<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1999
REGISTRATION STATEMENT NO. 333-81329
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VERSATEL TELECOM INTERNATIONAL N.V.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
THE NETHERLANDS 4813 NONE
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
<TABLE>
<S> <C>
PAALBERGWEG 36 CT CORPORATION SYSTEM
1105 BV AMSTERDAM-ZUIDOOST 1633 BROADWAY
THE NETHERLANDS NEW YORK, NY 10019
(31-20) 430 4300 (212) 664-1666
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
PRINCIPAL EXECUTIVE OFFICES)
</TABLE>
---------------
WITH COPIES TO
<TABLE>
<S> <C>
JOHN D. MORRISON JR. WILLIAM R. DOUGHERTY
SHEARMAN & STERLING SIMPSON THACHER & BARTLETT
599 LEXINGTON AVENUE 99 BISHOPSGATE
NEW YORK, NY 10022 LONDON, ENGLAND EC2M 3YH
(212) 848-4000 (44-171) 422-4000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If 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 the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED(1) OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
% Senior Dollar Notes due 2009......... $150,000,000 $41,700(3)
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% Senior Euro Notes due 2009(4)........ $102,000,000 $28,356(3)
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</TABLE>
(1) Includes Senior Dollar Notes and Senior Euro Notes that (i) are to be
offered and sold by the Registrant in the United States and (ii) are to
be offered outside the United States but that may be resold from time to
time in the United States during the distribution.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act.
(3) An aggregate $250,000,000 was registered on June 22, 1999. A
registration fee of $69,500 has been previously paid.
(4) Calculated based on the euro noon buying rate on July 19, 1999 of $1.02
per E1.00.
THIS 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
The information in this Prospectus is not complete and may be changed. We may
not sell these securities or accept any offer to buy these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This Prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any jurisdiction where such
offer or sale is not permitted.
PROSPECTUS Subject to Completion, dated July 22, 1999
[VERSATEL TELECOM LOGO]
VERSATEL TELECOM INTERNATIONAL N.V.
$150,000,000 % SENIOR DOLLAR NOTES DUE 2009
E100,000,000 % SENIOR EURO NOTES DUE 2009
- --------------------------------------------------------------------------------
THIS IS AN OFFERING BY VERSATEL TELECOM INTERNATIONAL N.V. OF $150,000,000 OF
ITS % SENIOR DOLLAR NOTES DUE 2009 AND E100,000,000 OF ITS % SENIOR EURO
NOTES DUE 2009. INTEREST ON EACH SERIES OF NOTES IS PAYABLE ON
AND OF EACH YEAR, BEGINNING , 2000.
WE MAY REDEEM ALL OR PART OF EITHER SERIES OF NOTES ON OR AFTER ,
2004. PRIOR TO , 2002, WE MAY REDEEM UP TO 35% OF EITHER SERIES
OF NOTES FROM THE PROCEEDS OF CERTAIN EQUITY OFFERINGS. WE MAY ALSO REDEEM ALL
OF EITHER SERIES OF NOTES PRIOR TO THEIR MATURITY IN THE EVENT OF CERTAIN
CHANGES AFFECTING WITHHOLDING TAXES IN THE NETHERLANDS. THE APPLICABLE
REDEMPTION PRICES ARE SPECIFIED IN THIS PROSPECTUS UNDER "DESCRIPTION OF THE
NOTES."
THE NOTES WILL BE OUR SENIOR UNSECURED OBLIGATIONS AND WILL NOT BE GUARANTEED BY
ANY OF OUR SUBSIDIARIES.
THIS OFFERING IS BEING MADE CONCURRENTLY WITH AN OFFERING BY VERSATEL AND A
NUMBER OF SELLING SHAREHOLDERS OF ORDINARY SHARES IN THE FORM OF SHARES OR
AMERICAN DEPOSITARY SHARES. THE CLOSING OF THIS OFFERING IS CONDITIONED UPON THE
CLOSING OF THE EQUITY OFFERING.
INVESTING IN THE NOTES INVOLVES RISKS. "RISK FACTORS" BEGINS ON PAGE 13.
