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The following is an excerpt from a DEF 14A SEC Filing, filed by GENESYS TELECOMMUNICATIONS LABORATORIES INC on 10/29/1997.
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GENESYS TELECOMMUNICATIONS LABORATORIES INC - DEF 14A - 19971029 - PROPOSAL_2

PROPOSAL NO. 2

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

The Company is asking the shareholders to ratify the selection of Arthur Andersen, LLP as the Company's independent public accountants for the fiscal year ending June 30, 1998. The affirmative vote of the holders of a majority of shares represented and voting at the Annual Meeting will be required to ratify the selection of Arthur Andersen, LLP.

In the event the shareholders fail to ratify the appointment, the Board of Directors will reconsider its selection. Even if the selection is ratified, the Board of Directors, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Board of Directors feels that such a change would be in the Company's and its shareholders' best interests.

In February 1997, the Company's Board of Directors retained Arthur Andersen, LLP as its independent public accountants and dismissed the Company's former public accountants, Coopers and Lybrand LLP. Arthur Andersen, LLP audited the Company's financial statements for fiscal 1996 and 1997. The decision to change independent public accountants was approved by resolution of the Board of Directors. The former independent public accountants' report on the Company's financial statements at and for the years ended June 30, 1994 and 1995 did not contain an adverse opinion, a disclaimer of opinion or any qualifications or modifications related to uncertainty, limitation of audit scope or application of accounting principles. Coopers & Lybrand LLP did not issue an audit report on the Company's financial statements for any other period. There were no disagreements with the former public accountants on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure with respect to the Company's consolidated financial statements up through the time of dismissal that, if not resolved to the former public accountants' satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their report. Prior to retaining Arthur Andersen, LLP, the Company had not consulted with Arthur Andersen, LLP regarding accounting principles.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board of Directors recommends that the shareholders vote FOR the ratification of the selection of Arthur Andersen, LLP to serve as the Company's independent auditors for the fiscal year ending June 30, 1998.

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OWNERSHIP OF SECURITIES

The following table sets forth certain information known to the Company with respect to beneficial ownership of the Company's Common Stock as of September 30, 1997 for (i) all persons who are beneficial owners of more than five percent of the Company's Common Stock, (ii) each director and nominee for director, (iii) the Company's Chief Executive Officer, Chief Technical Officer and the four other highest-paid executive officers named in the Summary Compensation Table below, and (iv) all current officers and directors as a group as of September 30, 1997.

                                                        NUMBER OF
                                                          SHARES
                                                       BENEFICIALLY PERCENT
                                                         OWNED(1)   OWNED(2)
                                                       ------------ --------
Gregory Shenkman(3)...................................   3,385,250    17.1%
 1155 Market Street
 San Francisco, CA 94103
Alec Miloslavsky(4)...................................   3,385,250    17.1%
 1155 Market Street
 San Francisco, CA 94103
Entities affiliated with Benchmark Capital LLC(5).....   1,897,368     9.6%
 2840 Sand Hill Road
 Suite 200
 Menlo Park, CA 94025
Entities affiliated with Weiss Peck & Greer(6)........     813,378     4.1%
 555 California Street, Suite 4760
 San Francisco, CA 94104
James Jordan(7).......................................     652,668     3.3%
Bruce Dunlevie(8).....................................   1,947,368     9.8%
Paul Levy(9)..........................................      87,000       *
Michael J. McCloskey(10)..............................     480,000     2.4%
Richard DeGolia(11)...................................     438,370     2.4%
Seth Homayoon(12).....................................     480,000     2.4%
William Wesemann(13)..................................     480,000     2.4%
All current officers and directors as a group (13
 persons)(14).........................................  12,049,156    60.2%


* 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 Common Stock. The number of shares beneficially owned includes Common Stock of which such individual has the right to acquire beneficial ownership either currently or within 60 days after September 30, 1997, including, but not limited to, upon the exercise of an option.

