
In addition, if you exercise dissenters' rights and as a result receive
only cash for your Genesys common stock, you will be obligated to report either:
- capital gain or loss equal to the difference between the cash received
and the tax basis of the Genesys common stock surrendered; or
- dividend income;
depending on whether the deemed redemption resulting from the exercise of
dissenters' rights qualifies for sale or exchange treatment under the tests set
forth in Section 302(b) of the Internal Revenue Code. Under those tests, you
should receive capital gain or loss treatment (rather than dividend treatment)
if the deemed redemption of your Genesys common stock constitutes a "complete
redemption" of your interests in Genesys common stock (and in Alcatel, after the
merger). To the extent that persons related to you (within the meaning of
Section 318 of the Internal Revenue Code) continue to hold stock in Alcatel
after the merger, the rules of Section 302 of the Internal Revenue Code in
conjunction with Section 318 of the Internal Revenue Code may require dividend
treatment unless a waiver of those rules is permitted under Section 302 of the
Internal Revenue Code. The U.S. federal income tax consequences of capital gain
or loss treatment are discussed above.
Alternatively, if Alcatel exercises its option to convert shares of
Genesys common stock into cash, or if the merger otherwise does not qualify as a
reorganization for U.S. federal income tax purposes within the meaning of
Section 368(a) of the Internal Revenue Code, you will be treated as having sold
your Genesys common stock in a taxable sale. The amount of any capital gain or
loss attributable to the sale will be equal to the difference between the cash
or fair market value of the Alcatel ADSs received and your tax basis in the
Genesys common stock surrendered. The U.S. federal income tax consequences of
capital gain or loss treatment are discussed above.
Certain U.S. Federal Income Tax Consequences of Holding Alcatel
ADSs. Alcatel's Annual Report on Form 20-F for the year ended December 31, 1998
contains a description of certain U.S. federal income tax consequences related
to holding Alcatel ADSs, including the treatment of dividends paid with respect
to Alcatel ADSs. The description contained in the Form 20-F, however, is only a
summary and does not purport to be a complete analysis of all potential tax
effects resulting from ownership of Alcatel ADSs (such as tax consequences for
holders of Alcatel ADSs who are dealers, or whose functional currency is not the
U.S. dollar, or who are otherwise subject to special treatment under U.S.
federal tax law). Therefore, prospective owners of Alcatel ADSs are advised to
consult their own tax advisors concerning the complete U.S. federal, state and
local tax consequences, as well as the French tax consequences, of their
ownership of Alcatel ADSs.
U.S. Backup Withholding and Information Reporting. As a holder of Alcatel
ADSs, you may, under certain circumstances, be subject to certain information
reporting requirements and a backup withholding tax at the rate of 31% with
respect to dividends paid on the Alcatel ADSs or the proceeds of sale of your
Alcatel ADSs, unless you:
- are a corporation or come within certain other exempt categories and,
when required, demonstrate this fact; or
- provide a correct taxpayer identification number, certify that you are
not subject to backup withholding and otherwise comply with applicable
requirements of the backup withholding rules. If you do not provide a
correct taxpayer identification number, you may be subject to penalties
imposed by the Internal Revenue Service.
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ACCOUNTING TREATMENT
The merger will be accounted for under French generally accepted
accounting principles as a pooling of interests. This method consists of an
addition of the results, assets, liabilities and shareholders' equity of Alcatel
and Genesys at their respective book values. Assuming that the merger will be
closed after December 31, 1999, the combined results of operations for the year
ending December 31, 2000 will include Genesys' results for the period commencing
on the closing date and ending on December 31, 2000. Under generally accepted
accounting principles in the United States, the merger will be accounted for
under the purchase method.
REGULATORY APPROVALS
The merger is subject to the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Under the Hart-Scott-Rodino Act, the merger may not be consummated until
notifications have been given and certain information has been furnished to the
Federal Trade Commission and the Antitrust Division of the Department of Justice
and the applicable waiting period has expired or been terminated. On December 9,
1999 Genesys and Alcatel filed Notification and Report Forms under the
Hart-Scott-Rodino Act with the Federal Trade Commission and the Antitrust
Division of the Department of Justice. Genesys and Alcatel expect the waiting
period to expire at 11:59 p.m. on January 8, 2000. At any time before or after
the consummation of the merger, and notwithstanding expiration of the waiting
period under the of the Hart-Scott-Rodino Act, any U.S. state could take action
under the antitrust laws as it deems necessary, desirable or in the public
interest. The action could include seeking to enjoin the consummation of the
merger or seeking divestiture of substantial assets of Genesys. Private parties
may also seek to take legal action under the antitrust laws under certain
circumstances.
Alcatel and Genesys expect to notify the Federal Cartel Office of Germany
of the proposed merger no later than December 21, 1999. The German law against
restraints on competition requires Alcatel and Genesys to provide the Federal
Cartel Office with certain information prior to the closing of the merger. After
the notification, the Federal Cartel Office has a period of one month to review
the filing, which period may be extended to up to four months.
There can be no assurance that the merger will not be challenged on
antitrust or competition grounds or, if a challenge is made, what the outcome
would be.
The merger also may require notification to, and filings with, certain
authorities in certain other non-U.S. jurisdictions where Genesys and Alcatel
currently operate. Alcatel and Genesys will make any required filings (and, if
deemed in Alcatel's and Genesys' interests, any voluntary filings) with the
appropriate governmental authorities as promptly as practicable.
CERTAIN SECURITIES LAWS CONSIDERATIONS
Recipients of Alcatel ADSs issued in connection with the merger can freely
transfer such Alcatel ADSs under the U.S. Securities Act of 1933, except that
persons who are deemed to be "affiliates," as that term is defined under the
Securities Act, of Genesys prior to the merger may only sell their Alcatel ADSs
in transactions permitted by the resale provisions of Rule 145 under the
Securities Act, or Rule 144 promulgated under the Securities Act in the case of
such persons who become affiliates of Alcatel, or as otherwise permitted under
the Securities Act. Individuals or entities that control, are controlled by, or
are under common control with, Genesys, including directors and certain officers
of Genesys, are typically considered to be affiliates. This proxy
statement/prospectus does not cover any resales of Alcatel ADSs received by
affiliates of Genesys in the merger.
DIVIDENDS
Although the payment of dividends by Alcatel in the future will depend on
business conditions, Alcatel's financial condition and earnings and other
factors, Alcatel expects to declare regularly scheduled
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dividends consistent with the practices of Alcatel prior to the consummation of
the merger. The merger agreement restricts Genesys from declaring, setting aside
or paying any dividend or other distribution in respect of its capital stock
until the earlier of the termination of the merger agreement or the consummation
of the merger.
STOCK EXCHANGE LISTING
The Alcatel ADSs are listed on the New York Stock Exchange, and the
principal trading market for Alcatel's shares is the Paris Bourse. Alcatel's
shares are also listed on the Amsterdam, Antwerp, Brussels, Frankfurt,
Stockholm, Tokyo and Swiss stock exchanges and are quoted on SEAQ International.
It is a condition to the merger that the Alcatel ADSs to be issued in the merger
be approved for listing on the New York Stock Exchange.
Following the merger, the Genesys common stock will no longer be listed on
the Nasdaq National Market.
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CERTAIN PROVISIONS OF THE MERGER AGREEMENT
The merger agreement contemplates the merger of Eden Merger Corp. into
Genesys, with Genesys surviving the merger as a wholly owned subsidiary of
Alcatel. This section of the document describes certain provisions of the merger
agreement. This description of the merger agreement is a summary and may not
contain all the information which is important to you. You should carefully read
the entire copy of the merger agreement, a copy of which is attached as Annex A
and is incorporated by reference in this proxy statement/prospectus.
CLOSING AND EFFECTIVE TIME OF THE MERGER
Closing. Unless the parties agree otherwise, the closing of the merger
will take place on the second business day after the date on which all closing
conditions have been satisfied or waived. The closing is expected to take place
shortly after the approval of the merger by the Genesys shareholders.
Effective Time. The merger will be effective upon the filing of the
agreement or merger with the Secretary of State of the State of California. The
filing of the agreement of merger shall be made simultaneously with, or as soon
as practicable after, the closing of the transactions contemplated by the merger
agreement.
MERGER CONSIDERATION
Upon consummation of the merger, all Genesys common stock held by:
- Genesys as treasury stock; and
- Eden Merger Corp. or Alcatel
will be canceled and no consideration will be paid for that stock. Except for
dissenting shares, all shares of Genesys common stock issued and outstanding
immediately prior to the consummation of the merger will automatically be
converted into a certain number of Alcatel ADSs or cash upon consummation of the
merger. The number of Alcatel ADSs or the amount of cash into which each share
of Genesys common stock will be converted depends on the average closing price
of an Alcatel ADS during the 10-trading-day period ending 2 trading days prior
to the special meeting of Genesys shareholders. That price is sometimes referred
to as the "average closing price" in this proxy statement/prospectus. If the
average closing price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average
closing price; or
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average
closing price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of any Alcatel ADSs.
The ratio ultimately used to determine what each share of Genesys common
stock will be converted into upon consummation of the merger is referred to
throughout this proxy statement/prospectus as the "exchange ratio." The
consideration ultimately paid to Genesys shareholders is referred to in the
document as the "merger consideration."
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FRACTIONAL SHARES
Alcatel will not issue fractional Alcatel ADSs in the merger. Instead, all
fractional Alcatel ADSs will be aggregated and sold on the New York Stock
Exchange by The Bank of New York. Genesys shareholders will be paid cash
(without interest) in an amount equal to their proportionate interest in the net
proceeds from the sale of the fractional Alcatel ADSs. The Bank of New York will
hold the proceeds from the sale in trust for the benefit of the Genesys
shareholders until they are distributed. Alcatel will pay commissions, transfer
taxes (other than those transfer taxes for which Genesys shareholders are solely
liable) and other out-of-pocket transaction costs of incurred in connection with
the sale of the fractional Alcatel ADSs.
DISSENTING SHARES
Holders of Genesys common stock who have demanded dissenters' rights in
accordance with the Corporations Code of California will not have their shares
converted into the merger consideration. Those holders will only be entitled to
those rights granted by the Corporations Code of California until they withdraw
or lose their dissenters' rights. See "COMPARISON OF SHAREHOLDERS RIGHTS --
Appraisal Rights" for further discussion of dissenters' rights.
EMPLOYEE STOCK OPTIONS, RESTRICTED STOCK AND EMPLOYEE BENEFIT MATTERS
Employee Stock Options. The merger agreement provides that each Genesys
stock option outstanding at the time of the consummation of the merger will
become an option to acquire a number of Alcatel ADSs, determined by multiplying
(i) the number of shares of Genesys common stock subject to the Genesys stock
option immediately prior to the consummation of the merger by (ii) the exchange
ratio. The per-ADS exercise price will be equal to the exercise price per share
of Genesys common stock immediately prior to the consummation of the merger
divided by the exchange ratio. After the consummation of the merger, each new
Alcatel option will be exercisable on the same terms and conditions as were
applicable to the related Genesys stock option prior to the consummation of the
merger.
As soon as practicable, but not more than five business days following
consummation of the merger, Alcatel will file a registration statement on Form
S-8 with the SEC to the extent registration is required to allow the Alcatel
ADSs subject to employee stock options to be freely tradable in the U.S. Alcatel
will use commercially reasonable efforts to maintain the effectiveness of the
registration statement for so long as Genesys stock options remain outstanding.
Restricted Stock. Unvested Genesys restricted stock that does not vest
upon the consummation of the merger will be converted into Alcatel ADSs like all
other Genesys common stock and will continue to vest upon the same terms and
conditions and will be subject to the same restrictions that existed prior to
the consummation of the merger.
Employee Benefit Matters. The merger agreement provides that for a period
of one year following the consummation of the merger, Alcatel will provide
Genesys employees who are actively employed as of the consummation of the merger
with employee benefit plans and arrangements that are, in the aggregate,
substantially equivalent to those provided by Genesys immediately prior to the
merger other than stock option or other equity-based plans and other than
employment, severance or similar plans and agreements.
Further, the merger agreement provides that Alcatel will honor all
agreements, contracts, arrangements, commitments and understandings as disclosed
to Alcatel in the disclosure schedule to the merger agreement, except as these
agreements, contracts, arrangements, commitments and understandings are amended
or waived with the consent of the applicable employee.
EXCHANGE OF SHARE CERTIFICATES
As soon as practicable after the consummation of the merger, transmittal
forms and exchange instructions will be mailed to Genesys shareholders for the
surrender and exchange of certificates formerly evidencing shares of Genesys
common stock for the merger consideration to which the shareholders have
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become entitled. After receipt of the transmittal forms, each holder of
certificates formerly representing Genesys common stock will be able to
surrender those certificates to The Bank of New York, as exchange agent, and
receive in exchange the following, as applicable:
- certificates evidencing the number of whole Alcatel ADSs to which the
holder is entitled;
- any cash payable in lieu of a fractional Alcatel ADS;
- their proportionate amount of dividends or other distributions with a
record date after the consummation of the merger and paid prior to the
Genesys shareholder's surrender of their certificates; and
- on the appropriate payment date or as promptly as practicable
thereafter, the proportionate amount of dividends or other
distributions with a record date (i) after the consummation of the
merger and (ii) prior to the Genesys shareholder's surrender of their
certificates, and a payment date after to the date the certificates
were surrendered; or
- cash.
GENESYS SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE A TRANSMITTAL FORM.
After the consummation of the merger, each certificate formerly
representing Genesys common stock, until surrendered and exchanged, shall be
deemed, for all purposes, to evidence only the right to receive the merger
consideration discussed above. Holders of unexchanged certificates will not be
entitled to receive any dividends or other distributions payable by Alcatel or
cash (paid in lieu of any fractional Alcatel ADS or otherwise) until their
certificates have been exchanged. Subject to applicable laws, following
surrender of certificates, dividends and distributions and any cash payments (in
lieu of any fractional Alcatel ADS or otherwise) will be paid to former Genesys
shareholders without interest.
In the event of a transfer of ownership of shares of Genesys common stock
which is not registered in the transfer records of Genesys as of the
consummation of the merger, the merger consideration may be paid to a transferee
if the certificate evidencing those shares of Genesys common stock is presented
to The Bank of New York, accompanied by all documents required to evidence and
effect the transfer and by evidence that any applicable stock transfer taxes
have been paid. The Bank of New York will deliver the merger consideration in
exchange for lost, stolen or destroyed certificates if the owner of the
certificates signs an affidavit of loss, theft or destruction, as appropriate.
Alcatel may also, in its discretion, require the holder of lost, stolen or
destroyed certificates to deliver a bond in a reasonable sum as indemnity
against any claim that might be made against Alcatel or The Bank of New York
with respect to alleged lost, stolen or destroyed certificates.
No dividend or other distribution, stock split or interest relating to the
Alcatel ADSs generally will be made to any fractional ADS. Fractional ADSs will
not have voting or any other rights.
REPRESENTATIONS AND WARRANTIES
The merger agreement contains various customary representations and
warranties by Genesys, on the one hand, and by Alcatel and Eden Merger Corp., on
the other hand, relating to, among other things:
- their proper organization and good standing;
- their capitalization;
- their authority relating to the merger agreement;
- certain consents and approvals and the absence of any violation of laws
or certain other agreements;
- the filing of SEC reports and the preparation of financial statements;
- the absence of certain material adverse changes or events;
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- litigation;
- the accuracy of information supplied by each party for inclusion or
incorporation by reference in this proxy statement/prospectus and in
the registration statement of which this proxy statement/prospectus is
a part;
- compliance with laws;
- tax treatment of the merger;
- intellectual property matters; and
- brokers and finders.
Additionally, the merger agreement contains additional customary
representations and warranties of Genesys relating to:
- the absence of any undisclosed liabilities;
- taxes;
- employee benefit matters;
- labor controversies;
- the required shareholder vote for the approval of the merger;
- the opinion of Goldman Sachs & Co., Genesys' financial advisor;
- the Genesys board of directors' recommendations regarding the merger;
- affiliate transactions;
- material contracts;
- insurance;
- environmental matters; and
- year 2000 compliance.
NO SOLICITATION
Genesys has agreed not to solicit, initiate or encourage any "Acquisition
Proposal" (as defined below) or engage in discussions or negotiations with any
person that has made an Acquisition Proposal. Genesys has also agreed not to
disclose any nonpublic information relating to itself or any of its subsidiaries
or afford access to its or its subsidiaries' properties, books or records to any
person that has made an Acquisition Proposal.
Notwithstanding the foregoing, until the consummation of the merger, if
Genesys' board of directors determines that a "Superior Proposal" (as defined
below) has been made and that failure to engage in negotiations or discussions
or provide information is reasonably likely to result in a breach of its
fiduciary duties, then Genesys may furnish information with respect to itself
and its subsidiaries and may participate in negotiations regarding the
Acquisition Proposal. In order to do so, Genesys must:
- enter into a confidentiality agreement with terms no less favorable to
Genesys than the terms of the confidentiality agreement between Genesys
and Alcatel;
- provide notice to Alcatel; and
- not be in violation of its obligations discussed in this section.
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For the purposes of this proxy statement/prospectus, an "Acquisition
Proposal" is any:
- offer or proposal for a merger, consolidation, recapitalization,
liquidation or other business combination involving Genesys;
- offer or proposal for the acquisition or purchase of over 50% of any
class of Genesys' equity securities;
- tender offer (including self tender offers) or exchange offer that, if
consummated, would result in any party owning 50% or more of any class
of equity securities of Genesys or a substantial portion of Genesys'
and its subsidiaries' assets, taken as a whole; or
- solicitation in opposition to approval of the merger by Genesys'
shareholders.
For the purposes of this proxy statement/prospectus, a "Superior Proposal"
is an Acquisition Proposal which Genesys' board of directors reasonably
believes, after consultation with its financial advisor, is:
- likely to result in a transaction more favorable to Genesys'
shareholders than the transaction with Alcatel; and
- reasonably capable of being financed by the person making the proposal.
Additionally, Genesys agreed to cease any discussions regarding
Acquisition Proposals with any third parties that were ongoing at the time of
the execution of the merger agreement. Finally, Genesys agreed not to release
any third party from, or waive any provision of, any confidentiality or
standstill agreement unless the third party has made a Superior Proposal.
CERTAIN FILINGS
Alcatel and Genesys have agreed to cooperate with each other:
- in connection with the preparation of the registration statement on
Form F-4;
- in determining whether any other governmental filings must be made, or
other actions taken or consents or approvals of parties to any material
contracts must be obtained; and
- in obtaining all actions, consents, approvals or waivers from any
governmental agencies or any parties to any material contracts.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER
Each of Alcatel's, Eden Merger Corp.'s and Genesys' obligations to
complete the merger are subject to the satisfaction or waiver of the following
conditions:
- Shareholder Approval. The shareholders of Genesys have approved the
merger;
- Antitrust. Any waiting periods under the Hart-Scott-Rodino Act and the
European Union antitrust laws relating to the merger have expired or
been terminated. EU Council Regulation (EEC) No. 4064/89 (as amended),
together with related regulations and decisions, requires that certain
mergers and acquisitions involving parties with aggregate worldwide
sales and individual European Union sales exceeding certain thresholds
be notified to and approved by the European Commission.
- Illegality. No provision of any applicable law or regulation and no
judgment, injunction, order or decree prohibits the consummation of the
merger;
- Effectiveness of the Registration Statement. The registration
statement on Form F-4 has become effective under the Securities Act and
is not subject to any stop order or proceedings seeking a stop order,
and any material "Blue Sky" and other state securities laws applicable
to
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the registration and qualification of the Alcatel ADSs have been
complied with (including visas of the Commission des Operations de
Bourse, or "COB," the administrative authority responsible for
overseeing the French securities markets); and
- Stock Exchange Listing. The Alcatel ADSs issuable in accordance with
the merger have been approved for listing on the New York Stock
Exchange.
ADDITIONAL CONDITIONS TO OBLIGATION OF GENESYS
The obligation of Genesys to complete the merger is also subject to the
following additional conditions:
- Agreements and Covenants. Each of Alcatel and Eden Merger Corp. have
performed in all material respects their respective agreements and
covenants as required by the merger agreement, and Genesys has received
a certificate to that effect signed by a senior executive vice
president of Alcatel;
- Representations and Warranties. Except as would not reasonably be
expected to have a material adverse effect on Alcatel or as otherwise
contemplated by the merger agreement, the representations and
warranties of Alcatel and Eden Merger Corp. are true and correct in all
respects as of the consummation of the merger, and Genesys has received
a certificate to that effect signed by a senior executive vice
president of Alcatel; and
- Tax Opinion. In the event Alcatel does not elect to pay cash for the
Genesys common stock, Genesys has received a tax opinion from Wilson
Sonsini Goodrich & Rosati, Professional Corporation (or from Shearman &
Sterling if Wilson Sonsini Goodrich & Rosati, Professional Corporation
fails to give the opinion) in form and substance reasonably
satisfactory to Genesys, to the effect that the merger will constitute
a reorganization for United States federal income tax purposes within
the meaning of Section 368(a) of the Internal Revenue Code.
ADDITIONAL CONDITIONS TO OBLIGATION OF ALCATEL AND EDEN MERGER CORP.
The obligations of Alcatel and Eden Merger Corp. to complete the merger
are also subject to the following additional conditions:
- Agreements and Covenants. Genesys has performed in all material
respects its agreements and covenants as required by the merger
agreement, and Alcatel has received a certificate to that effect signed
by the chief executive officer of Genesys;
- Representations and Warranties. Except as would not reasonably be
expected to have a material adverse effect on Genesys or as otherwise
contemplated by the merger agreement, the representations and
warranties of Genesys are true and correct in all respects as of the
consummation of the merger, and Alcatel has received an officer's
certificate to that effect signed by the chief executive officer of
Genesys;
- Compliance with Foreign Laws. All foreign laws regulating competition,
antitrust, investment or exchange control have been complied with, and
all approvals required under those foreign laws have been received;
- Tax Opinion. In the event Alcatel does not elect to pay cash for the
Genesys common stock, Alcatel has received a tax opinion from Shearman
& Sterling (or from Wilson Sonsini Goodrich & Rosati Professional
Corporation if Shearman & Sterling fails to give the opinion) in form
and substance reasonably satisfactory to Alcatel, to the effect that
the merger will constitute a reorganization for U.S. federal income tax
purposes within the meaning of Section 368(a) of the Internal Revenue
Code; and
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- Employment Agreements. Each of the following individuals has executed
an employment agreement and their employment agreement is in full force
and effect immediately prior to the consummation of the merger:
- Christopher Brennan;
- Alec Miloslavsky; and
- Ori Sasson.
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated and the transactions contemplated
by it abandoned at any time prior to the consummation of the merger, whether
before or after Genesys has obtained shareholder approval:
- by the mutual written consent of Genesys and Alcatel;
- by either Genesys or Alcatel, if the Genesys shareholders do not
approve the merger;
- by either Genesys or Alcatel, if the merger is not consummated by May
31, 2000, provided the party seeking to terminate has not materially
breached its obligations under the merger agreement;
- by either Genesys or Alcatel, if any law or regulation makes
consummation of the merger illegal or any judgment, injunction, order
or decree enjoining the consummation of the merger becomes final and
nonappealable;
- by Alcatel, if Genesys' board of directors withholds, withdraws or
modifies or amends in any respect adverse to Alcatel or Eden Merger
Corp. its approval or recommendation of the merger or resolves to do
so, or enters into any letter of intent or similar document or any
agreement, contract or commitment accepting any Acquisition Proposal;
- by Alcatel, if Genesys' board of directors recommends any Acquisition
Proposal to their shareholders or resolves or announces an intention to
do so;
- by Alcatel, if a tender offer or exchange offer for 50% or more of the
outstanding shares of Genesys common stock is announced or commenced,
and Genesys' board of directors either recommends the offer be accepted
or, within ten business days of commencement of the offer, but at least
three business days prior to the shareholder meeting, does not
recommend against acceptance or takes no position with respect to
offer;
- by Alcatel, if Genesys fails to include in this proxy
statement/prospectus its board of director's recommendation in favor of
the merger;
- by Alcatel, if Genesys' board of directors fails to reaffirm its
recommendation in favor of the merger within ten business days after
the announcement of an Acquisition Proposal and Alcatel's written
request for reaffirmation in connection therewith (or as soon as
practicable if the announcement occurs less than ten business days
prior to the special meeting of Genesys shareholders);
- by Alcatel, if Genesys breaches its obligations not to solicit certain
other transactions (as described in "-- No Solicitation" above);
- by Alcatel, if Genesys breaches any representation or warranty, or if
any representation or warranty becomes untrue, incomplete or incorrect,
except (i) as otherwise contemplated by the merger agreement or (ii)
for those failures to be true and correct which in the aggregate would
not reasonably be expected to have a material adverse effect on
Genesys. However, if Genesys can cure the breach through exercise of
commercially reasonable efforts within 30 days, for so long as Genesys
exercises those reasonable efforts, Alcatel cannot terminate the merger
agreement based on that breach;
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- by Alcatel, if Genesys materially breaches any covenant or agreement,
unless Genesys can cure the breach through exercise of commercially
reasonable efforts within 30 days, in which case, for so long as
Genesys exercises those reasonable efforts, Alcatel cannot terminate
the merger agreement based on that breach;
- by Genesys, if Alcatel breaches any representation or warranty, or if
any representation or warranty becomes untrue, incomplete or incorrect,
except (i) as otherwise contemplated by the merger agreement or (ii)
for those failures to be true and correct which in the aggregate would
not reasonably be expected to have a material adverse effect on
Alcatel. However, if Alcatel can cure the breach through exercise of
commercially reasonable efforts within 30 days, for so long as Alcatel
exercises those reasonable efforts, Genesys cannot terminate the merger
agreement based on that breach; or
- by Genesys, if Alcatel materially breaches any covenant or agreement,
unless Alcatel can cure the breach through exercise of commercially
reasonable efforts within 30 days, in which case, for so long as
Alcatel exercises those reasonable efforts, Genesys cannot terminate
the merger agreement based on that breach.
Any party terminating the merger agreement must give written notice of the
termination to the other party.
FEES AND EXPENSES
Fees. Genesys agreed to pay Alcatel a $45 million fee if:
- Alcatel terminates the merger agreement because:
- Genesys' board of directors withholds, withdraws or modifies or
amends in any respect adverse to Alcatel or Eden Merger Corp. its
approval or recommendation of the merger or resolves to do so, or
enters into any letter of intent or similar document or any
agreement, contract or commitment accepting any Acquisition Proposal
unless Alcatel experiences a material adverse effect or their
representations and warranties are not true in all material respects
at the time of the withdrawal, modification or amendment;
- Genesys' board of directors recommends any Acquisition Proposal to
their shareholders or resolves or announces an intention to do so;
- a tender offer or exchange offer for 50% or more of the outstanding
shares of Genesys common stock is announced or commenced and Genesys'
board of directors either recommends the offer be accepted or, within
ten business days of commencement of the offer, but at least three
business days prior to the shareholder meeting, does not recommend
against acceptance or takes no position with respect to offer;
- Genesys fails to include in this proxy statement/prospectus its board
of directors' recommendation in favor of the merger;
- Genesys' board of directors fails to reaffirm its recommendation in
favor of the merger within ten business days after the announcement
of an Acquisition Proposal and Alcatel's written request for
reaffirmation in connection therewith (or as soon as practicable if
the announcement occurs less than ten business days prior to the
special meeting of Genesys shareholders); and
- Genesys breaches its obligations not to solicit certain other
transactions (as described in "-- No Solicitation" above); or
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- Alcatel or Genesys terminates the merger agreement because the Genesys
shareholders did not approve the merger and:
- an Acquisition Proposal existed at the time the Genesys shareholders
did not approve the merger; and
- within nine months of the termination, Genesys enters into a
definitive agreement regarding, or consummates, any merger,
consolidation, recapitalization, liquidation, tender offer, exchange
offer or other business combination involving the acquisition,
purchase or change of control of 50% or more of any class of Genesys'
equity securities.
Expenses. Except as discussed above, each party pays its own costs and
expenses incurred in connection with the merger agreement and the transactions
contemplated by it.
CONDUCT OF BUSINESS BY GENESYS
Genesys has agreed that, prior to the consummation of the merger, Genesys
will conduct its business, and that of its subsidiaries, in the ordinary course
of business and in a manner consistent with past practice. In this regard,
Genesys will use reasonable commercial efforts to:
- preserve intact the business organization of Genesys and its
subsidiaries;
- preserve the business relationships of Genesys and its subsidiaries
with customers, suppliers and other persons; and
- keep available the services of the present officers and employees of
Genesys and its subsidiaries.
In particular, Genesys has agreed that it will not, and its subsidiaries
will not, take any action that makes any of its representations and warranties
untrue unless the merger agreement provides otherwise or unless the action would
not reasonably be expected to result in a material adverse effect on Genesys.
Furthermore, Genesys has agreed that neither it nor any of its subsidiaries,
without the prior written consent of Alcatel, will:
- declare, set aside or pay any dividend or other distribution with
respect to any shares of their capital stock, or repurchase, redeem or
otherwise acquire any of their outstanding shares of capital stock or
other equity securities or ownership interests;
- amend any provision of their articles of incorporation, by-laws or
amend any material term of any of their or their subsidiaries'
outstanding securities (other than securities of a wholly owned
subsidiary);
- incur, assume or guarantee any indebtedness for borrowed money other
than aggregate borrowings of $100,000 or less under existing short-term
credit facilities;
- change any accounting method or accounting practice, except for changes
required because of changes in GAAP;
- other than in the ordinary course of business consistent with past
practices:
- grant any severance or termination pay to any director, officer or
employee of Genesys or any of its subsidiaries,
- enter into any employment, deferred compensation or other similar
agreement (or amend any existing agreement) with any director,
officer or employee of Genesys or any of its subsidiaries,
- increase the benefits payable under any employee benefit plan,
severance or termination pay policy or employment agreement, or
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- increase compensation, bonus or other benefits payable to directors,
officers or employees of Genesys or any of its subsidiaries;
- issue securities other than pursuant to the exercise of options
outstanding as of June 30, 1999 and other than the issuance of options
after June 30, 1999 exercisable for more than 750,000 shares of Genesys
common stock and the issuance of shares pursuant thereto;
- acquire, dispose of or exclusively license any of its, or any of its
subsidiaries, material assets;
- enter into any agreement that limits the ability of Genesys or its
subsidiaries to compete in any line of business or involves exclusivity
arrangements or exclusive dealings to which Genesys or any of its
subsidiaries is a party, except for sales of inventory in the ordinary
course of business consistent with past practice;
- acquire or dispose of capital stock of any third party (other than
noncontrolling equity interests of third parties acquired in the
ordinary course of business; provided that the aggregate cost of all
acquisitions and dispositions does not exceed $250,000);
- merge or consolidate with any third party;
- enter into any contract or agreement involving a commitment by Genesys
in the aggregate of $250,000 or more, other than in the ordinary course
of business;
- make any capital expenditure, other than capital expenditures which are
not, in the aggregate, in excess of $1,000,000 for Genesys and its
subsidiaries taken as a whole;
- settle, compromise or dispose of any claim, action or proceeding
seeking monetary damages in excess of $250,000 or otherwise material to
Genesys;
- enter into any joint venture, partnership or similar agreement with any
person other than a wholly owned subsidiary; or
- authorize, commit to or agree to take any of the foregoing actions,
except as otherwise permitted by the merger agreement.
In addition to the stock options that Genesys may issue under the terms of
the merger agreement, Alcatel has agreed that Genesys may issue options
exercisable for up to 550,000 shares to employees who are hired or promoted
prior to the merger.
CONDUCT OF BUSINESS BY ALCATEL
Alcatel has agreed that, prior to the consummation of the merger, it will
not, and its subsidiaries will not, take any action that makes any of its
representations and warranties untrue, except if the merger agreement provides
otherwise and except for actions which, in the aggregate, would not reasonably
be expected to result in a material adverse effect on Alcatel.
AMENDMENTS; MODIFICATIONS AND WAIVER
Except as otherwise provided in the merger agreement, any provision of the
merger agreement may be amended, modified or waived by the parties to it if the
amendment, modification or waiver is in writing and signed, in the case of an
amendment, by each of Genesys, Alcatel and Eden Merger Corp. or, in the case of
a waiver, by the party against whom the waiver is to be effective; provided
that, after the adoption of the merger agreement by the Genesys shareholders, no
amendment shall be made except as allowed under applicable law.
INDEMNIFICATION
Alcatel will, and, after the merger, will cause Genesys to, provide to
individuals who have served as officers, directors, employees and agents of
Genesys, for six years after the merger, indemnification as set forth in
Genesys' articles of incorporation and by-laws, or in any agreement, according
to the terms in
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effect on September 24, 1999. For six years after the consummation of the
merger, Genesys will provide officers' and directors' liability insurance
covering acts and omissions which occurred prior to the consummation of the
merger to officers and directors of Genesys covered by insurance at the time of
the consummation of the merger, on terms no less favorable than those provided
by Genesys prior to the merger. In no event, however, will Alcatel or Genesys be
required to expend more than 150% of the annual premiums paid by Genesys at the
time of the merger.
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THE VOTING AGREEMENT
As a condition to the willingness of Alcatel to enter into the merger
agreement, Gregory Shenkman, Alec Miloslavsky, Ori Sasson and Bruce Dunlevie
entered into a voting agreement with Alcatel, dated as of September 27, 1999.
The following is a summary of the voting agreement which may not contain all of
the information important to you. You should read the entire voting agreement, a
copy of which is attached to this proxy statement/prospectus as Annex C and is
incorporated herein by reference. Gregory Shenkman, Alec Miloslavsky, Ori Sasson
and Bruce Dunlevie are collectively referred to in this proxy
statement/prospectus as the "Individual Shareholders."
AGREEMENT TO VOTE IN FAVOR OF THE MERGER
Each of the Individual Shareholders agreed to vote all of the shares of
Genesys common stock which they currently own or acquire in the future:
- in favor of the approval, consent, ratification and adoption of the
merger agreement;
- against any action that would materially impede, interfere, or
discourage the merger; and
- against any (i) merger, consolidation or other business combination
involving Genesys, (ii) recapitalization, reorganization, dissolution
or liquidation of Genesys, (iii) extraordinary corporate transaction
involving a disposition of 50% or more of Genesys' assets, and (iv)
action that would result in any material breach of representation,
warranty, covenant or agreement Genesys made or agreed to in the merger
agreement, other than the merger and related transactions with Alcatel.
Additionally, each Individual Shareholder appointed Alcatel, or any
nominee of Alcatel, with full power of substitution, as that Individual
Shareholder's irrevocable proxy and attorney-in-fact to vote and otherwise act
(by written consent or otherwise) with respect to the Individual Shareholder's
shares of Genesys common stock in the event that the Individual Shareholder does
not comply with its obligations under the voting agreement.
REPRESENTATIONS AND WARRANTIES OF THE INDIVIDUAL SHAREHOLDERS
Each Individual Shareholder made certain representations and warranties
to Alcatel, including:
- the number of shares he owns;
- the nature of his ownership;
- the absence of any other voting agreement, voting trust, shareholder
agreement, proxy or other agreement or understanding with respect to
the voting or transfer of any shares of Genesys common stock (except
that 200,000 shares of Genesys common stock owned by Alec Miloslavsky
and 181,670 shares of Genesys common stock owned by Gregory Shenkman
are subject to certain forward contracts with Salomon Smith Barney,
Inc);
- his capacity to enter the voting agreement and the legality, validity
and binding nature of the voting agreement;
- the lack of conflicts with laws and rights of third parties;
- consents and approvals; and
- the absence of certain litigation.
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REPRESENTATIONS AND WARRANTIES OF ALCATEL
Alcatel made certain representations and warranties to the Individual
Shareholders relating to:
- its authority to enter into the voting agreement and the validity and
binding nature of the voting agreement with respect it;
- the lack of any conflict with the organizational documents of Alcatel,
with any law or with Alcatel's agreements with third parties; and
- required filings and consents.
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DESCRIPTION OF ALCATEL SHARES
The following is a summary description of Alcatel's shares based on
certain provisions of Alcatel's articles of association and by-laws and
applicable provisions of the French corporation law, the Loi sur les Societes
Commerciales. This summary does not purport to be complete and is qualified by
reference to Alcatel's full articles of association and by-laws and provisions
of French law. An English translation of Alcatel articles of association and
by-laws is attached to Alcatel's Annual Report on Form 20-F for the year ended
December 31, 1998, which is incorporated by reference in this proxy
statement/prospectus. Many of the rights and restrictions affecting Alcatel
shares are discussed in the "COMPARISON OF SHAREHOLDER RIGHTS" section of this
proxy statement/prospectus, including those associated with shareholders'
meetings and voting rights, preferential subscription rights and dividends. For
additional information regarding these rights and restrictions, you should
review the "COMPARISON OF SHAREHOLDER RIGHTS" section of this proxy
statement/prospectus. If you would like more information about the rights of
holders of Alcatel ADSs, you should review the "DESCRIPTION OF ALCATEL AMERICAN
DEPOSITARY SHARES" section of this proxy statement/prospectus.
GENERAL
Alcatel currently has only one class of capital stock outstanding with a
nominal value of E 10.00 per share. On November 30, 1999, there were 199,533,555
Alcatel shares outstanding. The Alcatel articles of association and by-laws
provide that Alcatel shares may be held in either registered or bearer form,
except that holders of 3% or more of Alcatel's share capital must register their
Alcatel shares.
CHANGES IN CAPITAL STOCK
Alcatel's capital stock may only be increased with the approval of the
shareholders at an extraordinary meeting. The shareholders may delegate to the
Alcatel board of directors, which may in turn delegate to the chairman of the
board of directors, the power required to effect, in one or more stages, certain
increases in capital stock previously approved by the shareholders. At the June
18, 1998 shareholders' meeting, the shareholders of Alcatel granted to Alcatel's
board of directors the power to increase Alcatel's capital stock through the
issuance of shares, warrants, debt instruments or other securities convertible,
redeemable or otherwise exchangeable for Alcatel shares. Alcatel's shareholders
specifically authorized the Alcatel board of directors to increase the capital
stock in connection with exchange offers to acquire other companies or in
response to tender or exchange offers for Alcatel's shares. The board of
directors' power to increase the capital stock expires on August 18, 2000,
except that the power to increase Alcatel's capital stock in connection with
tender or exchange offers for Alcatel's shares expires on the date of the
shareholders' meeting convened to approve the financial statements for the year
ended December 31, 1999. The shareholders may renew either power upon its
expiration.
Capital stock may be increased by the issuance of additional shares or by
an increase in the nominal value of existing shares. Additional Alcatel shares
may be issued:
- for cash;
- in satisfaction of indebtedness by Alcatel;
- for assets contributed to Alcatel in kind; or
- upon the conversion of debt securities previously issued by Alcatel.
The capital stock may also be increased through the capitalization of
existing reserves, in which case the voting and quorum procedures of an ordinary
meeting of shareholders will apply. Share dividends may be approved by the
shareholders, in lieu of payment of cash dividends, at an ordinary meeting. See
also the discussion under the heading "COMPARISON OF SHAREHOLDER RIGHTS --
Dividends."
The capital stock of Alcatel may only be decreased with the approval of
Alcatel's shareholders at an extraordinary meeting. Reductions in capital stock
can be made either by decreasing the nominal value of the Alcatel shares or by
reducing the number of Alcatel shares. The number of Alcatel shares can be
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reduced if Alcatel either exchanges or repurchases and cancels them. Procedures
for reducing Alcatel's capital stock motivated by losses differ from those
motivated by other reasons.