<TABLE>
<CAPTION>
PER NOTE TOTAL
--------- ---------------------
<S> <C> <C> <C>
Offering Price.............................................. % $ E
Discounts and Commissions................................... % $ E
--------- --------- ---------
Proceeds to VersaTel........................................ % $ E
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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LEHMAN BROTHERS ING BARINGS
, 1999
<PAGE> 3
[The inside front cover contains a graph that sets forth VersaTel's local
access and overlay network, a graph of the local access infrastructure, a
summary of VersaTel's product packages as well as a graph that shows the
population density in Western Europe]
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary............................ 1
Risk Factors....................... 13
Disclosure Regarding
Forward-Looking Statements....... 25
Use of Proceeds.................... 26
Capitalization..................... 27
Exchange Rate Information.......... 29
Unaudited Pro Forma Consolidated
Financial Information............ 32
Selected Financial Data for
VersaTel......................... 39
Selected Financial Data for
Svianed.......................... 41
Management's Discussion and
Analysis of Financial Condition
and Results of Operations........ 43
Business........................... 59
Svianed.......................... 72
Management......................... 82
Principal Shareholders............. 89
Material Relationships and Related
Transactions..................... 90
Description of Material
Indebtedness..................... 92
Description of the Notes........... 95
Book-Entry, Delivery and Form...... 127
Tax Considerations................. 131
Underwriting....................... 138
Legal Matters...................... 141
Experts............................ 141
Where You Can Find More
Information...................... 141
Index to Financial Statements --
VersaTel......................... F-1
Index to Financial Statements --
Svianed.......................... F-23
Glossary........................... A-1
</TABLE>
In making a decision about buying these securities, you must rely on your
own examination of the terms of this offering, including the merits and risks
involved, and you should rely only on the information contained in this
prospectus. We have not authorized anyone to provide prospective investors with
information that is different from the information contained in this prospectus.
This prospectus is intended to offer no securities other than the Notes. This
prospectus is not an offer to sell nor is it seeking an offer to buy any
security in any jurisdiction where such an offer or sale would be illegal. The
information in this prospectus is true as of the date on the front cover,
regardless of the time of delivery of this prospectus or any sale of these
securities.
Until September 1, 1999, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
The underwriters expect to deliver the Notes on or about July 28, 1999. The
Notes will be accepted for delivery through the facilities of The Depository
Trust Company, Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System and Cedel Bank, against payment in immediately
available funds.
You must comply with all applicable laws and regulations in force in any
jurisdiction in which you purchase, offer or sell the Notes or possess or
distribute this prospectus, and must obtain any required consent, approval or
permission for your purchase, offer or sale of the Notes under the laws and
regulations in force in any jurisdiction to which you are subject or in which
you make such purchases, offers or sales.
We have made all reasonable inquiries, and we confirm that this document
contains all information with respect to us and the Notes which is material in
the context of the issue and offering of the Notes, that the information
contained herein is true and accurate in all material respects and is not
misleading in any material respect, that the opinions and intentions expressed
herein are honestly held and have been reached after considering all relevant
circumstances and are based on reasonable assumptions, that there
i
<PAGE> 5
are no other facts, the omission of which would, in the context of the issue and
offering of the Notes, make this document as a whole or any such information or
the expression of any such opinions or intentions misleading in any material
respect, and that all reasonable inquiries have been made by us to verify the
accuracy of such information. We accept responsibility for the information
contained in this document accordingly.
The Notes may not be offered, sold, transferred or delivered as part of
their initial distribution or at any time thereafter, directly or indirectly,
other than to (investment) banks, pension funds, insurance companies, securities
firms, investment institutions and other comparable entities, including
treasuries and finance companies of large enterprises, who or which are active
on a regular and professional basis in the financial markets for their own
account. This selling restriction will be included in all offers,
advertisements, publications and other documents in which an offer of the Notes
is made or a forthcoming offer is announced.
-------------------------
We publish our financial statements in Dutch guilders. In this prospectus,
references to "U.S. dollars" or "$" are references to the currency of the United
States, references to "Dutch guilders" or "NLG" are references to the currency
of The Netherlands and references to "Belgian francs" or "BEF" are references to
the currency of Belgium. The exchange rate of the Luxembourg franc to the U.S.
dollar is the same as that of the Belgian franc to the U.S. dollar. Solely for
the convenience of the reader, this prospectus contains translations of certain
Dutch guilder amounts into U.S. dollars at specified rates. These translations
should not be construed as representations that the Dutch guilder amounts
actually represent such U.S. dollar amounts or could be converted into U.S.
dollars at the rate indicated or at any other rate. Both The Netherlands and
Belgium have adopted the euro as of January 1, 1999. On July 19, 1999, the Noon
Buying Rate was $1.02 per E1.00. To obtain a current formulation of the value of
Dutch guilders or Belgian francs in U.S. dollars, investors are required first
to convert such currencies into euro at the fixed conversion rates of NLG
2.20371 per E1.00 and BEF 40.3399 per E1.00 established in connection with the
implementation of the third stage of European Monetary Union, and converting the
resulting euro amounts into U.S. dollars at the Noon Buying Rate for euro.