(2) Percentage of beneficial ownership is based upon 19,848,259 shares of Common Stock, all of which were outstanding on September 30, 1997. For each individual, this percentage includes Common Stock of which such individual has the right to acquire beneficial ownership either currently or within 60 days of September 30, 1997, including, but not limited to, upon the exercise of an option; however, such 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 36,000 shares held by Norm and Maya Shendon and 180,000 shares held by Dmitry and Maria Shenkman, of which Mr. Shenkman disclaims beneficial ownership. Includes 360,000 shares held by Dmitry Shenkman, Trustee of the Michelle Shenkman 1996 Trust u/t/a dated March 18, 1996, 360,000 shares held by Dmitry Shenkman, Trustee of the Nikita Anthony Shenkman 1996 Trust u/t/a dated March 18, 1996, 928,000 shares held by Gregory and Yelena Shenkman, Trustees of the Shenkman Family

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Trust u/t/a dated March 7, 1996 and 500,000 shares held by Shenkman Partners. Also includes 326,625 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(4) Includes 180,000 shares held by Anatoly and Zhanna Elkinbard, and 180,000 shares held by Larry and Lidia Miloslavsky, of which Mr. Miloslavsky disclaims beneficial ownership. Excludes 2,250 shares held by Lidia Miloslavsky and options exercisable by Lidia Miloslavsky to purchase a total of 1,500 shares of Common Stock which options were exercisable within 60 days of September 30, 1997, of which Mr. Miloslavsky disclaims beneficial ownership. 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, 120,000 shares held by Larry and Lidia Miloslavsky, Trustees of the Joshua Trobnikov Miloslavsky 1996 Trust u/t/a dated March 15, 1996 and 350,000 shares held by Miloslavsky Partners. Also includes 326,625 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(5) Consists of 219,987 shares held by Benchmark Founders' Fund, L.P. and 1,677,381 shares held by Benchmark Capital Partners, L.P. Mr. Dunlevie, a director of the Company, is an affiliate of the foregoing entities and may be deemed to share voting and investment power with respect to such shares. Mr. Dunlevie disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest in such shares arising from his interests in the entities referred to above.

(6) Consists of 444,102 shares held by WPG Enterprise Fund II, L.P. and 369,276 shares held by Weiss Peck & Greer Venture Associates III, L.P.

(7) Includes options exercisable by Mr. Jordan to purchase a total of 50,000 shares of Common Stock, which options were issued and became exercisable on February 28, 1997. Also includes 286,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(8) Includes 1,897,368 shares beneficially owned by entities affiliated with Benchmark Capital, LLC. Includes options exercisable by Mr. Dunlevie to purchase a total of 50,000 shares of Common Stock, which options were issued and became exercisable on February 28, 1997.

(9) Includes options exercisable by Mr. Levy to purchase a total of 20,000 shares of Common Stock, which options were issued and became exercisable on February 28, 1997. Also, includes 30,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(10) Includes 340,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(11) Includes 42,370 shares held by Richard C. DeGolia or Jennifer H. DeGolia, as Trustees of the RJ Family Trust u/t/a dated 6/16/95. Also, includes 252,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(12) Includes 320,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(13) Includes 320,000 unvested shares which are subject to repurchase by the Company at the purchase price paid per share.

(14) Includes (i) 2,611,250 unvested shares which are subject to repurchase by the Company at the purchase price paid per share, and (ii) 172,500 shares issuable upon exercise of stock options exercisable within 60 days of September 30, 1997.

COMPLIANCE WITH SEC REPORTING REQUIREMENTS

Under the securities laws of the United States, the Company's directors, executive officers, and any persons holding more than ten percent of the Company's Common Stock are required to report initial ownership of the Company's Common Stock and any subsequent changes in ownership to the Securities and Exchange Commission ("SEC"). Specific due dates have been established by the SEC, and the Company is required to disclose in this Proxy Statement any failure to file by these dates. Based upon (i) the copies of
Section 16(a) reports that the Company received from such persons for their 1997 fiscal year transactions and (ii) the written representations received from one or more of such persons that no annual Form 5 reports were required to be filed for them for the 1997 fiscal year, the Company believes that there has been compliance with all Section 16(a) filing requirements applicable to such officers, directors, and ten-percent beneficial owners.

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