At the June 10, 1999 shareholders' meeting, Alcatel's shareholders
authorized the board of directors to decrease Alcatel's share capital by
canceling the Alcatel shares that it repurchased pursuant to its share
repurchase program. See "NATURE OF TRADING MARKET -- Trading by Alcatel in its
Shares."
FORM, HOLDING AND TRANSFER OF ALCATEL SHARES
Form of Alcatel Shares. Alcatel shares may be held in registered or
bearer form at the option of the holder. Any shareholder owning 3% of the total
number of Alcatel shares, must request, within five trading days of reaching
that ownership level, that all of that shareholder's shares be registered. This
registration requirement will also apply to all Alcatel shares that the
shareholder may subsequently acquire each time the holder's interest in Alcatel
increases by 0.5%, up to and including 50%. Compliance with this requirement is
deemed to be compliance with the notification requirements described below under
"Holdings Exceeding Certain Percentages." In order to determine the 3%
threshold, shares held indirectly and share equivalents, as defined by French
company law, must also be taken into account.
Failure to comply with this requirement may, upon written petition of one
or more shareholders representing 3% or more of the capital stock, result in the
loss of the voting rights attached to the shares in excess of the relevant
threshold.
Holding of Alcatel Shares. Under French corporation law, ownership of
Alcatel shares (whether in registered or bearer form) is not represented by
share certificates. Bearer shares are recorded in the books of an "accredited
financial intermediary" (a French broker, bank or authorized financial
institution registered as such in France), in an account opened in the name of
the shareholder. Ownership of registered shares is recorded in books maintained
by Alcatel or its appointed agent. A holder of registered shares may manage its
own shares or appoint an accredited financial intermediary.
Transfer of Alcatel Shares. Alcatel shares are generally transferred by
means of an entry recorded in the transfer account maintained by or on behalf of
Alcatel for this purpose. However, in certain circumstances, including those in
which Alcatel shares are held in bearer form by a person who is not a resident
of France, an accredited financial intermediary may, in its discretion, issue
physical certificates representing Alcatel shares held in bearer form; provided
that the shares are held and traded outside of France. In that case, the shares
are transferable by delivery of the certificates. In determining whether or not
to issue physical certificates in these circumstances, the accredited financial
intermediary considers certification practices in foreign markets and may
consult with Alcatel.
HOLDINGS EXCEEDING CERTAIN PERCENTAGES
Any individual or entity, acting alone or in concert with others, that
acquires more than five percent, 10 percent, 20 percent, 33 1/3 percent, 50
percent or 66 2/3 percent of the outstanding voting rights of Alcatel or that
subsequently falls below any of these percentages must notify Alcatel of the
number of shares it holds within 15 calendar days of the date the threshold was
crossed. The individual or entity must also notify the Conseil des Marches
Financiers, the self-regulatory organization that has general regulatory
authority over the French stock exchanges, within five trading days of the date
the threshold was crossed. In order to permit shareholders to give the notice
required by law, Alcatel is obligated to publish in the Bulletin des Annonces
Legales Obligatoires, or "BALO," not later than 15 calendar days after Alcatel's
ordinary meeting of shareholders, information with respect to the total number
of votes available as of the date of the meeting. In addition, if Alcatel is
aware that the number of available votes has changed by at least five percent
since the last publication of the number of available votes, Alcatel must
publish the number of votes then available in the BALO within 15 calendar days
of that change and provide the Conseil des Marches Financiers with written
notice.
If a shareholder fails to comply with these notification requirements, the
shareholder will be deprived of voting rights attached to the shares it holds in
excess of the relevant threshold. The shareholder will be
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deprived of these voting rights at all shareholders' meetings held until the end
of a two-year period following the date on which the shareholder has complied
with the notifications requirements. Furthermore, any shareholder who fails to
comply with the above requirements may have all or part of its voting rights
(and not only with respect to the shares in excess of the relevant threshold)
suspended for up to five years by court decree at the request of Alcatel's
chairman, any shareholder of Alcatel or the COB, and may be subject to criminal
penalties.
In addition, the Alcatel articles of association provide that any
individual or entity which at any time owns a number of shares equal to or in
excess of 0.5% of Alcatel's issued capital stock must, within fifteen days of
exceeding this threshold, notify Alcatel by letter, fax or telex of the total
number of shares owned. This declaration must be repeated whenever a new
threshold of 0.5% is crossed up to and including the threshold of 2.5%. In order
to determine these thresholds, shares held directly and share equivalents, as
defined by French company law, must also be taken into account. Failure to
provide timely written notice to Alcatel may, upon petition of one or more
shareholders representing 3% or more of the capital stock, result in the loss of
the voting rights attached to the shares in excess of the relevant threshold.
LIQUIDATION RIGHTS
Upon a liquidation of Alcatel, any assets remaining after paying off all
of Alcatel's liabilities would be distributed pro rata among the holders of
Alcatel shares in proportion to the nominal value of their shareholdings.
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DESCRIPTION OF ALCATEL AMERICAN DEPOSITARY SHARES
Upon consummation of the merger, shares of Genesys common stock may be
converted into the right to receive Alcatel ADSs representing Alcatel shares.
Those Alcatel ADSs will be evidenced by American Depositary Receipts, or ADRs.
The Bank of New York, acting as the depositary for the Alcatel ADSs, will issue
the ADRs in accordance with the Amended and Restated Deposit Agreement, dated as
of March 10, 1997, between Alcatel, The Bank of New York and all holders of ADRs
issued under the deposit agreement.
The following is a summary of certain provisions of the deposit agreement.
Because this is a summary, it does not contain all the information that may be
important to you. For more complete information, you should read the entire
deposit agreement and the form of ADR itself, copies of which are attached as an
exhibit to the registration statement on Form F-6 that Alcatel filed with the
SEC on February 21, 1997 (Registration No. 333-6506). Additional copies of the
deposit agreement are also available for inspection at the principal office of
The Bank of New York, which is located at 101 Barclay Street, New York, New York
10286, and at the principal office of Societe Generale, the custodian under the
deposit agreement, which is located at 32, rue du Champ de Tir, 44312 Nantes,
France.
AMERICAN DEPOSITARY RECEIPTS
Each Alcatel ADS represents one-fifth of an Alcatel share. An ADR may
evidence any whole number of ADSs. The Alcatel shares underlying the ADRs will
be deposited with the custodian or any successor custodian, under the terms of
the deposit agreement.
Under French law and the Alcatel articles of association and by-laws,
shareholders must disclose the amount of their shareholding in certain
circumstances. ADR holders are required to comply with these disclosure
requirements as if the ADRs were the Alcatel shares they represent. An ADR
holder's voting rights could be affected if it does not comply with these
obligations.
DEPOSIT AND WITHDRAWAL OF ALCATEL SHARES
As used in this proxy statement/prospectus, "Deposited Securities" means
the Alcatel shares deposited under the deposit agreement and all other
securities, property and cash received by The Bank of New York or the custodian
in respect or in lieu of the Alcatel shares.
If Alcatel shares are deposited with the custodian, or at The Bank of New
York's principal office for forwarding to the custodian, The Bank of New York
will issue ADRs representing a whole number of ADSs. Upon the payment of
required taxes, charges and fees and the receipt of all required certifications,
The Bank of New York will register the ADRs in the name of the person or persons
specified by the depositor of the Alcatel shares. No Alcatel shares will be
accepted for deposit unless accompanied by evidence satisfactory to The Bank of
New York that any necessary approval has been granted by (a) the French
governmental agency, if any, that regulates currency exchange and (b) the French
governmental authority, if any, that regulates foreign ownership of French
companies. Alcatel will not, and will not permit any of its subsidiaries to,
deposit Alcatel shares for which any necessary approval has not been granted.
Upon surrender of ADRs at The Bank of New York's principal office, and
upon payment of the charges provided for in the deposit agreement, an ADR holder
is entitled to the whole number of Alcatel shares deposited under the deposit
agreement that underlie the ADSs evidenced by the surrendered ADRs. At the ADR
holder's request, risk and expense, The Bank of New York will deliver at its
principal office certificates or other documents of title for the Deposited
Securities, as well as any other property represented by the ADSs.
PRE-RELEASE OF ADRS
The Bank of New York may, unless Alcatel instructs it not to, issue ADRs
prior to the receipt of Alcatel shares. This is called a "Pre-release." In
addition, The Bank of New York may deliver Alcatel shares prior to the receipt
and cancellation of ADRs, even if the ADRs were issued as a Pre-release for
which
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Alcatel shares have not been received. Further, The Bank of New York may receive
ADRs in lieu of Alcatel shares in satisfaction of a Pre-release. Before or at
the time of such a transaction, the person to whom ADRs or Alcatel shares are
delivered must represent that it or its customer:
- owns the Alcatel shares or ADRs to be delivered to The Bank of New
York;
- assigns to The Bank of New York all rights to the Alcatel shares or
ADRs; and
- will not take any action inconsistent with the transfer of ownership of
the Alcatel shares or ADRs.
In addition, each transaction must be:
- fully collateralized (marked to market daily) with cash, United States
government securities or other collateral of comparable safety and
liquidity;
- terminable by The Bank of New York on not more than five business days'
notice; and
- subject to further indemnities and credit regulations as The Bank of
New York deems appropriate.
The Bank of New York will generally limit the number of Alcatel shares
represented by Pre-release ADRs to 30% of the Alcatel shares on deposit with the
custodian under the deposit agreement.
DIVIDENDS, OTHER DISTRIBUTIONS AND RIGHTS
The Bank of New York is responsible for making sure that it or the
custodian, as the case may be, receives all dividends and distributions in
respect of Deposited Securities.
Amounts distributed to ADR holders will be reduced by any taxes or other
governmental charges required to be withheld by Alcatel, the custodian or The
Bank of New York. If The Bank of New York determines that any distribution in
cash or property is subject to any tax or governmental charges that The Bank of
New York or the custodian is obligated to withhold, The Bank of New York may use
the cash or sell or otherwise dispose of all or a portion of that property to
pay the taxes or governmental charges. The Bank of New York will then distribute
the balance of the cash and/or property to the ADR holders entitled to the
distribution, in proportion to their holdings.
Cash Dividends and Cash Distributions. The Bank of New York is required
to convert into dollars all cash dividends and other cash distributions which it
or the custodian receives, to the extent that The Bank of New York can convert
euro (or any other foreign currency) on a reasonable basis and transfer the
resulting dollars to the United States within one day of receipt. The Bank of
New York will distribute the amount it receives, after deduction of charges
incurred in connection with any currency conversion, to the holders of ADRs. If
The Bank of New York determines that any foreign currency received by it cannot
be converted and transferred on a reasonable basis, The Bank of New York may
distribute the foreign currency (or an appropriate document evidencing the right
to receive the currency), or hold that foreign currency uninvested, without
liability for interest, for the accounts of the ADR holders entitled to receive
it.
Distributions of Alcatel Shares. If Alcatel distributes Alcatel shares as
a dividend or free distribution, The Bank of New York may, with Alcatel's
approval, and will, at Alcatel's request, distribute to ADR holders new ADRs
representing the Alcatel shares. The Bank of New York will distribute only whole
ADRs. Instead of distributing fractional ADRs, The Bank of New York will sell
the Alcatel shares that would have required it to use fractional ADRs and then
distribute the proceeds in the same way it distributes cash. If The Bank of New
York deposits the Alcatel shares but does not distribute additional ADRs, the
existing ADRs will also represent the new Alcatel shares.
If Alcatel's shareholders have the option of receiving a dividend in cash
or in Alcatel shares, Alcatel may also grant that option to ADR holders.
Other Distributions. If The Bank of New York or the custodian receives a
distribution of anything other than cash or Alcatel shares, The Bank of New York
will distribute whatever property or securities are received to the ADR holders,
in proportion to their holdings. If The Bank of New York determines that it
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cannot distribute that property or securities proportionately among the ADR
holders, then, after consultation with Alcatel, The Bank of New York may
distribute the property or securities by any means it thinks is fair and
practical, or it may sell the property or securities and distribute the net
proceeds of the sale to the ADR holders.
Rights to Subscribe for Additional Shares and Other Rights. If Alcatel
offers its shareholders any rights to subscribe for additional Alcatel shares or
any other rights, The Bank of New York will, if requested by Alcatel:
- make the rights available to all or certain holders of ADRs, by means
of warrants or otherwise, if lawful and feasible; or
- if it is not lawful or feasible to make the rights available, or if the
rights represented by the warrants or other instruments are not
exercised and appear to be about to lapse, attempt to sell those rights
or warrants or other instruments. In that case, The Bank of New York
will allocate the net proceeds of the sales (net of all taxes and
governmental charges payable in connection with the rights) for the
account of the ADR holders otherwise entitled to the rights. The
allocation will be made on an averaged or other practicable basis
without regard to any distinctions among holders because of the
application of exchange restrictions with regard to a particular holder
or otherwise.
If registration under the Securities Act is required in order for ADR
holders to be offered or sold the securities represented by any rights, The Bank
of New York will not make the rights available to ADR holders unless a
registration statement is in effect. Alcatel does not, however, have any
obligation to file a registration statement or to have a registration statement
declared effective. If The Bank of New York cannot make any rights available to
ADR holders and cannot dispose of the rights and make the net proceeds available
to ADR holders, then The Bank of New York will allow the rights to lapse, and
the ADR holders will not receive any value for them.
RECORD DATES
The Bank of New York will fix a record date any time:
- a dividend or distribution is to be made;
- rights are issued; or
- The Bank of New York receives notice of any meeting of holders of
Alcatel shares or other securities represented by the ADRs.
That record date will determine which ADR holders will be entitled to receive
the dividend, distribution or rights, or the net proceeds of a sale of them, or
to give instructions for the exercise of voting rights at the meeting.
NOTICES AND REPORTS
When Alcatel gives notice, by publication or otherwise, of a shareholders'
meeting or of the taking of any action in respect of any dividend, distribution
or offering of any rights, Alcatel will also transmit to the custodian a copy of
the notice, in the form given or to be given to holders of Deposited Securities.
The Bank of New York will arrange for the mailing to ADR holders of copies of
those notices, as well as other reports and communications which are received by
the custodian as the holder of Deposited Securities.
VOTING OF THE UNDERLYING ALCATEL SHARES
Under the deposit agreement, an ADR holder is entitled, subject to any
applicable provisions of French law, the Alcatel articles of association and
by-laws or the ADRs, to exercise voting rights pertaining to the whole number of
Alcatel shares represented by its ADSs. The Bank of New York will send to ADR
holders English-language summaries of any materials or documents provided by
Alcatel for the purpose of
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exercising voting rights. The Bank of New York will also send to ADR holders
directions as to how to give it voting instructions, as well as a statement as
to how the underlying Alcatel shares will be voted if The Bank of New York
receives blank or improperly completed voting instructions.
Voting rights may be exercised only in respect of five ADSs or integral
multiples thereof (subject to appropriate proportional adjustment in the event
of a stock split, reclassification or other similar event).
Only holders of Alcatel shares who hold their Alcatel shares in registered
form for at least three years will be entitled to double voting rights. Thus,
holders of ADRs representing Alcatel shares in bearer form will not be entitled
to double voting rights. Alcatel ADSs will represent Alcatel shares in bearer
form unless the ADR holder notifies The Bank of New York that it would like the
Alcatel shares to be held in registered form. The section entitled "COMPARISON
OF SHAREHOLDER RIGHTS -- Shareholders' Meetings" describes the double voting
rights and also certain requirements in order to vote Alcatel shares.
If The Bank of New York receives properly completed voting instructions,
on or before the date specified for delivery of voting instructions, it will
either vote the Deposited Securities in accordance with the instructions or
forward the instructions to the custodian. If the voting instructions are
forwarded to the custodian, the custodian will endeavor, insofar as practicable
and permitted under any applicable provisions of French law, the Alcatel
articles of association and by-laws and the Deposited Securities, to vote, or
cause to be voted, the Deposited Securities in accordance with any
nondiscretionary instructions. The Bank of New York will only vote Alcatel
shares or other securities that the ADRs represent in accordance with
instructions or in accordance with the statement as to the manner in which The
Bank of New York will vote if it receives a blank proxy or improperly completed
voting instructions.
The Bank of New York will not charge ADR holders for taking any of these
actions in connection with shareholders' meetings.
INSPECTION OF TRANSFER BOOKS
The Bank of New York will keep books at its principal office in New York
City for the registration and transfer of ADRs. Those books are open for
inspection by ADR holders, except that inspection is not permitted for purposes
of communicating with holders of ADRs on matters that are not related to the
business of Alcatel, the deposit agreement or the ADRs.
CHANGES AFFECTING DEPOSITED SECURITIES
If there is any change in nominal value or any split-up, consolidation,
cancellation or other reclassification of Deposited Securities, or any
recapitalization, reorganization, merger or consolidation or sale of assets
involving Alcatel, then any securities that The Bank of New York receives in
respect of Deposited Securities will become new Deposited Securities. Each ADR
will automatically represent its share of the new Deposited Securities, unless
The Bank of New York delivers new ADRs as described in the following sentence.
The Bank of New York may, with Alcatel's approval, and will, at Alcatel's
request, distribute new ADRs or ask ADR holders to surrender their outstanding
ADRs in exchange for new ADRs describing the new Deposited Securities.
CHARGES OF THE BANK OF NEW YORK
The Bank of New York will charge ADR holders the following fees and
expenses:
- fees for the registration of ADRs, the transfer, splitting-up or
combination of ADRs, and the delivery of dividends, distributions or
rights;
- taxes and other governmental charges;
- cable, telex, facsimile transmission and delivery expenses;
- expenses of conversions of foreign currency into U.S. dollars; and
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- a fee of $5.00 (or less) per each 100 ADSs (or portion thereof) for the
execution and delivery of ADRs and for the surrender of ADRs and
withdrawal of Deposited Securities.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
Amendment of the Deposit Agreement. Alcatel and The Bank of New York may
agree to amend the form of the ADRs and the deposit agreement at any time,
without the consent of the ADR holders. If the amendment adds or increases any
fees or charges (other than taxes or other governmental charges) or prejudices
an important right of ADR holders, it will not take effect as to outstanding
ADRs until the expiration of three months after a notice of the amendment has
been given by The Bank of New York to the record holders of ADRs. At the
expiration of that three-month period, every ADR holder will be deemed, by
continuing to hold its ADRs, to agree to the amendment and to be bound by the
deposit agreement as so amended. Alcatel and The Bank of New York may not amend
the deposit agreement or the form of ADRs to impair any ADR holder's right to
surrender its ADRs and receive the Alcatel shares and any other property
represented by the ADRs, except to comply with mandatory provisions of
applicable law.
Termination of the Deposit Agreement. The Bank of New York will terminate
the deposit agreement if Alcatel asks it to do so and will mail a notice of
termination to the record ADR holders at least 30 days before the date fixed for
the termination. The Bank of New York may likewise terminate the deposit
agreement if it resigns and a successor depositary has not been appointed by
Alcatel and accepted its appointment within 90 days after The Bank of New York
has given Alcatel notice of its resignation. After termination of the deposit
agreement, The Bank of New York will no longer register transfers of ADRs,
distribute dividends to the ADR holders, accept deposits of Alcatel shares, give
any notices, or perform any other acts under the deposit agreement whatsoever,
except that The Bank of New York will continue to:
- collect dividends and other distributions pertaining to Deposited
Securities;
- sell rights as described under the heading "-- Dividends, Other
Distributions and Rights -- Rights to Subscribe for Additional Shares
and Other Rights" above; and
- deliver Deposited Securities, together with any dividends or other
distributions received with respect thereto and the net proceeds of the
sale of any rights or other property, in exchange for surrendered ADRs.
One year after termination, The Bank of New York may sell the Deposited
Securities and hold the proceeds of the sale, together with any other cash then
held by it, for the pro rata benefit of ADR holders that have not surrendered
their ADRs. The Bank of New York will not have liability for interest on the
sale proceeds or any cash it holds.
TRANSFER OF ADRS
ADRs are transferable on the books of The Bank of New York upon surrender
by the holder, if the ADRs are properly endorsed and accompanied by the proper
instruments of transfer. The Bank of New York will execute and deliver a new ADR
to the person entitled to it. The Bank of New York may not suspend the surrender
of ADRs and withdrawal of Deposited Securities, except for:
- temporary delays caused by the closing of transfer books maintained by
The Bank of New York, Alcatel or Alcatel's transfer agent or registrar;
- the deposit of Alcatel shares in connection with voting at a
shareholders' meeting or the payment of dividends;
- the payment of fees, taxes and similar charges; or
- compliance with laws or governmental regulations relating to the ADRs
or to the withdrawal of Deposited Securities.
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The Bank of New York may refuse to deliver ADRs or to register transfers
of ADRs when the transfer books maintained by The Bank of New York or Alcatel's
transfer agent or registrar are closed, or at any time that The Bank of New York
or Alcatel thinks it is advisable to do so.
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NATURE OF TRADING MARKET
The principal trading market for Alcatel shares is the Paris Bourse, on
which the Alcatel shares have been traded since June 3, 1987. The Alcatel shares
are traded on the monthly settlement market of the Premier Marche of the Paris
Bourse. In addition, the ADSs, each representing one-fifth of an Alcatel share,
are listed on the New York Stock Exchange under the symbol "ALA." The ADSs have
been listed on the New York Stock Exchange since May 1992.
TRADING PRACTICES AND PROCEDURES ON THE PARIS BOURSE
Securities listed on the Premier Marche of the Paris Bourse are officially
traded through authorized financial institutions that are members of the Paris
Bourse and are traded continuously on each business day from 9:00 a.m. to 5:00
p.m. (Paris time), with a pre-opening session from 7:45 a.m. to 9:00 a.m. Any
trade of a security that occurs after a stock exchange session closes is
recorded on the next business day at the previous session's closing price for
that security. The ParisBourse(SBF) SA, or the SBF, a market enterprise that
manages and operates the Paris Bourse, publishes a daily official price list
that includes price information on listed securities. The Paris Bourse has
introduced continuous electronic trading during trading hours for most listed
securities.
The SBF manages and operates the Premier Marche and the Second Marche. The
SBF places securities listed on the Premier Marche in one of the three
categories, depending on their trading volume. The Alcatel shares are in the
category known as Continu A, which includes the most actively traded securities.
The minimum daily trading volume required for a security to be in Continu A is
FF 250,000 or twenty trades.
The SBF may suspend trading in a security listed on the Premier Marche if
the quoted price of the security exceeds certain price limits defined by the
regulations of the SBF. In particular, if the quoted price of a Continu A
security varies by more than 10% from the previous day's closing price, the SBF
may suspend trading in that security for up to 15 minutes. Further suspensions
for up to 15 minutes are possible if the price again varies by more than 5%. The
SBF also may suspend trading of a security listed on the Premier Marche in
certain other limited circumstances, including, for example, where there is
unusual trading activity in the security. In addition, in certain exceptional
circumstances the Conseil des Marches Financiers may also suspend trading.
Trades of securities listed on the Premier Marche are settled either in
the cash settlement market or in the monthly settlement market. The Alcatel
shares settle in the monthly settlement market. There are two ways to settle
trades in this market. One option is to settle immediately following the trade.
The second option is to elect on the determination date, which is the sixth
trading day before the end of the month, either to settle by the last trading
day of the month or to pay an additional fee and postpone the settlement
decision to the determination date of the following month. Both cash settlements
and immediate settlements take place on the third trading day following the
trade.
Equity securities traded on the monthly settlement market are considered
to have been transferred only after they have been registered in the purchaser's
account. Under French securities regulations, any sale of a security traded on
the monthly settlement market during the month of a dividend payment date is
deemed to occur after the dividend has been paid. If the sale takes place
before, but during the month of, a dividend payment date, the purchaser's
account will be credited with an amount equal to the dividend paid and the
seller's account will be debited by the same amount.
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ALCATEL SHARE PRICE INFORMATION
The table below provides the reported high and low quoted prices for the
Alcatel shares on the Paris Bourse for the periods indicated.
<TABLE>
<CAPTION>
PRICE PER SHARE(1)
-------------------
HIGH LOW
-------- --------
<S> <C> <C>
1997
First Quarter............................................... 105.04 61.44
Second Quarter.............................................. 115.25 90.55
Third Quarter............................................... 135.22 110.53
Fourth Quarter.............................................. 126.23 91.93
1998
First Quarter............................................... 178.21 114.34
Second Quarter.............................................. 203.82 157.02
Third Quarter............................................... 217.24 75.16
Fourth Quarter.............................................. 116.62 66.62
1999
First Quarter............................................... 126.30 91.50
Second Quarter.............................................. 137.10 105.50
Third Quarter............................................... 150.40 124.50
Fourth Quarter (through December 17)........................ 218.4 124.60
</TABLE>
- ---------------
(1) Share price information was published in French francs until January 1,
1999. Information relating to periods prior to January 1, 1999 has been
translated solely for convenience into euro at the fixed exchange rate of
E 1.00 = FF 6.55957.
On December 17, 1999, the last reported price for an Alcatel Share on the
Paris Bourse was E 200.
TRADING ON THE NEW YORK STOCK EXCHANGE
The Bank of New York serves as depositary with respect to the Alcatel ADSs
traded on the New York Stock Exchange. As of December 15, 1999, 89,983,085
Alcatel ADSs were outstanding in the United States. At that date, the number of
ADS holders of record with The Bank of New York was 2,495.
See "COMPARATIVE STOCK PRICES AND DIVIDENDS" for a table of the reported
high and low quoted prices of Alcatel ADSs on the New York Stock Exchange.
TRADING BY ALCATEL IN ITS SHARES
Under French law, Alcatel may not issue shares to itself. However, Alcatel
may, either directly or through a financial intermediary acting on its behalf,
purchase its own shares for one of three purposes:
(1) to reduce its share capital by canceling the shares it purchases,
with approval of the shareholders at an extraordinary meeting;
(2) to provide employees shares under a profit-sharing plan or stock
option plan; or
(3) if Alcatel's shares are listed on a regulated market (e.g., on the
Premier Marche) to acquire up to 10% of its share capital. To acquire
its own shares for this purpose, Alcatel must first file an
information notice that has received a visa of the COB and must obtain
approval from the shareholders at an ordinary meeting.
In the case of shares repurchased under (3) above, Alcatel has three options. It
may:
- keep the shares;
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- sell or transfer them (including to employees under a profit-sharing or
stock option plan or through an exchange of shares); or
- cancel the shares, with the approval of the shareholders at an
extraordinary shareholders' meeting.
Alcatel may not cancel more than 10% of its outstanding capital over a
24-month period. In addition, under COB regulations, all purchases by Alcatel of
its own shares are subject to certain limitations, including as to timing, price
and quantity, so as not to disrupt the normal trading of the shares.
Furthermore, Alcatel must inform the Conseil des Marches Financiers on a monthly
basis of any purchase, sale, transfer or cancellation of its own shares. The
Conseil des Marches Financiers then makes this information public.
Under French law, a company may not, directly or through an intermediary,
own more than 10% of its outstanding share capital, except in certain limited
circumstances. If Alcatel purchases its own shares, those shares must be held in
registered form. Those shares also must be fully paid. Alcatel shares
repurchased by Alcatel are deemed outstanding under French law, but are not
entitled to dividends, voting rights or preferential subscription rights.
At the annual shareholders' meeting held on June 18, 1998, Alcatel was
authorized to purchase Alcatel shares at a maximum purchase price of FF 1,500
(E 228.67) per share and to sell them at a minimum sale price of FF 700
(E 106.71) per share, up to 10% of the outstanding Alcatel shares. In September
1998, Alcatel commenced a share buyback plan valid until the next annual
shareholders' meeting. At the annual shareholders' meeting held on June 10,
1999, the authorization to purchase Alcatel shares was renewed at a maximum
purchase price of E 230 per share and a minimum sale price of E 90 per share. In
addition, Alcatel's indirect subsidiaries purchase or sell shares from time to
time. As of December 15, 1999, Alcatel held, directly and indirectly, 14,268,874
shares.
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COMPARISON OF SHAREHOLDER RIGHTS
Alcatel is incorporated under the laws of the Republic of France and the
rights of its shareholders are governed by French law and Alcatel's articles of
association and by-laws. Genesys is incorporated under the laws of the State of
California and the rights of its shareholders are governed by California law,
Genesys' articles of incorporation and by-laws.
SIZE OF THE BOARD; TERM OF OFFICE
ALCATEL
Alcatel's articles of association and by-laws provide that its board of
directors must be composed of no less than six but no more than 18 directors.
French corporation law provides, however, that if Alcatel is the surviving
entity in a merger, the maximum number of directors can be increased to 30 for
up to three years following the merger. Alcatel's board of directors currently
consists of 14 members.
Directors on Alcatel's board serve for six year terms. French corporation
law provides that directors may be re-elected for an unlimited number of
additional terms. French corporation law does not allow a board of directors to
be classified.
GENESYS
Under California law, although changes in the number of directors must in
general be approved by a majority of the outstanding shares, the board of
directors may fix the exact number of directors within a stated range set forth
in the articles of incorporation or by-laws, if that stated range has been
approved by the shareholders. Genesys' by-laws permit Genesys' board of
directors to adjust the size of the board from a minimum of four to a maximum of
six directors. The current number of directors is fixed at five.
Under California law and Genesys' by-laws, directors serve until the next
annual meeting.
NOMINATION AND ELECTION OF DIRECTORS
ALCATEL
Generally, Alcatel's board of directors nominates candidates for election
or re-election to the board of directors. The names of those candidates
nominated for election must appear in the agenda for the shareholders' meeting
at which directors will be elected. Information regarding the candidates' ages,
backgrounds and professional activities during the past five years and number of
Alcatel shares they own must be provided to Alcatel's shareholders no later than
five days before the shareholders' meeting. In addition, if the election of
directors is on the agenda of the meeting, any shareholder may propose alternate
or additional candidate(s).
Alcatel's directors are elected by its shareholders at an ordinary
meeting. Directors are elected by a plurality of the votes cast. French
corporation law does not allow for cumulative voting. See "-- Shareholders'
Meetings -- Alcatel -- Attendance and Voting" for further discussion of voting.
The chairman of the board is designated by the board of directors itself.
GENESYS
Genesys' board of directors and shareholders nominate candidates for
election or re-election to the board. Genesys' by-laws require the names of the
nominees for the board appear in the notice for the meeting at which the
nominees will be presented for election.
Genesys' directors are elected by its shareholders at an annual meeting.
Under California law, shareholders of a California corporation may, unless the
corporation's articles of incorporation or by-laws expressly eliminate
cumulative voting, cumulate their votes in the election of directors so long as
at least one shareholder has given notice of an intent to cumulate his or her
votes at the meeting prior to the voting. Genesys' by-laws prohibit cumulative
voting for directors.
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QUALIFICATIONS OF DIRECTORS AND EMPLOYEE DIRECTORS
ALCATEL
Directors can be individuals or entities, including corporations. If an
entity is a director, it appoints an individual to act as its representative.
French corporation law requires that directors hold a minimum number of
shares. Alcatel's articles of association and by-laws require that each member
of Alcatel's board own at least 10 Alcatel shares. No more than a third of
Alcatel's directors may be over 70 years old. If the number of directors over 70
years of age exceeds this limit, the oldest director(s) are be deemed to have
resigned at the ordinary shareholders' meeting called to approve the accounts of
the financial year during which the proportion of directors over 70 years of age
was exceeded, unless the proportion was re-established in the interim. Alcatel's
articles of association and by-laws provide that the maximum ages for the
chairman of the board and the chief executive officer are 68 and 65,
respectively.
Two of Alcatel's directors must be both employees of Alcatel or one of its
consolidated subsidiaries and holders of shares of an Alcatel sponsored mutual
fund whose assets are at least 75% Alcatel shares. If an employee director fails
to satisfy one or both of these criteria, he or she shall be deemed to have
resigned from the board one calendar month thereafter.
If less than two employee directors are on the board, the board must,
within three months, either appoint the necessary number of employee directors
or call a shareholders' meeting to elect the necessary number of employee
directors.
GENESYS
Neither California law nor Genesys' by-laws require board members to have
any specific qualifications.
DUTIES AND POWERS OF THE BOARD AND BOARD VOTING
ALCATEL
Under French corporation law, directors have a duty to oversee and control
the company's management.
Alcatel's articles of association and by-laws grant its board of directors
the broadest powers available under French corporation law to act on behalf of
Alcatel, provided the action is within Alcatel's corporate purpose and does not
prejudice the powers expressly granted to Alcatel's shareholders. Actions taken
by Alcatel's board which are outside the scope of its corporate purpose are
enforceable by third parties against Alcatel, unless Alcatel can prove the third
party knew, or should have known the act was beyond the scope of Alcatel's
corporate purpose. The fact that Alcatel's articles of association and by-laws
are publicly available is not sufficient proof of that knowledge.
Each director has one vote on all matters before the board, but the
chairman of the board has the deciding vote in the event of a tie.
GENESYS
California law and Genesys' by-laws provide that the business and affairs
of the corporation shall be managed and all corporate powers shall be exercised
by or under the direction of the board. In discharging this function, directors
of California corporations owe fiduciary duties of care and loyalty to the
corporations for which they serve as directors as well as the shareholders of
such corporations.
A director of a California corporation, in performance of such director's
duties is fully protected in relying, in good faith, on information, opinions,
reports or statements, including financial statements and other financial data,
prepared by officers or employees of the corporation, counsel, independent
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accountants or a committee of the board on which the director does not serve,
each as to matters which the director believes to be within such person's
professional or expert competence.
Genesys' by-laws provide that the number of directors constituting a
quorum shall be a majority of the number of authorized directors.
REMOVAL OF DIRECTORS AND FILLING OF VACANCIES
ALCATEL
Alcatel's directors may be removed, with or without cause, at any time
prior to the expiration of their terms of office by a majority vote of Alcatel's
shareholders.
As long as at least three directors remain on Alcatel's board, the
remaining directors may appoint new directors to fill vacancies on Alcatel's
board resulting from resignation or death. Alcatel's shareholders must confirm
the appointment of new directors at their next meeting. The term of office of a
director appointed to fill a vacancy created by death or resignation expires at
the end of his or her predecessor's term. If less than three directors remain on
the board, a shareholders' meeting must be called immediately to elect new
directors.
Pursuant to French corporation law, any change in the composition of the
board of directors caused by the removal, resignation or death of one or more
directors must be disclosed to the public within one month of such change.
GENESYS
Under California law, any or all of the directors of a California
corporation may be removed if such removal is approved by the affirmative vote
of a majority of the outstanding shares; provided, however, that no director of
such corporation may be removed, unless the entire board of directors of such
corporation is removed, when the votes cast against removal, or not consenting
in writing to the removal, would be sufficient to elect the director if voted
cumulatively at an election at which the same total number of votes were cast,
or, if the action is taken by written consent, all shares entitled to vote were
voted, and for a corporation such as Genesys without a classified board, the
entire number of directors authorized at the time of the director's most recent
election were then being elected. Genesys' articles of incorporation and by-laws
do not contain any provisions which are inconsistent with California law with
respect to the removal of directors.
Under California law, any vacancy on the board of directors may be filled
by unanimous written consent of the directors then in office, by the affirmative
vote of a majority of the directors at a meeting held pursuant to notice or
waivers of notice or by a sole remaining director. Under Genesys' by-laws, a
vacancy created by the removal of a director by the shareholders or court order
may be filled only by the approval of the vote of a majority of the shares
entitled to vote at a duly held meeting.
LIABILITY OF DIRECTORS
ALCATEL
Article 244 of the French corporation law provides that directors of a
company can be civilly liable to the company or to third parties for violations
of the French corporation law, violations of Alcatel's articles of association
and by-laws or for mismanaging the company.
Mismanagement is broadly defined as any act, intentional or unintentional,
contrary to the interest of the company. If mismanagement results in the
company's bankruptcy, the directors themselves, in their individual capacities,
may be subject to the bankruptcy procedures.
Directors are generally jointly and severally liable for misconduct by the
board, unless misconduct can be attributed to certain directors only. In
particular, all of a company's directors will be jointly and
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severally liable for actions taken by the company's board unless individual
directors can prove they were against the action.
Third parties, including a company's shareholders, bringing suit against
one or more directors must prove they have suffered an injury, either personally
or through the company, and the directors' action caused the injury. See "--
Shareholder Suits" for a description of how shareholders can bring a suit on
behalf of Alcatel.
Directors can incur criminal liability for violating certain provisions of
French corporation law and other laws and regulations, including employment laws
and securities laws and regulations specific to a company's business. In
particular, French corporation law provides that a company's directors can be
fined and/or sentenced to prison if they, in bad faith and for their own direct
or indirect benefit, use the company's assets or credit for purposes which they
know are detrimental to the company's interests.
GENESYS
Under California law, directors are liable to the corporation for (a) acts
or omissions that involve intentional misconduct or a knowing and culpable
violation of law; (b) acts or omissions that a director believes to be contrary
to the best interests of the corporation or its shareholders or that involve the
absence of good faith on the part of the director; (c) any transaction from
which a director derived an improper personal benefit; (d) acts or omissions
that show a reckless disregard for the director's duty to the corporation or
shareholders in circumstances in which the director was aware, or should have
been aware, in the ordinary course of performing a director's duty, of a risk of
serious injury to the corporation or its shareholders; (e) acts or omissions
that constitute an unexcused pattern of inattention that amounts to an
abdication of the director's duty to the corporation or its shareholders; (f)
transactions between the corporation and its directors or corporations which
have related directors; or (g) improper distributions, loans or guarantees made
by the corporation.
LIMITATION ON DIRECTORS' LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
ALCATEL
French corporation law prohibits provisions of the articles of association
and by-laws limiting director liability. French corporation law also prohibits a
company from indemnifying its directors against their liability as describe
above. However, if a director is sued by a third party and ultimately prevails
in the litigation on all counts, but is nevertheless required to bear attorneys'
fees and costs, the company can reimburse those fees and costs pursuant to an
indemnification arrangement with the director. Any indemnification arrangement
between Alcatel and any of its directors must be approved by Alcatel's
shareholders.
GENESYS
Genesys' articles of incorporation provide that the liability of its
directors is limited to the fullest extent permitted by law. California law
permits California corporations to adopt in their articles of incorporation a
provision eliminating, with certain exceptions, the personal liability of a
director to the corporation or its shareholders for monetary damages for breach
of the director's fiduciary duty as a director. California law does not permit
the elimination of monetary liability where such liability is based on: (a)
intentional misconduct or knowing and culpable violation of law; (b) acts or
omissions that a director believes to be contrary to the best interest of the
corporation or its shareholders, or that involve the absence of good faith on
the part of the director; (c) receipt of any improper personal benefit; (d) acts
or omissions that show reckless disregard for the directors's duty to the
corporation or its shareholders, where the director in the ordinary course of
performing a director's duties should have been aware of a risk or serious
injury to the corporation or its shareholders; (e) acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation and its shareholders; (f) interested
transactions between the corporation and a director, in which a director has a
material financial interest; or (g) liability for improper distributions, loans
or guarantees.