Unless otherwise indicated, the translations of Dutch guilders into U.S. dollars
have been made at NLG 2.04 per $1.00, based on the noon buying rate in the City
of New York for cable transfers in euro as certified for customs purposes by the
Federal Reserve Bank of New York ("Noon Buying Rate") on March 31, 1999. See
"Exchange Rate Information" for historical information regarding the Noon Buying
Rate. On July 19, 1999, the exchange rate of Dutch guilders to U.S. dollars
(based on the Noon Buying Rate for euro) was NLG 2.16 per $1.00. This prospectus
contains translations of certain Belgian franc amounts into U.S. dollars at
specified rates. These translations should not be construed as representations
that the Belgian franc amounts actually represent such U.S. dollar amounts or
could be converted into U.S. dollars at the rate indicated or at any other rate.
Unless otherwise indicated, the translation of Belgian francs into U.S. dollars
has been made at BEF 37.32 per $1.00, based on the Noon Buying Rate in the City
of New York for cable transfers in euro as certified for customs purposes by the
Federal Reserve Bank of New York on March 31, 1999. On July 19, 1999 the
exchange rate of Belgian francs to U.S. dollars (based on the Noon Buying Rate
for euro) was BEF 39.54 per $1.00. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a discussion of the effects
of exchange rate fluctuations on VersaTel. For more information regarding recent
rates of exchange between Dutch guilders, Belgian francs and euros versus U.S.
dollars, see "Exchange Rate Information."
-------------------------
ii
<PAGE> 6
-------------------------
SERVICE OF PROCESS AND
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated under the laws of The Netherlands and substantially all
of our assets are located outside the United States. In addition, most of our
management board, supervisory board and executive officers are not residents of
the United States. As a result, it may not be possible for investors to effect
service of process within the United States upon such persons or to enforce
against such persons or VersaTel judgments of U.S. courts based upon civil
liabilities under the U.S. federal securities laws. The United States and The
Netherlands do not have a treaty providing for the reciprocal recognition and
enforcement of judgments, so U.S. judgments are not directly enforceable in The
Netherlands. However, a final judgment for the payment of money obtained in a
U.S. court, which is not subject to appeal or any other means of contestation
and is enforceable in the United States, would in principle be upheld by a
Netherlands court of competent jurisdiction when asked to render a judgment in
accordance with such final judgment by a U.S. court, without substantive
re-examination or re-litigation on the merits of the subject matter thereof;
provided that such judgment has been rendered by a court of competent
jurisdiction, in accordance with rules of proper procedure, that it has not been
rendered in proceedings of a penal or revenue nature, that its content and
possible enforcement are not contrary to public policy or public order of The
Netherlands, and that such judgment does not concern the recognition of punitive
damages which have no bearing on the amount of damages incurred. Notwithstanding
the foregoing, there can be no assurance that U.S. investors will be able to
enforce against VersaTel, or executive officers or members of the management or
supervisory boards, or certain experts named herein who are residents of The
Netherlands or other countries outside the United States, any judgments in civil
and commercial matters, including judgments under the federal securities laws.
VersaTel has been advised by its Netherlands counsel, Stibbe Simont Monahan
Duhot, that there is doubt as to whether a Netherlands court would impose civil
liability on VersaTel, or on its executive officers or the members of the
management or supervisory boards, in an original action based solely upon the
federal securities laws of the United States brought in a court of competent
jurisdiction in The Netherlands against VersaTel or such members.
-------------------------
Persons participating in this offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the Notes offered hereby at
levels which might not otherwise prevail in the open market. Such stabilization,
if it commences, may be discontinued at any time. You should read the
"Underwriting" section for a description of these activities.
iii
<PAGE> 7
SUMMARY
This summary may not contain all the information that may be important to
you. You should read this entire prospectus, including the financial data and
related notes, before making an investment decision. You should also carefully
consider the information set forth under the heading "Risk Factors." This
prospectus has been prepared assuming the consummation of the reclassification
of our ordinary share capital into a single class of ordinary shares, which is
to occur before the closing of this offering. See "Description of Capital
Stock." Financial and other information contained in this document (i) has been
adjusted to reflect a 2-for-1 stock split of our ordinary shares, which was
effected on April 13, 1999 and (ii) unless otherwise specified, assumes no
exercise of the underwriters' over-allotment option in our concurrent offering
of ordinary shares. This prospectus includes forward-looking statements which
are subject to risks and uncertainties. See "Disclosure Regarding
Forward-Looking Statements." Technical terms used in our business are explained
in the "Glossary" at the end of this prospectus. Unless the context otherwise
requires, the terms "we", "us", "our" and similar terms used in this prospectus
refer to VersaTel Telecom International N.V. and its subsidiaries.
VERSATEL
VersaTel is a rapidly growing, competitive network operator focused
primarily on the Benelux, which consists of The Netherlands, Belgium and
Luxembourg. Our objective is to become the leading fully integrated provider of
local access, facilities-based broadband services, including voice, data and
Internet services to our customers in this region. We currently provide
high-quality, competitively priced, telecommunications, data and Internet
services in The Netherlands and Belgium primarily to 4 targeted market segments:
- business services -- small- and medium-sized businesses located
throughout the Benelux,
- local access services -- high bandwidth users within the Benelux which
are near and directly connected to our network,
- data services -- high bandwidth data customers with multiple sites
throughout the Benelux, and
- carrier services -- telecommunications, data and Internet service
providers.
With over 13,500 business customers and over 375 employees, we are a
leading alternative to KPN Telecom N.V. and Belgacom S.A., the former monopoly
telecommunications carriers in The Netherlands and Belgium, respectively. Our
revenues grew from NLG 18.9 million for the year ended December 31, 1997 to NLG
39.6 million for the year ended December 31, 1998 and our revenues for the 3
months ended March 31, 1999 were NLG 15.5 million.
On June 11, 1999, we acquired Svianed B.V., the third largest provider of
data services in The Netherlands. Svianed complements VersaTel's strategy by
providing data services to approximately 50 customers, primarily in the
financial services and banking industry, including the principal social
insurance organization and the largest financial institution in The Netherlands.
These customers are served on a network which connects to over 600 buildings and
utilizes over 700 leased lines covering approximately 6,000 kilometers. The
Svianed network has 50 regional points of presence and transports traffic at
speeds of up to 150 Mbps. Svianed had revenues of NLG 56.7 million and EBITDA of
NLG 17.9 million for the year ended December 31, 1998. For the 3 months ended
March 31, 1999, Svianed had revenues of NLG 15.6 million and EBITDA of NLG 5.2
million. The revenues for VersaTel and Svianed on a combined basis would have
been NLG 96.2 million for the year ended December 31, 1998 and NLG 31.1 million
for the 3 months ended March 31, 1999.
We are building a fully integrated broadband network to provide end-to-end
connectivity to our customers. Our network has been designed to pass through all
the major population and business centers
1
<PAGE> 8
in the Benelux and to connect city centers, business parks and buildings along
its route. Our network design consists of 3 fully integrated elements:
- Benelux network -- multiple, integrated fiber optic rings connecting all
major population and business centers in the Benelux,
- local access infrastructure -- high bandwidth fiber optic and radio
connectivity to customers along our Benelux network route including city
centers, business parks and buildings, and
- international network -- fiber optic rings initially connecting London,
Dusseldorf, Frankfurt, Paris and the Benelux network.
As of May 31, 1999, we have constructed over 850 kilometers of our network
in the Benelux which we intend to have in service in the third quarter of 1999.
We intend to build an additional 650 kilometers of our network, including local
access infrastructure, by the end of 1999. As of May 31, 1999, our construction
passed 12 city centers, 6 business parks and 5,200 buildings along the route of
our network. We intend to complete our international rings connecting the
Benelux network, London and Paris and connecting the Benelux network, Frankfurt,
Dusseldorf and Paris by December 1999. We have completed our international
connection from the Benelux network to London and to Frankfurt. We intend to
directly connect Svianed's customers to, and transition Svianed's traffic onto,
our network in order to reduce our reliance on leased lines. We believe this
will significantly enhance the quality of our service offering to Svianed's
customers and reduce our costs.
During the past year, we have substantially expanded our product offering
from our initial offering of long distance voice services. We currently offer a
full portfolio of voice, data and Internet services to our business customers
and a broad range of connectivity, termination, co-location and hosting services
to other telecommunications, data and Internet service providers. Through our
acquisition of Svianed we will be able to significantly accelerate the
deployment of our broadband data services product offering by combining our
market presence with Svianed's data and network management expertise.
In addition to Svianed, we have recently extended our product and service
offerings and expanded our customer base through the following strategic
acquisitions:
- VuurWerk Internet B.V. -- a leading provider of web hosting, co-location,
access and e-commerce services in The Netherlands and Belgium. VuurWerk
is one of the largest providers of web hosting services in The
Netherlands, with more than 10,000 domain name registrations and 6,000
customers.
- SpeedPort N.V. -- a provider of Internet co-location and connectivity
solutions for high bandwidth and mission critical Internet and e-commerce
applications. SpeedPort will use VersaTel's international fiber
connectivity to build its IP-based network to serve its customers.
- CS Net B.V. -- enables Internet-based trade communities to conduct
business-to-business transactions in specific industries. It currently
provides these services to 6 trade communities with 10,000 end users.
- ITinera Services N.V. -- a Belgium-based Internet service provider with
over 950 business customers.
Over time, we intend to market most products and services of these
companies under the VersaTel brand. SpeedPort, however, will continue to market
its Internet solutions under its current brands.