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California law permits indemnification of expenses incurred in derivative
or third-party actions, except that with respect to derivative actions (a) no
indemnification may be made when a person is adjudged liable to the corporation
in the performance of that person's duty to the corporation and its
shareholders, unless a court determines such person is entitled to indemnity for
expenses, and then such indemnification may be made only to the extent that such
court shall determine, and (b) no indemnification may be made without court
approval in respect to amounts paid in settling or otherwise disposing of an
action or expenses incurred in defending an action which is settled or otherwise
disposed of without court approval.
Indemnification is permitted by California law only for acts taken by the
person seeking indemnification in good faith and believed to be in the best
interest of the corporation and its shareholders and, with respect to a criminal
proceeding, which such person had no reasonable cause to believe his conduct was
unlawful, as determined by a majority vote of a quorum of disinterested
directors, independent legal counsel (if a quorum of disinterested directors is
not obtainable), a majority vote of a quorum of shareholders (excluding shares
owned by the indemnified party), or the court handling the action. California
law requires indemnification when the individual has successfully defended the
action on the merits. California corporations may include in their articles of
incorporation a provision which extends the scope of indemnification through
agreements, by-laws or other corporate actions beyond that specifically
authorized by law.
LOANS TO DIRECTORS
ALCATEL
French corporation law does not allow a company to make any loan to any
individual member of the board of directors or their dependents. A company may
make loans to members of the board of directors that are entities, but not to
the individual representing the entity, provided certain conflict-of-interest
transaction procedures and conditions are satisfied. See "--
Conflict-of-interest Transactions" for further description of these conditions.
GENESYS
California law provides that any loan to or guaranty for the benefit of a
director or officer, including pursuant to an employee benefit plan, of the
corporation requires approval of holders of a majority of the outstanding shares
of the corporation. However, California law also provides that if Genesys has
100 or more shareholders of record and has adopted a by-law allowing the Genesys
board to do so, the Genesys board alone may approve loans to or guaranties on
behalf of an officer (whether or not such officer is a director) or adopt an
employee benefit plan authorizing such loans or guarantees, by a vote sufficient
without counting the vote of any interested director or directors, if the
Genesys board determines that any such loan, guaranty or plan may reasonably be
expected to benefit the corporation.
SHAREHOLDERS' MEETINGS
ALCATEL
Ordinary and Extraordinary Meetings. Two types of shareholders' meetings
exist under French corporation law, ordinary and extraordinary. Alcatel is
required to hold an ordinary meeting of shareholders within six months of the
end of each fiscal year to approve its annual accounts. Ordinary meetings may
also be held to elect directors, appoint statutory auditors, determine dividends
and ratify agreements entered into between Alcatel on the one hand and its
directors, certain other members of its management, or corporations or other
legal entities that are affiliates of those persons on the other hand.
Extraordinary meetings of shareholders must be held to amend the articles of
association or by-laws, to approve mergers, spinoffs, asset contributions,
dispositions of all or substantially all of a company's assets, to create new
classes of capital stock, to increase or decrease share capital, to waive
shareholders' preferential subscription rights, to authorize employee stock
option plans, to issue debt instruments or other securities convertible,
redeemable or exchangeable into Alcatel shares and to wind up business.
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Right to Call Meetings. Meetings of Alcatel shareholders may be called by
the Alcatel board of directors or, if the Alcatel board of directors does not
call the meeting, by Alcatel's statutory auditors or, under certain
circumstances, by an agent appointed by the President of the Commercial Court
(President du Tribunal de Commerce). Any interested party, in the case of an
emergency, holders of 10% or more of Alcatel's capital stock and certain
qualifying organized groups of shareholders meeting certain specific conditions
pursuant to French corporation law may request that the Commercial Court appoint
an agent.
Notice. Shareholders' meetings must be announced by a preliminary notice
(avis de reunion) at least 30 days prior to the meeting date. The preliminary
notice must set forth certain information, including the agenda for the meeting,
a draft of the resolutions to be submitted to the shareholders, a description of
the procedures which holders of bearer shares must follow to attend the meeting
and the procedure for voting by mail. The preliminary notice must also be
published in the BALO. Final notice of the shareholders' meeting setting forth
the time, date and place of the meeting (avis de convocation) must be sent to
registered shareholders and published in a qualified newspaper and in the BALO
15 days prior to the shareholders' meeting.
Attendance and Voting. Holders of Alcatel shares in registered form must
register their Alcatel shares at least five days prior to a meeting of
shareholders to be entitled to attend and vote at the meeting. Holders of
Alcatel shares in bearer form must deposit with Alcatel at lease five days prior
to a meeting of shareholders a certificate from an accredited financial
intermediary, stating that their Alcatel shares will be held by the intermediary
until the time fixed for the shareholders' meeting. Shareholders may participate
in general meetings either in person or by proxy. Shareholders may vote in
person, by proxy or by mail.
Proxies must be sent to any shareholder upon request. In order to be
counted, proxies must be received at Alcatel's registered office, or at another
address indicated on the notice convening the meeting, prior to the date of the
meeting. A shareholder may grant a proxy to his or her spouse or to another
shareholder. A shareholder that is a corporation may grant a proxy to a legal
representative. Alternatively, the shareholder may send a blank proxy without
nominating any representative. In this case, the chairman of the meeting will
vote the blank proxy in favor of all resolutions proposed by the board of
directors and against all others.
Alcatel must send shareholders a voting form to be used by the shareholder
to vote by mail. The completed form must be returned to Alcatel at least three
days prior to the date of the shareholders' meeting.
Each Alcatel share entitles its holder to one vote at ordinary
shareholders' meetings. However, double voting rights (or two votes per share)
are assigned to Alcatel registered shares held by the same person for at least
three years. These double voting rights expire upon conversion of Alcatel
registered shares into Alcatel bearer shares or upon transfer of ownership.
Under French corporation law, shares held directly or indirectly by Alcatel are
not entitled to voting rights.
No shareholder casting single votes in its own name or by proxy may
exercise more than 8% of the votes present or represented at a shareholders'
meeting. If the shareholder also has the right to exercise double voting rights
in its own name or by proxy, the 8% limitation may be exceeded solely to take
into account those double voting rights. Except as discussed in the next
sentence, however, no shareholder may exercise voting rights exceeding 16% of
the total number of votes present or represented at a shareholders' meeting. The
foregoing limitations do not apply to any person if a person or group of persons
acting in concert who come to own 66.66% or more of all Alcatel shares as a
result of a cash tender offer or a stock-for-stock exchange offer for 100% of
Alcatel's shares. This limitation does not apply to the votes cast by the
chairman of the meeting pursuant to a blank proxy.
French corporation law does not allow for cumulative voting in the
election of directors.
Quorum. For an ordinary shareholders' meeting, 25% of the outstanding
voting power of Alcatel shares must be present for a quorum to exist. For an
extraordinary shareholders' meeting, 33.33% of the outstanding voting power of
Alcatel shares must be present for a quorum to exist. If a shareholders' meeting
is reconvened for lack of a quorum, there is no quorum requirement for an
ordinary shareholders'
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meeting, and 25% of the outstanding voting power must be present for a quorum to
exist for an extraordinary shareholders' meeting.
Majority. A simple majority of the votes cast is required to approve
actions taken at ordinary shareholders' meetings. Actions taken at extraordinary
shareholders' meetings require 66.66% of the votes cast for approval. A
unanimous vote is required, however, to increase the liabilities of
shareholders.
GENESYS
Annual and Special Meetings. Genesys' by-laws provide for two types of
meetings, annual and special. Genesys is required to hold an annual meeting on a
date set by the board in order to elect directors and conduct any other proper
business.
Right to Call Meetings. A special meeting may be called at any time by
the board of directors, by the chairman of the board, by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than 10% of the votes at that meeting.
Notice. All notices of meetings of Genesys shareholders must be sent or
otherwise given in accordance with Genesys' by-laws not less than ten (or, if
sent by third-class mail, 30 days) nor more than 60 days before the date of the
meeting. The notice must specify the place, date and hour of the meeting and (a)
in the case of a special meeting, the general nature of the business to be
transacted, or (b) in the case of the annual meeting, those matters which the
board, at the time of giving notice, intends to present for action by the
shareholders. The notice of any meeting at which directors are to be elected
must include the name of any nominee or nominees whom, at the time of notice,
management intends to present for election.
Attendance and Voting. Shareholders may vote in person or by written
proxy signed by the shareholder and filed with the secretary of the corporation.
Quorum. Genesys' by-laws provide that the presence in person or by proxy
of the holders of a majority of the shares entitled to vote at any meeting shall
constitute a quorum for the transaction of business. The shareholders present at
a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken is approved by at
least a majority of the shares required to constitute a quorum.
Majority. A simple majority of the votes constituting a quorum is
required to approve any action taken at an annual or special meeting.
SHAREHOLDER ACTION BY WRITTEN CONSENT
ALCATEL
Shareholder action by written consent, in lieu of a shareholder meeting,
is not allowed under French corporation law.
GENESYS
Under California law, shareholders may execute an action by written
consent in lieu of a shareholder meeting. However, Genesys' by-laws provide that
any action required or permitted to be taken by the shareholders must be
effected by a duly called annual or special meeting and may not be effected by
any consent in writing.
SHAREHOLDERS' PROPOSALS
ALCATEL
Generally, only actions set forth in a meeting's agenda may be taken at a
shareholders' meeting. Shareholders may, however, dismiss directors and take
certain other actions even if those actions were not
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included in the agenda. Additional resolutions may be submitted for shareholder
approval at the meeting by the board of directors if made within 10 days of the
publication of the preliminary notice in the BALO by:
- one or several shareholders holding a specified percentage of shares;
or
- a duly qualified association of shareholders who have held their shares
in registered form for at least two years and who together hold at
least 1% of Alcatel's voting rights.
During the two weeks preceding a meeting of shareholders, any shareholder
may submit by registered mail questions to the board of directors relating to
the agenda for the meeting. The board of directors must respond to these
questions.
GENESYS
Under California law, any shareholder approval at a meeting other than
unanimous approval by shareholders entitled to vote is valid only if the general
nature of the proposal so approved was stated in the notice of meeting or any
written waiver of notice.
SHAREHOLDER SUITS
ALCATEL
Under French corporation law, one or more shareholders can sue the
directors of the company, on behalf of the company, for damages suffered by the
company. Any damages awarded are paid to the company.
GENESYS
California law provides that a shareholder bringing a derivative action on
behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain criteria are met. California law
also provides that the corporation or the defendant in a derivative suit may,
under certain circumstances, make a motion to the court for an order requiring
the plaintiff shareholder to furnish a security bond.
APPRAISAL RIGHTS
ALCATEL
French corporation law does not provide for an appraisal procedure
allowing dissenting shareholders to have their shares appraised in the context
of a merger or consolidation. However, French law provides that, in certain
circumstances, including mergers, spin-offs, asset contributions or squeeze-
outs, an independent expert must pass upon the fairness of the consideration
being offered.
Rights of appraisal are not available to Alcatel shareholders in
connection with the merger.
GENESYS
For a discussion of dissenters' rights under California law and in
connection with the merger, see "THE SPECIAL MEETING -- Dissenters' Rights."
Annex D contains the full text of Chapter 13 of the California Corporations Code
regarding dissenters' rights.
PREFERENTIAL SUBSCRIPTION RIGHTS
ALCATEL
Under French corporation law, shareholders have preferential rights to
subscribe for additional shares to be issued on a pro rata basis. Additional
shares may be subscribed for with cash or by set-off of cash debts. Shareholders
may also subscribe for any other securities issued which may either directly
result in, or carry rights to subscribe for, additional Alcatel shares.
Shareholders may waive their preferential
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subscription rights in respect of any particular offering, either individually
or collectively, at an extraordinary meeting. In the event of any waiver, the
relevant issuance of securities must be completed within the period prescribed
by law, and the Alcatel board of directors may offer existing holders of shares
a non-transferable priority right to subscribe to the new securities issued
during a limited period of time. Preferential subscription rights, if not
previously waived, are transferable during the subscription period relating to a
particular offering and may be quoted on the Paris Bourse.
GENESYS
No Genesys shareholders have preferential subscription rights.
STOCK REPURCHASES
ALCATEL
For a discussion of Alcatel's ability to purchase and hold Alcatel shares,
see "NATURE OF THE TRADING MARKET -- Trading by Alcatel in its Shares."
GENESYS
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of its
shares) unless either the corporation's retained earnings immediately prior to
the proposed distribution equal or exceed the amount of the proposed
distribution or, immediately after giving effect to such distribution, the
corporation's assets (exclusive of goodwill, capitalized research and
development expenses and deferred charges) would be at least equal to 1 1/4
times its liabilities (not including deferred taxes, deferred income and other
deferred credits), and the corporation's current assets would be at least equal
to its current liabilities (or 1 1/4 times its current liabilities if the
average pre-tax and pre-interest expense earnings for the preceding two fiscal
years were less than the average interest expense for such years). Such tests
are applied to California corporations on a consolidated basis.
ANTI-TAKEOVER STATUTES
ALCATEL
There are no French anti-takeover statutes similar to the anti-takeover
statutes enacted by certain states in the United States. However, a number of
provisions are available under French corporation law that have certain
anti-takeover effects. These provisions include, among other things:
- a company's ability to repurchase its own shares;
- the existence of shares with double voting rights;
- the board's ability to increase share capital during a tender offer;
- limitations on the voting power of each shareholder; and
- shareholders' agreements providing for preemptive rights in case of a
sale of shares by a shareholder.
Additionally, unless a shareholder has double voting rights, Alcatel's
articles of association and by-laws provide that no shareholder may cast, in his
or her own name or by proxy, more than 8% of the votes present or represented at
a shareholders' meeting. See "-- Shareholders' Meetings." In addition, the
shareholders of Alcatel have authorized Alcatel's board of directors to increase
the share capital during a tender or exchange offer for Alcatel shares. See
"DESCRIPTION OF ALCATEL SHARES -- Changes in Capital Stock."
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GENESYS
California has not enacted an anti-takeover statute similar to the
anti-takeover statutes enacted by certain other states.
CONFLICT-OF-INTEREST TRANSACTIONS
ALCATEL
Agreements between a company and a member of its board of directors are
subject to approval the board of directors unless the agreement is entered into
at arm's length and in the ordinary course of business. The same applies to
agreements in which a director has an indirect personal interest. The agreement
may be declared void if it is not submitted to the board of directors for
approval and is proven to be detrimental to the company. Additionally, the
company's statutory auditors must be made aware of the agreement within one
month of its execution and must submit a report to the company's shareholders,
who then must approve the agreement at their next meeting. If the agreement is
not approved by the shareholders, it will remain enforceable by third parties
against the company, but the company may hold the interested member of the board
of directors liable for any damages it suffers as a result thereof.
GENESYS
Under California law, certain contracts or transactions in which one or
more of a corporation's directors has an interest are not void or voidable
because of such interest, provided that certain conditions, such as obtaining
the required approval and fulfilling the requirements of good faith and full
disclosure, are met. California law requires that (a) either the shareholders or
the board of directors must approve any such contract or transaction after full
disclosure of the material facts, and in the case of board approval the contract
or transaction must also be "just and reasonable" to the corporation, or (b) the
person asserting the validity of the contract or transaction must sustain the
burden of proving that it was just and reasonable as to the corporation at the
time it was approved. In the latter case, California law explicitly places the
burden of proof on the interested director.
If shareholder approval is sought, the interested director is not entitled
to vote his shares at the shareholder meeting with respect to any action
regarding such contract or transaction. If board approval is sought, the
contract or transaction must be approved by a majority vote of a quorum of the
directors, without counting the vote of any interested directors (except that
interested directors may be counted for purposes of establishing a quorum).
DIVIDENDS
ALCATEL
Dividends, if any, are decided at ordinary meetings of shareholders and
are generally paid once a year. Interim dividends may be paid if they are
approved by the Alcatel board of directors and distributed in accordance with
French corporation law.
The Alcatel board of directors examines the financial statements each
fiscal year and recommends how to dispose of all unappropriated profits.
Distributable profits of Alcatel are distributed as dividends, unless the
Alcatel shareholders decide otherwise at the ordinary meeting. Distributable
profits are equal to:
- net profits for the year; plus
- profits carried forward; plus
- distributable reserves; minus
- losses carried forward; minus
- amounts to be allocated by law or pursuant to the Alcatel articles of
association and by-laws, as reserves.
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The Alcatel board of directors, at its discretion, may propose a dividend
that is payable in cash or shares. If the shareholders' meeting approves such
proposal, Alcatel shareholders may elect to receive the dividends to which they
are entitled entirely in cash or entirely in shares, plus or minus cash for
fractional amounts. The value of the Alcatel shares is determined by reference
to the price of the shares on the Paris Bourse and cannot be less than their
nominal value. In 1996, the Alcatel board of directors proposed, and the
shareholders approved, payment of dividends either in Alcatel shares or cash.
Accordingly, 1,137,022 Alcatel shares were issued as dividends. In 1997, 1998
and 1999, cash dividends, but not dividends in Alcatel shares, were paid.
Under French corporation law, the ordinary shareholders' meeting at which
annual dividends may be declared must be held within six months of the end of
the company's prior fiscal year unless otherwise authorized by court order.
Annual dividends must be paid within nine months of the end of the company's
prior fiscal year, unless otherwise authorized by court order. Dividends are
payable to persons holding shares issued with a right to the dividends for that
year on the date of payment. Dividends not claimed within five years of the date
of payment become the property of the French government.
If earnings are sufficient, the Alcatel board of directors may, without
the approval of shareholders, declare and pay interim dividends on the basis of
audited accounts. French corporation law requires that interim dividends amount
to at least five francs per share. Interim dividends may also be paid in stock
in lieu of cash. Alcatel has in the past ten years not paid interim dividends.
GENESYS
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of its
shares) unless either the corporation's retained earnings immediately prior to
the proposed distribution equal or exceed the amount of the proposed
distribution or, immediately after giving effect to such distribution, the
corporation's assets (exclusive of goodwill, capitalized research and
development expenses and deferred charges) would be at least equal to 1 1/4
times its liabilities (not including deferred taxes, deferred income and other
deferred credits), and the corporation's current assets would be at least equal
to its current liabilities (or 1 1/4 times its current liabilities if the
average pre-tax and pre-interest expense earnings for the preceding two fiscal
years were less than the average interest expense for such years). Such tests
are applied to California corporations on a consolidated basis.
82
<PAGE> 90
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OWNERSHIP OF SECURITIES
The following table sets forth certain information known to Genesys with
respect to beneficial ownership of Genesys' common stock as of November 1, 1999
for (i) all persons who are beneficial owners of more than five percent of
Genesys' common stock; (ii) each director of Genesys; (iii) each of the
executive officers named in the Summary Compensation Table of the "Executive
Compensation and Related Information" section of Genesys' Annual Report on Form
10-K/A for the fiscal year ended December 31, 1999, including certain former
officers as required by the SEC rules; and (iv) all current executive officers
and directors as a group as of November 1, 1999. As of November 1, 1999, no
executive officers or directors of Alcatel had beneficial ownership of any
shares of Genesys' common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME BENEFICIALLY OWNED(1) PERCENT OWNED(2)
- ---- --------------------- ----------------
<S> <C> <C>
Gregory Shenkman(3)................................... 3,009,750 11.6%
Alec Miloslavsky(4)................................... 2,746,500 10.6%
Ori Sasson(5)......................................... 661,916 2.5%
Richard DeGolia(6).................................... 204,720 *
Donald Hunt(7)........................................ 25,529 *
Paul Levy(8).......................................... 102,500 *
Bruce Dunlevie(9)..................................... 87,748 *
Michael McCloskey(10)................................. 0 *
John McNulty(11)...................................... 14,167 *
Yuri Shtivelman(12)................................... 242,670 *
All current executive officers and directors as a
group (11 Persons)(13).............................. 7,431,335 27.4%
</TABLE>
- ---------------
* Less than one percent.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have
sole voting and investment power with respect to all shares of Genesys'
common stock. The number of shares beneficially owned includes Genesys'
common stock of which such individual has the right to acquire beneficial
ownership either currently or within 60 days after November 1, 1999,
including, but not limited to, upon the exercise of an option.
(2) Percentage of beneficial ownership is based upon 25,853,766 shares of
Genesys' common stock, all of which were outstanding on November 1, 1999.
For each individual, this percentage includes Genesys' common stock of
which such individual has the right to acquire beneficial ownership either
currently or within 60 days of November 1, 1999, including, but not limited
to, upon the exercise of an option; however, such Genesys common stock
shall not be deemed outstanding for the purpose of computing the percentage
owned by any other individual. Such calculation is required by General Rule
13d-3(d)(1)(i) under the Securities Exchange Act of 1934.
(3) Includes 354,000 shares held by Dmitry Shenkman, Trustee of the Michelle
Shenkman 1996 Trust u/t/a dated March 18, 1996, Michelle Shenkman is Mr.
Shenkman's daughter; 354,000 shares held by Dmitry Shenkman, Trustee of the
Nikita Anthony Shenkman 1996 Trust u/t/a dated March 18, 1996, Nikita is
Mr. Shenkman's child; 928,000 shares held by Gregory and Yelena Shenkman,
Trustees of the Shenkman Family Trust u/t/a dated March 7, 1996 and 500,000
shares held by Shenkman Partners. L.P., a California limited partnership of
which Mr. Shenkman is a general partner. Also includes 7,500 shares
issuable upon exercise of options that are currently exercisable or will
become exercisable within 60 days and if exercised would be subject to
Genesys' right of repurchase.
(4) Includes 360,000 shares held by Larry Miloslavsky and Anatoly Elkinbard,
Trustees of the Miloslavsky 1996 Irrevocable Trust u/t/a dated March 13,
1996; 350,000 shares held by Miloslavsky Partners, L.P., a California
limited partnership of which Mr. Miloslavsky is a general partner and
110,000 shares held by Larry and Linda Miloslavsky, Trustee of the Joshua
Trobnika Miloslavsky 1996 Trust u/t/a dated March 15,1996. Also includes
106,250 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after November 1,
1999.
(5) Includes 40,000 shares held by the DAS Trust UTA 9-24-98, 40,000 shares
held by the EIS Trust UTA 9-24-98 and 78,000 shares held by the EYS Trust
UTA 5-19-97, of which Mr. Sasson is the trustee. Includes 450,000 shares
issuable upon exercise of options that shareholders will become immediately
vested and exercisable upon the effective date of the merger.
(6) Includes 104,131 shares held by Richard C. DeGolia or Jennifer H. DeGolia,
as Trustees of the RJ Family Trust u/t/a dated 6/16/95 of which 38,250 are
unvested and subject to repurchase by Genesys. Includes 100,000 unvested
shares that are exercisable and, to the extent exercised, subject to
repurchase by Genesys, at the purchase price paid per share, in the event
of Mr. DeGolia's early termination of service with Genesys.
83
<PAGE> 91
(7) Includes 25,000 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after November 1,
1999.
(8) Includes 30,000 unvested shares that are subject to repurchase by Genesys
at the purchase price paid per share, in the event Mr. Levy resigns from
Genesys' Board of Directors. Also includes 7,500 unvested shares issuable
upon exercise of options that are currently exercisable and if exercised
would be subject to Genesys' right of repurchase.
(9) Includes 57,500 shares issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days after November 1,
1999 and if exercised would be subject to Genesys' right of repurchase.
(10) Mr. McCloskey (former President, Chief Financial Officer and Chief
Operating Officer) holds zero shares of record.
(11) Includes 10,000 unvested shares which are subject to repurchase by Genesys,
at the purchase price paid per share, in the event of Mr. McNulty's (former
Vice President, Sales) early termination of service with Genesys. Also
includes 4,167 unvested shares issuable upon exercise of options that are
currently exercisable and if exercised would be subject to Genesys' right
of repurchase.
(12) Includes 45,000 shares that remain subject to vesting and repurchase by
Genesys and 1,800 shares held by Mr. Shtivelman's daughter. Also includes
100,000 unvested shares that are exercisable and, to the extent exercised,
subject to repurchase by Genesys, at the purchase price paid per share, in
the event of Mr. Shtivelman's early termination of service with Genesys.
(13) Includes (i) 1,203,750 shares issuable upon exercise of stock options that
are exercisable or will become exercisable within 60 days after November 1,
1999, including 800,000 shares that, pursuant to certain employment
agreements become vested and exercisable upon the effective date of the
merger, and (ii) 113,250 unvested shares which are subject to repurchase by
Genesys, at the purchase price paid per share, in the event of the
officer's early termination of service with Genesys.
LEGAL MATTERS
The validity of the Alcatel shares, including those underlying the ADSs
offered hereby, to be issued to Genesys shareholders in connection with the
merger, as well as certain other legal matters in connection with the merger
will be passed upon for Alcatel by Mr. Pascal Durand-Barthez, Alcatel's general
counsel. Mr. Durand-Barthez is regularly employed by Alcatel. Certain legal
matters in connection with the merger will be passed upon for Genesys by Wilson
Sonsini Goodrich & Rosati, Professional Corporation.
EXPERTS
The consolidated financial statements of Genesys incorporated in this
proxy statement/prospectus by reference to its Annual Report on Form 10-K, as
amended, for the year ended June 30, 1999, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto. These consolidated financial statements are incorporated herein by
reference in reliance upon Arthur Andersen LLP's authority as experts in giving
such reports.
The consolidated financial statements of Alcatel incorporated in this
proxy statement/prospectus by reference to its Annual Report on Form 20-F for
the year ended December 31, 1998 have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto. These consolidated financial statements are incorporated herein by
reference in reliance upon Arthur Andersen LLP's authority as experts in giving
such reports.
With respect to the unaudited interim financial information for the six
months ended June 30, 1999 and 1998, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of that
information. However, their separate report thereon dated September 9, 1999
appearing therein states that they did not audit and they do not express an
opinion on that unaudited consolidated interim financial information.
Accordingly, the degree of reliance on their report on that information should
be restricted in light of the limited nature of the review procedures applied.
In addition, the accountants are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Act.
84
<PAGE> 92
WHERE TO FIND MORE INFORMATION
Alcatel and Genesys are each subject to the information reporting
requirements of the Securities Exchange Act and, in accordance with that Act,
file certain reports and other information with the SEC. However, as a foreign
private issuer, Alcatel and its stockholders are exempt from some of the
Securities Exchange Act reporting requirements. The reporting requirements that
do not apply to Alcatel or its stockholders include the proxy solicitation
rules, the rules regarding the furnishing of annual reports to stockholders, and
Section 16 short-swing profit reporting for officers and directors and for
holders of more than 10% of Alcatel shares. You may read and copy any report,
statement or other information filed by Alcatel or Genesys at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Reports and other information filed electronically with the SEC
are also available to the public from commercial document retrieval services and
at the worldwide web site maintained by the SEC at "http:// www.sec.gov."
Alcatel is filing a registration statement on Form F-4 to register with
the SEC the ADSs to be delivered in connection with the merger. This proxy
statement/prospectus is a part of that registration statement and constitutes a
prospectus of Alcatel in addition to being a proxy statement of Genesys for the
special meeting of Genesys shareholders. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
Alcatel provides The Bank of New York with annual and semi-annual reports
in English, as well as summaries in English or an English version of all notices
of stockholders' meetings and other reports and communications that it generally
makes available to stockholders. Alcatel's annual reports include a review of
its operations and annual audited consolidated financial statements prepared in
accordance with French GAAP, together with a reconciliation of net income and
stockholders' equity to U.S. GAAP. Alcatel's semi-annual reports include
unaudited interim consolidated financial information prepared in accordance with
French GAAP. You may read these reports and other documents at The Bank of New
York's Corporate Trust Office at 101 Barclay Street, New York, New York 10286.
The SEC allows Alcatel and Genesys to "incorporate by reference"
information into this proxy statement/prospectus, which means that Alcatel and
Genesys can disclose important information to you by referring you to other
documents filed separately with the SEC. The information incorporated by
reference is deemed to be part of this proxy statement/prospectus, except for
any information superseded by information in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents set
forth below that Alcatel and Genesys have previously filed with the SEC. These
documents contain important information about Alcatel and Genesys and their
finances.
<TABLE>
<CAPTION>
ALCATEL SEC FILINGS (FILE NO. 333-76003) PERIOD
---------------------------------------- ------
<S> <C>
Annual Report on Form 20-F.................... year ended December 31, 1998
Report of Foreign Private Issuer on Form
6-K......................................... dated July 29, 1999
Report of Foreign Private Issuer on Form
6-K......................................... dated September 24, 1999
Report of Foreign Private Issuer on Form
6-K......................................... dated September 30, 1999
Report of Foreign Private Issuer on Form
6-K......................................... dated November 12, 1999
Report of Foreign Private Issuer on Form
6-K......................................... dated November 18, 1999
</TABLE>
<TABLE>
<CAPTION>
GENESYS SEC FILINGS (FILE NO. 000-22605) PERIOD
---------------------------------------- ------
<S> <C>
Genesys' Quarterly Report on Form 10-Q........ for the quarter ended September 30, 1999
Genesys' Current Report on Form 8-K........... dated September 29, 1999
Genesys' Annual Report on Form 10-K/A......... for the fiscal year ended June 30, 1999
Genesys' Quarterly Report on Form 10-Q........ for the quarter ended March 31, 1999
Genesys' Current Report on Form 8-K........... dated January 14, 1999
Genesys' Quarterly Report on Form 10-Q........ for the quarter ended December 31, 1998
Genesys' Current Report on Form 8-K........... dated August 3, 1998
</TABLE>
85
<PAGE> 93
Alcatel and Genesys are also incorporating by reference additional
documents that they file with the SEC between the date of this proxy
statement/prospectus and the date of the special meeting of Genesys
shareholders. All reports and other documents subsequently filed by Alcatel or
Genesys pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act prior to the date of the Special Meeting shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
of such reports and documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this proxy statement/prospectus to the
extent that a statement contained herein, or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute part of this proxy statement/prospectus.
Alcatel has supplied all information contained or incorporated by
reference in this proxy statement/ prospectus relating to Alcatel, and Genesys
has supplied all information relating to Genesys.
If you are a shareholder of Alcatel and/or Genesys, you may have
previously received some of the documents incorporated by reference, but you can
obtain any of them through Alcatel, Genesys or the SEC. Documents incorporated
by reference are available from Alcatel and Genesys without charge. Exhibits to
the documents will not be sent, however, unless those exhibits have specifically
been incorporated by reference in this proxy statement/prospectus. Shareholders
may obtain, without charge, documents incorporated by reference in this proxy
statement/prospectus by requesting them in writing or by telephone from the
appropriate company at the following addresses:
<TABLE>
<S> <C>
Alcatel Genesys Telecommunications Laboratories
Department of Investor Relations Rick DeGolia, Corporate Secretary
54, rue La Boetie 1155 Market Street
75008 Paris San Francisco, CA 94103
France USA
(33) 1-40-76-10-10 (415) 437-1100
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS FROM ALCATEL OR GENESYS, PLEASE DO
SO BY JANUARY 15, 2000 TO RECEIVE THEM BEFORE THE SPECIAL MEETING OF GENESYS
SHAREHOLDERS.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE ON THE MERGER. NEITHER
ALCATEL NOR GENESYS HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT
IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. THIS
PROXY STATEMENT/PROSPECTUS IS DATED DECEMBER 20, 1999. YOU SHOULD NOT ASSUME
THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IS ACCURATE AS
OF ANY DATE OTHER THAN THAT DATE, AND NEITHER THE MAILING OF THIS PROXY
STATEMENT/PROSPECTUS TO GENESYS SHAREHOLDERS, NOR THE DELIVERY OF ALCATEL ADSS,
CASH OR OTHER MERGER CONSIDERATION IN THE MERGER SHOULD CREATE ANY IMPLICATION
TO THE CONTRARY.
86
<PAGE> 94
INDEX TO ALCATEL'S UNAUDITED INTERIM
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-------
<S> <C>
Independent Public Accountants' Review Report............... F-2
Consolidated income statements for the six-month periods
ended June 30, 1999 and 1998 and for the year ended
December 31, 1998......................................... F-3
Consolidated balance sheet at June 30, 1999, June 30, 1998
and December 31, 1998..................................... F-4
Consolidated statements of cash flows for the first half
1999 and 1998 and for 1998................................ F-6
Consolidated statements of changes in shareholders' equity
for the six-month periods ended June 30, 1999 and 1998 and
for the year ended December 31, 1998...................... F-7
Notes to consolidated financial statements.................. F-8
Reconciliation to U.S. GAAP................................. F-18
</TABLE>
F-1
<PAGE> 95
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Alcatel:
We have reviewed the accompanying consolidated balance sheet of Alcatel
and consolidated subsidiaries (the "Alcatel Group") as of June 30, 1999, and the
related consolidated statements of income, cash flows and changes in
shareholders' equity for the six-month periods ended June 30, 1999 and 1998, all
expressed in euro. These financial statements are the responsibility of the
company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles in France.
Without calling into question the conclusions expressed above, we wish to
draw your attention to note 1(b) to the unaudited interim consolidated financial
statements, which state the change in the methods used to evaluate and present
the provisions for pension and retirement indemnities.
Accounting practices used by the Alcatel Group in preparing the
accompanying consolidated interim financial statements conform with generally
accepted accounting principles in France ("French GAAP"), but do not conform in
certain respects with accounting principles generally accepted in the United
States of America ("US GAAP"). A description of the differences between French
GAAP and US GAAP and reconciliations of the consolidated net income (loss) and
shareholders' equity to United States generally accepted accounting principles
are set forth in Notes 11 and 12 of the Notes to the Unaudited Consolidated
Interim Financial Statements.
We have previously audited, in accordance with generally accepted auditing
standards in France and in the United States of America, the consolidated
balance sheet of the Alcatel Group as of December 31, 1998, and the related
consolidated statements of income, cash flows and changes in shareholders'
equity for the year then ended, and, in our report dated March 11, 1999, we
expressed an unqualified opinion on those statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 1998, and the related consolidated statements of income, cash flows
and changes in shareholders' equity for the year then ended, is fairly stated,
in all material respects, in relation to the consolidated balance sheet, and the
related consolidated statement of income, cash flows and changes in
shareholders' equity from which they have been derived.
Arthur Andersen LLP
Paris, France
September, 9, 1999, except for the amounts translated for convenience as
described in Note (a), for which the date is December 15, 1999
F-2
<PAGE> 96
ALCATEL AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30,
-----------------------------------------------
NOTE 1999(A) 1999 1998 1998
---- ------- ------- ------------ ------------
AS PUBLISHED AS PUBLISHED
(IN MILLIONS EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C>
Net sales............................... $10,158 E10,091 E 9,391 E 21,259
Cost of sales........................... (7,269) (7,221) (6,817) (15,426)
------- ------- ------- --------
GROSS PROFIT............................ 2,889 2,870 2,575 5,833
Administrative and selling expenses..... (1,528) (1,518) (1,391) (3,027)
R&D costs............................... (1,048) (1,041) (833) (1,809)
------- ------- ------- --------
INCOME FROM OPERATIONS.................. (3) 313 311 351 997
Financial income (loss)................. (4) (52) (52) 45 (4)
Restructuring costs..................... (9) (142) (141) (8) (406)
Other revenue (expense)................. (5) 375 373 2,160 2,207
------- ------- ------- --------
INCOME BEFORE AMORTIZATION OF GOODWILL
AND TAXES............................. 493 490 2,547 2,795
Income tax.............................. (139) (138) (174) (199)
Share in net income of equity
affiliates............................ 83 82 100 177
CONSOLIDATION NET INCOME BEFORE
AMORTIZATION OF GOODWILL.............. 438 435 2,473 2,774
Amortization of goodwill................ (194) (193) (151) (424)
Minority interests...................... (19) (19) (4) (9)
------- ------- ------- --------
NET INCOME.............................. 224 223 2,318 2,340
======= ======= ======= ========
Basic earnings per share................ (6) 1.22 1.21 14.59 13.83
Diluted earnings per share.............. (6) 1.21 1.20 13.45 13.16
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E") into U.S. Dollars ("$") has been made
solely for the convenience of the reader at the Noon Buying Rate of E 1.00 =
$1.0066 on December 15, 1999.
The accompanying Notes are an integral part of these
Unaudited Condensed Consolidated Interim Financial Statements.
F-3
<PAGE> 97
ALCATEL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30,
--------------------------- DECEMBER 31,
NOTE 1999(A) 1999 1998 1998
---- ------- ------- ------- ------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Goodwill, net............................ (7) $ 6,020 E 5,981 E 4,202 E 4,036
Other intangible assets, net............. 566 562 134 411
------- ------- ------- -------
INTANGIBLE ASSETS, NET................... 6,586 6,543 4,336 4,447
------- ------- ------- -------
Property, plant and equipment............ 10,265 10,198 9,538 9,817
Depreciation............................. (6,553) (6,510) (6,207) (6,188)
------- ------- ------- -------
PROPERTY, PLANT AND EQUIPMENT, NET
VALUE.................................. 3,711 3,687 3,331 3,629
------- ------- ------- -------
Share in net assets of equity
affiliates............................. 1,285 1,277 1,001 1,182
Other investments and miscellaneous,
net.................................... 2,412 2,396 2,076 2,218
------- ------- ------- -------
INVESTMENTS AND OTHER NON-CURRENT
ASSETS................................. 3,697 3,673 3,077 3,400
------- ------- ------- -------
TOTAL NON-CURRENT ASSETS................. 13,995 13,903 10,745 11,477
------- ------- ------- -------
INVENTORIES AND WORK IN PROGRESS......... 4,110 4,083 3,887 3,468
------- ------- ------- -------
Trade receivables and related accounts... 7,958 7,906 7,719 7,726
Other accounts receivable................ 3,720 3,696 2,148 3,157
------- ------- ------- -------
ACCOUNTS RECEIVABLE...................... 11,678 11,601 9,867 10,882
------- ------- ------- -------
Short-term investments................... 336 334 1,238 456
Marketable securities, net value......... 1,672 1,661 352 1,502
Cash..................................... 1,213 1,205 2,695 1,855
------- ------- ------- -------
Cash and cash equivalents................ 2,885 2,866 3,047 3,357
------- ------- ------- -------
SHORT-TERM INVESTMENTS AND CASH AND CASH
EQUIVALENTS............................ 3,221 3,200 4,285 3,813
TOTAL CURRENT ASSETS..................... 19,009 18,884 18,039 18,163
------- ------- ------- -------
TOTAL ASSETS............................. 33,003 32,787 28,784 29,640
======= ======= ======= =======
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E") into U.S. Dollars ("$") has been made
solely for the convenience of the reader at the Noon Buying Rate of E 1.00 =
$1.0066 on December 15, 1999.
The accompanying Notes are an integral part of these
Unaudited Condensed Consolidated Interim Financial Statements.