2
<PAGE> 9
THE BENELUX MARKET OPPORTUNITY
VersaTel was founded in 1995 to capitalize on the opportunities created by
the liberalization of the telecommunications market in the Benelux. We believe
that the Benelux provides an excellent opportunity for competitive
communications service providers for several reasons, including its:
- HIGH POPULATION DENSITY. With approximately 26.2 million people in a
relatively small geographical area, the Benelux market is characterized
by one of the world's highest population densities, approximately 351
persons per square kilometer, compared to approximately 107 persons per
square kilometer in western Europe as a whole.
- HIGH GROWTH POTENTIAL. Data and telecommunications revenues as a
percentage of gross domestic product of 5.3% in 1997 were still
relatively low compared to 6.3% in the United Kingdom and 7.0% in the
United States, each with a more developed communications market.
- RAPIDLY EXPANDING DATA AND INTERNET MARKETS. The market for data and
Internet services is growing rapidly in the Benelux. According to
International Data Corporation, the estimated annual growth of the market
for Internet access services will be 30.4% and 45.2% in The Netherlands
and Belgium, respectively, from 1997 to 2001.
- HIGH INTENSITY OF COMMUNICATIONS TRAFFIC. The Benelux is a major
transportation and trade gateway which generates a relatively high level
of communications traffic. According to EITO (the European Information
Technology Observatory), the total Benelux telecommunication services
market amounted to $14.2 billion in 1997. If ranked as a single country,
the Benelux would have been the fifth largest telecommunications market
in western Europe behind Germany, France, the United Kingdom and Italy.
- TRADITIONALLY UNDERSERVED MARKET. At present, the Benelux communications
market is dominated by the former monopoly carriers, KPN Telecom,
Belgacom and P&T Luxembourg in The Netherlands, Belgium and Luxembourg,
respectively. We believe these carriers have not traditionally focused on
providing high quality customer service to our targeted customers.
- DEMAND FOR END-TO-END, BROADBAND SERVICES. We believe that business
customers will increasingly demand high bandwidth end-to-end
communications services, as they rapidly adopt Internet-based
applications as essential business and communications tools, such as
electronic commerce.
BUSINESS STRATEGY
VersaTel's objective is to become the leading local access,
facilities-based operator for broadband voice, data and Internet services in the
Benelux. The principal elements of our strategy are:
- DEPLOY OUR BROADBAND NETWORK. We are deploying a fully integrated
broadband network that will use the latest network technologies to
provide voice, data and Internet services and will support all major
protocols.
- FOCUS ON TARGETED CUSTOMER SEGMENTS WITH SPECIALIZED TEAMS. We use our
sales force, customer care and billing systems to meet the specific needs
of broadband local access customers, small- and medium-sized businesses,
broadband data services customers and other telecommunications, data and
Internet service providers.
- PROVIDE INNOVATIVE PRODUCTS AND SERVICES. We intend to continue to use
our network to allow us to become market leaders in providing our
customers with advanced product and service offerings and we plan to
provide customized solutions to fit local market needs.
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<PAGE> 10
- EXPAND CARRIER SERVICES. We plan to use our network to generate
substantial revenue and additional traffic on our network through sales
to telecommunications, data and Internet service providers lacking a
network infrastructure.
- FOCUS ON SUPERIOR CUSTOMER SERVICE. We strive to maintain a competitive
advantage over competitors in our target markets by providing superior
customer service in terms of responsiveness, accuracy and quality.
- PURSUE SELECTIVE ACQUISITIONS AND STRATEGIC RELATIONSHIPS. We plan to
continue to acquire other competitive telecommunications, data and
Internet service providers in order to accelerate the growth of our
customer base, increase the use of our network and expand our service
portfolio.
REGULATORY AND COMPETITIVE ENVIRONMENT
The European telecommunications market has historically been dominated by
monopoly telecommunications services providers, which are commonly known as
PTTs. With a series of directives, the European Commission has been instrumental
in opening the telecommunications market to competition. As part of the
liberalization of the telecommunications market, PTTs must now offer cost-
oriented interconnection agreements to alternative service providers. In
addition, the European Commission has mandated carrier selection, carrier
pre-selection and number portability. We have and will continue to maintain a
proactive approach to regulatory issues on both a national and European level.
We believe that this approach will help ensure compliance by the PTTs with
European Commission directives, allow us to take advantage of regulatory
opportunities and help us influence a regulatory framework that fosters a
competitive environment. Liberalization has resulted in increased competition
from new market entrants, reduced long distance tariffs and increased traffic
volumes, as well as the emergence of new service offerings and enhanced product
and price awareness. In March 1999, the Netherlands telecommunications
regulatory authority, OPTA, issued a ruling requiring KPN Telecom to offer
unbundled local access at KPN Telecom's central exchange offices to other
service providers. Unbundled local access, combined with new technologies now
available, may enable us to offer a high bandwidth service offering to those
customers that are not directly connected to our network.
CORPORATE STRUCTURE
VersaTel was incorporated under the laws of The Netherlands on October 10,
1995, as a private company with limited liability, referred to as a besloten
vennootschap met beperkte aansprakelijkheid or a B.V. VersaTel converted its
legal structure from a B.V. to a public company with limited liability, referred
to as a naamloze vennootschap or an N.V., on October 15, 1998. On December 31,
1998, VersaTel Telecom International N.V. transferred substantially all of its
assets and liabilities, excluding the notes issued in May 1998 and December
1998, to its subsidiaries. As a result of the transfer, VersaTel Telecom
International N.V. is now a holding company with no material assets, other than
the stock of its subsidiaries: VersaTel Telecom Europe B.V., VersaTel Telecom
Netherlands B.V., VersaTel Telecom Belgium N.V., Bizztel Telematica B.V., CS Net
B.V., CS Engineering B.V., Amstel Alpha B.V. (the parent of SpeedPort N.V.),
7-Klapper Beheer B.V. (the parent of VuurWerk Internet B.V.), ITinera Services
N.V. and Svianed B.V.
Our address is: VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam-Zuidoost
The Netherlands.
Our telephone number is: +31-20-430-4300.
4
<PAGE> 11
RECENT DEVELOPMENTS
On July 20, 1999, we entered into, along with our shareholders and certain
other parties, a Settlement Agreement with one of our major shareholders,
Cromwilld Limited, in order to resolve disputes arising out of our shareholders'
agreement and other matters. The major terms of the Settlement Agreement provide
for:
- the transfer of 146,988 of our ordinary shares held by Telecom Founders
B.V. to Cromwilld;
- the issuance of 200,000 of our shares on July 20, 1999 to Cromwilld at a
price of NLG 7.50 per ordinary share;
- the ability for Cromwilld to include 1,800,000 of its ordinary shares in
this offering;
- certain piggyback registration rights in favor of Cromwilld that will
take effect 180 days from the date hereof;
- the payment by us of $300,000 for Cromwilld's fees and expenses related
to the Settlement Agreement and certain other matters;
- the acknowledgement by all parties to our shareholders' agreement that
the shareholders' agreement will be terminated concurrently with the
closing of this offering;
- the withdrawal by Cromwilld of its pending legal proceedings against us
and our shareholders;
- Cromwilld's full cooperation with this offering; and
- the obligation of our shareholders, including Cromwilld, to procure the
resignation or dismissal of Cromwilld's nominee, Denis O'Brien, from our
Supervisory Board, after the closing of this offering.
Our revenues for the second quarter of 1999 were NLG 21.7 million, which
represents a revenue growth of 40.0% from the first quarter of 1999. These
revenues include revenues from Svianed as a result of its acquisition as of June
11, 1999.
On July 23, 1999 our shareholders are expected to approve the appointment
of an additional Supervisory Board member, Sander van Brummelen. Mr. van
Brummelen is currently a member of the board of directors of Gak Groep N.V. (the
former parent of Svianed). His appointment will be effective July 23, 1999.
5
<PAGE> 12
THE OFFERING
Issuer........................ VersaTel Telecom International N.V.
Notes Offered................. $150,000,000 in aggregate principal amount of
% Senior Dollar Notes due 2009 and
E100,000,000 in aggregate principal amount of
% Senior Euro Notes due 2009.
Use of Proceeds............... The net proceeds of this offering of Senior
Dollar Notes and Senior Euro Notes (after
deducting of underwriting discounts and
estimated expenses) are estimated to be
approximately $ million. We intend to
use a portion of the net proceeds from this
offering to repay $150.0 million in aggregate
principal amount of interim loans made by
Lehman Commercial Paper Inc. and ING (U.S.)
Capital, LLC, affiliates of the underwriters,
which loans were incurred in connection with
the acquisition of Svianed. The remaining net
proceeds of this offering will be used to fund
capital expenditures for the expansion of our
network and for acquisitions, in each case as
permitted by the indentures governing our
existing notes.
We also expect to receive net proceeds of
approximately $ million from the concurrent
offering by us and a number of selling
shareholders of ordinary shares in the form of
Shares and ADSs. We will use the net proceeds
of the equity offering to fund capital
expenditures for the expansion of our network,
and for acquisitions, working capital and other
general corporate purposes, including operating
deficits. See "Use of Proceeds."
Closing Condition............. The closing of this offering is conditioned on,
among other things, the simultaneous closing of
our concurrent offering of Shares and ADSs.