F-4
<PAGE> 98
ALCATEL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30,
--------------------------------------------- DECEMBER 31,
NOTE 1999(A) 1999 1998 1998
---- ------------- ------------- ------------- -------------
(IN MILLIONS)
BEFORE BEFORE BEFORE BEFORE
APPROPRIATION APPROPRIATION APPROPRIATION APPROPRIATION
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Capital stock (E 10 nominal value;
198,781,381 shares issued at June
30, 1999; FF 40 nominal value
169,270,712 at June 30, 1998 and
198,710,296 at December 31, 1998)... $ 2,001 E 1,988 E 1,032 E 1,212
Additional paid-in capital.......... 6,553 6,510 6,071 7,272
Retained earnings................... 3,720 3,696 1,737 3,675
Cumulative translation
adjustments....................... (718) (713) (811) (989)
Net income.......................... 224 223 2,318 --
Less treasury stock at cost......... (1,278) (1,270) (394) (1,257)
------- -------- -------- --------
SHAREHOLDERS' EQUITY................ (8) 10,503 10,434 9,954 9,913
------- -------- -------- --------
MINORITY INTERESTS.................. 458 455 453 438
------- -------- -------- --------
Accrued pension and retirement
obligations....................... 1,126 1,119 1,172 1,232
Accrued contract costs and other
reserves.......................... (9) 4,085 4,058 3,704 4,045
------- -------- -------- --------
TOTAL RESERVES FOR LIABILITIES AND
CHARGES........................... 5,211 5,177 4,876 5,277
------- -------- -------- --------
Bonds and notes issued.............. (10) 3,236 3,215 2,730 2,134
Other borrowings.................... 3,190 3,169 1,882 1,971
------- -------- -------- --------
TOTAL FINANCIAL DEBT................ 6,426 6,384 4,612 4,105
------- -------- -------- --------
Customers' deposits and advances.... 1,104 1,097 1,849 1,046
Trade payables and related
accounts.......................... 3,532 3,509 3,438 3,416
Other payables...................... 5,771 5,733 3,601 5,446
------- -------- -------- --------
TOTAL OTHER LIABILITIES............. 10,406 10,338 8,889 9,908
------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY............................ 33,003 32,787 28,784 29,640
======= ======== ======== ========
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E") into U.S. Dollars ("$") has been made
solely for the convenience of the reader at the Noon Buying Rate of E 1.00 =
$1.0066 on December 15, 1999.
The accompanying Notes are an integral part of these
Unaudited Condensed Consolidated Interim Financial Statements.
F-5
<PAGE> 99
ALCATEL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FIRST HALF FIRST HALF FIRST HALF
1999(A) 1999 1998 1998
---------- ---------- ---------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income..................................... $ 224 E 223 E 2,318 E 2,340
Minority interests............................. 19 19 4 9
Adjustments to reconcile income before minority
interests to net cash provided by operating
activities:
Depreciation, amortization, net.............. 668 664 540 1,239
Changes in reserves for pension obligations,
net....................................... (115) (114) 42 73
Changes in other reserves, net............... (14) (14) (190) (351)
Net (gain) loss on disposal of non-current
assets.................................... (286) (284) (2,166) (2,250)
Share in net income of equity affiliates (net
of dividends received).................... (51) (51) (38) (102)
---------- -------- -------- --------
WORKING CAPITAL PROVIDED BY OPERATIONS......... 446 443 510 958
---------- -------- -------- --------
Net change in current assets and liabilities:
Decrease (increase) in accounts receivable... (271) (269) 162 (577)
Decrease (increase) in inventories........... (450) (447) (483) (7)
Increase (decrease) in accounts payable and
accrued expenses.......................... 8 8 (162) 156
Changes in reserves on current assets
(including accrued contract costs), net... 1 1 (99) 157
---------- -------- -------- --------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES................................... (266) (264) (71) 687
---------- -------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from disposal of fixed assets......... 65 65 27 125
Capital expenditures........................... (465) (462) (372) (1,012)
Decrease (increase) in loans................... 24 24 28 (47)
Cash expenditures for acquisition of
consolidated companies, net of cash acquired,
and for acquisition of unconsolidated
companies.................................... (2,050) (2,037) (19) (893)
Cash proceeds from sale of previously
consolidated companies, net of cash sold, and
from sale of unconsolidated companies........ 273 271 3,060 2,960
Decrease (increase) in short-term
investments.................................. 258 256 (570) 426
---------- -------- -------- --------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES................................... (1,895) (1,883) 2,154 1,559
NET CASH FLOW AFTER INVESTMENT................. (2,161) (2,147) 2,083 2,246
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term debt......... 934 928 (2,786) (2,758)
Proceeds from issuance of long-term debt....... 1,074 1,067 666 602
Proceeds from issuance of shares............... 5 5 47 277
Dividends paid................................. (382) (379) (287) (295)
---------- -------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES................................... 1,632 1,621 (2,360) (2,175)
---------- -------- -------- --------
Net effect of exchange rate change............. 35 35 (5) (43)
NET INCREASE (DECREASE) IN MARKETABLE
SECURITIES AND CASH.......................... (494) (491) (282) 28
---------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT BEGINNING OF
YEAR......................................... 3,379 3,357 3,329 3,329
---------- -------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR....... 2,885 2,866 3,047 3,357
========== ======== ======== ========
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E") into U.S. Dollars ("$") has been
made solely for the convenience of the reader at the Noon Buying Rate of
E 1.00 = $1.0066 on December 15, 1999.
The accompanying Notes are an integral part of these
Unaudited Condensed Consolidated Interim Financial Statements.
F-6
<PAGE> 100
ALCATEL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
TREASURY
STOCK
NUMBER ADDITIONAL CUMULATIVE OWNED BY
OF SHARES CAPITAL PAID-IN RETAINED TRANSLATION NET CONSOLIDATED SHAREHOLDERS'
OUTSTANDING STOCK CAPITAL EARNINGS ADJUSTMENTS INCOME SUBSIDIARIES EQUITY
----------- ------- ---------- -------- ----------- ------ ------------ -------------
(IN MILLIONS OF EURO)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997
AFTER APPROPRIATION......... 157,953,570 995 5,453 1,501 (855) 0 (394) 6,701
----------- ----- ------ ----- ---- ------ ------ ------
Capital increase............ 35,511,216 217 5,360 5,577
DSC's goodwill charges to
equity..................... (3,541) (3,541)
Net change in treasury stock
owned by consolidated
subsidiaries............... (9,088,242) 9 (863) (854)
Translation adjustment...... (135) (135)
Effect on Thomson-CSF's
stake in Alcatel Space..... 232 232
Change in ALSTOM's profit... (10) (10)
Net income.................. 2,340 2,340
Appropriation of net
income..................... 1,943 (2,340) (397)
----------- ----- ------ ----- ---- ------ ------ ------
BALANCE AT DECEMBER 31, 1998
AFTER APPROPRIATION........ 184,376,544 1,212 7,272 3,675 (989) 0 (1,257) 9,913
Translation of the capital
stock in euro.............. 775 (767) (8) 0
Capital increase............ 71,085 1 5 6
Net change in treasury stock
owned by consolidated
subsidiaries............... (167,656) 29 (13) 16
Translation adjustment...... 276 276
Net income.................. 223 223
----------- ----- ------ ----- ---- ------ ------ ------
BALANCE AT JUNE 30, 1999.... 184,279,973 1,988 6,510 3,696 (713) 223 (1,270) 10,434
=========== ===== ====== ===== ==== ====== ====== ======
</TABLE>
- ---------------
For 1997 and 1998, the Consolidated Financial Statements have been prepared in
French francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
The accompanying Notes are an integral part of these
Unaudited Condensed Consolidated Interim Financial Statements.
F-7
<PAGE> 101
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF ACCOUNTING POLICIES
The interim consolidated financial statements of Alcatel and its
consolidated subsidiaries (the "Group") are presented in accordance with the
Conseil National de la Comptabilite (French Accounting Authorities)
recommendation of March 1999 about interim statements and comply with the same
accounting rules as year-end policies with the following specifications:
A) SEASONAL NATURE OF ACTIVITY
Interim net sales and income from operations recorded by the Telecom
activity have been characterized during past financial years by a highly
seasonal nature due to a high level of activity during the last quarter of the
year, particularly in December. The company expects that this trend, the degree
of which varies each year, will continue in 1999. Pursuant to the Conseil
National de la Comptabilite (French Accounting Authorities) recommendation of
March 1999, these seasonal net sales are accounted for under the same rules as
year-end net sales; sales are recorded in the period in which they are achieved.
B) PENSION AND RETIREMENT OBLIGATIONS
For defined benefit pension plans, in order to harmonize the procedure
throughout the Group, liabilities and prepaid expenses are determined from
January 1, 1999, in accordance with Statements of Financial Accounting Standards
no. 87 and no. 88 as follows:
-- using the Projected Unit Credit Method (with projected final salary);
-- recognising, over the expected average remaining working lives of the
employees participating in the plan, actuarial gains and losses in
excess of more than 10% of the present value of the defined benefit
obligation or 10% of the fair value of any plan assets.
The pension obligation for the first half 1999 has been set up using the
extrapolation of the actuarial evaluation made for December 1998.
Furthermore, the financial component of the periodic benefit cost
(interest costs after deduction of return on plan assets) is from now on shown
in the financial income rather than in the income from operations. For 1998 and
the first half 1998, information has been restated in order to take into account
this new presentation.
The effect of change in valuation and presentation are detailed in Notes
3, 4 and 5.
C) INCOME TAX
For interim financial statements, the income tax charge is calculated by
applying the estimated effective annual tax rate to net income for the period.
The estimated effective annual tax rate takes account of any eventual tax
credits.
D) INTRODUCTION OF THE EURO
The consolidated financial statements, previously presented in French
francs, are now presented in euro. The financial statements denominated in
French francs have been translated into euro using the fixed exchange rate
applicable since January 1, 1999 (E 1 = FF 6.55957) for 1998 and the first
semester 1998. From January 1, 1999, consolidated financial statements are
prepared in euro.
F-8
<PAGE> 102
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2 -- CHANGE IN CONSOLIDATED COMPANIES
The main changes in the consolidated companies for the first half 1999 and
for the year 1998 are as follows:
-- In March 1998, Alcatel sold to ALSTOM (successor of GEC Alsthom NV)
most of the Engineering and Systems segment'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 (the
effective date of the transaction). (Share in net income for the first
quarter amounted to E 9 million.)
-- In June 1998, ALSTOM made an international initial public offering of
up to 120.9 million shares, including 11.7 million new shares and 109.2
million shares previously held by GEC and Alcatel and its 100% owned
subsidiary Societe Immobiliere Kleber-Lauriston (SIKL). Following the
offering, Alcatel retains a 24% stake in the capital. 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 June 30,
1998. (Share in net income at 50% for the first half 1998 amounted to
E 59 million.)
-- In April 1998, Alcatel signed with Aerospatiale, Dassault Industries,
Thomson-CSF and Thomson SA a cooperation agreement for the purpose of
creating a significant defense and electronics entity by grouping within
Thomson-CSF the electronic and defense activities of Alcatel and
Dassault Electronique and by grouping the satellite activities of
Alcatel, Aerospatiale and Thomson-CSF within a single company, Alcatel
Space. Following these transactions, Alcatel held a 16.36% stake in
Thomson-CSF and a 51% stake in Alcatel Space. As of December 31, 1998,
Alcatel's stake in Thomson-CSF had decreased to 15.84% due to the
increase in capital of Thomson-CSF in connection with its tender offer
for Dassault Electronique.
In view of Alcatel's role in managing Thomson-CSF as outlined in the
Shareholders Agreement among the shareholders of Thomson-CSF and Alcatel's
15.84% share in Thomson-CSF, Alcatel has a significant influence on Thomson-CSF,
and therefore accounts for it under the equity method. Alcatel Space is fully
consolidated.
The transactions are accounted for as of January 1, 1998.
-- In September 1998, Alcatel closed in a stock-for-stock transaction the
acquisition of DSC Communications Corporation, a U.S. company with a
strong position in access and switching products for fixed and mobile
networks. Upon closing, 19,504,775 Alcatel shares were issued and DSC
shareholders received 0.815 Alcatel ADSs (American Depositary Shares),
which represents 0.163 shares of ordinary Alcatel stock, for each
outstanding DSC share. At the end of the year 1998, Alcatel combined
DSC's activities with those of its United States operations. DSC (now
Alcatel USA, Inc) has been consolidated since September 1998.
-- In November 1998, Alcatel sold to Mannesmann Dematic AG its postal
automation activities comprising the French APAS SA entity, as well as a
division of Alcatel Bell in Belgium.
-- In December 1998, Alcatel acquired, for $290 million in cash, Packet
Engines Inc, a U.S. company which make routers and powerful Ethernet
switches for local access networks. This company will be consolidated
from January 1, 1999.
F-9
<PAGE> 103
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
-- In March 1999, Alcatel acquired for $350 million Assured Access
Technology Inc, a U.S. company which is an innovative developer of
leading remote access solutions for the rapidly expanding IP carrier
market. This company is consolidated from April 1, 1999.
-- Early in April 1999, Alcatel successfully completed its tender offer
launched at the beginning of March 1999 for $37.00 per share (the
transaction is valued at approximately $2.0 billion) for Xylan
Corporation, a U.S. company with a fast-growing position in the
enterprise data market. This company is consolidated from April 1, 1999.
-- In June 1999, Alcatel acquired for $180 million Internet Devices Inc.,
a U.S. leading provider of IP-based Virtual Private Network solutions.
This company will be consolidated from July 1, 1999.
NOTE 3 -- INFORMATION BY BUSINESS SEGMENT AND BY GEOGRAPHICAL AREA
A) INFORMATION BY BUSINESS SEGMENT
The tables below break down information by business segment:
-- Networking: fixed and mobile switching and voice and data networking,
fixed and mobile radio infrastructure, networking implementation and
design.
-- Internet and Optics: terrestrial and submarine transmission, ADSL,
satellites.
-- Enterprise and Consumer: PBX, corporate networking, terminals.
-- Telecom components: network and data cables, mobile components, power
systems and mechanical components for telecom systems.
-- Energy cables: energy cables and enamelled wires and power systems.
-- Other: includes miscellaneous businesses outside Alcatel's core
business, such as postal automation (sold to Mannesmann in 1998),
defense activities (sold to Thomson-CSF in 1998), corporate purchasing,
reinsurance and banking activities and corporate expenses. None of these
activities meets sufficient quantitative criteria to be disclosed as
reportable segments.
Following the new organization, effective January 1, 1999, wireline and
wireless access systems activities were transferred to the Networking segment
from the Transport and Access segment, which was renamed the Internet and Optics
segment. The former HSS activity was transferred from the Enterprise and
Consumer segment to the Networking segment. The Battery activities were
transferred from the Telecom Components segment to the Energy Cables segment.
F-10
<PAGE> 104
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
For 1998 and the first half 1998, information has been restated in order
to take into account this new information by business segment and the new
presentation of the financial component of the pension costs. Figures for the
year 1998 and the first semester 1998 amount respectively to E 46 million and
E 23 million (Note 1(b)).
<TABLE>
<CAPTION>
INTERNET ENTERPRISE
AND AND TELECOM ENERGY TOTAL
JUNE 30, 1999 NETWORKING OPTICS CONSUMER COMPONENTS CABLES OTHER GROUP
- ------------- ---------- -------- ---------- ---------- ------ ------ -------
(IN MILLIONS OF EURO, EXCEPT FOR STAFF COUNT)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales
- -- segments...................... 3,087 2,354 1,548 1,540 1,759 83
- -- between segments.............. (7) (1) (13) (218) (29) (12)
------ ------ ------ ------ ------ ------ -------
Net sales........................ 3,080 2,353 1,535 1,322 1,730 71 10,091
------ ------ ------ ------ ------ ------ -------
Income from operations........... 55 88 (36) 151 37 16 311
Depreciation of property, plant
and equipment, net............. 121 86 40 56 63 33 400
Appropriation reserves (current
assets and accrued contract
costs)......................... 22 (24) (11) (11) (8) 27 (4)
Capital expenditures............. 104 105 58 60 47 15 389
Property, plant and equipment.... 1,044 675 319 771 590 288 3,687
Inventories and work in
progress....................... 1,289 1,264 524 383 575 48 4,083
Other current assets from
operations(a).................. 3,082 2,598 787 356 1,025 434 8,282
Total assets from operations..... 5,415 4,537 1,630 1,509 2,189 770 16,052
------ ------ ------ ------ ------ ------ -------
Staff............................ 42,852 20,554 15,717 17,785 17,698 3,847 118,453
</TABLE>
- ---------------
<TABLE>
<S> <C> <C>
(a) Total current assets from operations for
reportable segments.......................... 8,282
Eliminations of inter-segment operations..... (199)
-----
Total consolidated trade receivables and
advances..................................... 8,083
=====
</TABLE>
<TABLE>
<CAPTION>
INTERNET ENTERPRISE
AND AND TELECOM ENERGY TOTAL
JUNE 30, 1998 RESTATED* NETWORKING OPTICS CONSUMER COMPONENTS CABLES OTHER GROUP
- ----------------------- ---------- -------- ---------- ---------- ------ ------ -------
(IN MILLIONS OF EURO, EXCEPT FOR STAFF COUNT)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales
- -- segments...................... 2,872 1,845 1,373 1,545 1,891 305
- -- between segments.............. (3) (7) (12) (241) (23) (28)
Net sales........................ 2,869 1,838 1,361 1,304 1,868 277 9,517
Income from operations........... 71 136 (54) 125 82 33 393
------ ------ ------ ------ ------ ------ -------
Staff............................ 41,024 19,642 16,231 19,146 17,502 5,441 118,986
------ ------ ------ ------ ------ ------ -------
</TABLE>
- ---------------
* Taking into account from January 1, 1998, the disposal of the Defense business
and the contribution of the new Space activities from Thomson-CSF.
F-11
<PAGE> 105
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
INTERNET ENTERPRISE
AND AND TELECOM ENERGY TOTAL
1998 RESTATED NETWORKING OPTICS CONSUMER COMPONENTS CABLES OTHER GROUP
- ------------- ---------- -------- ---------- ---------- ------ ------ -------
(IN MILLIONS OF EURO, EXCEPT FOR STAFF COUNT)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales
- -- segments...................... 6,790 4,651 3,126 3,101 3,684 601
- -- between segments.............. (8) (6) (20) (441) (43) (177)
Net sales........................ 6,782 4,646 3,106 2,660 3,641 424 21,259
Income from operations........... 238 462 (69) 298 141 (26) 1,044
------ ------ ------ ------ ------ ------ -------
Staff............................ 42,625 19,906 14,699 18,028 17,425 5,589 118,272
------ ------ ------ ------ ------ ------ -------
</TABLE>
B) INFORMATION BY GEOGRAPHICAL AREA
<TABLE>
<CAPTION>
REST OF NORTH REST OF
FRANCE GERMANY EUROPE ASIA AMERICA WORLD CONSOLIDATED
------ ------- ------- ----- ------- ------- ------------
(IN MILLIONS OF EURO, EXCEPT FOR STAFF COUNT)
<S> <C> <C> <C> <C> <C> <C> <C>
JUNE 30, 1999
NET SALES
-- by subsidiary location....... 3,653 1,056 2,666 330 1,870 516 10,091
-- by geographical market....... 1,601 847 3,662 881 1,983 1,117 10,091
JUNE 30, 1998 (RESTATED)*
NET SALES
-- by subsidiary location....... 3,669 1,015 2,728 314 1,373 418 9,517
-- by geographical market....... 1,681 874 3,399 920 1,399 1,244 9,517
DECEMBER 31, 1998 (RESTATED)*
NET SALES
-- by subsidiary location....... 8,203 2,436 6,238 732 3,037 614 21,259
-- by geographical market....... 3,681 2,082 6,774 2,063 3,437 3,222 21,259
Income from operations............ 230 2 423 21 231 137 1,044
Property, plant and equipment,
net............................. 1,034 531 963 57 816 229 3,629
Total assets...................... 15,354 2,399 6,591 670 3,359 1,267 29,640
Staff............................. 38,267 17,685 35,139 3,575 15,688 7,918 118,272
</TABLE>
- ---------------
* Same restatements as those presented in information by business segment.
NOTE 4 -- FINANCIAL INCOME (LOSS)
<TABLE>
<CAPTION>
JUNE 30,
----------------------
1999 1998 1998
---- ----- -----
(IN MILLIONS OF EURO)
<S> <C> <C> <C>
Net interest (expense) income*.............................. (53) (68) (49)
Dividends**................................................. 32 119 128
Provisions for depreciation of investments.................. (6) (2) (16)
Net exchange gain (loss).................................... 7 (9) (66)
Financial item of retirement fees***........................ (26) -- --
Other financial items (net)................................. (6) 4 (1)
--- ----- -----
FINANCIAL INCOME (LOSS)..................................... (52) 45 (4)
=== ===== =====
</TABLE>
- ---------------
F-12
<PAGE> 106
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
* of which E 74 million for 1998 and E 26 million for the first semester 1998
relating to unamortized premium regarding the 2.5% 1994 convertible bonds
converted during 1998.
** received from unconsolidated companies, which includes E 92 million of
exceptional dividends received from Havas in the first half 1998.
*** in compliance with accounting treatment mentioned in Note 1(b), the
corresponding figures for the first half 1998 and the year 1998 amount
respectively to E 23 million and E 46 million.
NOTE 5 -- OTHER REVENUE (EXPENSE)
<TABLE>
<CAPTION>
JUNE 30,
----------------------
1999 1998 1998
---- ----- -----
(IN MILLIONS OF EURO)
<S> <C> <C> <C>
Net capital gains on disposal of fixed assets*.............. 208 2,166 2,250
Other (net)**............................................... 165 (6) (43)
--- ----- -----
TOTAL....................................................... 373 2,160 2,207
=== ===== =====
</TABLE>
- ---------------
* which includes E 2,098 million relating to the disposal of Cegelec and
Alstom for the first half 1998 and 1998.
** which includes for the first half 1999, E 67 million relating to the change
in actuarial valuation of the pension obligation due to the adoption of the
U.S. accounting standards (Note 1(b)) and E 77 million relating to the
conversion of the Vivendi's convertible bonds at the beginning of 1999.
NOTE 6 -- EARNINGS PER SHARE
The number of shares and share equivalents used to calculate net income
per share and diluted earnings per share is defined in accordance with U.S.
accounting standards.
Net income per share is computed on the basis of the weighted average
number of shares issued after deduction of the weighted average number of shares
owned by group subsidiaries.
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 following tables present a reconciliation of the net income per share
and the diluted earnings per share for each period disclosed:
<TABLE>
<CAPTION>
NUMBER PER SHARE
JUNE 30, 1999 NET INCOME OF SHARES AMOUNT
- ------------- ------------ ----------- ---------
(IN MILLIONS
OF EURO)
<S> <C> <C> <C>
Net income per share................................ 223 184,254,037 1.21
Stock option plans.................................. 0 1,591,564 --
Convertible bonds................................... --
----- ----------- -----
DILUTED EARNINGS PER SHARE.......................... 223 185,845,601 1.20
===== =========== =====
DILUTED EARNINGS PER SHARE BEFORE AMORTIZATION OF
GOODWILL.......................................... 409 185,845,601 2.20
===== =========== =====
</TABLE>
F-13
<PAGE> 107
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
At June 30, 1999, certain securities having a potential dilutive effect in
the future were not included in the computation of diluted earnings per share
because to do so would have been antidilutive:
-- 7% convertible bonds issued by DSC Communications in 1997;
Consolidated subsidiaries owned 14,476,853 shares and zero share
equivalents.
<TABLE>
<CAPTION>
NUMBER PER SHARE
JUNE 30, 1998 NET INCOME OF SHARES AMOUNT
- ------------- ------------ ----------- ---------
(IN MILLIONS
OF EURO)
<S> <C> <C> <C>
Net income per share................................ 2,318 158,921,794 14.59
Stock option plans.................................. -- 2,008,051 --
Convertible bonds................................... 11 12,192,714 --
----- ----------- -----
DILUTED EARNINGS PER SHARE.......................... 2,329 173,122,559 13.45
===== =========== =====
DILUTED EARNINGS PER SHARE BEFORE AMORTIZATION OF
GOODWILL.......................................... 2,480 173,122,559 14.32
</TABLE>
At June 30, 1998, no share equivalent having a potential dilutive effect
in the future existed. Group subsidiaries owned 5,245,510 shares and 2,200,790
share equivalents.
<TABLE>
<CAPTION>
NUMBER PER SHARE
1998 NET INCOME OF SHARES AMOUNT
- ---- ------------ ----------- ---------
(IN MILLIONS
OF EURO)
<S> <C> <C> <C>
Basic earnings per share............................ 2,340 169,142,442 13.83
Stock option plans.................................. -- 1,524,791 --
Convertible bonds................................... 5 7,521,511 --
----- ----------- -----
DILUTED EARNINGS PER SHARE.......................... 2,345 178,188,744 13.16
===== =========== =====
DILUTED EARNINGS PER SHARE BEFORE AMORTIZATION OF
GOODWILL.......................................... 2,760 178,188,744 15.49
</TABLE>
At December 31, 1998, no share equivalent having a potential dilutive
effect in the future existed. Consolidated subsidiaries owned 7,419,355 shares
and 1,420,840 share equivalents.
F-14
<PAGE> 108
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- GOODWILL, NET
<TABLE>
<CAPTION>
JUNE 30,
JUNE 30, 1999 1998 1998
---------------------------------- -------- -----
CUMULATIVE
ACQUISITIONS GROSS VALUE AMORTIZATION NET NET NET
- ------------ ----------- ------------ ----- -------- -----
(IN MILLIONS OF EURO)
<S> <C> <C> <C> <C> <C>
CFA....................................... 2,910 (1,330) 1,580 1,725 1,652
Xylan..................................... 1,439 (18) 1,421 -- --
Telettra.................................. 1,546 (976) 570 625 592
Alcatel Cable............................. 398 (70) 328 348 338
Assured Access............................ 329 (4) 325 -- --
Packet Engine............................. 286 (7) 279 -- --
STC....................................... 907 (688) 219 246 218
NTS Rockwell.............................. 669 (419) 250 261 233
AEG Kabel................................. 380 (278) 102 120 116
Canada Wire and Cable..................... 206 (206) 0 0 --
Alcatel Space............................. 472 (36) 436 254 398
Others.................................... 1,011 (540) 471 623 488
------ ------ ----- ----- -----
TOTAL..................................... 10,553 (4,572) 5,981 4,202 4,036
====== ====== ===== ===== =====
</TABLE>
The acquisition of the U.S. company DSC was financed by capital increase
and therefore the related goodwill (E 3,541 million) was charged against
shareholders' equity. Amortization of goodwill charged to shareholders' equity
would have amounted to E 101 million for the first semester 1999 (E 84 million
in 1998 and E 13 million for the first semester 1998).
The caption "other reserves" includes the negative goodwill (net) related
to the acquisition of Thomson-CSF in 1998 for E 167 million at June 1999 (Note
9). The negative goodwill will be amortized over a twenty year period.
Cumulative amortization of negative goodwill amounted to E 13 million at June
30, 1999.
NOTE 8 -- SHAREHOLDERS' EQUITY
The annual shareholders' meeting of June 10, 1999 determined the net
dividend per share to be E 2.00 before tax credit. Dividends were paid on June
30, 1999, giving rise to an aggregate distribution of E 397 million.
NOTE 9 -- ACCRUED CONTRACT COSTS AND OTHER RESERVES
A) ANALYSIS BY TYPE
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998 1998
-------- -------- -----
(IN MILLIONS OF EURO)
<S> <C> <C> <C>
Accrued contract costs...................................... 2,133 1,606 2,042
Reserves for restructuring.................................. 900 926 915
Other reserves*............................................. 1,025 1,172 1,088
----- ----- -----
TOTAL....................................................... 4,058 3,704 4,045
===== ===== =====
</TABLE>
- ---------------
* of which E 178 million of negative goodwill relating to the acquisition of
Thomson-CSF at December 31, 1998 and E 167 million at June 30, 1999.
F-15
<PAGE> 109
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
Accrued contract costs relate primarily to warranties, cost of completed
billed contracts, contract losses and penalties relating to commercial
contracts.
B) ANALYSIS OF RESERVES FOR RESTRUCTURING
<TABLE>
<CAPTION>
JUNE 30, 1999 JUNE 30, 1998 1998
------------- ------------- -----
(IN MILLIONS OF EURO)
<S> <C> <C> <C>
OPENING BALANCE 915 1,303 1,303
Expensed during year................................. (173) (168) (585)
New plans and adjustments to previous estimates...... 141 8 406
Effect of acquisition (disposal) of consolidated
subsidiaries....................................... (1) (213) (193)
Currency translation adjustments and others.......... 19 (3) (16)
---- ----- -----
CLOSING BALANCE...................................... 900 926 915
==== ===== =====
</TABLE>
A plan aimed at adapting the level of workforce and rationalizing
manufacturing facilities and distribution activities of the Telecom and Cables
sectors was set up in 1995 for the three year period 1996/1998 and mainly
concerns the subsidiaries in France, Italy, Germany, Spain and Belgium. This
plan is expected to be completed in 1999.
The main activities concerned by the new 1998 plan are the following:
-- restructuring of U.S. operations following the DSC acquisition,
-- reorganization of the "carrier data" activity in the United States and
in France.
For the first half 1999, it concerns essentially the HFC activity (Hybrid
Fiber Coax) in Germany, which will be discontinued, as well as of adjustments of
existing plans.
NOTE 10 -- OTHER BONDS AND NOTES
The main changes for the first half 1999 are analyzed as follows:
-- issuance by Alcatel, on February 17, 1999, of a E 1,000 million
convertible bond, bearing interest at 4,375% rate and maturing on
February 17, 2009.
-- redemption for 2,500 million yen (E 28 million) of samurai bonds
amounting to 20,000 million yen issued in 1997.
NOTE 11 -- SUMMARY OF 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 12).
(A) ACCOUNTING FOR GAINS ON SALES OF TREASURY STOCK
Alcatel 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-16
<PAGE> 110
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
(B) 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. For the most recent U.S. acquisitions, the remaining goodwill,
after allocation to the purchase price of research and development in process,
is amortized over a 20-year life in French GAAP as well as in U.S. GAAP.
(C) FAIR VALUE ACCOUNTING FOR THE MERGERS WITH COMPAGNIE FINANCIERE ALCATEL,
ALSTHOM AND GENERALE OCCIDENTALE
Alcatel 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.
(D) 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), DSC Communications Corporation
(1998) and of the 30% stake in Alcatel n.v. (1992) were 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 (over a 20-year life for DSC).
(E) ACCOUNTING FOR MARKETABLE SECURITIES AND MARKETABLE EQUITY SECURITIES
Alcatel 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.
(F) LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFIT AND OTHER
COSTS
Alcatel 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's policy.
(G) ACCOUNTING FOR CLOSING OF DUPLICATE FACILITIES OF ACQUIRING COMPANIES
Under certain conditions, Alcatel 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.
(H) ACCOUNTING FOR THE ACQUISITION OF THE 30% STAKE IN ALCATEL N.V.
In connection with this transaction, Alcatel 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
F-17
<PAGE> 111
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
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.
(I) INCOME TAXES
Income taxes have been accounted for in accordance with the Financial
Accounting Standard Board's Statement no. 109 "Accounting for Income Taxes."
From January 1, 1998, Alcatel's accounting policies are in line with the
recognition of deferred tax assets under U.S. GAAP. Consequently, there will be
no more adjustment for the purpose of reconciliation to U.S. GAAP except for the
tax effect of other adjustments and tax on undistributed earnings on equity
investments.
(J) 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."
(K) ACCOUNTING FOR THE U.S. INVESTMENTS
The costs identified with research and development activities which have
no alternative future use, are not distinguished as part of acquisition cost and
have been considered as goodwill. Under U.S. GAAP, such costs are to be
allocated to the purchase price and expensed at the date of acquisition if
technological feasibility has not been established and no alternative commercial
use has been identified.
(L) OTHER COMPREHENSIVE INCOME
Statement of Financial Accounting Standards no. 130, "Other Comprehensive
Income," effective for financial periods beginning after December 15, 1997,
requires retroactive reporting of comprehensive income and its components,
displayed as prominently as other financial statements. Comprehensive income may
be defined for U.S. GAAP purposes as the change in equity of a business
enterprise from transactions and other events and circumstances from non-owner
sources. French GAAP does not require separate disclosure of all such changes in
equity during a fiscal period.
NOTE 12 -- RECONCILIATION TO U.S. GAAP
The following is a summary of the estimated adjustments to the
Consolidated Income Statements for the six-month period ended June 30, 1999 and
June 30, 1998 and the year 1998 and Alcatel shareholders' equity at June 30,
1999 and December 31, 1998, which would be required if U.S. GAAP had been
applied instead of French GAAP.
On January 1, 1999, the euro was introduced as the common legal currency
of eleven member states of the European Economic and Monetary Union, including
France. The Company has adopted the euro as its reporting currency in its
Consolidated Financial Statements and translated all French franc amounts at the
fixed exchange rate for French francs to euro for 1998. From January 1, 1999,
Consolidated Financial Statements are prepared in euro. Although these 1998
statements depict the same trends as would have been shown had they been
presented in French francs, they may not be directly
F-18
<PAGE> 112
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
comparable to the financial statements of other companies that have also been
restated in euro. Prior to the adoption of the euro, the currencies of other
countries fluctuated against the French francs, but because the euro did not
exist prior to January 1, 1999, historical exchange rates for euro are not
available. A comparison of the Company's financial statements and those of
another company that had historically used a reporting currency other than the
French franc that takes into account actual fluctuation in exchange rates could
give a much different impression than a comparison of the financial statements
and those of another company as translated into euro. Note 1(d) to the
Consolidated Financial Statements explains how the amounts in these statement
were translated.
(1) NET INCOME
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30,
-------------------------------
1999(A) 1999 1998 1998
------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
NET INCOME AS REPORTED IN THE CONSOLIDATED
INCOME STATEMENTS............................. $ 224 E 223 E 2,318 E 2,340
Accounting for gains on sales of treasury
stock....................................... -- --
Amortization of acquisition goodwill.......... 95 94 83 153
Fair value accounting for the mergers of
Alcatel with subsidiaries (amortization of
acquisition goodwill)....................... (6) (6) (6) (12)
Acquisition goodwill charged against
shareholders' equity........................ (67) (67) (6) (53)
Accounting for investments in securities...... 63 63 70 2
Restructuring plans........................... (110) (109) 10 40
Accounting for the acquisition of the 30%
stake in Alcatel n.v. ...................... 1 1 1 1
Income taxes.................................. 4 4 (91) (329)
Accounting for disposal of Cegelec and
ALSTOM...................................... 0 0 (124) (124)
Accounting for Thomson CSF's investment....... (13) (13) 601 430
Purchased in process research and development
(US investments)............................ (303) (301) -- (1,096)
Other adjustments*............................ (146) (145) (26) (212)
Tax effect of the above adjustments........... (49) (49) (20) 39
------- -------- -------- --------
NET INCOME ACCORDING TO U.S. GAAP............. $ (307) E (305) E 2,810 E 1,179
======= ======== ======== ========
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
* For 1999, concerns mainly the cancellation of E 67 million relating to the
change in actuarial valuation of the pension obligation due to the adoption
of U.S. accounting standards (Note 1(b)) and E 77 million relating to the
conversion of the Vivendi's convertible bonds at the beginning of 1999.
For 1998, concerns mainly retirement benefits and unpaid interest and
unamortized premiums on converted bonds (see Note 4).
(a) Translation of amounts from euro ("E ") into U.S. Dollars ("$") has been
made solely for the convenience of the reader at the Noon Buying Rate of
E 1.00 = $1.0066 on December 15, 1999.
F-19
<PAGE> 113
ALCATEL AND SUBSIDIARIES
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS -- (CONTINUED)
(2) STATEMENT OF COMPREHENSIVE INCOME
Under U.S. GAAP, the following information would be displayed within the
consolidated financial statements as either a separate statement or as a
component of the consolidated statements of changes in shareholders' equity and
minority interest.
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30,
-------------------------------
1999(A) 1999 1998 1998
------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
NET INCOME UNDER U.S. GAAP.................... $ (307) E (305) E 2,810 E 1,179
Foreign currency translation adjustments...... 285 283 30 (144)
Unrealized gains on securities................ 100 99 497 398
Minimum pension liabilities adjustments....... (53) (53) 91 77
Tax effect on the above adjustments........... (6) (6) (157) (126)
------- -------- -------- --------
COMPREHENSIVE INCOME ACCORDING TO U.S. GAAP... $ 18 E 18 E 3,271 E 1,384
======= ======== ======== ========
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 =
FF 6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E ") into U.S. Dollars ("$") has been
made solely for the convenience of the reader at the Noon Buying Rate of E 1.00
= $1.0066 on December 15, 1999.
(3) SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30,
-------------------------------
1999(A) 1999 1998
------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
SHAREHOLDERS' EQUITY AS REPORTED IN THE
CONSOLIDATED INTERIM BALANCE SHEET........................ $10,503 E 10,434 E 9,913
Amortization of acquisition goodwill...................... 553 549 451
Fair value accounting for the mergers of Alcatel with
subsidiaries (acquisition goodwill)..................... 529 526 532
Acquisition goodwill charged against shareholders'
equity.................................................. 2,780 2,762 2,829
Accounting for investments in securities.................. 1,004 997 835
Restructuring plans....................................... 195 194 296
Accounting for the acquisition of the 30% stake in Alcatel
n.v..................................................... (45) (45) (46)
Income taxes.............................................. (164) (163) (165)
Accounting for disposal of Cegelec and GEC ALSTOM......... (125) (124) (124)
Accounting for the investment in Thomson-CSF.............. 555 551 564
Purchased in process research and development related to
U.S. investments........................................ (303) (301) --
Other adjustments......................................... (310) (308) (191)
Tax effect of the above adjustments....................... (438) (435) (374)
Minority interests........................................ 1 1 (7)
------- -------- --------
SHAREHOLDERS' EQUITY ACCORDING TO U.S. GAAP............... $14,735 E 14,638 E 14,514
======= ======== ========
</TABLE>
- ---------------
For 1998, the Consolidated Financial Statements have been prepared in French
francs and translated into euro using the fixed exchange rate of E 1.00 = FF
6.55957 applicable since January 1, 1999 (see Note 1(d)).
(a) Translation of amounts from euro ("E") into U.S. Dollars ("$") has been
made solely for the convenience of the reader at the Noon Buying Rate of
E 1.00 = $1.0066 on December 15, 1999.
F-20
<PAGE> 114
ANNEX A
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
GENESYS TELECOMMUNICATIONS LABORATORIES, INC.,
ALCATEL
AND
EDEN MERGER CORP.