Maturity Date................. , 2009.
Interest Payment Dates........ and , commencing
, 2000.
Ranking....................... The Notes will be our general unsecured
obligations and will rank senior in right of
payment to any of our future indebtedness that
is, by its terms or by the terms of the
agreement or instrument governing such
indebtedness, expressly subordinated in right
of payment to the Notes and equal in right of
payment to all of our existing and future
senior indebtedness, including our existing
notes. At March 31, 1999, after giving effect
to the issuance of the Notes offered hereby,
the incurrence and repayment of the interim
loans and the acquisition of Svianed as if each
had occurred on such date, we would have had
approximately $ million of
consolidated indebtedness.
Substantially all of VersaTel Telecom
International N.V.'s assets and liabilities
(other than the existing notes) are owned by
its restricted subsidiaries. VersaTel Telecom
International
6
<PAGE> 13
N.V. is a holding company with limited assets
and operates its business through its
restricted subsidiaries. Any right of VersaTel
Telecom International N.V. and its creditors,
including holders of the Notes, to participate
in the assets of any of VersaTel Telecom
International N.V.'s subsidiaries upon any
liquidation or administration of such
subsidiary will be subject to the prior claims
of the creditors of such subsidiary. The claims
of creditors of VersaTel Telecom International
N.V. are subordinated to all existing and
future third-party indebtedness and
liabilities, including trade payables, of our
subsidiaries. At March 31, 1999, after giving
effect to issuance of the Notes offered hereby,
the incurrence and repayment of the interim
loans and the acquisition of Svianed as if each
had occurred on such date, VersaTel Telecom
International N.V.'s subsidiaries would have
had total liabilities of $ million
reflected on its consolidated balance sheet.
Optional Redemption........... VersaTel may redeem each series of Notes, in
whole or in part, at any time on or after
, 2004, at the redemption prices set
forth in this prospectus, plus accrued and
unpaid interest, liquidated damages, and
additional amounts, if any, to the date of
redemption.
Before , 2002, VersaTel may redeem up
to 35% of each series of Notes with the net
proceeds of one or more public equity offerings
received by, or invested in, VersaTel at
% of the principal amount thereof, plus
accrued and unpaid interest, and additional
amounts, if any, to the redemption date;
provided that at least 65% of the aggregate
original principal amount of each series of
Notes remains outstanding thereafter. You
should read "Description of the
Notes -- Optional Redemption" for further
information on VersaTel's right to redeem the
Notes.
Each series of Notes may also be redeemed at
the option of VersaTel, in whole but not in
part, at any time at a redemption price equal
to the aggregate principal amount thereof,
together with accrued and unpaid interest, and
additional amounts, if any, to the redemption
date and all additional amounts then due and
which would become due as a result of the
redemption or otherwise, in the event of
changes affecting Netherlands withholding
taxes. You should read "Description of the
Notes -- Redemption for Taxation Reasons" for
further discussion of VersaTel's options in
this regard.
Change of Control............. Upon a change of control, holders of each
series of Notes will have the right to require
us to purchase their Notes in whole or in part
at a price in cash equal to 101% of the
principal amount thereof plus accrued and
unpaid interest thereon to the date of
repurchase, plus additional amounts, if any, to
the date of repurchase. See "Description of the
Notes -- Repurchase of Notes upon a Change of
Control."
7
<PAGE> 14
Certain Covenants............. Each indenture will contain covenants that,
among other things, limit our ability to:
- incur additional indebtedness,
- pay dividends on, redeem or repurchase our
capital stock,
- make investments,
- issue or sell capital stock of restricted
subsidiaries,
- create certain liens,
- sell assets,
- in the case of restricted subsidiaries,
guarantee indebtedness,
- engage in certain lines of business,
- engage in transactions with affiliates, and
- consolidate, merge or transfer all our assets
on a consolidated basis.
These covenants are subject to a number of
important exceptions and qualifications. See
"Description of the Notes -- Certain
Covenants."
Withholding Taxes; Additional
Amounts..................... Unless required by law, all payments by
VersaTel in respect of each series of Notes
will be made without withholding or deduction
for or on account of any taxes imposed by or
within any relevant taxing jurisdiction.
Subject to certain exceptions and limitations,
VersaTel will be required to pay any additional
amounts as may be necessary in order that the
net amounts received by the holders after any
withholding or deduction in respect of any such
taxes required by law shall equal the
respective amounts of principal and interest
that would have been received in respect of the
Notes in the absence of such withholding or
deduction. See "Description of the Notes --
Withholding Taxes."
Trustee....................... United States Trust Company of New York.
Listing....................... We expect to list the Notes on the Luxembourg
Stock Exchange.
For additional information concerning the Notes, see "Description of the
Notes."