Dated as of September 27, 1999
A-1
<PAGE> 115
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I THE MERGER.................................................. A-5
SECTION 1.1 THE MERGER.................................................. A-5
SECTION 1.2 EFFECT ON COMMON STOCK...................................... A-6
SECTION 1.3 EXCHANGE OF CERTIFICATES.................................... A-7
SECTION 1.4 TRANSFER TAXES; WITHHOLDING................................. A-9
SECTION 1.5 STOCK OPTIONS............................................... A-9
SECTION 1.6 LOST CERTIFICATES........................................... A-9
SECTION 1.7 MERGER CLOSING.............................................. A-9
SECTION 1.8 STOCK TRANSFER BOOKS........................................ A-10
SECTION 1.9 RESTRICTED STOCK............................................ A-10
ARTICLE II THE SURVIVING CORPORATION................................... A-10
SECTION 2.1 ARTICLES OF INCORPORATION................................... A-10
SECTION 2.2 BY-LAWS..................................................... A-10
SECTION 2.3 OFFICERS AND DIRECTORS...................................... A-10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-10
SECTION 3.1 CORPORATE EXISTENCE AND POWER............................... A-10
SECTION 3.2 CORPORATE AUTHORIZATION..................................... A-11
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS....................... A-11
SECTION 3.4 CAPITALIZATION.............................................. A-12
SECTION 3.5 SUBSIDIARIES................................................ A-13
SECTION 3.6 SEC DOCUMENTS............................................... A-13
SECTION 3.7 FINANCIAL STATEMENTS........................................ A-13
SECTION 3.8 ABSENCE OF UNDISCLOSED LIABILITIES.......................... A-14
SECTION 3.9 PROXY STATEMENT; FORM F-4................................... A-14
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC.................... A-14
SECTION 3.11 TAXES....................................................... A-15
SECTION 3.12 EMPLOYEE BENEFIT PLANS...................................... A-16
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS............................ A-18
SECTION 3.14 LABOR MATTERS............................................... A-18
SECTION 3.15 CERTAIN CONTRACTS AND ARRANGEMENTS.......................... A-18
SECTION 3.16 ENVIRONMENTAL MATTERS....................................... A-19
SECTION 3.17 INTELLECTUAL PROPERTY....................................... A-20
SECTION 3.18 OPINION OF FINANCIAL ADVISOR................................ A-22
SECTION 3.19 BOARD RECOMMENDATION........................................ A-22
SECTION 3.20 TAX TREATMENT............................................... A-22
SECTION 3.21 FINDERS' FEES............................................... A-22
</TABLE>
A-2
<PAGE> 116
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 3.22 AFFILIATE TRANSACTIONS...................................... A-22
SECTION 3.23 INSURANCE................................................... A-22
SECTION 3.24 YEAR 2000 COMPLIANCE........................................ A-22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
22.......................................................... A-23
SECTION 4.1 CORPORATE EXISTENCE AND POWER............................... A-23
SECTION 4.2 AUTHORIZATION............................................... A-23
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS....................... A-23
SECTION 4.4 CAPITALIZATION.............................................. A-24
SECTION 4.5 SEC DOCUMENTS............................................... A-24
SECTION 4.6 FINANCIAL STATEMENTS........................................ A-24
SECTION 4.7 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC.................... A-25
SECTION 4.8 PROXY STATEMENT; FORM F-4................................... A-25
SECTION 4.9 LITIGATION; COMPLIANCE WITH LAWS............................ A-25
SECTION 4.10 INTELLECTUAL PROPERTY....................................... A-25
SECTION 4.11 MERGER SUB'S OPERATIONS..................................... A-25
SECTION 4.12 TAX TREATMENT............................................... A-25
SECTION 4.13 FINDERS' FEES............................................... A-26
ARTICLE V COVENANTS OF THE PARTIES.................................... A-26
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY...................... A-26
SECTION 5.2 CONDUCT OF THE BUSINESS OF PARENT........................... A-26
SECTION 5.3 SHAREHOLDERS' MEETING; PROXY MATERIAL....................... A-26
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT............ A-27
SECTION 5.5 NO SOLICITATION............................................. A-27
SECTION 5.6 DIRECTOR AND OFFICER LIABILITY.............................. A-28
SECTION 5.7 COMMERCIALLY REASONABLE EFFORTS............................. A-29
SECTION 5.8 CERTAIN FILINGS............................................. A-29
SECTION 5.9 PUBLIC ANNOUNCEMENTS........................................ A-30
SECTION 5.10 FURTHER ASSURANCES.......................................... A-30
SECTION 5.11 EMPLOYEE MATTERS............................................ A-30
SECTION 5.12 TAX-FREE REORGANIZATION TREATMENT........................... A-30
SECTION 5.13 STATE AND FOREIGN PERMITS................................... A-30
SECTION 5.14 LISTING..................................................... A-30
SECTION 5.15 STATE TAKEOVER LAWS......................................... A-31
SECTION 5.16 CERTAIN NOTIFICATIONS....................................... A-31
SECTION 5.17 AFFILIATE LETTERS........................................... A-31
SECTION 5.18 POOLING..................................................... A-31
SECTION 5.19 LETTERS OF ACCOUNTANTS...................................... A-31
ARTICLE VI CONDITIONS TO THE MERGER.................................... A-32
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS...................... A-32
SECTION 6.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO CONSUMMATE THE
MERGER...................................................... A-32
SECTION 6.3 CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS TO
CONSUMMATE THE MERGER....................................... A-33
</TABLE>
A-3
<PAGE> 117
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VII TERMINATION................................................. A-33
SECTION 7.1 TERMINATION................................................. A-33
SECTION 7.2 EFFECT OF TERMINATION....................................... A-34
SECTION 7.3 FEES........................................................ A-35
ARTICLE VIII MISCELLANEOUS............................................... A-35
SECTION 8.1 NOTICES..................................................... A-35
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.................. A-36
SECTION 8.3 INTERPRETATION.............................................. A-36
SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER......................... A-36
SECTION 8.5 SUCCESSORS AND ASSIGNS...................................... A-37
SECTION 8.6 SPECIFIC PERFORMANCE........................................ A-37
SECTION 8.7 GOVERNING LAW............................................... A-37
SECTION 8.8 SEVERABILITY................................................ A-37
SECTION 8.9 THIRD PARTY BENEFICIARIES................................... A-37
SECTION 8.10 ENTIRE AGREEMENT............................................ A-37
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS................................. A-37
</TABLE>
A-4
<PAGE> 118
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of September 27, 1999
(this "AGREEMENT"), by and among Genesys Telecommunications Laboratories, Inc.,
a California corporation (the "COMPANY"), Alcatel, a corporation organized under
the laws of France ("PARENT"), and Eden Merger Corp., a California corporation
and a direct wholly-owned subsidiary of Parent ("MERGER SUB").
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company, and Parent as sole shareholder of Merger Sub, have each approved this
Agreement and the merger of Merger Sub with and into the Company, upon the terms
and subject to the conditions set forth herein, and in accordance with the
California Corporations Code (the "CCC"), whereby each issued and outstanding
share of common stock, no par value (the "COMMON STOCK"), of the Company (other
than shares of Common Stock owned, directly or indirectly, by the Company or by
Merger Sub immediately prior to the Effective Time (as defined in Section 1.1(b)
hereof)), will, upon the terms and subject to the conditions and limitations set
forth herein, be converted into a fraction of a Parent American Depositary Share
(collectively, the "ADSS"), each of which ADS represents one-fifth of a share,
nominal value 10 Euros per share of Parent (the "PARENT SHARES") in accordance
with the provisions of Article I of this Agreement;
WHEREAS, as a condition and inducement to Parent's and Merger Sub's entering
into this Agreement and incurring the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Parent is entering into a
Voting Agreement with certain shareholders of the Company, dated the date hereof
(the "VOTING AGREEMENT"), pursuant to which, among other things, such
shareholders have agreed, subject to the terms and conditions contained therein,
to vote all shares of Common Stock then owned by such shareholders to approve
and adopt this Agreement, and have granted to Parent a proxy to vote their
shares of Common Stock upon the terms and subject to the conditions set forth
therein;
WHEREAS, the parties intend that the Merger shall be accounted for as a "pooling
of interests" for financial reporting purposes in accordance with French
generally accepted accounting principles; and
WHEREAS, for federal income tax purposes, the Merger (as defined in Section
1.1(a) hereof) is intended to qualify as a reorganization under the provisions
of Section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "CODE").
NOW, THEREFORE, in consideration of the representations, warranties, covenants,
agreements and conditions set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
THE MERGER.
SECTION 1.1 THE MERGER.
(a) Upon the terms and subject to the conditions of this Agreement, and in
accordance with the CCC, at the Effective Time (as defined in Section 1.1(b)
hereof), Merger Sub shall be merged (the "MERGER") with and into the Company,
whereupon the separate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation (sometimes referred to herein as the
"SURVIVING CORPORATION") and shall continue to be governed by the laws of the
State of California and shall continue under the name "Genesys
Telecommunications Laboratories, Inc."
(b) Concurrently with the Closing (as defined in Section 1.7 hereof), the
Company, Parent and Merger Sub shall cause an agreement of merger (the
"AGREEMENT OF MERGER") with respect to the Merger to be executed and filed with
the Secretary of State of the State of California (the "SECRETARY OF STATE") as
provided in the CCC. The Merger shall become effective on the date and time at
which the Agreement of Merger has been duly filed with the Secretary of State or
at such other date and time as is
A-5
<PAGE> 119
agreed between the parties and specified in the Agreement of Merger, and such
date and time is hereinafter referred to as the "EFFECTIVE TIME."
(c) From and after the Effective Time, the Surviving Corporation shall
possess all rights, privileges, immunities, powers and franchises and be subject
to all of the obligations, restrictions, disabilities, liabilities, debts and
duties of the Company and Merger Sub.
SECTION 1.2 EFFECT ON COMMON STOCK. At the Effective Time:
(a) CANCELLATION OF SHARES OF COMMON STOCK. Each share of Common Stock
held by the Company as treasury stock and each share of Common Stock owned by
Merger Sub immediately prior to the Effective Time shall automatically be
cancelled and retired and cease to exist, and no consideration or payment shall
be delivered therefor or in respect thereto. All shares of Common Stock to be
converted into ADSs pursuant to this Section 1.2 shall, by virtue of the Merger
and without any action on the part of the holders thereof, cease to be
outstanding, be cancelled and retired and cease to exist, and each holder of a
certificate (representing prior to the Effective Time any such shares of Common
Stock) shall thereafter cease to have any rights with respect to such shares of
Common Stock, except the right to receive (i) the ADSs representing Parent
Shares into which such shares of Common Stock have been converted, (ii) any
dividend and other distributions in accordance with Section 1.3(c) hereof and
(iii) any cash, without interest, to be paid in lieu of any fraction of an ADS
in accordance with Section 1.3(d) hereof.
(b) CAPITAL STOCK OF MERGER SUB. Each share of common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of Common Stock, no par value, of the Surviving
Corporation with the same rights, powers and privileges as the shares so
converted and shall constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(c) CONVERSION OF SHARES OF COMMON STOCK. Subject to Section 1.3(d)
hereof, each share of Common Stock issued and outstanding immediately prior to
the Effective Time (other than shares of Common Stock referred to in the first
sentence of Section 1.2(a) hereof and Dissenting Shares (as defined in Section
1.2(d)) shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into (i) 1.667 ADS's in the event the Closing Share
Value (as defined below) is less than $33.00 and greater than $27.00, or (ii)
that number of ADS's equal to the quotient (calculated to three decimal places)
obtained by dividing $55 by the Closing Share Value in the event the Closing
Share Value is not less than $33.00 or (iii) that number of ADSs equal to the
quotient (calculated to three decimal places) obtained by dividing $45.00 by the
Closing Share Value in the event the Closing Share Value is not greater than
$27.00 (the "EXCHANGE RATIO"). In the event the Closing Share Value is not
greater than $24.00, Parent shall be entitled to deliver to Company
shareholders, in lieu of the ADSs to which they might otherwise be entitled
hereunder, an amount in cash equal to $45.00 per share of Common Stock held. The
parties hereto acknowledge that in such event, several changes to the terms of
the proposed transaction necessitated by such event would arise, including the
fact that the proposed transaction would cease to be a tax-free reorganization.
In such event, the duties of the Exchange Agent as set forth in Section 1.3
below shall be exercised for the exchange of Common Stock for cash instead of
ADSs. "CLOSING SHARE VALUE" shall mean the average of the closing price of the
ADS's on the New York Stock Exchange (the "NYSE") during the 10-trading day
period ending 2 trading days prior to the Special Meeting.
(d) DISSENTING SHARES. (i) Notwithstanding any provision of this
Agreement to the contrary, any shares of Common Stock held by a holder who has
demanded and perfected dissenters' rights for such shares in accordance with the
CCC and who, as of the Effective Time, has not effectively withdrawn or lost
such dissenters' rights ("DISSENTING SHARES") shall not be converted into or
represent a right to receive ADSs pursuant to Section 1.2(c), but the holder
thereof shall only be entitled to such rights as are granted by the CCC.
(i) Notwithstanding the provisions of subsection (i) above, if any
holder of shares of Common Stock who demands purchase of such shares
under the CCC shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder's dissenters' rights, then, as of
the later of (A) the Effective Time or (B) the occurrence of such
event, such holder's shares shall
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automatically be converted into and represent only the right to
receive ADSs as provided in Section 1.2(c), without interest thereon,
upon surrender of the certificate formerly representing such shares.
(ii) The Company shall give Parent (A) prompt notice of its receipt of
any written demands for purchase of any shares of Common Stock,
withdrawals of such demands, and any other instruments relating to the
Merger served pursuant to the CCC and received by the Company and (B)
the opportunity to participate in all negotiations and proceedings
with respect to demands for purchase of any shares of Common Stock
under the CCC. The Company shall not, except with the prior written
consent of Parent or as may be required under applicable laws (in
which case Company shall provide prior notice to Parent), voluntarily
make any payment with respect to any demands for the purchase of
Common Stock or offer to settle or settle any such demands.
SECTION 1.3 EXCHANGE OF CERTIFICATES.
(a) Prior to the mailing of the Proxy Statement (as defined in Section
5.3(c) hereof) The Bank of New York or such other bank, trust company, Person or
Persons as shall be designated by Parent and reasonably acceptable to the
Company shall act as the depositary and exchange agent for the delivery of the
ADSs in exchange for shares of Common Stock (the "EXCHANGE AGENT") in connection
with the Merger. At or promptly following the Effective Time, Parent shall
deposit, or cause to be deposited, with the Exchange Agent the receipts
("ADRS"), representing ADSs, for the benefit of the holders of shares of Common
Stock which are converted into ADSs pursuant to Section 1.2(c) hereof (together
with cash as required to (i) pay any dividends or distributions with respect
thereto in accordance with Section 1.3(c) hereof and (ii) make payments in lieu
of fractional ADSs, pursuant to Section 1.3(d) hereof, being hereinafter
referred to as the "EXCHANGE FUND")). To the extent required, the Exchange Agent
will requisition from The Bank of New York, as depositary for the ADSs (the
"DEPOSITARY"), from time to time, such number of ADSs as are issuable in respect
of shares of Common Stock properly delivered to the Exchange Agent. For purposes
of this Agreement, "PERSON" means any natural person, firm, individual,
corporation, limited liability company, partnership, association, joint venture,
company, business trust, trust or any other entity or organization, whether
incorporated or unincorporated, including a government or political subdivision
or any agency or instrumentality thereof.
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail (and to make available for
collection by hand) to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding shares of
Common Stock (other than Dissenting Shares) (the "CERTIFICATES"), (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificate or Certificates shall pass, only upon proper
delivery of the Certificate or Certificates to the Exchange Agent and which
shall be in the form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for a certificate or certificates representing
ADRs evidencing that number of whole ADSs, if any, into which the number of
shares of Common Stock previously represented by such Certificate shall have
been converted pursuant to this Agreement (which instructions shall provide that
at the election of the surrendering holder, Certificates may be surrendered, and
ADRs evidencing the ADSs in exchange therefor collected, by hand delivery). Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
a letter of transmittal duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate or Certificates shall be
entitled to receive in exchange therefor ADRs evidencing the fraction of an ADS
for each share of Common Stock formerly represented by such Certificate or
Certificates, to be mailed (or made available for collection by hand if so
elected by the surrendering holder) within fifteen business days of receipt
thereof (but in no case prior to the Effective Time), and the Certificate or
Certificates so surrendered shall be forthwith cancelled. The Exchange Agent
shall accept such Certificate or Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange
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thereof in accordance with normal exchange practices. No interest shall be paid
or accrued for the benefit of holders of the Certificates on the cash payable
pursuant to subsections (c) and (d) below upon the surrender of the
Certificates.
(c) No dividends or other distributions with respect to Parent Shares with
a record date on or after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the ADSs represented thereby by reason
of the conversion of shares of Common Stock pursuant to Sections 1.2(c) hereof
and no cash payment in lieu of fractional ADSs shall be paid to any such holder
pursuant to Section 1.3(d) hereof until such Certificate is surrendered in
accordance with this Article I. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid, without
interest, to the person in whose name the ADSs representing such securities are
registered (i) at the time of such surrender or as promptly after the sale of
the Excess ADSs (as defined in Section 1.3(d) hereof) as practicable, the amount
of any cash payable in lieu of fractional ADSs to which such holder is entitled
pursuant to Section 1.3(d) hereof and the proportionate amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to ADSs, and (ii) at the appropriate payment date or as promptly as
practicable thereafter, the proportionate amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender payable with respect
to such ADSs.
(d) Notwithstanding any other provision of this Agreement, no fraction of
an ADS will be issued and no dividend or other distribution, stock split or
interest with respect to Parent Shares shall relate to any fractional ADS, and
such fractional interest shall not entitle the owner thereof to vote or to any
rights as a security holder of the ADSs. In lieu of any such fractional
security, each holder of shares of Common Stock otherwise entitled to a fraction
of an ADS will be entitled to receive in accordance with the provisions of this
Section 1.3 from the Exchange Agent a cash payment representing such holder's
proportionate interest in the net proceeds from the sale by the Exchange Agent
on behalf of all such holders of the aggregate of the fractions of ADSs which
would otherwise be issued (the "EXCESS ADSS"). The sale of the Excess ADSs by
the Exchange Agent shall be executed on the NYSE through one or more member
firms of the NYSE and shall be executed in round lots to the extent practicable.
Until the net proceeds of such sale or sales have been distributed to the
holders of shares of Common Stock, the Exchange Agent will, subject to Section
1.3(e) hereof, hold such proceeds in trust for the holders of shares of Common
Stock (the "ADS TRUST"). Parent shall pay all commissions, transfer taxes (other
than those transfer taxes for which the Company's shareholders are solely
liable) and other out-of-pocket transaction costs, including the expenses and
compensation, of the Exchange Agent incurred in connection with such sale of the
Excess ADSs. As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of shares of Common Stock in lieu of any
fractional ADS interests, the Exchange Agent shall make available such amounts
to such holders of shares of Common Stock without interest.
(e) Any portion of the Exchange Fund which remains undistributed to the
holders of the Certificate or Certificates for one year after the Effective Time
shall be delivered to Parent, upon demand, and any holders of shares of Common
Stock prior to the Merger who have not theretofore complied with this Article I
shall thereafter look for payment of their claim, as general creditors thereof,
only to Parent for their claim for ADSs, any cash without interest, to be paid,
in lieu of any fractional ADSs and any dividends or other distributions with
respect to ADSs to which such holders may be entitled.
(f) None of Parent, Merger Sub, Company or the Exchange Agent shall be
liable to any Person in respect of any ADSs held in the Exchange Fund (and any
cash, dividends and other distributions payable in respect thereof) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate or Certificates shall not have been surrendered
prior to one year after the Effective Time (or immediately prior to such earlier
date on which (i) any ADSs, (ii) any cash in lieu of fractional ADSs or (iii)
any dividends or distributions with respect to ADSs in respect of such
Certificate or Certificates would otherwise escheat to or become the property of
any Governmental Entity (as defined in Section 3.3(b) hereof)), any such ADSs,
cash, dividends or distributions in respect of such Certificate or Certificates
shall, to the extent permitted by applicable law, become the property of Parent,
free and clear of all claims or interest of any Person previously entitled
thereto.
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SECTION 1.4 TRANSFER TAXES; WITHHOLDING. If any certificate for an ADS
is to be issued to, or cash is to be remitted to, a Person (other than the
Person in whose name the Certificate surrendered in exchange therefor is
registered), it shall be a condition of such exchange that the Certificate or
Certificates so surrendered shall be properly endorsed and otherwise in proper
form for transfer and that the Person requesting such exchange shall pay to the
Exchange Agent any transfer or other Taxes (as defined in Section 3.11(b)
hereof) required by reason of the issuance of the ADSs (or cash in lieu of
fractional ADSs) to a Person other than the registered holder of the Certificate
or Certificates so surrendered, or shall establish to the satisfaction of the
Exchange Agent that such Tax either has been paid or is not applicable. Parent
or the Exchange Agent shall be entitled to deduct and withhold from the ADSs (or
cash in lieu of fractional ADSs) otherwise payable pursuant to this Agreement to
any holder of shares of Common Stock such amounts as Parent or the Exchange
Agent are required to deduct and withhold under the Code, or any provision of
state, local or foreign Tax law, with respect to the making of such payment. To
the extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of shares of Common Stock in respect of whom such
deduction and withholding was made by Parent or the Exchange Agent.
SECTION 1.5 STOCK OPTIONS.
(a) Each option granted to a Company employee, consultant or director of
the Company or any Subsidiary of the Company to acquire shares of Common Stock,
which is outstanding immediately prior to the Effective Time ("OPTION") shall
become and represent an option to purchase a number of ADSs (a "SUBSTITUTE
OPTION"), determined by multiplying (i) the number of shares of Common Stock
subject to such Option immediately prior to the Effective Time by (ii) the
Exchange Ratio (rounded to the nearest whole ADS), at an exercise price per ADS
(rounded to the nearest whole cent) equal to the exercise price per share of
Common Stock subject to the Option immediately prior to the Effective Time
divided by the Exchange Ratio; PROVIDED, HOWEVER, that in the case of an Option
that is intended to qualify as an incentive stock option under Section 422 of
the Code, the conversion formula shall be adjusted if necessary to conform with
Section 424(a) of the Code. After the Effective Time, each Substitute Option
shall be exercisable upon the same terms and conditions as were applicable to
the related Option prior to the Effective Time subject to accelerated vesting if
and to the extent provided in the applicable plans as of the date hereof. Parent
shall take such corporate action as may be necessary or appropriate to, as soon
as practicable, but in no event more than five business days following the
Effective Time, file a registration statement on Form S-8 (or any successor or
other appropriate form) with respect to the ADSs subject to any Substitute
Option to the extent such registration is required under applicable law in order
for such ADSs to be sold without restriction in the United States, and Parent
shall use commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as such Substitute Option remains
outstanding.
SECTION 1.6 LOST CERTIFICATES. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the ADSs to which the holder thereof is entitled pursuant to this
Article I.
SECTION 1.7 MERGER CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VI hereof, the closing of the Merger (the
"CLOSING") will take place at 10:00 a.m., California time, on a date to be
specified by the parties hereto, and no later than the second business day after
the satisfaction or waiver of the conditions set forth in Article VI hereof, at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650
Page Mill Road, Palo Alto, California, unless another time, date or place is
agreed to by the parties hereto (such date, the "CLOSING DATE").
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SECTION 1.8 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
From and after the Effective Time, the holders of Certificates shall cease to
have any rights with respect to shares of Common Stock, except as otherwise
provided in this Agreement or by applicable law.
SECTION 1.9 RESTRICTED STOCK. Any unvested shares of restricted stock
shall be converted into ADSs pursuant to Section 1.2(c) hereof and shall
continue to vest upon the same terms and conditions as under the applicable Plan
and/or restricted stock agreement.
ARTICLE II
THE SURVIVING CORPORATION.
SECTION 2.1 ARTICLES OF INCORPORATION. At the Effective Time, the
Articles of Incorporation of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Articles of
Incorporation of the Surviving Corporation; PROVIDED, HOWEVER, that at the
Effective Time the Articles of Incorporation of the Surviving Corporation shall
be amended so that the name of the Surviving Corporation shall be "Genesys
Telecommunications Laboratories, Inc."
SECTION 2.2 BY-LAWS. The by-laws of Merger Sub in effect at the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter amended in accordance with applicable law, the articles of
incorporation of such entity and the by-laws of such entity.
SECTION 2.3 OFFICERS AND DIRECTORS.
(a) From and after the Effective Time, the officers of the Company at the
Effective Time shall be the officers of the Company, until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law.
(b) The Board of Directors of the Company effective as of, and immediately
following, the Effective Time shall consist of the directors of Merger Sub
immediately prior to the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and Merger Sub, subject to such
exceptions as are specifically disclosed in writing in the disclosure letter
previously supplied by the Company to Parent, which disclosure shall provide an
exception to or otherwise qualify the representations or warranties of Company
specifically referred to in such disclosure and such other representations and
warranties to the extent such disclosure shall reasonably appear to be
applicable to such other representations or warranties (the "COMPANY DISCLOSURE
SCHEDULE") as follows:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of California, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, "LICENSES") required to
carry on its business as now conducted except for failures to have any such
License which would not, in the aggregate, have a Company Material Adverse
Effect (as defined below). The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned, leased or operated by it or the nature of its
activities makes such qualification necessary, except in such jurisdictions
where failures to be so qualified would not
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reasonably be expected to, in the aggregate, have a Company Material Adverse
Effect. As used herein, the term "COMPANY MATERIAL ADVERSE EFFECT" means a
material adverse effect on the financial condition, business, assets or results
of operations of the Company and its Subsidiaries, taken as a whole, PROVIDED,
HOWEVER, that in no event shall any effect that results from (x) the public
announcement or pendency of the transactions contemplated hereby or any actions
taken in compliance with this Agreement, (y) changes affecting the
telecommunications and enterprise communications software industries generally
and which do not disproportionately materially affect the Company or (z) changes
affecting the United States economy generally, constitute a Company Material
Adverse Effect. The Company has heretofore made available to Parent true and
complete copies of the Articles of Incorporation and the by-laws of the Company
as currently in effect. The Company's Articles of Incorporation and bylaws are
in full force and effect. The Company is not in violation of any of the
provisions of the Company's Articles of Incorporation or its bylaws.
SECTION 3.2 CORPORATE AUTHORIZATION.
(a) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and, subject to approval of the Company's
shareholders, as set forth in Section 3.2(b) hereof and as contemplated by
Section 5.3 hereof, to perform its obligations hereunder and consummate the
Merger and the other transactions contemplated hereunder. The execution and
delivery of this Agreement and the performance of its obligations hereunder and
the consummation of the Merger and the other transactions contemplated hereby
have been duly and validly authorized, and this Agreement has been approved, by
the Board of Directors of the Company and no other corporate proceedings, on the
part of the Company, other than the approval of the Company's shareholders, are
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company and
constitutes, assuming due authorization, execution and delivery of this
Agreement by Parent and Merger Sub, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) Under applicable law, the Articles of Incorporation and the rules of
the Nasdaq, the affirmative vote of the holders of a majority of the shares of
Common Stock outstanding on the record date, established by the Board of
Directors of the Company in accordance with the by-laws of the Company,
applicable law and this Agreement, is the only vote required to approve the
Merger and adopt this Agreement.
SECTION 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will (i) conflict with
or result in any breach of any provision of the Articles of Incorporation or the
by-laws of the Company; (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or obligation to
repurchase, repay, redeem or acquire or any similar right or obligation) under
any of the terms, conditions or provisions of any note, mortgage, letter of
credit, other evidence of indebtedness, guarantee, license, lease or agreement
or similar instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their assets may be
bound or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b) below have
been obtained or made, as the case may be, violate any order, injunction,
decree, statute, rule or regulation of any Governmental Entity to which the
Company or any of its Subsidiaries is subject, excluding from the foregoing
clauses (ii) and (iii) such requirements, defaults, breaches, rights or
violations (A) that would not, in the aggregate, reasonably be expected to have
a Company Material Adverse Effect (without giving effect to clause (x) of the
definition of Company Material Adverse Effect) and would not have a material
adverse effect on, or materially delay, the ability of the Company to perform
its obligations hereunder or (B) that become applicable as a result of the
business or
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activities in which Parent or Merger Sub or any of their respective affiliates
is or proposes to be engaged or any acts or omissions by, or facts specifically
pertaining to, Parent or Merger Sub.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any government or any agency, court, tribunal,
commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"GOVERNMENTAL ENTITY") is required in connection with the execution and delivery
of this Agreement by the Company or the performance by the Company of its
obligations hereunder, except (i) the filing of the Articles of Merger in
accordance with the CCC and filings to maintain the good standing of the
Surviving Corporation; (ii) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR ACT"), the EC Merger Regulations (as
defined below) or any foreign laws regulating competition, antitrust, investment
or exchange controls; (iii) compliance with any applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "SECURITIES ACT") and the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder (the "EXCHANGE ACT"); (iv) compliance with
any applicable requirements of state blue sky or takeover laws and (v) such
other consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings (A) the failure of which to be obtained or made would
not, in the aggregate, reasonably be expected to have a Company Material Adverse
Effect and would not have a material adverse effect on, or materially delay, the
ability of the Company to perform its obligations hereunder or (B) that become
applicable as a result of the business or activities in which Parent or Merger
Sub or any of their respective affiliates is or proposes to be engaged or any
acts or omissions by, or facts specifically pertaining to, Parent or Merger Sub.
For purposes of this Agreement, "EC MERGER REGULATIONS" mean Council Regulation
(EEC) No. 4064/89 of December 21, 1989 on the Control of Concentrations Between
Undertakings, OJ (1989) L 395/1, as amended, and the regulations and decisions
of the Commission of the European Community or other organs of the European
Union or European Community implementing such regulations.
SECTION 3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 120,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, no par value, of the Company (the "PREFERRED STOCK"). As of September 24,
1999, there were (i) 25,374,145 shares of Common Stock issued and outstanding
and (ii) no shares of Preferred Stock issued and outstanding. All shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and were not issued in violation of any
preemptive rights. As of September 24, 1999, there were outstanding Options to
purchase 11,966,169 shares of Common Stock. The Company has provided to Parent
schedules detailing each outstanding Option, the name of the holder of such
Option, the number of shares of Common Stock subject to such Option, the
exercise price of such Option and the vesting schedule of such Option, including
the extent vested to date and whether the exercisability of such Option will be
accelerated and become exercisable by the transactions contemplated by this
Agreement. Except as set forth in this Section 3.4 and except for changes since
September 24, 1999, resulting from the exercise of Options outstanding on such
date, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no securities of the Company or any Subsidiary
of the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company and (iii) no options or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "COMPANY SECURITIES"). There are no
outstanding obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. No Subsidiary of the Company
owns any capital stock or other voting securities of the Company. There are no
outstanding contractual obligations of the Company to provide funds to, or make
any investment (in the form of a loan, capital contribution or otherwise) in,
any other Person.
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SECTION 3.5 SUBSIDIARIES.
(a) Each Subsidiary of the Company that is actively engaged in any
business or owns any material assets (each, an "ACTIVE COMPANY SUBSIDIARY") (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) has all corporate powers and
all material governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and (iii) is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for failures
of this representation and warranty to be true which would not, in the
aggregate, have a Company Material Adverse Effect. For purposes of this
Agreement, "SUBSIDIARY" means with respect to any Person, any corporation or
other legal entity of which such Person owns, directly or indirectly, more than
50% of the outstanding stock or other equity interests, the holders of which are
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity. All Active Company Subsidiaries
and their respective jurisdictions of incorporation and the percentage of each
such Subsidiary's outstanding capital stock or equity interest owned by the
Company are identified in Schedule 3.5 of the Company Disclosure Schedule.
(b) All of the outstanding shares of capital stock of each Subsidiary of
the Company are duly authorized, validly issued, fully paid and nonassessable,
and such shares are owned by the Company or by a Subsidiary of the Company free
and clear of any Liens (as defined hereafter) or limitations on voting rights.
There are no subscriptions, options, warrants, calls, rights, convertible
securities or other agreements or commitments of any character relating to the
issuance, transfer, sale, delivery, voting or redemption (including any rights
of conversion or exchange under any outstanding security or other instrument)
for any of the capital stock or other equity interests of any of such
Subsidiaries. There are no agreements requiring the Company or any of its
Subsidiaries to make contributions to the capital of, or lend or advance funds
to, any Subsidiaries of the Company. For purposes of this Agreement, "LIEN"
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset.
SECTION 3.6 SEC DOCUMENTS. The Company has filed all required reports,
proxy statements, registration statements, forms and other documents with the
SEC since June 17, 1997 (the "COMPANY SEC DOCUMENTS"). As of their respective
dates, and giving effect to any amendments thereto, (a) the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the applicable rules
and regulations of the SEC promulgated thereunder and (b) none of the Company
SEC Documents contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. No forms, reports and documents filed after the date of
this Agreement and prior to the Effective Time by the Company will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
Subsidiary of the Company is required to file any form, report or other document
with the SEC.
SECTION 3.7 FINANCIAL STATEMENTS. The financial statements of the
Company (including, in each case, any notes and schedules thereto) included in
the Company SEC Documents (a) were prepared from the books and records of the
Company and its Subsidiaries, (b) comply as to form in all material respects
with all applicable accounting requirements and the rules and regulations of the
SEC with respect thereto, (c) are in conformity with United States generally
accepted accounting principles ("GAAP"), applied on a consistent basis (subject
to normal year-end audit adjustments in the case of unaudited statements, as
permitted by Form 10-Q as filed with the SEC under the Exchange Act) during the
periods involved and (d) fairly present, in all material respects, the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal and
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recurring year-end audit adjustments which were not and are not expected to be,
individually or in the aggregate, material in amount).
SECTION 3.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the Company SEC Documents filed prior to the date hereof, and except for
liabilities and obligations incurred in the ordinary course of business since
the date of the most recent consolidated balance sheet included in the Company
SEC Documents, neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) except for those that would not, in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.9 PROXY STATEMENT; FORM F-4.
(a) None of the information contained in the Proxy Statement (defined in
Section 5.3(c)) (and any amendments thereof or supplements thereto) will, at the
time of the mailing of the Proxy Statement to the shareholders of the Company,
at the Effective Time and at the time of the Special Meeting (defined in Section
5.3(a)), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to statements made or omitted in the Proxy Statement relating to Parent
or Merger Sub based on information supplied by Parent for inclusion in the Proxy
Statement. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is made by the Company
with respect to the statements made or omitted in the Proxy Statement relating
to Parent or Merger Sub based on information supplied by Parent for inclusion in
the Proxy Statement.
(b) None of the information supplied or to be supplied by the Company for
inclusion or incorporation by reference in the registration statement on Form
F-4 (and/or such other form as may be applicable and used) to be filed with the
SEC in connection with the issuance of ADSs and, if applicable, the deemed
issuance, if any, of shares of Common Stock by reason of the transactions
contemplated by this Agreement (such registration statement, as it may be
amended or supplemented, is herein referred to as the "FORM F-4") will, with
respect to information relating to the Company, at the time the Form F-4 is
filed with the SEC, and at any time it is amended or supplemented or at the time
it becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.10 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Except as set
forth in the Company SEC Documents filed prior to the date hereof, since June
30, 1999, there has not been a Company Material Adverse Effect. Without limiting
the foregoing, except as disclosed in the Company SEC Documents filed by the
Company prior to the date hereof or as contemplated by this Agreement, since
June 30, 1999, (i) the Company and its Subsidiaries have conducted their
business in the ordinary course of business and (ii) there has not been:
(a) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any Subsidiary
(other than any wholly-owned Subsidiary) of the Company of any outstanding
shares of capital stock or other equity securities of, or other ownership
interests in, the Company or of any Company Securities;
(b) any amendment of any provision of the Articles of Incorporation or
by-laws of, or of any material term of any outstanding security issued by, the
Company or any Subsidiary (other than any wholly-owned Subsidiary) of the
Company;
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(c) any incurrence, assumption or guarantee by the Company or any
Subsidiary of the Company of any indebtedness for borrowed money other than
borrowings under existing short term credit facilities not in excess of $100,000
in the aggregate;
(d) any change in any method of accounting or accounting practice by the
Company or any Subsidiary of the Company, except for any such change required by
reason of a change in GAAP;
(e) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary of the Company, (ii)
employment, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer or employee of the
Company or any Subsidiary of the Company entered into, (iii) increase in
benefits payable under any employee benefit plan or any severance or termination
pay policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company or any
Subsidiary of the Company, in each case other than in the ordinary course of
business consistent with past practices;
(f) any issuance of Company Securities other than pursuant to the exercise
of Options outstanding as of June 30, 1999 and the issuance of Options after
such date exercisable for not more than 750,000 shares of Common Stock and the
issuance of Company Securities pursuant thereto;
(g) any acquisition, disposition or exclusive license of assets material
to the Company and its Subsidiaries or any contract or agreement that limits or
purports to limit the ability of the Company or any of its Subsidiaries to
compete in any line of business or with any person or in any geographical area
or any contract or agreement which involves or purports to involve exclusivity
arrangements or exclusive dealings to which the Company or any of its
subsidiaries is a party, except for sales of inventory in the ordinary course of
business consistent with past practice, or any acquisition or disposition of
capital stock of any third party (other than acquisitions of noncontrolling
equity interests of third parties in the ordinary course of business where the
aggregate cost of all such acquisitions and dispositions does not exceed
$250,000), or any merger or consolidation with any third party, by the Company
or any Subsidiary;
(h) any entry into any contract or agreement involving a commitment on
behalf of the Company of up to an aggregate of $250,000 other than in the
ordinary course of business;
(i) any capital expenditure, other than capital expenditures which are
not, in the aggregate, in excess of $1,000,000 for the Company and its
Subsidiaries taken as a whole;
(j) any settlement, compromise or other disposition of any claim, action
or proceeding seeking monetary damages in excess of $250,000 or otherwise
material to the Company;
(k) entry by the Company into any joint venture, partnership or similar
agreement with any person other than a wholly-owned Subsidiary; or
(l) any authorization of, or commitment or agreement to take any of, the
foregoing actions except as otherwise permitted by this Agreement.
SECTION 3.11 TAXES.
(a) (1) All federal, state, local and foreign Tax Returns (as defined
below) required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is a member (a "COMPANY GROUP")
have been timely filed, and all returns filed are complete and accurate except
to the extent any failure to file or any inaccuracies in filed returns would
not, individually or in the aggregate, have a Company Material Adverse Effect;
(2) all Taxes (as defined below) due and owing by the Company, any Subsidiary of
the Company or any Company Group have been paid, or adequately reserved for in
accordance with GAAP, except to the extent any failure to pay or reserve would
not, individually or in the aggregate, have a Company Material Adverse Effect;
(3) there is no presently pending and, to the knowledge of the Company,
contemplated or scheduled audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy which would, individually or in the
aggregate, have a Company Material Adverse Effect with respect to any
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Taxes due and owing by the Company, any Subsidiary of the Company or any Company
Group nor has the Company or any Subsidiary of the Company filed any waiver of
the statute of limitations applicable to the assessment or collection of any Tax
which would, individually or in the aggregate, have a Company Material Adverse
Effect; (4) all assessments for Taxes due and owing by the Company, any
Subsidiary of the Company or any Company Group with respect to completed and
settled examinations or concluded litigation have been paid; (5) neither the
Company nor any Subsidiary of the Company is a party to any tax indemnity
agreement, tax sharing agreement or other agreement under which the Company or
any Subsidiary of the Company could become liable to another person as a result
of the imposition of a Tax upon any person, or the assessment or collection of
such a Tax; and (6) the Company and each of its Subsidiaries has complied in all
material respects with all rules and regulations relating to the withholding of
Taxes.
(b) For purposes of this Agreement, (i) "TAXES" means all taxes, levies or
other like assessments, charges or fees (including estimated taxes, charges and
fees), including, without limitation, income, corporation, advance corporation,
gross receipts, transfer, excise, property, sales, use, value-added, license,
payroll, withholding, social security and franchise or other governmental taxes
or charges, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, and such term shall include any
interest, penalties or additions to tax attributable to such taxes and (ii) "TAX
RETURN" means any report, return, statement or other written information
required to be supplied to a taxing authority in connection with Taxes.
SECTION 3.12 EMPLOYEE BENEFIT PLANS.
(a) Except for any plan, fund, program, agreement or arrangement that is
subject to the laws of any jurisdiction outside the United States, Schedule
3.12(a) of the Company Disclosure Schedule contains a true and complete list of
each deferred compensation, incentive compensation, and equity compensation
plan; "welfare" plan, fund or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"));
"pension" plan, fund or program (within the meaning of section 3(2) of ERISA);
each employment, termination or severance agreement; and each other employee
benefit plan, fund, program, agreement, policy or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (each,
an "ERISA AFFILIATE"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee, consultant, director or former employee, consultant or director
of the Company or any Subsidiary of the Company (the "PLANS"). Schedule 3.12(a)
of the Company Disclosure Schedule contains an accurate and complete list of the
Plans.
(b) With respect to each Plan, the Company has heretofore delivered or
made available to Parent a true and complete copy of the Plan and any amendments
thereto, all written communications regarding any Plan and relating to any
amendments to the Plan which both would result in any material liability to the
Company and are not already reflected in the applicable Plan document (or if the
Plan is not a written Plan, a description thereof), any related trust or other
funding vehicle, the most recent reports or summaries required under ERISA or
the Code, the most recent determination letter received from the Internal
Revenue Service and any material correspondence with the Internal Revenue
Service at the Department of Labor with respect to each Plan intended to qualify
under section 401 of the Code, the most recent annual actuarial valuations, if
any, prepared by each Plan; if the Plan is funded, the most recent annual and
periodic accounting of Plan assets; the most recent summary Plan description
together with the most recent summary of material modifications, if any,
required under ERISA with respect to each Plan; and all communications material
to any employee or employees relating to any Plan and any proposed Plan and not
reflected in the applicable Plan document, in each case, relating to any
increases in benefits, acceleration of payments or vesting schedules or other
increases in benefits, acceleration of payments or vesting schedules or other
events which would result in any material liability to the Company.
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(c) Neither the Company nor any of its ERISA Affiliates has, for the past
six (6) years, maintained, established, sponsored, participated in, or
contributed to, any employee benefit plan which is subject to Part 3 of Subtitle
B of Title I of ERISA, Title IV of ERISA or Section 412 of the Code.
(d) No Plan is a "multiemployer plan," as defined in section 3(37) of
ERISA, nor is any Plan a plan described in section 4063(a) of ERISA.
(e) Each Plan has been established, operated and administered in all
material respects in accordance with its terms and applicable law, including,
but not limited to, ERISA and the Code. The Company has performed in all
material respects all obligations required to be performed by it under each
Plan. There are no actions, suits or claims pending, or, to the knowledge of the
Company, threatened or anticipated (other than routine claims for benefits)
against any Plan or against the assets of any Plan. Each Plan can be amended,
terminated or otherwise discontinued after the Effective Time in accordance with
its terms (for example, including 401(k) plan vesting and the exercise of
previously granted options), without material liability to the Company, Parent
or any of their Subsidiaries (other than ordinary administration expenses
typically incurred in a termination event). There are no inquiries or
proceedings pending or, to the knowledge of the Company or any Affiliates,
threatened by the Internal Revenue Service or Department of Labor with respect
to any Plan. Neither the Company nor any ERISA Affiliate is subject to any
penalty or tax with respect to any Plan under Section 402(i) of ERISA or
Sections 4975 through 4980 of the Code.
(f) Each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service, or in the case of such a Plan for which a favorable
determination letter has not yet been received, the applicable remedial
amendment period under Section 401(b) of the Code has not expired.
(g) No Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his or her beneficiary),
dependant or other covered person. The Company has never represented or
contracted (whether in oral or written form) to any employee (either
individually or to employees as a group) that such employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment, except to the extent required by
statute.
(h) There are no pending, or to the knowledge of the Company, threatened
or anticipated, material claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits).
(i) The execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not, either alone or in
combination with another event, (i) entitle any current or former employee or
officer of the Company or any ERISA Affiliate to severance pay, forgiveness of
indebtedness, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, other than payments, accelerations or increases mandated by applicable
law.
(j) No payment or benefit which may be made under the Plans will be
characterized as an "excess parachute payment" within the meaning of section
280G of the Code.
(k) To the knowledge of the Company, all employee benefit plans that are
subject to the laws of any jurisdiction outside the United States are in
material compliance with such applicable laws, including relevant Tax laws, and
the requirements of any trust deed under which they were established. Schedule
3.12(k) lists all employee benefit plans that are subject to the laws of any
jurisdiction outside the United States except for such plans that are
governmental or statutory plans. Each such plan which is required by contract or
under applicable local law to be funded has been funded at least to the extent
so required. If and to the extent any such plan is not funded, the obligations
under such plan are reflected on
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the books and records of the entity maintaining the plan and on the consolidated
financial statements of the Company.
(l) The Company, in all material respects, (i) is in compliance with all
applicable foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and conditions of employment
and wages and hours, in each case, with respect to employees; (ii) has withheld
all amounts required by law or by agreement to be withheld from the wages,
salaries and other payments to employees; (iii) is not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust or other fund or
to any governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice).
SECTION 3.13 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in the Company SEC Documents filed prior to the
date hereof, there is no action, suit or proceeding pending against, or to the
knowledge of the Company threatened against, the Company or any Subsidiary of
the Company or any of their respective properties before any court or arbitrator
or any Governmental Entity which would (i) reasonably be expected to have a
Company Material Adverse Effect or (ii) seek to delay or prevent the
consummation of the Merger or the other transactions contemplated by this
Agreement. Neither the Company nor any of its Subsidiaries nor any property or
asset of the Company or any of its Subsidiaries is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of the Company, continuing investigation
by, any Governmental Entity, or any material order, writ, judgment, injunction,
decree, determination or award of any court, Governmental Entity or arbitrator
that would reasonably be expected to have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries are in compliance with all applicable
laws, ordinances, rules and regulations of any federal, state, local or foreign
governmental authority applicable to their respective businesses and operations,
except for such violations, if any, which, in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. All
governmental approvals, permits and licenses (collectively, "PERMITS") required
to conduct the business of the Company and its Subsidiaries have been obtained,
are in full force and effect and are being complied with except for such
violations and failures to have Permits in full force and effect, if any, which,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.14 LABOR MATTERS. As of the date of this Agreement (i) there
is no labor strike, dispute, slowdown, stoppage or lockout actually pending or,
to the knowledge of the Company, threatened against the Company; (ii) to the
knowledge of the Company, no union organizing campaign with respect to the
Company's employees is underway; (iii) there is no unfair labor practice charge
or complaint against the Company pending or, to the knowledge of the Company,
threatened before the National Labor Relations Board or any similar state or
foreign agency; (iv) there is no written grievance pending relating to any
collective bargaining agreement or other grievance procedure; (v) to the
knowledge of the Company, no charges with respect to or relating to the Company
are pending before the Equal Employment Opportunity Commission or any other
agency responsible for the prevention of unlawful employment practices; and (vi)
there are no collective bargaining agreements with any union covering employees
of the Company.
SECTION 3.15 CERTAIN CONTRACTS AND ARRANGEMENTS. Each material contract
or agreement to which the Company or any of its Subsidiaries is a party or by
which any of them is bound is in full force and effect, and neither the Company
nor any of its Subsidiaries, nor, to the knowledge of the Company, any other
party thereto, is in breach of, or default under (nor does there exist any
condition which upon the passage of time or the giving of notice would cause
such a violation of or default under) any such contract or agreement, and no
event has occurred that with notice or passage of time or both would
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constitute such a breach or default thereunder by the Company or any of its
Subsidiaries, or, to the knowledge of the Company, any other party thereto,
except for such failures to be in full force and effect and such breaches and
defaults which, in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.16 ENVIRONMENTAL MATTERS.
(a) (i) "CLEANUP" means all actions required to: (A) cleanup, remove,
treat or remediate Hazardous Materials (as defined hereafter) in the
indoor or outdoor environment; (B) prevent the Release (as defined
hereafter) of Hazardous Materials so that they do not migrate, endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment; (C) perform pre-remedial studies and investigations and
post-remedial monitoring and care; or (D) respond to any government
requests for information or documents in any way relating to cleanup,
removal, treatment or remediation or potential cleanup, removal, treatment
or remediation of Hazardous Materials in the indoor or outdoor
environment.
(ii) "ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or written notice by any Person alleging potential
liability (including, without limitation, potential liability for
investigatory costs, Cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties)
arising out of, based on or resulting from (A) the presence or Release of
any Hazardous Materials at any location, whether or not owned or operated
by the Company or any of its Subsidiaries or (B) circumstances forming the
basis of any violation of any Environmental Law (as defined hereafter).
(iii) "ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws and regulations (and enforceable judicial or administrative
interpretations thereof) relating to pollution or protection of the
environment, including, without limitation, laws relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, transport
or handling of Hazardous Materials.
(iv) "HAZARDOUS MATERIALS" means all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil
and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. Section
300.5, or defined as such by, or regulated as such under, any
Environmental Law.
(v) "RELEASE" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, dispersal, leaching or
migration into the environment (including, without limitation, ambient
air, surface water, groundwater and surface or subsurface strata) or into
or out of any property, including the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater or property.
(b) (i) To the knowledge of the Company, the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws
(which compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof), except where failures
to be in compliance would not, in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Since January 1, 1996 and prior to
the date of this Agreement, neither the Company nor any of its
Subsidiaries has received any communication (written or oral), whether
from a Governmental Entity, citizens' group, employee or otherwise,
alleging that the Company or any of its Subsidiaries is not in such
compliance, except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(ii) There is no Environmental Claim pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries
or, to the knowledge of the Company, against any Person whose liability
for any Environmental Claim the Company or any of its
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Subsidiaries has or may have retained or assumed either contractually or
by operation of law that would reasonably be expected to have a Company
Material Adverse Effect.
(iii) There are no present or past, actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the Release or presence of any Hazardous Material that could
form the basis of any Environmental Claim against the Company or any of
its Subsidiaries or, to the knowledge of the Company, against any Person
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or
by operation of law that would in either case, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(iv) The Company agrees to cooperate with Parent to effect the
retention of any permits or other governmental authorizations under
Environmental Laws that will be required to permit the Company to conduct
the business as conducted by the Company and its Subsidiaries immediately
prior to the Closing Date.
(v) None of the real property owned or leased by the Company or any
Subsidiary of the Company is listed or, to the knowledge of the Company,
proposed for listing on the "National Priorities List" under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any similar list of sites in the United States or any
other jurisdiction requiring investigation or Cleanup, where such listing
would result in a liability to the Company which would have a Company
Material Adverse Effect.
SECTION 3.17 INTELLECTUAL PROPERTY.
(a) The Company Disclosure Schedule sets forth a list of United States,
international and foreign (i) patents and patent applications, (ii) registered
trademarks and trademark applications, and (iii) registered copyrights and
copyright applications, in each case owned by the Company and its Subsidiaries
and material to the business of the Company and its Subsidiaries ("Company
Registered Intellectual Property"). Such list is only true and complete as of
the Effective Date as to patents and patent applications.
(b) To the knowledge of the Company and its Subsidiaries, the Company and
its Subsidiaries own or have the right to use all Intellectual Property (as
defined hereafter) material to the conduct of their businesses as currently
conducted and as currently anticipated to be conducted until Closing.
(c) (i) All registrations relating to the Company Registered
Intellectual Property are subsisting, unexpired and free of liens and
encumbrances; (ii) to the knowledge of the Company and its Subsidiaries,
the operation of the business of the Company and its Subsidiaries as
currently conducted and currently anticipated to be conducted until
Closing does not infringe the Intellectual Property of any third party and
no such claim is pending or threatened; (iii) no final judgment, decree,
injunction, rule or order has been rendered by any Governmental Entity or
arbitral body that would restrict the Company's or its Subsidiaries'
rights to use any Intellectual Property owned by the Company or its
Subsidiaries; and (iv) neither the Company nor its Subsidiaries have
received notice of any pending suit, action or administrative proceeding
that seeks to invalidate any Intellectual Property owned by the Company or
its Subsidiaries; and (v) to the Company's knowledge, the consummation of
the transactions contemplated by this Agreement will not result in the
termination of any of the Company or Subsidiary owned or licensed
Intellectual Property, except where such termination will not have a
Company Material Adverse Effect.
(d) To the knowledge of the Company and its Subsidiaries, no person is
engaging in any activity that infringes any Intellectual Property owned by the
Company and its Subsidiaries.
(e) The Company and its Subsidiaries have made available to Parent copies
of all material agreements relating to Licensed Intellectual Property (as
defined in Section 3.17(f)(ii) below). With respect to each such material
agreement:
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(i) Subject to the obtaining of any necessary third-party consents
set forth in the Company Disclosure Schedule, such agreement will not
cease to be in full force and effect on its terms as a result of the
consummation of the transactions contemplated by this Agreement, nor will
the consummation of the transactions contemplated by this Agreement permit
acceleration of or constitute a breach or default under such agreement or
otherwise give rise to a right to terminate such agreement, except where
such acceleration, breach, default or termination is not anticipated to
have a Company Material Adverse Effect;
(ii) Neither the Company nor its Subsidiaries have (A) received any
notice of acceleration, termination or cancellation under such agreement,
nor (B) received any notice of breach or default under such agreement,
which breach has not been cured;
(iii) To the knowledge of the Company and its Subsidiaries, neither
the Company, its Subsidiaries, nor any other party to such agreement is in
breach or default thereof in any material respect, and no event has
occurred that, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration
under such agreement; and
(iv) To the Company's knowledge, such agreement is valid and
binding and in full force and effect.
(f) The Company and its Subsidiaries have taken reasonable steps in
accordance with industry practice to maintain the confidentiality of their trade
secrets and other confidential information of the Company and its Subsidiaries.
To the knowledge of the Company and its Subsidiaries: (i) no person has
misappropriated any material trade secrets or other material confidential
information owned by the Company and its Subsidiaries; and (ii) no employee,
independent contractor or agent of the Company and its Subsidiaries has
misappropriated any trade secrets of any other person in the course of such
performance as an employee; and (iii) no employee, independent contractor or
agent of the Company and its Subsidiaries is in breach of any material term of
any employment agreement, non-disclosure agreement or assignment of invention
agreement relating to the protection or ownership of Intellectual Property
material to the business of the Company and its Subsidiaries.
(g) To the knowledge of the Company and its Subsidiaries, the Software is
free of all viruses, worms or trojan horses that materially disrupt its
operation or have a material adverse impact on the operation of other software
programs or operating systems. To the Company's knowledge, the Company has
obtained all approvals necessary for exporting the Software outside the United
States and importing the Software into any country in which the Software is
licensed for use, and, to the Company's knowledge, all such export and import
approvals in the United States and throughout the world are valid, current,
outstanding and in full force and effect.
(h) For purposes of this Agreement:
(i) "INTELLECTUAL PROPERTY " shall mean all rights provided under
U.S., state and foreign law relating to intellectual property, including
without limitation all: (x) (1) patents and utility models and
applications therefor and all reissues, divisions, re-examinations,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (2) copyrights and copyrightable works,
including, but not limited to, computer applications, programs, software,
databases and related items; (3) trademarks, service marks, trade names,
and trade dress, the goodwill of any business symbolized thereby, and all
common-law rights relating thereto; (4) trade secrets and other
confidential information; and (y) all registrations, applications and
recordings for any of the foregoing.
(ii) "LICENSED INTELLECTUAL PROPERTY " shall mean (x) Intellectual
Property or Software licensed to the Company and its Subsidiaries by any
third party, and (y) Intellectual Property and Software licensed by the
Company and its Subsidiaries to any third party.
(iii) "SOFTWARE " shall mean all computer software (i) material to
the operation of the business of the Company and its Subsidiaries, or (ii)
distributed or licensed by the Company and its Subsidiaries.
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SECTION 3.18 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Goldman, Sachs & Co. ("GOLDMAN SACHS") to the effect that, as of such
date, the consideration to be received by the holders of Common Stock pursuant
to this Agreement is fair from a financial point of view to such holders.
SECTION 3.19 BOARD RECOMMENDATION. The Board of Directors of the
Company, at a meeting duly called and held, has unanimously approved this
Agreement and (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, taken together are fair to and in the
best interests of the shareholders of the Company; and (ii) resolved to
recommend that the shareholders of the Company adopt this Agreement and approve
the Merger.
SECTION 3.20 TAX TREATMENT. Neither the Company nor any of its
affiliates has taken any action or knows of any fact, agreement, plan or other
circumstance that is reasonably likely to (i) prevent the Merger from qualifying
as a reorganization under the provisions of Section 368(a) of the Code, or (ii)
prevent the exchange of shares of Common Stock from meeting the requirements of
Treasury Regulation Section 1.367(a)-3(c)(1).
SECTION 3.21 FINDERS' FEES. Except for Goldman Sachs, whose fees will be
paid by the Company, there is no investment banker, broker, finder or other
intermediary that might be entitled to any fee or commission from the Company,
any Subsidiary of the Company, Parent or any of Parent's affiliates upon
consummation of the transactions contemplated by this Agreement.
SECTION 3.22 AFFILIATE TRANSACTIONS. Except as set forth in the Company
SEC Documents filed prior to the date hereof, there are no material contracts,
commitments, agreements, arrangements or other transactions between the Company
or any of its Subsidiaries, on the one hand, and any (i) officer or director of
the Company or any of its Subsidiaries, (ii) record or beneficial owner of five
percent or more of the voting securities of the Company or (iii) affiliate (as
such term is defined in Regulation 12b-2 promulgated under the Exchange Act) of
any such officer, director or beneficial owner, on the other hand.
SECTION 3.23 INSURANCE. The Company has provided or made available to
Parent true, correct and complete copies of all policies of insurance to which
each of the Company and its Subsidiaries are a party or are a beneficiary or
named insured. The Company and its Subsidiaries maintain insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in business similar to that
of the Company and its Subsidiaries (taking into account the cost and
availability of such insurance).
SECTION 3.24 YEAR 2000 COMPLIANCE. The Company and its Subsidiaries have
(1) undertaken an assessment of those Company Systems that could be adversely
affected by a failure to be Year 2000 Compliant, (2) developed a plan and time
line for rendering such Systems Year 2000 Compliant, and (3) to date,
implemented such plan in accordance with such timetable as would reasonably be
expected to avoid a Company Material Adverse Effect. Based on such inventory,
review and assessment, all Company Systems are Year 2000 Compliant or will be
Year 2000 Compliant as required to avoid having a Company Material Adverse
Effect. For purposes hereof, "COMPANY SYSTEMS" shall mean all computer,
hardware, software, Software, systems, and equipment (including embedded
microcontrollers in noncomputer equipment) embedded within or required to
operate the current products of the Company and its Subsidiaries, and/or
material to or necessary for the Company and its Subsidiaries to carry on its
business as currently conducted. For purposes hereof, "YEAR 2000 COMPLIANT"
means that the Company Systems provide uninterrupted millennium functionality in
that the Company Systems will record, store, process and present calendar dates
falling on or after January 1, 2000, in the same manner and with the same
functionality as the Company Systems record, store, process, and present
calendar dates falling on or before December 31, 1999.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
Parent and Merger Sub, jointly and severally, represent and warrant to the
Company subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company, which disclosure shall provide an exception to or otherwise
qualify the representations or warranties of Parent specifically referred to in
such disclosure and such other representations and warranties to the extent such
disclosure shall reasonably appear to be applicable to such other
representations or warranties (the "PARENT DISCLOSURE SCHEDULE"), as follows:
SECTION 4.1 CORPORATE EXISTENCE AND POWER. Each of Parent and Merger Sub
is a corporation duly incorporated (or other entity duly organized), validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate or other power, as the case may be, and all
Licenses required to carry on its business as now conducted except for failures
to have any such License which would not, in the aggregate, have a Parent
Material Adverse Effect (as defined below). Each of Parent and Merger Sub is
duly qualified to do business and is in good standing in each jurisdiction where
the character of the property owned, leased or operated by it or the nature of
its activities makes such qualification necessary, except for those
jurisdictions where failures to be so qualified would not reasonably be expected
to, in the aggregate, have a Parent Material Adverse Effect. As used herein, the
term "PARENT MATERIAL ADVERSE EFFECT" means a material adverse effect on the
financial condition, business, assets or results of operations of Parent and its
Subsidiaries, taken as a whole, PROVIDED, HOWEVER, that in no event shall any
effect that results from (x) the public announcement or pendency of the
transactions contemplated hereby or any actions taken in compliance with this
Agreement, (y) changes affecting the telecommunications industry generally and
which do not disproportionately materially affect Parent or (z) changes
affecting the economies in which such entity operates generally, constitute a
Parent Material Adverse Effect. Parent has heretofore delivered or made
available to the Company true and complete copies of the governing documents or
other organizational documents of like import, as currently in effect, of each
of Parent and Merger Sub.
SECTION 4.2 AUTHORIZATION. Each of Parent and Merger Sub has the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance of its obligations hereunder have been duly and validly
authorized by the Boards of Directors of Parent and Merger Sub, by Parent as the
sole shareholder of Merger Sub, this Agreement has been approved by the Board of
Directors of Merger Sub, and no other proceedings on the part of Parent or
Merger Sub are necessary to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly executed and delivered by each of
Parent and Merger Sub and constitutes, assuming due authorization, execution and
delivery of this Agreement by the Company, a valid and binding obligation of
each of Parent and Merger Sub, enforceable against each of them in accordance
with its terms.
SECTION 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Neither the execution and delivery of this Agreement nor the
performance by each of Parent and Merger Sub of its obligations hereunder will
(i) conflict with or result in any breach of any provision of the articles of
incorporation or by-laws (or other governing or organizational documents) of
Parent or Merger Sub, as the case may be, or (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
lease or agreement or similar instrument or obligation to which any of Parent or
Merger Sub is a party or by which any of them or any of their respective assets
may be bound or (iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in subsection (b) below have
been obtained or made, as the case may be, violate any order, injunction,
decree, statute, rule
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or regulation of any Governmental Entity to which either Parent or Merger Sub is
subject, excluding from the foregoing clauses (ii) and (iii) such requirements,
defaults, breaches, rights or violations (A) that would not, in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect and would not
reasonably be expected to have a material adverse effect on the ability of
either Parent or Merger Sub to consummate the transactions contemplated hereby
or (B) that become applicable as a result of the business activities in which
the Company or any of its affiliates is or proposes to be engaged or any acts or
omissions by, or facts specifically pertaining to, the Company.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any Governmental Entity is required in connection with
the execution and delivery of this Agreement by each of Parent and Merger Sub or
the performance by any of them of their respective obligations hereunder, except
(i) the filing of the Articles of Merger in accordance with the CCC and filings
to maintain the good standing of the Surviving Corporation; (ii) compliance with
any applicable requirements of the HSR Act or the EC Merger Regulations or any
other foreign laws regulating competition, antitrust, investment or exchange
controls; (iii) compliance with any applicable requirements of the Securities
Act and the Exchange Act; (iv) compliance with any applicable requirements of
state blue sky or takeover laws; (v) the filing of a registration statement
relating to the new Parent shares to be issued in connection with the issuance
of the ADSs with the French Commission des Operations de Bourse (the "COB"); and
(vi) the approval (visa) of such registration statement by the COB and such
other consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings (A) the failure of which to be obtained or made would
not reasonably be expected to have a Parent Material Adverse Effect and would
not have a material adverse effect on the ability of either Parent or Merger Sub
to perform their respective obligations hereunder or (B) that become applicable
as a result of the business or activities in which the Company or any of its
affiliates is or proposes to be engaged or any acts or omissions by, or facts
specifically pertaining to, the Company.
SECTION 4.4 CAPITALIZATION. As of June 30, 1999 there were 198,781,381
issued Parent Shares. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, no par value, of which 100 shares are outstanding,
all of which are owned by Parent. All ADSs to be issued at the Effective Time
shall be, when issued, duly authorized and validly issued and fully paid and
nonassessable and free of preemptive rights with respect thereto. As of June 30,
1999, there were outstanding options and securities convertible into or
exchangeable or exercisable for 10,718,314 Parent Shares.
SECTION 4.5 SEC DOCUMENTS. Parent has filed all required periodic
reports on Forms 20-F and 6-K with the SEC since January 1, 1997 (the "PARENT
SEC DOCUMENTS"). As of their respective dates, and giving effect to any
amendments thereto, (a) the Parent SEC documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations of the SEC promulgated
thereunder and (b) none of the reports on Form 20-F contained in the Parent SEC
Documents contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No forms, reports and documents filed after the date of
this Agreement and prior to the Effective Time by the Parent will contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. No
Subsidiary of the Parent is required to file any form, report or other document
with the SEC.
SECTION 4.6 FINANCIAL STATEMENTS. The financial statements of Parent
(including, in each case, any notes and schedules thereto) included in the
Parent SEC Documents filed prior to the date hereof (a) were prepared from the
books and records of Parent and its Subsidiaries, (b) comply as to form in all
material respects with all applicable accounting requirements and the rules and
regulations of the SEC with respect thereto and (c) are in conformity with
applicable accounting principles applied on a consistent basis (subject to
normal year-end audit adjustments in the case of unaudited statements).
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SECTION 4.7 ABSENCE OF MATERIAL ADVERSE CHANGES, ETC. Since December 31,
1998 there has not been a Parent Material Adverse Effect.
SECTION 4.8 PROXY STATEMENT; FORM F-4.
(a) None of the information supplied or to be supplied by Parent or Merger
Sub, as the case may be, in writing for inclusion in the Proxy Statement (and
any amendments thereof or supplements thereto) will, with respect to information
relating to such entities, at the time of the mailing the Proxy Statement to the
shareholders of the Company, at the Effective Time and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) None of the information supplied or to be supplied by Parent or Merger
Sub, as the case may be, for inclusion or incorporation by reference in the Form
F-4 will, with respect to information relating to such entities, at the time the
Form F-4 is filed with the SEC, and at any time it is amended or supplemented or
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.9 LITIGATION; COMPLIANCE WITH LAWS.
(a) Except as set forth in either the Parent SEC Documents or otherwise
fully covered by insurance, there is no action, suit or proceeding pending
against, or to the knowledge of Parent threatened against, Parent or any
Subsidiary of Parent or any of their respective properties before any court or
arbitrator or any Governmental Entity which would reasonably be expected to have
a Parent Material Adverse Effect.
(b) Parent and its Subsidiaries are in compliance with all applicable
laws, ordinances, rules and regulations of any federal, state, local or foreign
governmental authority applicable to their respective businesses and operations,
except for such violations, if any, which, in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.10 INTELLECTUAL PROPERTY.
(a) Parent and its Subsidiaries own or have the right to use all material
Intellectual Property reasonably necessary for Parent and its Subsidiaries to
conduct their business as it is currently conducted.
(b) To the knowledge of Parent: (i) Parent does not infringe the
intellectual property rights of any third party in any respect that would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect; (ii) no judgment, decree, injunction, rule or order has
been rendered by a Governmental Entity which would limit, cancel or question the
validity of, or Parent's or its Subsidiaries' rights in and to, any Intellectual
Property owned by Parent in any respect that would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect; and
(iii) Parent has not received notice of any pending or threatened suit, action
or adversarial proceeding that seeks to limit, cancel or question the validity
of, or Parent's or its Subsidiaries' rights in and to, any Intellectual
Property, which would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
SECTION 4.11 MERGER SUB'S OPERATIONS. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has not (i)
engaged in any business activities, (ii) conducted any operations other than in
connection with the transactions contemplated hereby or (iii) incurred any
liabilities other than in connection with the transactions contemplated hereby.
SECTION 4.12 TAX TREATMENT. Neither Parent nor any of its affiliates has
taken any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to (i) prevent the Merger from qualifying as a
reorganization under the provisions of Section 368(a) of the Code or (ii)
prevent the
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exchange of shares of Common Stock from meeting the requirements of Treasury
Regulation Section 1.367(a)-3(c)(1).
SECTION 4.13 FINDERS' FEES. Except for J.P. Morgan Securities Inc.,
whose fees will be paid by Parent, there is no investment banker, broker, finder
or other intermediary that might be entitled to any fee or commission in
connection with or upon consummation of the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
ARTICLE V
COVENANTS OF THE PARTIES.
SECTION 5.1 CONDUCT OF THE BUSINESS OF THE COMPANY. From the date hereof
until the Closing Date, the Company and its Subsidiaries shall conduct their
businesses in the ordinary course consistent with past practice and shall use
commercially reasonable efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Closing Date, the Company will not
(and will not permit any of its Subsidiaries to) take any action or omit to take
any action that would (i) make any of its representations and warranties
contained herein false to an extent that would cause the condition set forth in
Section 6.3(b) not to be satisfied or (ii) make the representation and warranty
set forth in Section 3.10 false. Furthermore, for the avoidance of doubt, the
Company will not take any of the actions specified in Section 3.10 (as modified
by the Company Disclosure Schedule) without the prior consent of Parent.
SECTION 5.2 CONDUCT OF THE BUSINESS OF PARENT. From the date hereof
until the Closing Date, Parent will not (and will not permit any of its
Subsidiaries to) take any action or omit to take any action that would make any
of its representations and warranties contained herein false to an extent that
would cause the condition set forth in Section 6.2(b) not to be satisfied.
SECTION 5.3 SHAREHOLDERS' MEETING; PROXY MATERIAL.
(a) Subject to the last sentence of this Section 5.3(a), the Company
shall, in accordance with applicable law and the Articles of Incorporation and
the by-laws of the Company duly call, give notice of, convene and hold a special
meeting of its shareholders (the "SPECIAL MEETING") as promptly as practicable
after the date hereof for the purpose of considering and taking action upon this
Agreement and the Merger. The Board of Directors of the Company shall recommend
approval and adoption of this Agreement and the Merger by the Company's
shareholders; PROVIDED that the Board of Directors of the Company may withdraw,
modify or change such recommendation if but only if (i) it believes in good
faith that a Superior Proposal (as defined in Section 5.5 hereof) has been made
and (ii) it has determined in good faith, based on the advice of outside
counsel, that the failure to withdraw, modify or change such recommendation is
reasonably likely to result in a breach of the fiduciary duties of the Board of
Directors of the Company under applicable law. The Company shall use
commercially reasonable efforts to solicit from its shareholders proxies in
favor of the approval of this Agreement and to take all other action necessary
or advisable to secure the vote or consent of shareholders required by the CCC
to obtain such approval, except to the extent that the Board of Directors of the
Company has changed its recommendation to the shareholders of the Company with
respect to the Merger and this Agreement in accordance with this Section 5.3(a).
(b) The Proxy Statement shall include the recommendation of the Board of
Directors of the Company to the shareholders of the Company in favor of approval
of the Merger and this Agreement; PROVIDED HOWEVER, that the Board of Directors
of the Company may, prior to the Effective Time, withdraw, modify or change any
such recommendation to the extent that the Board of Directors of the
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Company has changed its recommendation to the shareholders of the Company with
respect to the Merger and this Agreement in accordance with Section 5.3(a).
(c) Promptly following the date of this Agreement, the Company shall
prepare a proxy statement relating to the adoption of this Agreement and the
approval of the Merger by the Company's shareholders (the "PROXY STATEMENT"),
and Parent shall prepare and file with the SEC, following resolution of any
comments the SEC may have with respect to the Proxy Statement, the Form F-4, in
which the Proxy Statement will be included. Parent and the Company shall
cooperate with each other in connection with the preparation of the foregoing
documents and shall furnish all information concerning such party as the other
party may reasonably request in connection with the preparation of such
documents. Parent and the Company shall each use its reasonable best efforts to
have the Form F-4 declared effective under the Securities Act as promptly as
practicable after such filing. The Company will use commercially reasonable
efforts to cause the Proxy Statement to be mailed to the Company's shareholders
as promptly as practicable after the Form F-4 is declared effective under the
Securities Act.
(d) The Company shall as promptly as practicable notify Parent of the
receipt of any comments from the SEC relating to the Proxy Statement. Each of
Parent and the Company shall as promptly as practicable notify the other of (i)
the effectiveness of the Form F-4, (ii) the receipt of any comments from the SEC
relating to the Form F-4 and (iii) any request by the SEC for any amendment to
the Form F-4 or for additional information. All filings by Parent and the
Company with the SEC in connection with the transactions contemplated hereby,
including the Proxy Statement, the Form F-4 and any amendment or supplement
thereto, shall be subject to the prior review of the other, and all mailings to
the Company's shareholders in connection with the transactions contemplated by
this Agreement shall be subject to the prior review of Parent.
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY AGREEMENT. Upon
reasonable advance notice, between the date hereof and the Closing Date, the
Company shall (i) give Parent, its respective counsel, financial advisors,
auditors and other authorized representatives (collectively, "PARENT'S
REPRESENTATIVES") reasonable access during normal business hours to the offices,
properties, books and records of the Company and its Subsidiaries, (ii) furnish
to Parent's Representatives such financial and operating data and other
information relating to the Company, its Subsidiaries and their respective
operations as such Persons may reasonably request and (iii) instruct the
Company's employees, counsel and financial advisors to cooperate with Parent in
its investigation of the business of the Company and its Subsidiaries; PROVIDED
THAT any information and documents received by Parent or Parent's
Representatives (whether furnished before or after the date of this Agreement)
shall be held in accordance with the Confidentiality Agreements dated August 17,
1999 and September 21, 1999 between Parent and the Company (the "CONFIDENTIALITY
AGREEMENTS"), which shall remain in full force and effect pursuant to the terms
thereof, notwithstanding the execution and delivery of this Agreement or the
termination hereof until the Effective Time.
SECTION 5.5 NO SOLICITATION. From the date hereof until the Effective
Time or, if earlier, the termination of this Agreement, the Company shall not
(whether directly or indirectly through advisors, agents or other
intermediaries), and the Company shall cause its respective officers, directors,
advisors, representatives or other agents of the Company not to, directly or
indirectly, (a) solicit, initiate or encourage any inquiry, offer or proposal
that constitutes an Acquisition Proposal (as defined hereafter) or (b) engage in
discussions or negotiations with, or disclose any nonpublic information relating
to the Company or its Subsidiaries or afford access to the properties, books or
records of the Company or its Subsidiaries to, any Person that has made an
Acquisition Proposal (or inquires with respect thereto) or has advised the
Company that it is interested in making an Acquisition Proposal; PROVIDED THAT,
if and only if (i) the Company's Board of Directors believes in good faith,
based on such matters as it deems relevant, including the advice of the
Company's financial advisor, that such Acquisition Proposal is a Superior
Proposal and (ii) the Company's Board of Directors determines in good faith,
based on such matters as it deems relevant, including the advice of the
Company's outside legal counsel, that the failure to engage in such negotiations
or discussions or provide such information is reasonably likely to result in a
breach of the
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fiduciary duties of the Board of Directors of the Company under applicable law,
then the Company may furnish information with respect to the Company and its
Subsidiaries and participate in negotiations regarding such Acquisition
Proposal; PROVIDED THAT the Company will not disclose any information to such
Person without (i) first entering into a confidentiality agreement on terms no
less favorable to the Company than the one entered into by Company and Parent on
August 17, 1999, and (ii) providing Parent twenty-four (24) hours notice of the
Company's intention to provide such information, PROVIDED that Company is not in
breach of this Section 5.5. The Company shall provide Parent with a copy of any
written Acquisition Proposal received and a written statement with respect to
any nonwritten Acquisition Proposal received, which statement shall include the
identity of the parties making the Acquisition Proposal and the terms thereof.
The Company shall inform Parent as promptly as practicable, and in any event
within one (1) business day, regarding any change in the terms of any
Acquisition Proposal with a third party or any other material development
regarding any Acquisition Proposal with a third party. For purposes of this
Agreement, "ACQUISITION PROPOSAL" means any offer or proposal for a merger,
consolidation, recapitalization, liquidation or other business combination
involving the Company or the acquisition or purchase of over 50% or more of any
class of equity securities of the Company, or any tender offer (including
self-tenders) or exchange offer that, if consummated, would result in any Person
beneficially owning 50% or more of any class of equity securities of the
Company, or a substantial portion of the assets of, the Company and its
Subsidiaries taken as a whole or any solicitation in opposition to approval by
the Company's shareholders of this Agreement, other than the transactions
contemplated by this Agreement. As used herein, a "SUPERIOR PROPOSAL" shall mean
an Acquisition Proposal which in the reasonable judgment of the Company's Board
of Directors, based on such matters as it deems relevant including the advice of
the Company's financial advisor, (i) is likely to result in a transaction
providing greater benefits to the Company's shareholders than those provided
pursuant to this Agreement, and (ii) is reasonably capable of being financed by
the Person making such Proposal on a timely basis. Nothing contained in this
Section 5.5 shall prohibit the Company or the Company's Board of Directors from
taking and disclosing to the Company's shareholders a position with respect to a
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any disclosure required by
applicable law. The Company immediately shall cease and cause to be terminated
all existing discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Proposal. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party unless such third party has made a Superior
Proposal.
SECTION 5.6 DIRECTOR AND OFFICER LIABILITY.
(a) Parent and the Company agree that all rights to indemnification and
all limitations on liability existing in favor of any Indemnitee (as defined
hereafter) as provided in the Articles of Incorporation or by-laws of the
Company or an agreement between an Indemnitee and the Company or a Subsidiary of
the Company as in effect as of the date hereof shall survive the Merger and
continue in full force and effect in accordance with its terms.
(b) For six years after the Effective Time, Parent shall or shall cause
the Surviving Corporation to indemnify and hold harmless the individuals who on
or prior to the Effective Time were officers, directors, employees or agents of
the Company and any of its Subsidiaries (the "INDEMNITEES") to the same extent
as set forth in subsection (a) above. In the event any claim in respect of which
indemnification is available pursuant to the foregoing provisions is asserted or
made within such six-year period, all rights to indemnification shall continue
until such claim is disposed of or all judgments, orders, decrees or other
rulings in connection with such claim are fully satisfied. (c) For six (6) years
after the Effective Time, the Surviving Corporation shall provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; PROVIDED, HOWEVER, that in no event shall the
Surviving Corporation be required to expend more than an amount per year equal
to 150% of current annual premiums paid by the Company for such insurance (the
"MAXIMUM AMOUNT") to maintain
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or procure insurance coverage pursuant hereto; PROVIDED, FURTHER, that if the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Amount, the Surviving Corporation shall maintain or
procure, for such six-year period, the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the Maximum
Amount.
(d) The obligations of Parent and the Surviving Corporation under this
Section 5.6 shall not be terminated or modified in such a manner as to adversely
affect any Indemnitee to whom this Section 5.6 applies without the consent of
such affected Indemnitee (it being expressly agreed that the Indemnitees to whom
this Section 5.6 applies shall be third party beneficiaries of this Section
5.6).
SECTION 5.7 COMMERCIALLY REASONABLE EFFORTS. Upon the terms and subject
to the conditions of this Agreement, each party hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
SECTION 5.8 CERTAIN FILINGS.
(a) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Proxy Statement and the Form F-4
Registration Statement, (ii) in determining whether any action by or in respect
of, or filing with, any Governmental Entity is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (iii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Proxy Statement and the Form F-4
Registration Statement and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the provisions of this Section 5.8, each
party hereto shall file with the Department of Justice and the Federal Trade
Commission a Pre-Merger Notification and Report Form pursuant to the HSR Act in
respect of the transactions contemplated hereby within ten (10) days of the date
of this Agreement, and each party will use its reasonable best efforts to take
or cause to be taken all actions necessary, including to promptly and fully
comply with any requests for information from regulatory Governmental Entities,
to obtain any clearance, waiver, approval or authorization relating to the HSR
Act that is necessary to enable the parties to consummate the transactions
contemplated by this Agreement. Without limiting the provisions of this Section
5.8, each party hereto shall use commercially reasonable efforts to promptly
make the filings required to be made by it with all foreign Governmental
Entities in any jurisdiction in which the parties believe it is necessary or
advisable.
(b) The Company and Parent shall each use commercially reasonable efforts
to resolve such objections, if any, as may be asserted with respect to the
Merger or any other transaction contemplated by this Agreement under any
Antitrust Law (as defined below). Notwithstanding anything to the contrary in
this Agreement, none of Parent, any of its Subsidiaries or the Surviving
Corporation, shall be required (and the Company shall not, without the prior
written consent of Parent, agree, but shall, if so directed by Parent, agree) to
hold separate or divest any of their respective assets or operations or enter
into any consent decree or licensing or other arrangement with respect to any of
their assets or operations.
(c) Each of the Company and Parent shall promptly inform the other party
of any material communication received by such party from the Federal Trade
Commission, the Antitrust Division of the Department of Justice, the Commission
of the European Community or any other governmental or regulatory authority
regarding any of the transactions contemplated hereby.
(d) "ANTITRUST LAW" means the Sherman Act, as amended, the Clayton Act, as
amended, EC Merger Regulations and all other federal, state and foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate competition or actions having the purpose or effect of monopolization
or restraint of trade.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other public announcement
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with respect to the Merger, this Agreement or the other transactions
contemplated hereby without the prior consent of the other party, except that
public disclosure may be made as may be required by law or by any listing
agreement with, or the policies of, a national securities exchange following
prior consultation with the other party.
SECTION 5.10 FURTHER ASSURANCES. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions to vest, perfect
or confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation,
as a result of, or in connection with, the Merger.
SECTION 5.11 EMPLOYEE MATTERS.
(a) For a period of one year immediately following the date of the
Closing, Parent agrees to cause the Surviving Corporation and its Subsidiaries
to provide to all active employees of the Company who continue to be employed by
the Company as of the Effective Time ("CONTINUING EMPLOYEES") coverage by
benefit plans or arrangements that are, in the aggregate, substantially
equivalent to (including, with respect to eligibility requirements, exclusions
and the employee portion of the cost of such benefit plans or arrangements) than
those provided to the employees of the Company immediately prior to the date of
the Closing (other than stock option or other equity-based plans and other than
employment, severance or similar plans and agreements).
(b) Parent shall, and shall cause the Surviving Corporation and Parent's
Subsidiaries to, honor in accordance with their terms all agreements, contracts,
arrangements, commitments and understandings described in Schedule 3.12(a) of
the Company Disclosure Schedule, except as such agreements, contracts,
arrangements, commitments and understandings may be amended or waived with the
consent of the applicable employee.
(c) The holders of Options have been or will be given by the Company, or
shall have property waived, any required notice prior to the Merger and all such
rights will be terminated at or prior to the Effective Date.
SECTION 5.12 TAX-FREE REORGANIZATION TREATMENT. In the event Parent does
not exercise its election under Section 1.2(c) to convert shares of Common Stock
into cash as set forth in Section 1.2(c), each of Parent and the Company shall
take all reasonable actions necessary to cause the Merger to qualify as a
reorganization under the provisions of section 368(a) of the Code and the
exchange of shares of Common Stock pursuant to the Merger to meet the
requirements of Treasury Regulation Section 1.367(a)-3(c)(1) and to obtain the
opinions of counsel referred to in Sections 6.2(d) and 6.3(e) hereof, and
neither party will take any action inconsistent therewith.
SECTION 5.13 STATE AND FOREIGN PERMITS. Parent shall use commercially
reasonable efforts to obtain, prior to the effective date of the Form F-4
Registration Statement, all necessary state and foreign securities law permits
and approvals required to carry out the transactions contemplated by this
Agreement and the Merger, and will pay all expenses incident thereto.
SECTION 5.14 LISTING. Parent shall use commercially reasonable efforts
to cause the ADSs to be issued in the Merger or upon exercise of Substitute
Options or upon cancellation of Options to be listed on the NYSE, subject to
notice of official issuance thereof, prior to the Closing Date.
SECTION 5.15 STATE TAKEOVER LAWS. If any "fair price," "business
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the Merger, the Company and Parent
shall each take such actions as are necessary so that the transactions
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contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of any such statute or regulation on the Merger.
SECTION 5.16 CERTAIN NOTIFICATIONS. Between the date hereof and the
Effective Time, each party shall promptly notify the other party hereto in
writing after becoming aware of the occurrence of any event which will, or is
reasonably likely to, result in the failure to satisfy any of the conditions
specified in Article VI.
SECTION 5.17 AFFILIATE LETTERS. The Company shall, at least 45 days
prior to the date of the Special Meeting, deliver to Parent a list reasonably
satisfactory to Parent setting forth the names and addresses of all persons who
at the time of the Special Meeting are, in the Company's reasonable judgment,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall furnish such information and documents as Parent may
reasonably request for the purpose of reviewing such list. The Company shall use
its reasonable best efforts to cause each person who is identified as an
affiliate on such list to execute a written agreement at least 30 days prior to
the date of the Special Meeting in the form of Exhibit A hereto (collectively,
the "AFFILIATE AGREEMENTS").
SECTION 5.18 POOLING. From and after the date of this Agreement and
until the Effective Time, neither Parent nor the Company, nor any of their
respective Subsidiaries or other affiliates, shall knowingly take any action, or
knowingly fail to take any action, that is reasonably likely to jeopardize the
treatment of the Merger as a French "pooling of interests" for accounting
purposes. Between the date of this Agreement and the Effective Time, Parent and
the Company each shall take all reasonable actions necessary to cause the
characterization of the Merger as a French "pooling of interests" for accounting
purposes if such a characterization were jeopardized by action taken by Parent
or the Company, respectively, prior to the Effective Time. Notwithstanding
anything to the contrary in this Agreement, no action or omission shall be
required on the part of the Company or any of its affiliates pursuant hereto if
the Company or any such affiliate determines, in good faith, that such action or
omission could be detrimental (other than to a de minimus extent) to the Company
or such affiliate.
SECTION 5.19 LETTERS OF ACCOUNTANTS.
(a) Parent shall use commercially reasonable efforts to cause to be
delivered to the Company "comfort" letters of Arthur Andersen LLP, Parent's
independent public accountants, dated and delivered the date on which the Form
F-4 shall become effective and as of the Effective Time, and addressed to the
Company, in form and substance reasonably satisfactory to the Company and
reasonably customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
(b) The Company shall use commercially reasonable efforts to cause to be
delivered to Parent "comfort" letters of Arthur Andersen LLP, the Company's
independent public accountants, dated and delivered the date on which the Form
F-4 shall become effective and as of the Effective Time, and addressed to
Parent, in form and substance reasonably satisfactory to Parent and reasonably
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER.
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, to the
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extent permitted by applicable law, the waiver on or prior to the Effective Time
of each of the following conditions:
(a) This Agreement shall have been adopted, and the Merger approved, by
the shareholders of the Company in accordance with applicable law;
(b) Any applicable waiting periods under the HSR Act and the EC Merger
Regulation relating to the Merger shall have expired or been terminated;
(c) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger or the
other transactions contemplated by this Agreement;
(d) The Form F-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order,
and any material "blue sky," other state, federal and foreign securities laws
applicable to the registration and qualification of the ADSs and the Parent
Shares following the Closing shall have been complied with (including visas of
the COB); and
(e) The ADSs issuable in accordance with the Merger shall have been
approved for listing on the NYSE, subject to official notice of issuance.
SECTION 6.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO CONSUMMATE THE
MERGER. The obligation of the Company to consummate the Merger shall be further
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Effective Time of each of the following conditions:
(a) Parent and Merger Sub shall each have performed in all material
respects its respective agreements and covenants contained in or contemplated by
this Agreement that are required to be performed by it at or prior to the
Effective Time pursuant to the terms hereof;
(b) The representations and warranties of Parent and Merger Sub contained
in Article IV hereof (without giving effect to any materiality qualifications or
limitations therein or any references therein to Parent Material Adverse Effect)
shall be true and correct in all respects as of the Effective Time (or, to the
extent such representations and warranties speak as of an earlier date, they
shall be true in all respects as of such earlier date), except (i) as otherwise
contemplated by this Agreement and (ii) for such failures to be true and correct
which in the aggregate would not reasonably be expected to have a Parent
Material Adverse Effect;
(c) The Company shall have received certificates signed by any senior
executive vice president of Parent, dated the Closing Date, to the effect that,
to such officer's knowledge, the conditions set forth in Sections 6.2(a) and
6.2(b) hereof have been satisfied or waived; and
(d) In the event Parent does not exercise its election under Section
1.2(c) to convert shares of Common Stock into cash as set forth in Section
1.2(c), the Company shall have received an opinion of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, its tax counsel, in form and substance
reasonably satisfactory to it, to the effect that the Merger will constitute a
reorganization for United States federal income tax purposes within the meaning
of Section 368(a) of the Code and that Parent, Merger Sub and the Company are
each parties to a reorganization and such opinion shall not have been withdrawn
prior to the Effective Time; PROVIDED, HOWEVER, that if Wilson Sonsini Goodrich
& Rosati, Professional Corporation does not render such opinions, this condition
shall nonetheless be deemed to be satisfied with respect to Company if Shearman
& Sterling renders such opinions to Company. The Company agrees to make such
reasonable representations related to the requirements of Section 368 and 367 of
the Code as may be requested by tax counsel in connection with the opinions
referred to above.
SECTION 6.3 CONDITIONS TO PARENT'S AND MERGER SUB'S OBLIGATIONS TO
CONSUMMATE THE MERGER. The obligations of Parent and Merger Sub to effect the
Merger shall be further subject to the satisfaction, or to the extent permitted
by applicable law, the waiver on or prior to the Effective Time of each of the
following conditions:
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(a) The Company shall have performed in all material respects each of its
agreements and covenants contained in or contemplated by this Agreement that are
required to be performed by it at or prior to the Effective Time pursuant to the
terms hereof (except for those agreements set forth in Section 5.18);
(b) The representations and warranties of the Company contained in Article
III hereof (without giving effect to any materiality qualifications or
limitations therein or any references therein to Company Material Adverse
Effect) shall be true and correct in all respects as of the Effective Time (or,
to the extent such representations and warranties speak as of an earlier date,
they shall be true in all respects as of such earlier date), except (i) as
otherwise contemplated by this Agreement and (ii) for such failures to be true
and correct which in the aggregate would not reasonably be expected to have a
Company Material Adverse Effect;
(c) Parent shall have received a certificate signed by the chief executive
officer of the Company, dated the Closing Date, to the effect that, to such
officer's knowledge, the conditions set forth in Sections 6.3(a) and 6.3(b)
hereof have been satisfied or waived;
(d) All foreign laws regulating competition, antitrust, investment or
exchange control shall have been complied with, and all approvals required under
such foreign laws shall have been received;
(e) In the event Parent does not exercise its election under Section
1.2(c) to convert shares of Common Stock into cash as set forth in Section
1.2(c). Parent shall have received an opinion of Shearman & Sterling, its tax
counsel, in form and substance reasonable satisfactory to it, to the effect that
the Merger will constitute a reorganization for United States federal income tax
purposes within the meaning of Section 368(a) of the Code and that Parent,
Merger Sub and the Company are each parties to a reorganization and such opinion
shall not have been withdrawn prior to the Effective Time PROVIDED, HOWEVER,
that if Shearman & Sterling does not render such opinions, this condition shall
nonetheless be deemed to be satisfied with respect to Parent and Merger Sub if
Wilson Sonsini Goodrich & Rosati, Professional Corporation renders such opinions
to Parent. Parent and Merger Sub agree to make such reasonable representations
related to the requirements of Section 368 and 367 of the Code as may be
requested by tax counsel in connection with the opinions referred to above; and
(f) Each of the individuals listed on Schedule 6.3(f) shall have executed
an employment agreement concurrently with the execution and delivery of this
Agreement, and such employment agreement shall be in full force and effect at
the Effective Time.
ARTICLE VII
TERMINATION.
SECTION 7.1 TERMINATION. Notwithstanding anything herein to the
contrary, this Agreement may be terminated and the transactions contemplated by
this Agreement may be abandoned at any time prior to the Closing Date, whether
before or after the Company has obtained shareholder approval:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not been
consummated by May 31, 2000, or such other date, if any, as the Company and
Parent shall agree upon; provided, that the party seeking to terminate this
Agreement pursuant to this Section 7.1(b) shall not have breached in any
material respect its obligations under this Agreement;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the transactions contemplated by this
Agreement illegal or if any judgment, injunction, order or decree enjoining
Parent, Merger Sub or the Company from consummating the transactions
contemplated by this Agreement is entered and such judgment, injunction, order
or decree shall have become final and nonappealable;
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(d) by Parent, if (i) the Board of Directors of the Company shall have
withheld, withdrawn or modified or amended in any respect adverse to Parent or
Merger Sub its approval or recommendation of the Merger or shall have resolved
to do so, or shall have entered into any letter of intent or similar document or
any agreement, contract or commitment accepting any Acquisition Proposal (ii)
the Board of Directors of the Company shall have recommended to the shareholders
of the Company any Acquisition Proposal or shall have resolved or announced an
intention to do so, or (iii) a tender offer, exchange offer for 50% or more of
the outstanding shares of the Company Common Stock is announced or commenced
and, either (A) the Board of Directors of the Company recommends acceptance of
such tender offer or exchange offer by its shareholders or (B) within (i) ten
(10) business days of such commencement or (ii) in any event, at least three (3)
business days prior to the shareholder meeting, the Board of Directors of the
Company shall have failed to recommend against acceptance of such tender offer
or exchange offer by its shareholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders), (iv) the Company shall have failed to include in the Proxy
Statement the recommendation of the Company's Board of Directors in favor of the
approval of the Merger or this Agreement, (v) the Company's Board of Directors
shall have failed to reaffirm its recommendation in favor of the approval of the
Merger and this Agreement within ten business days after the announcement of an
Acquisition Proposal and Parent's written request for such reaffirmation in
connection therewith (unless such announcement shall have occurred less than ten
business days prior to the Special Meeting, in which case such reaffirmation
shall occur as soon as practicable, and if so practicable, in advance of the
Special Meeting), or (vi) the Company shall have breached its obligations under
Section 5.5 in any respect;
(e) by either the Company or Parent, if the approval of the shareholders
of the Company of the Merger and the adoption of this Agreement shall not have
been obtained at a duly held meeting of shareholders of the Company or any
adjournment thereof;
(f) by Parent, upon a breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this agreement, or if any
representation or warranty of the Company shall have become untrue, incomplete
or incorrect, in either case such that the conditions set forth in Section
6.3(a) or (b) would not be satisfied (a "TERMINATING COMPANY BREACH"); provided,
however, that if such Terminating Company Breach is curable by the Company
through the exercise of commercially reasonable efforts within 30 days and for
so long as the Company continues to exercise such reasonable efforts, Parent may
not terminate this Agreement under this Section 7.1(f); and provided, further
that the preceding proviso shall not in any event be deemed to extend any date
set forth in paragraph (b) of this Section 7.1; or
(g) by the Company, upon breach of any representation, warranty, covenant
or agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall have become untrue, incomplete or
incorrect, in either case such that the conditions set forth in Section 6.2(a)
or (b) would not be satisfied (a "TERMINATING PARENT BREACH"); provided,
however, that if such Terminating Parent Breach is curable by Parent through the
exercise of commercially reasonable efforts within 30 days and for so long as
Parent continues to exercise such reasonable efforts, the Company may not
terminate this Agreement under this Section 7.1(g); and provided, further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 7.1. The party desiring to terminate this
Agreement shall give written notice of such termination to the other party.
SECTION 7.2 EFFECT OF TERMINATION. Except for any willful breach of this
Agreement by any party hereto (which willful breach and liability therefor shall
not be affected by the termination of this Agreement or the payment of any
Termination Fee (as defined in Section 7.3(a) hereof)), if this Agreement is
terminated pursuant to Section 7.1 hereof, then this Agreement shall become void
and of no effect with no liability on the part of any party hereto; PROVIDED,
HOWEVER that notwithstanding such termination the agreements contained in
Sections 7.2, 7.3 and 8.7 hereof and the provision to Section 5.4 hereof shall
survive the termination hereof.
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SECTION 7.3 FEES.
(a) The Company agrees to pay Parent in immediately available funds by
wire transfer an amount equal to $45 million (the "TERMINATION FEE") if:
(i) this Agreement is terminated by Parent pursuant to Section
7.1(d) hereof, other than a termination pursuant to Section 7.1(d)(i)
either (A) after the occurrence of a Parent Material Adverse Effect or (B)
in the event the representations and warranties of Parent set forth in
Article IV were not true in all material respects at the time of the
withdrawal, modification or amendment referred to in such section; or
(ii) (A) Parent or the Company shall terminate this Agreement
pursuant to Section 7.1(e) hereof due to the failure of the Company's
shareholders to approve the Merger and this Agreement, (B) at the time of
such failure to so approve the Merger and this Agreement there shall exist
an Acquisition Proposal with respect to the Company that has not been
publicly and irrevocably withdrawn and (C) within nine (9) months after
such termination, the Company shall enter into a definitive agreement with
respect to any merger, consolidation, recapitalization, liquidation,
tender offer, exchange offer or other business combination involving the
acquisition, purchase or change of control of 50% or more of any class of
equity securities of the Company (an "ACQUISITION TRANSACTION") or any
Acquisition Transaction shall be consummated.
(b) The Company shall pay the Termination Fee required to be paid pursuant
to Section 7.3(a) hereof (if all conditions thereto have been satisfied) (i) not
later than one (1) business day after the termination of this Agreement by
Parent or (ii) in the case of Section 7.3(a)(ii), at or prior to the execution
of an agreement described in Section 7.3(a)(ii)(C).
(c) Except as provided otherwise in this Section 7.3, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
ARTICLE VIII
MISCELLANEOUS.
SECTION 8.1 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given upon (a) personal delivery,
(b) transmitter's confirmation of a receipt of a facsimile transmission, (c)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(d) when mailed in the United States by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by notice given hereunder):
If to the Company, to:
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, California 94103
United States
Fax: (415) 437-1250
Attention: President
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with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
United States
Fax: (650) 493-6811
Attention: Jeffrey D. Saper, Esq.
Steve L. Camahort, Esq.
If to Parent or Merger Sub, to:
Alcatel
54, rue La Boetie
75008 Paris
FRANCE
Fax: 33-140-761-435
Attention: Pascal Durand-Barthez
with a copy to:
Shearman & Sterling
1550 El Camino Real
Menlo Park, California 94025
UNITED STATES
Fax: (650) 330-2299
Attention: Alan F. Denenberg, Esq.
Christopher D. Dillon, Esq.
SECTION 8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other covenants and agreements contained herein which by their terms are to be
performed in whole or in part, or which prohibit actions, subsequent to the
Effective Time, shall survive the Merger in accordance with their terms.
SECTION 8.3 INTERPRETATION. References herein to the "knowledge of the
Company" shall mean the actual knowledge of the executive officers of the
Company. Whenever the words "include," "includes" or "including" are used in
this Agreement they shall be deemed to be followed by the words "without
limitation." The phrase "made available" when used in this Agreement shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available. As used in this
Agreement, the term "affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under the Exchange Act.
The article and section headings contained in this Agreement are solely for the
purpose of reference, are not part of the agreement of the parties hereto and
shall not in any way affect the meaning or interpretation of this Agreement. Any
matter disclosed pursuant to any Schedule of the Company Disclosure Schedule or
the Parent Disclosure Schedule shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
SECTION 8.4 AMENDMENTS, MODIFICATION AND WAIVER.
(a) Except as may otherwise be provided herein, any provision of this
Agreement may be amended, modified or waived by the parties hereto, by action
taken by or authorized by their respective Board of Directors, prior to the
Closing Date if, and only if, such amendment or waiver is in writing and signed,
in the case of an amendment, by the Company and Parent or, in the case of a
waiver, by the party against whom
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the waiver is to be effective; PROVIDED THAT after the adoption of this
Agreement by the shareholders of the Company, no such amendment shall be made
except as allowed under applicable law.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither the Company nor Parent
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other parties hereto.
SECTION 8.6 SPECIFIC PERFORMANCE. The parties acknowledge and agree that
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies.
SECTION 8.8 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner
materially adverse to any party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner.
SECTION 8.9 THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the Company and its successors and permitted assigns, with respect to
the obligations of Parent and Merger Sub under this Agreement, and for the
benefit of Parent and Merger Sub, and their respective successors and permitted
assigns, with respect to the obligations of the Company under this Agreement,
and this Agreement shall not, except to the extent necessary to enforce the
provisions of Article I and Section 5.6 hereof be deemed to confer upon or give
to any other third party any remedy, claim, liability, reimbursement, cause of
action or other right.
SECTION 8.10 ENTIRE AGREEMENT. This Agreement, including any exhibits or
schedules hereto and the Confidentiality Agreements constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements or understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
SECTION 8.11 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be deemed an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
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[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized respective officers as of the date first written above.
ALCATEL
By: /s/ SERGE TCHURUK
-------------------------------------------
Name: Serge Tchuruk
Title: Chairman and Chief Executive Officer
EDEN MERGER CORP.
By: /s/ PAUL A. WENSEL
-------------------------------------------
Name: Paul A. Wensel
Title: Secretary
GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
By: /s/ ORI SASSON
-------------------------------------------
Name: Ori Sasson
Title: Chief Executive Officer
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ANNEX B
GOLDMAN, SACHS & CO.
- - 85 BROAD STREET
- - NEW YORK, NEW YORK 10004
TEL: 212-902-1000
GOLDMAN
SACHS
PERSONAL AND CONFIDENTIAL
September 27, 1999
Board of Directors
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, CA 94103
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, no par value (the
"Shares"), of Genesys Telecommunications Laboratories, Inc. (the "Company") of
the Consideration (as defined below) to be received by such holders pursuant to
the Agreement and Plan of Merger and Reorganization, dated as of September 27,
1999, among Alcatel ("Buyer"), Eden Merger Corp., a wholly owned subsidiary of
Buyer ("Merger Sub"), and the Company (the "Agreement"). For purposes of this
opinion, "Consideration" shall mean (a) the per Share exchange ratio of (i)
1.667 American Depository Shares of Buyer (an "ADS"), each of which represents
one-fifth of a share, nominal value 10 Euros per share, of Buyer (each, a "Buyer
Share") in the event the average closing price of an ADS on the New York Stock
Exchange during the 10 trading day period ending two trading days prior to the
special meeting of the Company's shareholders to be held for the purpose of
considering and taking action upon the Agreement and the merger (the "Merger")
of Merger Sub with and into the Company (the "Closing Share Value") is less than
$33.00 and greater than $27.00, or (ii) that number of ADS's equal to the
quotient obtained by dividing $55 by the Closing Share Value in the event the
Closing Share Value is not less than $33.00 or (iii) that number of ADS's equal
to the quotient obtained by dividing $45.00 by the Closing Share Value in the
event the Closing Share Value is not greater than $27.00, or (b) in the event
the Closing Share Value is less than $24.00 and Buyer does not elect under
Section 1.2(c) of the Agreement to convert Shares into ADS's as set forth in
Section 1.2(c), $45.00 per Share in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We
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<PAGE> 153
Board of Directors
Genesys Telecommunications Laboratories, Inc.
September 27, 1999
Page Two
are familiar with the Company having provided certain investment banking
services to the Company from time to time, including having acted as lead
managing underwriter of the Company's initial public offering in June 1997, and
having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. In
addition, we have provided certain investment banking services to Buyer from
time to time, including having acted as a joint global coordinator and a lead
managing underwriter of the initial public offering of ALSTOM, formerly a 50/50
joint venture between Buyer and The General Electric Company, p.l.c., in June
1998, and may provide investment banking services to Buyer and its affiliates in
the future. Goldman, Sachs & Co. provides a full range of financial advisory and
securities services and, in the course of its normal trading activities, may
from time to time effect transactions and hold securities, including derivative
securities, of the Company or Buyer for its own account and for the accounts of
customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Registration Statement on Form S-1, dated June 12, 1997, and the
prospectus, dated June 16, 1997, relating to the initial public offering of the
Company; Annual Reports to Shareholders and Annual Reports on Form 10-K of the
Company for the two fiscal years ended June 30, 1998; Annual Reports to
Shareholders and Annual Reports on Form 20-F of the Buyer for the five years
ended December 31, 1998; certain interim reports to shareholders and Quarterly
Reports on Form 10-Q of the Company; certain Reports of Foreign Private Issuer
on Form 6-K of the Buyer; certain other communications from the Company and the
Buyer to their respective shareholders; and certain internal financial analyses
and forecasts for the Company prepared by its management. We also have held
discussions with members of the senior management of the Company and Buyer
regarding the strategic rationale for, and the potential benefits of, the
transaction contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading activity
for the Shares, the Buyer Shares and ADS's, compared certain financial and stock
market information for the Company and the Buyer with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the
telecommunications industry specifically and in other industries generally and
performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. As you are aware, Buyer did not make
available to us its projections of expected future performance. Accordingly, our
review with respect to such information was limited to discussions with senior
managers of Buyer of the estimates of research analysts for Buyer. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or Buyer or any of their subsidiaries,
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Board of Directors
Genesys Telecommunications Laboratories, Inc.
September 27, 1999
Page Three
and we have not been furnished with any such evaluation or appraisal. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to how any
holder of Shares should vote with respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the
Consideration pursuant to the Agreement is fair from a financial point of view
to the holders of Shares.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
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<PAGE> 155
ANNEX C
VOTING AGREEMENT
VOTING AGREEMENT, dated as of September 27, 1999 (this "Agreement"),
between Alcatel, a company organized under the laws of France ("Parent"), and
certain shareholders of Genesys Telecommunications Laboratories, Inc., a
California corporation (the "Company"), as set forth on Exhibit A hereto
(collectively, the "Individual Shareholders").
WITNESSETH:
WHEREAS, Parent, Merger Sub, a California corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and the Company propose to enter into,
simultaneously herewith, an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement"; terms used but not defined in this Agreement shall have the
meanings ascribed to them in the Merger Agreement), which provides, upon the
terms and subject to the conditions thereof, for, among other things, the merger
of Merger Sub with and into the Company;
WHEREAS, certain shareholders of the Company own such number of shares of
common stock, no par value, of the Company ("Common Stock") as is set forth on
Exhibit A hereto; and
WHEREAS, as a condition to the willingness of Parent and Merger Sub to
enter into the Merger Agreement and incur the obligations set forth therein,
Parent has required that the Individual Shareholders agree, and in order to
induce Parent and Merger Sub to enter into the Merger Agreement, each Individual
Shareholder has agreed, to enter into this Agreement with respect to all shares
of Common Stock now owned and which may hereafter be acquired by the Individual
Shareholders (the "Shares");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
VOTING OF SHARES
SECTION 1.01. Vote in Favor of Merger; Grant of Proxy. (a) During the
period commencing on the date hereof and terminating at the Effective Time, each
Individual Shareholder, solely in his or her capacity as a shareholder of the
Company, agrees to vote (or cause to be voted) all shares of Common Stock
currently beneficially owned by such Individual Shareholder, and all shares of
Common Stock which such Individual Shareholder acquires in the future, at any
meeting of the shareholders of the Company, and in any action by written consent
of the shareholders of the Company, (i) in favor of the approval, consent,
ratification and adoption of the Merger Agreement and the Merger, and (ii)
against any action that would materially impede, interfere, or discourage the
Merger, and, other than the Merger and the transactions contemplated by the
Merger Agreement, against any merger, consolidation or other business
combination involving the Company, against any recapitalization, reorganization,
dissolution or liquidation of the Company and against any extraordinary
corporate transaction involving a disposition of 50% or more of the assets of
the Company, and against any action that would result in any material breach of
representation, warranty, covenant, or agreement of the Company under the Merger
Agreement.
(b) Each Individual Shareholder, solely in his or her capacity as a
shareholder of the Company, also hereby constitutes Parent, or any nominee of
Parent, with full power of substitution, as such Individual Shareholder's
irrevocable proxy and attorney-in-fact to vote and otherwise act (by written
consent or otherwise) with respect to such Individual Shareholder's shares of
Common Stock as indicated in Section 1.01(a) in the event that such Individual
Shareholder fails to comply with its obligations under such
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section. Each Individual Shareholder intends this proxy to be irrevocable and
coupled with an interest and will take such further action and execute such
other instruments as may be necessary to effectuate the intent of this proxy. To
the extent inconsistent with the foregoing provisions of this Section 1.01, each
Individual Shareholder hereby revokes any and all previous proxies with respect
to any shares of Common Stock that such Individual Shareholder owns or has the
right to vote.
(c) Notwithstanding anything in this Agreement to the contrary, no
Individual Shareholder shall be required to exercise any option or convert any
Company security into Common Stock.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDIVIDUAL SHAREHOLDERS
SECTION 2.01. Representations, Warranties and Covenants of the Individual
Shareholders. Each of the Individual Shareholders (referred to in this Section
2.01 as "he") hereby represents and warrants to Parent and Merger Sub solely
with respect to himself that:
(a) Holdings. He is the lawful record and beneficial owner of the number
of shares of Common Stock set forth on Exhibit A of this Agreement, free and
clear of all encumbrances, and, except as contemplated by this Agreement, he is
not a party to any voting trust, shareholder agreement, proxy or other agreement
or understanding in effect with respect to the voting or transfer of any shares
of Common Stock; except that shares of Common Stock owned by Alec
Miloslavsky and shares of Common Stock owned by Gregory Shenkman are
subject to certain forward contracts with Salomon Smith Barney, Inc.
(b) Capacity; No Conflict. He has the legal capacity to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by such Individual Shareholder, and,
assuming the due authorization, execution and delivery by Parent, this Agreement
constitutes a legal, valid and binding obligation of such Individual
Shareholder. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to such Individual Shareholder or such Individual
Shareholder's properties or assets. No consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental body, agency,
official or authority is required by or with respect to such Individual
Shareholder in connection with the execution and delivery of this Agreement by
such Individual Shareholder or the consummation by such Individual Shareholder
of the transactions contemplated hereby, except for (i) any filings as may be
required under applicable U.S. or state securities laws and the securities laws
of any foreign country and (ii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not prevent or
materially alter or delay any of the transactions contemplated by this
Agreement.
(c) Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of such Individual
Shareholder or any of his affiliates, threatened against such Individual
Shareholder or any of his affiliates or any of their respective properties or
any of their respective officers or directors, in the case of a corporate entity
(in their capacities as such) that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on his ability to
consummate the transactions contemplated by this Agreement. There is no
judgment, decree or order against such Individual Shareholder or any of his
affiliates or, to the knowledge of such Individual Shareholder or any of his
affiliates, any of their respective directors or officers, in the case of a
corporate entity (in their capacities as such) that could prevent, enjoin, alter
or materially delay any of the transactions contemplated by this Agreement, or
that could reasonably
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be expected to have a material adverse effect on such Individual Shareholder's
ability to consummate the transactions contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT
Parent hereby represents and warrants to the Individual Shareholders as
follows:
SECTION 3.01. Authority Relative to This Agreement. Parent is a
corporation duly incorporated and validly existing under the laws of France. The
execution, delivery and performance by Parent of this Agreement and the
consummation by Parent of the transactions contemplated hereby are within
Parent's corporate powers and have been duly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by Parent and, assuming the due authorization, execution and delivery
by the Individual Shareholders, constitutes a valid and binding agreement of
Parent enforceable against Parent in accordance with its terms.
SECTION 3.02. No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance by Parent of this Agreement and the
consummation by Parent of the transactions contemplated hereby require no action
by or in respect of, or filing with, any governmental body, agency, official or
authority, whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign, (insofar as
such action or filing relates to Parent) other than (i) compliance with any
applicable requirements of the HSR Act, the EC Merger Regulations, any foreign
laws regulating competition or antitrust, or the Exchange Act, (ii) approvals
and authorizations of self-regulatory and governmental organizations in the
securities and commodities field, and (iv) such other consents, approvals and
filings which, if not obtained or made, would not, individually or in the
aggregate, have a material adverse effect on Parent or materially impair the
ability of Parent to consummate the transactions contemplated hereby.
(b) The execution, delivery and performance by Parent of this Agreement
and the consummation by Parent of the transactions contemplated hereby do not
and will not (i) contravene or conflict with the organizational documents of
Parent, (ii) assuming receipt of or compliance with all matters referred to in
Section 3.02(a), contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Parent or (iii) constitute a breach of or a default under
or give rise to a right of termination, cancellation or acceleration of any
right or obligation of Parent or to a loss of any benefit to which Parent is
entitled under any provision of any agreement, contract or other instrument
binding upon Parent or any license, franchise, permit or other similar
authorization held by Parent, other than, in the case of each of (ii) and (iii),
any such items that, individually or in the aggregate, would not have a material
adverse effect on Parent or materially impair the ability of Parent to
consummate the transactions contemplated by this Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Amendment; No Waiver. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by each Individual Shareholder and
Parent or in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise
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thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 4.02. Fees and Expenses. Except as otherwise provided herein,
all costs and expenses (including, without limitation, all fees and
disbursements of counsel, accountants, investment bankers, experts and
consultants to a party) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
SECTION 4.03. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy,
facsimile, cable, telegram or telex, or by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier service
to the respective parties at their addresses as specified in Exhibit B hereto.
SECTION 4.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
SECTION 4.05. Assignment; Binding Effect; Benefit. The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, provided that no
party may assign, delegate or otherwise transfer any of its rights, interests or
obligations under this Agreement without the prior written consent of the other
parties hereto, except that Parent may assign, delegate or otherwise transfer
any of its rights, interests or obligations under this Agreement to an affiliate
without the consent of the Individual Shareholders.
SECTION 4.06. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof, that the parties hereto would
not have an adequate remedy at law for money damages in such event and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or in equity.
SECTION 4.07. Governing Law; Submission to Jurisdiction. (a) This
Agreement shall be governed by the Laws of the State of California as applied to
contracts executed and to be performed entirely in such state.
(b) Each Individual Shareholder and Parent hereby irrevocably submits to
the non-exclusive jurisdiction of any California State court or any Federal
court sitting in the state of California in any action or proceeding arising out
of or relating to this Agreement, and each Individual Shareholder hereby
irrevocably agrees that all claims with respect to any such action or proceeding
may be heard and determined in such California State court or in such Federal
court. Each Individual Shareholder and Parent hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient forum to
the maintenance of such action or proceeding.
SECTION 4.08. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
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SECTION 4.09. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, each of which
when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 4.10. Entire Agreement. This Agreement and, to the extent
referred to herein, the Merger Agreement, constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect thereto; provided, however, that any capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Merger Agreement. No addition to or modification of any provision of this
Agreement shall be binding upon either party hereto unless made in writing and
signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by themselves, as individuals, or by
their respective officers thereunto duly authorized.
ALCATEL
By: /s/ SERGE TCHURUK
-------------------------------------
Name: Serge Tchuruk
Title: Chairman and Chief Executive
Officer
/s/ GREGORY SHENKMAN
----------------------------------------
Gregory Shenkman
/s/ ALEC MILOSLAVSKY
----------------------------------------
Alec Miloslavsky
/s/ ORI SASSON
----------------------------------------
Ori Sasson
/s/ BRUCE DUNLEVIE
----------------------------------------
Bruce Dunlevie
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EXHIBIT A
OWNERSHIP OF COMMON STOCK
<TABLE>
<CAPTION>
NAME SHARES
- ---- ---------
<S> <C>
Bruce Dunlevie....................... 840,258
Alec Miloslavsky..................... 3,125,250
Gregory Shenkman..................... 3,002,250
Ori Sasson........................... 258,918
</TABLE>
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EXHIBIT B
ADDRESSES FOR NOTICES
If to the Parent:
Alcatel
54, rue La Boetie
75008 Paris
France
Attn: Pascal Durand-Barthez
Fax: 331-4076-1435
With a copy to:
Shearman & Sterling
1550 El Camino Real
Menlo Park, California 94025
Attn: Alan F. Denenberg, Esq.
Christopher D. Dillon, Esq.
Fax: (650) 330-2299
If to the Individual Shareholders:
c/o Genesys Telecommunications Laboratories, Inc.
1155 Market Street, 11th Floor
San Francisco, California 94103
Fax: (415) 437-1260
With a copy to:
In the case of Ori Sasson:
Jeff Saper
Steve L. Lamahort
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Tel: (650) 493-9300
Fax: (650) 461-5375
In the cases of Gregory Shenkman and Alec Miloslavsky:
Ed Kaufman
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Tel: (310) 277-1010
Fax: (310) 203-7199
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ANNEX D
CHAPTER 13 OF THE CALIFORNIA GENERAL CORPORATION LAW
CHAPTER 13. DISSENTERS' RIGHTS
1300 SHORT FORM MERGER; PURCHASE OF SHARES AT FAIR MARKET VALUE; "DISSENTING
SHARES" AND DISSENTING SHAREHOLDER.--
(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and
(b) or subdivision (e) or (f) of Section 1201, each shareholder of the
corporation entitled to vote on the transaction and each shareholder of a
subsidiary corporation is a short-form merger may, by complying with this
chapter, require the corporation in which the shareholder holds shares to
purchase for cash at their fair market value the shares owned by the
shareholder which are dissenting shares as defined in subdivision (b). The
fair market value shall be determined as of the day before the first
announcement of the terms of the proposed reorganization or short-form
merger, excluding any appreciation or depreciation in consequence of the
proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.
(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:
(1) Which were not immediately prior to the reorganization or
short-form merger either (A) listed on any national securities
exchange certified by the Commissioner of Corporations under
subdivision (o) of Section 25100 or (B) listed on the list of OTC
margin stocks issued by the Board of Governors of the Federal Reserve
System, and the notice of meeting of shareholders to act upon the
reorganization summarizes this section and Sections 1301, 1302, 1303
and 1304; provided, however, that this provision does not apply to
any shares with respect to which there exists any restriction on
transfer imposed by the corporation or by any law or regulation; and
provided, further, that this provision does not apply to any class of
shares described in subparagraph (A) or (B) if demands for payment
are filed with respect to 5 percent or more of the outstanding shares
of that class.
(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not
voted in favor or the reorganization or, (B) if described in
subparagraph (A) or (B) of paragraph (1) (without regard to the
provisos in that paragraph), were voted against the reorganization,
or which were held of record on the effective date of a short-form
merger; provided, however, that subparagraph (A) rather than
subparagraph (B) of this paragraph applies in any case where the
approval required by Section 1201 is sought by written consent rather
than at a meeting.
(3) Which the dissenting shareholder has demanded that the
corporation purchase at their fair market value, in accordance with
Section 1301.
(4) Which the dissenting shareholder has submitted for endorsement,
in accordance with Section 1302.
(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.
1301 DISSENTER'S RIGHTS; DEMAND ON CORPORATION FOR PURCHASE OF SHARES.--
(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3)
and (4) of subdivision (b) thereof, to require the corporation to purchase
their shares for cash, such corporation shall mail to each such
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shareholder a notice of the approval of the reorganization by its
outstanding shares (Section 152) within 10 days after the date of such
approval, accompanied by a copy of Section 1300, 1302, 1303, 1304 and this
section, a statement of the price determined by the corporation to
represent the fair market value of the dissenting shares, and a brief
description of the procedure to be followed if the shareholder desires to
exercise the shareholder's right under such sections. The statement of
price constitutes an offer by the corporation to purchase at the price
stated any dissenting shares as defined in subdivision (b) of Section
1300, unless they lose their status as dissenting shares under Section
1309.
(b) Any shareholder who has a right to require the corporation to purchase
the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand
upon the corporation for the purchase of such shares and payment to the
shareholder in cash of their fair market value. The demand is not
effective for any purpose unless it is received by the corporation or any
transfer agent thereof (1) in the case of shares described in clause (i)
or (ii) of paragraph (1) of subdivision (b) of Section 1300 (without
regard to the provisos in that paragraph), not later than the date of the
shareholders' meeting to vote upon the reorganization, or (2) in any other
case within 30 days after the date on which the notice of the approval by
the outstanding shares pursuant to subdivision (a) or the notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder.
(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the
corporation purchase and shall contain a statement of what such
shareholder claims to be the fair market value of those shares as of the
day before the announcement of the proposed reorganization of short-form
merger. The statement of fair market value constitutes an offer by the
shareholder to sell the shares at such price.
1302 DISSENTING SHARES, STAMPING OR ENDORSING. -- Within 30 days after the date
on which notice of the approval by the outstanding shares or the notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder, the
shareholder shall submit to the corporation at its principal office or at the
office of any transfer agent thereof, (a) if the shares are certificated
securities, the shareholder's certificates representing any shares which the
shareholder demands that the corporation purchase, to be stamped or endorsed
with a statement that the shares are dissenting shares or to be exchanged for
certificates of appropriate denomination so stamped or endorsed or (b) if the
shares are uncertificated securities, written notice of the number of shares
which the shareholder demands that the corporation purchase. Upon subsequent
transfers of the dissenting shares on the books of the corporation the new
certificates, initial transaction statement, and other written statements issued
therefor shall bear a like statement, together with the name of the original
dissenting holder of the shares.
1303 DISSENTING SHAREHOLDER ENTITLED TO AGREED PRICE WITH INTEREST;
TIME OF PAYMENT.--
(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the
legal rate on judgments from the date of the agreement. Any agreements
fixing the fair market value of any dissenting shares as between the
corporation and the holders thereof shall be filed with the secretary of
the corporation.
(b) Subject to the provisions of Section 1306; payment of the fair market
value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or
contractual conditions to the reorganization are satisfied, whichever is
later, and in the case of certificated securities, subject to surrender of
the certificates therefor, unless provided otherwise by agreement.
D-2
<PAGE> 164
1304 DISSENTERS ACTIONS; JOINDER; CONSOLIDATION; APPOINTMENT OF APPRAISERS.--
(a) If the corporation denies that the shares are dissenting shares, or
the corporation and the shareholder fail to agree upon the fair market
values of the shares, then the shareholder demanding purchase of such
shares as dissenting shares or any interested corporation, within six
months after the date on which notice of the approval by the outstanding
shares (Section 152) or notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, but not thereafter, may file a complaint in
the superior court of the proper county praying the court to determine
whether the shares are dissenting shares or the fair market value of the
dissenting shares or both or may intervene in any action pending on such a
complaint.
(b) Two or more dissenting shareholders may join as plaintiff, or be
joined as defendants in any such action and two or more such actions may
be consolidated.
(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall
first determine that issue. If the fair market value of the dissenting
shares is in issue, the court shall determine, or shall appoint one or
more impartial appraisers to determine, the fair market value of the
shares.
1305 APPRAISERS DUTY AND REPORT; COURT JUDGEMENT; PAYMENT; APPEAL;
COSTS OF ACTION.--
(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time
fixed by the court, the appraisers, or a majority of them, shall make and
file a report in the office of the clerk of the court. Thereupon, on the
motion of any party, the report shall be submitted to the court and
considered on such evidence as the court considers relevant. If the court
finds the report reasonable, the court may confirm it.
(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not confirmed
by the court, the court shall determine the fair market value of the
dissenting shares. (c) Subject to the provisions of Section 1306, judgment
shall be rendered against the corporation for payment of an amount equal
to the fair market value of each dissenting share multiplied by the number
of dissenting shares which any dissenting shareholder who is a party, or
who has intervened, is entitled to require the corporation to purchase,
with interest thereon at the legal rate from the date on which judgment
was entered.
(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities,
only upon the endorsement and delivery to the corporation of the
certificates for the shares described in the judgment. Any party may
appeal from the judgment.
(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as
the court considers equitable, but, if the appraisal exceeds the price
offered by the corporation, the corporation shall pay the costs (including
in the discretion of the court attorneys' fees, fees of expert witnesses
and interest at the legal rate on judgments from the date of compliance
with Sections 1300, 1301 and 1302 if the value awarded by the court for
the shares is more than 125 percent of the price offered by the
corporation under subdivision (a) of Section 1301).
1306 DISSENTING SHAREHOLDERS: EFFECT OF PREVENTION OF PAYMENT OF FAIR MARKET
VALUE. -- To the extent that the provisions of Chapter 5 prevent the payment to
any holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.
D-3
<PAGE> 165
1307 DISSENTING SHARES, DISPOSITION OF DIVIDENDS. -- Cash dividends declared and
paid by the corporation upon the dissenting shares after the date of approval of
the reorganization by the outstanding shares (Section 152) and prior to payment
for the shares by the corporation shall be credited against the total amount to
be paid by the corporation therefor.
1308 DISSENTING SHARES, RIGHTS AND PRIVILEGES. -- Except as expressly limited in
this chapter, holders of dissenting shares continue to have all the rights and
privileges incident to their shares, until the fair market value of their shares
is agreed upon or determined. A dissenting shareholder may not withdraw a demand
for payment unless the corporation consents thereto.
1309 DISSENTING SHARES, LOSS OF STATUS. -- Dissenting shares lose their status
as dissenting shares and the holders thereof cease to be dissenting shareholders
and cease to be entitled to require the corporation to purchase their shares
upon the happening of any of the following:
(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter
all necessary expenses incurred in such proceedings and reasonable
attorneys' fees.
(b) The shares are transferred prior to their submission for endorsement
in accordance with Section 1302 or are surrendered for conversion into
shares of another class in accordance with the articles.
(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of
the shares, and neither files a complaint or intervenes in a pending
action as provided in Section 1304, within six months after the date on
which notice of the approval by the outstanding shares or notice pursuant
to subdivision (i) of Section 1110 was mailed to the shareholder.
(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.
1310 SUSPENSION OF CERTAIN PROCEEDINGS WHILE LITIGATION IS PENDING. -- If
litigation is instituted to test the sufficiency or regularity of the votes of
the shareholders in authorizing a reorganization, any proceeding under Sections
1304 and 1305 shall be suspended until final determination of such litigation.
1311 CHAPTER INAPPLICABLE TO CERTAIN CLASSES OF SHARES. -- This chapter, EXCEPT
SECTION 1312, does not apply to classes of shares whose terms and provisions
specifically set forth the amount to be paid in respect to such shares in the
event of a reorganization or merger.
1312 VALIDITY OF REORGANIZATION OR SHORT FORM MERGER, ATTACK ON;
SHAREHOLDERS' RIGHTS; BURDEN OF PROOF. --
(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have
any right at law or in equity to attack the validity of the reorganization
or short-form merger, or to have the reorganization or short-form merger
set aside or rescinded, except in an action to test whether the number of
shares required to authorize or approve the reorganization have been
legally voted in favor thereof; but any holder of shares of a class whose
terms and provisions specifically set forth the amount to be paid in
respect to them in the event of a reorganization or short-form merger is
entitled to payment in accordance with those terms and provisions or, if
the principal terms of the reorganization are approved pursuant to
subdivision (b) of Section 1202, is entitled to payment in accordance with
the terms and provisions of the approved reorganization.
D-4
<PAGE> 166
(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, subdivision (a)
shall not apply to any shareholder of such party who has not demanded
payment of cash for such shareholder's shares pursuant to this chapter;
but if the shareholder institutes any action to attack the validity of the
reorganization or short-form merger or to have the reorganization or
short-form merger set aside or rescinded, the shareholder shall not
thereafter have any right to demand payment of cash for the shareholder's
shares pursuant to this chapter. The court in any action attacking the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall not
restrain or enjoin the consummation of the transaction except upon 10
days, prior notice to the corporation and upon a determination by the
court that clearly no other remedy will adequately protect the complaining
shareholder or the class of shareholders of which such shareholder is a
member.
(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with,
another party to the reorganization or short-form merger, in any action to
attack the validity of the reorganization or short-form merger or to have
the reorganization or short-form merger set aside or rescinded, (1) a
party to a reorganization or short-form merger which controls another
party to the reorganization or short-form merger shall have the burden of
proving that the transaction is just and reasonable as to the shareholders
of the controlled party, and (2) a person who controls two or more parties
to a reorganization shall have the burden of proving that the transaction
is just and reasonable as to the shareholders of any party so controlled.
D-5
<PAGE> 167
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Alcatel has provided for the indemnification of its directors and officers
with respect to general civil liability which they may incur in connection with
their activities on behalf of Alcatel.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------- ------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization, dated as of
September 27, 1999, by and among Genesys, Alcatel and Eden
Merger Corp. (included as Annex A to the proxy
statement/prospectus).
3.1 Statuts (Articles of Association and By-Laws) of the
Registrant (English translation) (incorporated by reference
to Alcatel's Annual Report on Form 20-F dated June 28, 1999)
(File No. 1-11130).
4.1 Form of Amended and Restated Deposit Agreement, dated as of
March 10, 1997, among Alcatel, The Bank of New York, as
Depository, and the holders from time to time of the ADRs
issued thereunder, including the form of ADR (incorporated
by reference to Exhibit A(1) to Alcatel's Registration
Statement on Form F-6 (File No. 333-6506)).
5.1 Form of Opinion of Mr. Pascal Durand-Barthez as to the
validity of the Alcatel shares.
8.1 Form of Opinion of Shearman & Sterling as to certain tax
matters.
8.2 Form of Opinion of Wilson Sonsini Goodrich & Rosati as to
certain tax matters.
10.1 Voting Agreement, dated as of September 27, 1999, between
Alcatel and certain shareholders of Genesys (included as
Annex C to the proxy statement/prospectus).
15.1 Letter from Arthur Andersen LLP on unaudited interim
financial information.
21.1 Subsidiaries of Alcatel (incorporated by reference to
Alcatel's Annual Report on Form 20-F for the year ended
December 31, 1998).
23.1 Consent of Shearman & Sterling (included in Exhibit 8.1).
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 8.2).
23.3 Consent of Mr. Durand-Barthez (included in Exhibit 5.1).
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Arthur Andersen LLP.
24.1 Power of Attorney.
99.1 Form of proxy card to be mailed to shareholders of Genesys.
99.2 Form of Chairman and Chief Executive Officer's Letter to the
shareholders of Genesys.
</TABLE>
II-1
<PAGE> 168
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------- ------------------------
<C> <S>
99.3 Form of Notice of Special Meeting of Stockholders to the
shareholders of Genesys.
99.4 Restated Certificate of Incorporation of Genesys
(incorporated by reference to Exhibit 3.1 to Genesys' Annual
Report Form 10-K filed September 28, 1999. (File No.
0-22605)).
99.5 Amended and Restated By-laws of Genesys (incorporated by
reference to Exhibit 3.1 to Genesys' Quarterly Report Form
10-Q filed February 16, 1999). (File No. 0-22605).
99.6 Consent of Goldman, Sachs & Co.
</TABLE>
(C)
Opinion of Goldman, Sachs & Co. (included as Annex B to the proxy
statement/prospectus).
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) (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;
(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;
(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;
(4) to file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 of
Regulation S-X under the Securities Act at the start of any
delayed offering or throughout a continuous offering;
(b) that, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities 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 initial bona fide offering thereof;
(c) (1) that prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a
part of this registration statement, by any person or party
who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable
registration form with respect to reofferings by persons who
may be deemed
II-2
<PAGE> 169
underwriters, in addition to the information called for by the other items of
the applicable form;
(2) every prospectus: (i) that is filed pursuant to paragraph (c)(1)
immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes 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;
(d) insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue;
(e) (1) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11,
or 13 of this Form F-4, within one business day of receipt of
such request, and to send the incorporated documents by first
class mail or other equally prompt means, and
(2) to arrange or provide for a facility in the United States for
the purpose of responding to such requests; and
(f) to supply by means of a post-effective amendment all information
concerning a transaction and the company being acquired involved
therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Paris, France on December 20, 1999.
Alcatel
/s/ JEAN-PIERRE HALBRON
By:
--------------------------------------
Name: Jean-Pierre Halbron
Title: Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on its behalf by the following persons in
the capacities and on December 20, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board (Chief Executive Officer and
- --------------------------------------------- Director)
Serge Tchuruk
/s/ JEAN-PIERRE HALBRON Director and Senior Executive Vice President
- --------------------------------------------- (Principal Financial and Accounting Officer)
Jean-Pierre Halbron
* Director
- ---------------------------------------------
Daniel Bernard
* Director
- ---------------------------------------------
Philippe Bissara
Director
- ---------------------------------------------
Frank Blount
Director
- ---------------------------------------------
Paolo Cantarella
* Director
- ---------------------------------------------
Jacques Friedmann
* Director
- ---------------------------------------------
Noel Goutard
Director
- ---------------------------------------------
Pierre-Louis Lions
* Director
- ---------------------------------------------
Thierry de Loppinot
</TABLE>
<PAGE> 171
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- ---------------------------------------------
Jean-Marie Messier
Director
- ---------------------------------------------
Bruno Vaillant
* Director
- ---------------------------------------------
Marc Vienot
Director
- ---------------------------------------------
Helmut Werner
* Authorized representative in the United States
- ---------------------------------------------
Krish Prabhu
*By: JEAN-PIERRE HALBRON Attorney-in-Fact
- ---------------------------------------------
Jean-Pierre Halbron
</TABLE>
<PAGE> 172
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------- ------------------------
<C> <S>
2.1 Agreement and Plan of Merger and Reorganization, dated as of
September 27, 1999, by and among Genesys, Alcatel and Eden
Merger Corp. (included as Annex A to the proxy
statement/prospectus).
3.1 Statuts (Articles of Association and By-Laws) of the
Registrant (English translation) (incorporated by reference
to Alcatel's Annual Report on Form 20-F dated June 28, 1999)
(File No. 1-11130).
4.1 Form of Amended and Restated Deposit Agreement, dated as of
March 10, 1997, among Alcatel, The Bank of New York, as
Depository, and the holders from time to time of the ADRs
issued thereunder, including the form of ADR (incorporated
by reference to Exhibit A(1) to Alcatel's Registration
Statement on Form F-6 (File No. 333-6506).
5.1 Form of Opinion of Mr. Pascal Durand-Barthez as to the
validity of the Alcatel shares.
8.1 Form of Opinion of Shearman & Sterling as to certain tax
matters.
8.2 Form of Opinion of Wilson Sonsini Goodrich & Rosati as to
certain tax matters.
10.1 Voting Agreement, dated as of September 27, 1999, between
Alcatel and certain shareholders of Genesys (included as
Annex C to the proxy statement/prospectus).
15.1 Letter from Arthur Andersen LLP on unaudited interim
financial information.
21.1 Subsidiaries of Alcatel (incorporated by reference to
Alcatel's Annual Report on Form 20-F for the year ended
December 31, 1998).
23.1 Consent of Shearman & Sterling (included in Exhibit 8.1).
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in
Exhibit 8.2).
23.3 Consent of Mr. Durand-Barthez (included in Exhibit 5.1).
23.4 Consent of Arthur Andersen LLP.
23.5 Consent of Arthur Andersen LLP.
24.1 Power of Attorney.
99.1 Form of proxy card to be mailed to shareholders of Genesys.
99.2 Form of Chairman and Chief Executive Officer's Letter to the
shareholders of Genesys.
99.3 Form of Notice of Special Meeting of Stockholders to the
shareholders of Genesys.
99.4 Restated Certificate of Incorporation of Genesys
(incorporated by reference to Exhibit 3.1 to Genesys' Annual
Report Form 10-K filed September 28, 1999. (File No.
0-22605).
99.5 Amended and Restated By-laws of Genesys (incorporated by
reference to Exhibit 3.1 to Genesys' Quarterly Report Form
10-Q filed February 16, 1999). (File No. 0-22605).
99.6 Consent of Goldman, Sachs & Co.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[Alcatel Letterhead]
December 20, 1999
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Dear Sirs:
I am familiar with the Registration Statement on Form F-4 covering shares
of Common Stock, par value E 10 per share, of Alcatel to be issued in connection
with the merger (the "Merger") of Eden Merger Corp., a wholly-owned subsidiary
of Alcatel ("Eden"), into Genesys Telecommunications Laboratories, Inc.
("Genesys"), pursuant to an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") dated as of September 27, 1999, among Alcatel, Eden and
Genesys.
I am of the opinion that the shares of Common Stock of Alcatel to be
issued in connection with the Merger (the "Shares"), when issued in accordance
with the Merger Agreement, will be duly and validly issued and fully paid.
My opinion is based on the following interpretation of French law.
I believe that the exchange of the Shares for shares Genesys pursuant to
the Merger Agreement amounts substantially to "une offre publique d'echange" for
the purpose of Article 193-1 of the French Company Act no. 66-537 of July 24,
1966 (the "Law"), for the reasons summarized below.
(i) An "offre publique d'echange" for the purpose of Article 193-1 of
the Law is not limited to (x) an "offre publique d'echange" as
defined by the rules of the Reglement General du Conseil des Marches
Financiers, since these rules only apply to offers made on French
companies, or (y) a public exchange offer within the meaning of the
U.S. Securities Act of 1933;
(ii) The exchange of shares to be consummated through the Merger is
different from any procedure available under French law and, in
particular, is different from a "fusion" within the meaning of
article 1844-4 of the French Civil Code and articles 371 et seq. of
the Law, in that both Genesys and Alcatel will survive the Merger;
and
(iii) The Merger has the characteristics of an "offre publique d'echange"
for the purpose of Article 193-1 of the Law, as:
(a) it amounts to an exchange of shares, proposed to public
shareholders in the United States through a procedure which is
under the control of U.S. stock exchange authorities and governed
by U.S. stock exchange laws and regulations; and
(b) it is comparable in its consequences, calendar and disclosure
obligations to a public exchange offer, and either procedure could
have been used by Alcatel.
I believe that there are strong grounds to support this interpretation,
but I cannot predict whether a court of competent jurisdiction in the Republic
of France or elsewhere would purport this interpretation in any judicial
proceeding on this question.
<PAGE> 2
I hereby consent to the reference to me under "Legal Matters" in such
Registration Statement.
Very truly yours,
/s/ PASCAL DURAND-BARTHEZ
Pascal Durand-Barthez
General Counsel
<PAGE> 1
EXHIBIT 8.1
[FORM OF SHEARMAN & STERLING TAX OPINION]
December 20, 1999
650-330-2204
Alcatel
54, rue La Boetie
75008 Paris, France
Ladies and Gentlemen:
We have acted as counsel for Alcatel, a French corporation ("Parent"), in
connection with the preparation, execution and delivery of the Agreement and
Plan of Merger and Reorganization, dated as of September 27, 1999, (the
"Agreement"), among Parent, Eden Merger Corp., a California corporation and a
direct wholly owned subsidiary of Parent ("Merger Sub"), and Genesys
Telecommunications Laboratories, Inc. (the "Company"), and documents related or
incidental thereto and transactions to be effected thereunder. You have
requested our opinion concerning certain United States federal income tax
consequences of the merger of Merger Sub with and into the Company (the
"Merger") pursuant to the Agreement. Unless otherwise defined, capitalized terms
used herein have the meanings assigned to them in the Agreement or in the Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus") which will be included
in the Registration Statement on Form F-4 (the "Registration Statement") filed
by Alcatel on the date hereof with the Securities and Exchange Commission (the
"Commission"). All section references herein are made to the corresponding
section of the Internal Revenue Code of 1986, as amended (the "Code").
In delivering this opinion, we have reviewed and relied upon facts and
descriptions set forth in the Registration Statement, the Agreement and related
documents pertaining to the Merger. We also have relied upon certificates of
officers of Parent and the Company (the "Officers' Certificates"). We have
assumed that the Officers' Certificates, respectively, have been executed and
delivered by appropriate officers of Parent and the Company and are true and
correct. We also have assumed that the certifications made in the Officers'
Certificates, respectively, will continue to be true and correct as of the
Effective Time of the Merger unless we receive written notification from Parent
or the Company prior to the Effective Time of the Merger.
Based on the foregoing and the Code, the Income Tax Regulations issued by
the United States Treasury Department thereunder, rulings of the Internal
Revenue Service and court decisions, all as in effect on the date hereof, we are
of the opinion that if the Merger is completed in accordance with the terms and
conditions of the Agreement and assuming in the case of opinions one and two
that Parent does not elect to pay cash for the Common Stock, and if the
statements set forth in the Officers' Certificates are true and correct on the
date hereof and at the Effective Time of the Merger, for United States federal
income tax purposes:
1. The Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code.
2. Parent, Merger Sub, and the Company each will be a "party to
the reorganization" within the meaning of Section 368(b) of the Code.
3. The discussion entitled "Material U.S. Federal Income Tax
Consequences" in the Proxy Statement/Prospectus, insofar as it relates to
statements of law or legal conclusions, is correct in all material
respects.
<PAGE> 2
In accordance with customary practice relating to opinion letters, our
opinions speak only as of the date hereof, and, subject to the assumptions and
conditions set forth above, the Effective Time of the Merger, and we disclaim
any duty to update such opinions.
This opinion has been delivered to you and is intended solely for your
benefit. It may not be relied upon by any other person or entity, and may not be
made available to any other person or entity without our prior written consent.
In accordance with the requirements of Item 601(b)(23) of Regulation S-K
under the Securities Act of 1933 (the "Act") we hereby consent to the filing of
this opinion with the Commission as an exhibit to the Registration Statement at
the time of the filing thereof, and to the references made to us under the
caption "THE MERGER -- Material U.S. Federal Income Taxes" in the Proxy
Statement/Prospectus. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ SHEARMAN & STERLING
<PAGE> 1
EXHIBIT 8.2
[FORM OF WILSON SONSINI GOODRICH & ROSATI TAX OPINION]
December 20, 1999
Genesys Telecommunications Laboratories, Inc.
1155 Market Street, 11th Floor
San Francisco, CA 94103
Ladies and Gentlemen:
We have acted as counsel to Genesys Telecommunications Laboratories, Inc.,
a California corporation ("the Company"), in connection with the preparation and
execution of the Agreement and Plan of Merger and Reorganization (the
"Agreement") dated as of September 27, 1999, by and among Alcatel, a corporation
organized under the laws of France ("Parent"), Eden Acquisition Corp., a
California corporation and a direct, wholly-owned subsidiary of Parent ("Merger
Sub"), and the Company. Pursuant to the Agreement, Merger Sub will merge with
and into the Company (the "Merger"), the separate corporate existence of Merger
Sub will cease and the Company will become a wholly-owned subsidiary of Parent.
The Merger and certain proposed transactions incident thereto are described in
the Registration Statement on Form F-4 (the "Registration Statement") of Parent,
which includes the Proxy Statement/Prospectus of the Company (the "Proxy
Statement/Prospectus"). You have requested our opinion concerning certain United
States federal income tax consequences of the Merger.
Unless otherwise defined, capitalized terms referred to herein have the
meanings set forth in the Agreement or in the Proxy Statement/Prospectus. All
section references, unless otherwise indicated, are to the Internal Revenue Code
of 1986, as amended (the "Code").
In delivering our opinion, we have reviewed and relied upon (without any
independent investigation) the truth and accuracy, at all relevant times, of the
facts, statements, covenants, descriptions, representations, and warranties
contained in the following documents (including all exhibits and schedules
attached thereto):
1. The Agreement;
2. The Registration Statement;
3. Certificates of officers of Parent and the Company, respectively (the
"Officers' Tax Certificates"); and
4. Such other instruments and documents related to the formation,
organization, and operation of Parent, Merger Sub, and the Company and
related to the Merger, as we have deemed necessary or appropriate.
In connection with rendering this opinion, we also have assumed (without
any independent investigation) that:
1. Original documents (including signatures thereto) submitted to us are
authentic, documents submitted to us as copies conform to the original
documents, and that all such documents have been (or will be by the
Effective Time) duly and validly executed and delivered where due
execution and delivery are prerequisites to effectiveness thereof;
2. All representations, warranties, and statements made or agreed to by
Parent, Merger Sub, the Company, their managements, employees,
officers, directors, and shareholders in connection
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Genesys Telecommunications Laboratories, Inc.
December 20, 1999
Page 2
with the Merger, including, but not limited to, those set forth in the
Agreement (including the exhibits thereto) and the Officers' Tax
Certificates are true and accurate at all relevant times and no actions
have been (or will be) taken which are inconsistent with such
representations;
3. All covenants contained in the Agreement (including exhibits thereto)
and the Officers' Tax Certificates are performed without waiver or
breach of any material provision thereof;
4. The Merger will be reported by Parent and the Company on their
respective federal income tax returns in a manner consistent with the
opinion set forth below;
5. Any representation or statement made in any of the documents referred
to herein "to the knowledge" of any person or party or similarly
qualified is correct without such qualification; and
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that, if the Merger is consummated in accordance with the
provisions of the Agreement and the statements set forth in the Officers' Tax
Certificates are true and correct as of the Effective Time, then, (a) in the
event Parent does not exercise its election to convert shares of Company Common
Stock into cash as set forth in Section 1.2(c) of the Agreement, for United
States federal income tax purposes, the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and Parent,
Merger Sub, and the Company each will be a "party to the reorganization" within
the meaning of Section 368(b) of the Code and (b) the discussion contained in
the Registration Statement under the caption "Material U.S. Federal Income Tax
Consequences," subject to the limitations and qualifications described therein,
sets forth the material United States Federal income tax considerations
generally applicable to the Merger.
This opinion represents and is based upon our best judgment regarding the
application of United States federal income tax laws arising under the Code,
existing judicial decisions, administrative regulations and published rulings
and procedures. Our opinion is not binding upon the Internal Revenue Service or
the courts, and there is no assurance that the Internal Revenue Service will not
successfully assert a contrary position. Furthermore, no assurance can be given
that future legislative, judicial or administrative changes, on either a
prospective or retroactive basis, will not adversely affect the accuracy of the
conclusions stated herein. Nevertheless, we undertake no responsibility to
advise you of any new developments in the application or interpretation of the
United States federal income tax laws.
This opinion addresses only the matters stated herein, and does not
address any other federal, state, local or foreign tax consequences that may
result from the Merger or any other transaction (including any transaction
undertaken in connection with the Merger).
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement or to any transaction whatsoever, including the
Merger, if all the transactions described in the Agreement are not consummated
in accordance with the terms of such Agreement and without waiver or breach of
any material provision thereof or if all of the representations, warranties,
statements and assumptions upon which we relied are not true and accurate
through the Effective Time and at all relevant times thereafter. In the event
any one of the statements, representations, warranties or assumptions upon which
we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
In accordance with the requirements of Item 601(b)(23) of Regulation S-K
under the Securities Act of 1933, as amended (the "Act"), we hereby consent to
the filing of this opinion with the Securities and Exchange Commission as an
exhibit to the Registration Statement at the time of the filing thereof, and to
the references made to us under the caption "THE MERGER -- Material U.S. Federal
Income Taxes" in the
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Genesys Telecommunications Laboratories, Inc.
December 20, 1999
Page 3
Proxy Statement/Prospectus. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
/s/ WILSON SONSINI GOODRICH &
ROSATI
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
EXHIBIT 15.1
ARTHUR ANDERSEN LLP
December 20, 1999
Alcatel
54 rue la Boetie
75008 Paris
We are aware that Alcatel has incorporated by reference in this proxy
statement/prospectus its unaudited interim consolidated financial statements
ended June 30, 1999, which includes our report dated September 9, 1999 covering
the unaudited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered a part
of the registration statement prepared or certified by our firm or a report
prepared or certified by our firm within the meaning of Sections 7 and 11 of the
Act.
Very truly yours,
Arthur Andersen LLP
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this proxy statement/prospectus of our report dated March 11,
1999 included in Alcatel's Annual Report on Form 20-F for the year ended
December 31, 1998 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Paris, France
December 20, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this proxy statement/prospectus of our report dated July 20,
1999 included in Genesys Telecommunications Laboratories, Inc.'s Form 10-K/A for
the year ended June 30, 1999 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
San Jose, California
December 17, 1999
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EXHIBIT 24.1
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes Jean-Pierre
Halbron and Pascal Durand-Barthez, as attorney-in-fact and agent, with full
power of substitution, to sign on his or her behalf, individually and in any and
all capacities, including the capacities stated below, and to file the
Registration Statement on Form F-4, Form S-8, Form F-6 or such other Form as may
be appropriate in connection with the registration of American Depositary
Shares, American Depositary Receipts and/or the related Ordinary Shares of the
registrant and any and all amendments (including pre-effective and
post-effective amendments) to the Registration Statement and to file the same,
with exhibits thereto and other documents in connection therewith with the
Securities and Exchange Commission, granting to said attorney-in-fact and agent
full power and authority to perform any other act on behalf of the undersigned
required to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ SERGE TCHURUK Chairman of the Board
- --------------------------------------------- (Chief Executive Officer and
Serge Tchuruk Director) December 20, 1999
/s/ JEAN-PIERRE HALBRON Director and Senior Executive
- --------------------------------------------- Vice President (Principal
Jean-Pierre Halbron Financial and Accounting Officer) December 20, 1999
/s/ DANIEL BERNARD Director
- ---------------------------------------------
Daniel Bernard December 20, 1999
/s/ PHILIPPE BISSARA Director
- ---------------------------------------------
Philippe Bissara December 20, 1999
Director
- ---------------------------------------------
Frank Blount
Director
- ---------------------------------------------
Paolo Cantarella
/s/ JACQUES FRIEDMANN Director
- ---------------------------------------------
Jacques Friedmann December 20, 1999
/s/ NOEL GOUTARD Director
- ---------------------------------------------
Noel Goutard December 20, 1999
Director
- ---------------------------------------------
Pierre-Louis Lions
/s/ THIERRY DE LOPPINOT Director
- ---------------------------------------------
Thierry de Loppinot December 20, 1999
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JEAN-MARIE MESSIER Director
- ---------------------------------------------
Jean-Marie Messier December 20, 1999
Director
- ---------------------------------------------
Bruno Vaillant
/s/ MARC VIENOT Director
- ---------------------------------------------
Marc Vienot December 20, 1999
Director
- ---------------------------------------------
Helmut Werner
/s/ KRISH PRABHU Authorized representative in the
- --------------------------------------------- United States
Krish Prabhu December 20, 1999
</TABLE>
<PAGE> 1
EXHIBIT 99.1
PROXY
GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
SPECIAL MEETING OF SHAREHOLDERS, JANUARY 21, 2000
This Proxy is Solicited on Behalf of the Board of Directors of
Genesys Telecommunications Laboratories, Inc.
The undersigned revokes all previous proxies, acknowledges receipt of the
notice of the Special Meeting of Shareholders to be held on January 21, 2000 and
the proxy statement, and appoints Ori Sasson and Richard DeGolia, or either of
them, the proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of Genesys Telecommunications Laboratories, Inc. that the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
an entity or entities, at the Special Meeting of Shareholders of Genesys to be
held at the Genesys' executive offices at 1155 Market Street, San Francisco,
California, 94103 on January 21, 2000 at 11:00 AM, and any adjournment or
postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat. The shares represented by this proxy
shall be voted in the manner set forth on the reverse side.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
[X] PLEASE MARK VOTES AS
IN THIS EXAMPLE.
--------------------------------------------------------
To approve and adopt the Agreement and
Plan of Merger and Reorganization,
dated as of September 27, 1999, by and
among Genesys Telecommunications
Laboratories, Inc., Alcatel and Eden
Merger Corp., and the transactions
contemplated thereby, pursuant to
which Genesys will become a
wholly-owned subsidiary of Alcatel.
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<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
<TABLE>
<S> <C>
MARK HERE FOR ADDRESS CHANGE [ ]
AND NOTE AT LEFT
------------
Please sign exactly as your name appears hereon. If acting
as attorney, executor, trustee, or in other representative
capacity sign name and title.
</TABLE>
<PAGE> 1
EXHIBIT 99.2
LOGO
TO THE SHAREHOLDERS OF GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
On September 27, 1999, Genesys Telecommunications Laboratories, Inc.'s
board of directors approved a merger agreement between Alcatel and Genesys. The
merger agreement provides for the merger of Genesys with a newly formed, wholly
owned subsidiary of Alcatel.
You will receive either Alcatel ADSs or cash in exchange for your Genesys
common stock in the merger. The number of Alcatel ADSs or the amount of cash
into which each share of your Genesys common stock will be converted depends on
the average closing price of an Alcatel ADS during the 10-trading-day period
ending 2 trading days prior to the special meeting of Genesys shareholders. That
price is referred to as the "average closing price." If the average closing
price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average
closing price;
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average
closing price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of any Alcatel ADSs.
Each Alcatel ADS represents one-fifth of a share of Alcatel common stock.
Alcatel ADSs are listed on the New York Stock Exchange under the trading symbol
"ALA," and on December 17, 1999 Alcatel ADSs closed at $40.625 per ADS.
The merger cannot be completed unless the holders of a majority of Genesys
common stock entitled to vote adopt the merger agreement. Only shareholders who
hold their shares of Genesys common stock at the close of business on December
16, 1999 will be entitled to vote at the special meeting.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS DETERMINED THE MERGER
TO BE FAIR TO YOU AND IN YOUR BEST INTERESTS AND DECLARED THE MERGER ADVISABLE.
GENESYS' BOARD OF DIRECTORS APPROVED THE MERGER AGREEMENT AND RECOMMENDS ITS
ADOPTION BY YOU.
This proxy statement/prospectus provides you with detailed information
concerning Alcatel, Genesys and the merger. Please give all of the information
contained in the proxy statement/prospectus your careful attention. IN
PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THEDISCUSSION IN THE SECTION ENTITLED
"RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROXY STATEMENT/PROSPECTUS.
Please use this opportunity to take part in the affairs of Genesys by
voting on the adoption of the merger agreement. Whether or not you plan to
attend the meeting, please complete, sign, date and return the accompanying
proxy in the enclosed self-addressed stamped envelope. Returning the proxy does
NOT
<PAGE> 2
deprive you of your right to attend the meeting and to vote your shares in
person. YOUR VOTE IS VERY IMPORTANT.
We appreciate your interest in Genesys and consideration of this matter.
Ori Sasson
Chief Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF ALCATEL COMMON STOCK OR
THE ALCATEL ADSS TO BE ISSUED IN CONNECTION WITH THE MERGER OR DETERMINED
WHETHER THIS PROXY STATEMENT/PROSPECTUS IS ADEQUATE OR ACCURATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated December 20, 1999 and was first
mailed to shareholders on or about December 21, 1999.
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, CA 94103
Telephone: (415) 437-1171
Facsimile: (415) 437-1260
<PAGE> 1
EXHIBIT 99.3
LOGO
NOTICE OF SPECIAL MEETING
GENESYS TELECOMMUNICATIONS LABORATORIES, INC.
1155 MARKET STREET
SAN FRANCISCO, CALIFORNIA 94103
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
<TABLE>
<S> <C>
Date: January 21, 2000
Time: 11:00 AM
Place: 1155 Market Street
San Francisco, CA 94103
</TABLE>
------------------------
At the meeting you will be asked:
1. To consider and vote upon a proposal to adopt the Agreement and Plan
of Merger and Reorganization, dated as of September 27, 1999, by and among Eden
Merger Corp., a wholly owned subsidiary of Alcatel, Alcatel and Genesys
Telecommunications Laboratories, Inc., pursuant to which Eden Merger Corp. will
merge with and into Genesys and Genesys will survive the merger as a wholly
owned subsidiary of Alcatel. You will receive either Alcatel ADSs or cash in
exchange for your Genesys common stock in the merger. The number of Alcatel ADSs
or the amount of cash into which each share of your Genesys common stock will be
converted depends on the average closing price of an Alcatel ADS during the
10-trading-day period ending 2 trading days prior to the special meeting of
Genesys shareholders. That price is referred to as the "average closing price."
If the average closing price of an Alcatel ADS is:
- less than $33.00 and greater than $27.00, each share of Genesys common
stock will be converted into 1.667 Alcatel ADSs;
- $33.00 or greater, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $55.00 by the average
closing price;
- $27.00 or less, each share of Genesys common stock will be converted
into the number of Alcatel ADSs equal to the quotient (calculated to
three decimal places) obtained by dividing $45.00 by the average
closing price.
In addition, if the average closing price of an Alcatel ADS is $24.00 or
less, Alcatel may, at its option, deliver $45.00 in cash to Genesys shareholders
instead of any Alcatel ADSs.
Adoption of the merger agreement will also constitute approval of the
merger and the other transactions contemplated by the merger agreement.
2. To transact such other business as may properly come before the
special meeting or any adjournment of the special meeting.
<PAGE> 2
The attached proxy statement/prospectus contains a more complete
description of these items of business. Only holders of record of Genesys common
stock at the close of business on December 16, 1999, the record date, are
entitled to vote on the matters listed in this notice of special meeting. You
may vote in person at the Genesys Special Meeting even if you have returned a
proxy.
By Order of the Board of Directors
of Genesys Telecommunications
Laboratories, Inc.
Richard DeGolia
Senior Vice President, Business
Development &
Strategic Planning, Acting General
Counsel
and Corporate Secretary
San Francisco, California
December 20, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY IN THE
ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE
<PAGE> 1
EXHIBIT 99.6
GOLDMAN, SACHS & CO.
- - 85 BROAD STREET
- - NEW YORK, NEW YORK 10004
TEL: 212-902-1000
GOLDMAN
SACHS
PERSONAL AND CONFIDENTIAL
December 19, 1999
Board of Directors
Genesys Telecommunications Laboratories, Inc.
1155 Market Street
San Francisco, CA 94103
Re: Registration Statement on Form F-4 of Alcatel relating to Ordinary Shares,
nominal value 10 Euros each, of Alcatel being registered in connection with
the Agreement (as defined below)
Gentlemen:
Reference is made to our opinion letter dated September 27, 1999 with respect to
the fairness from a financial point of view to the holders of the outstanding
shares of Common Stock, no par value (the "Shares"), of Genesys
Telecommunications Laboratories, Inc. (the "Company") of the Consideration (as
defined therein) to be received by such holders pursuant to the Agreement and
Plan of Merger and Reorganization, dated as of September 27, 1999, among Alcatel
("Buyer"), Eden Merger Corp., a wholly owned subsidiary of Buyer, and the
Company (the "Agreement").
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of the Company in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated, quoted
or otherwise referred to for any other purpose, nor is it to be filed with,
included in or referred to in whole or in part in any registration statement,
proxy statement or any other document, except in accordance with our prior
written consent. We understand that the Company has determined to include our
opinion in the above-referenced Registration Statement.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary - The Merger - Opinion of Genesys' Financial
Advisor," "The Merger - Background of the Merger," "The Merger - Genesys'
Reasons for the Merger," and "The Merger - Opinion of Genesys' Financial
Advisor" and to the inclusion of the foregoing opinion in the Proxy
Statement/Prospectus included in the above-mentioned Registration Statement. In
giving such consent, we do not thereby admit that we come within the category of
persons
<PAGE> 2
Genesys Telecommunications Laboratories, Inc.
December 19, 1999
Page Two
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
(GOLDMAN, SACHS & CO.)