8
<PAGE> 15
SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial information of VersaTel has
been prepared in accordance with U.S. GAAP and is derived from, and should be
read in conjunction with, the historical audited financial statements of
VersaTel and Svianed included elsewhere in this prospectus. The unaudited pro
forma statement of operations data for the year ended December 31, 1998 give
effect to the acquisition of Svianed, the incurrence and repayment of the
interim loans incurred in connection with such acquisition, the concurrent
offering by VersaTel and a number of selling shareholders of ordinary shares in
the form of Shares and ADSs, and this offering (the "Transactions") as if they
had occurred on January 1, 1998. The unaudited pro forma statement of operations
data for the 3 months ended March 31, 1999 give effect to the Transactions as if
they had occurred on January 1, 1999. The unaudited pro forma balance sheet data
as of March 31, 1999 give effect to the Transactions as if they had occurred on
such date. The unaudited pro forma financial information is presented for
illustrative purposes only and is not necessarily an indication of the results
that would have been achieved had such transactions been consummated as of the
dates indicated or that may be achieved in the future. You should read the data
below in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Unaudited Pro Forma Consolidated
Financial Information" included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1998 MARCH 31, 1999
---------------------- ----------------------
NLG $(1) NLG $(1)
--------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue........................................ 96,244 47,178 31,080 15,235
Operating expenses:
Cost of revenue excluding depreciation and
amortization.............................. 58,699 28,774 19,113 9,369
Selling, general and administrative.......... 59,623 29,227 23,913 11,722
Depreciation and amortization................ 50,343 24,678 14,317 7,018
--------- --------- --------- ---------
Total operating expenses..................... 168,665 82,679 57,343 28,109
--------- --------- --------- ---------
Loss from operations........................... (72,421) (35,501) (26,263) (12,874)
Net interest expense........................... 84,734 41,536 32,607 15,984
Currency loss (gain)........................... (5,146) (2,522) 40,283 19,747
--------- --------- --------- ---------
Net result before income taxes................. ( ) ( ) ( ) ( )
Provision for income taxes..................... 7 3 -- --
--------- --------- --------- ---------
Net result..................................... ( ) ( ) ( ) ( )
========= ========= ========= =========
Net result per share (basic and diluted)(2).... ( ) ( ) ( ) ( )
Weighted average number of shares
outstanding(2)...............................
FINANCIAL DATA:
EBITDA(3)...................................... (22,078) (10,823) (11,946) (5,856)
Capital expenditures........................... 90,511 44,368 55,972 27,437
Ratio of earnings to fixed charges(4).......... -- -- -- --
Deficiency of earnings plus fixed charges to
cover fixed charges(5)....................... (67,275) (32,979) (66,546) (32,621)
</TABLE>
9
<PAGE> 16
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
----------------------
NLG $(1)
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and restricted cash....................................
Working capital (excluding cash and restricted cash)........ (93,832) (45,996)
Capitalized finance cost.................................... 52,735 25,850
Property, plant and equipment, net.......................... 62,193 30,487
Construction in progress.................................... 92,205 45,199
Goodwill.................................................... 173,088
Total assets................................................
Total long-term obligations (including current portion).....
Total shareholders' equity (deficit)........................
</TABLE>
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) Includes 130,000 ordinary shares approved for issuance by our shareholders
in connection with the acquisition of CS Net.
(3) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a company's
ability to incur and service debt. EBITDA should not be considered as a
substitute for operating earnings, net income, cash flow or other statements
of operations or cash flow data computed in accordance with U.S. GAAP or as
a measure of the Company's results of operations or liquidity. Funds
depicted by this measure may not be available for management's discretionary
use (due to covenant restrictions, debt service payments, the expansion of
our network, and other commitments). Because all companies do not calculate
EBITDA identically, the presentation of EBITDA contained herein may not be
comparable to other similarly entitled measures of other companies.
(4) The ratio of earnings to fixed charges is calculated by dividing (i) income
(loss) from continuing operations before income taxes plus fixed charges by
(ii) fixed charges. Fixed charges consist of interest expense. Earnings plus
fixed charges were insufficient to cover fixed charges by NLG 67.2 million
in 1998 and by NLG 66.5 million for the 3 months ended March 31, 1999.
(5) The deficiency of earnings plus fixed charges to cover fixed charges is
calculated by adding (i) income (loss) from continuing operations before
income taxes plus (ii) fixed charges. Fixed charges consist of interest
expense.
10
<PAGE> 17
SUMMARY FINANCIAL DATA OF VERSATEL
The following summary financial data of VersaTel as of and for the years
ended December 31, 1996, 1997 and 1998 have been prepared in accordance with
U.S. GAAP and have been derived from the historical financial statements of
VersaTel, which have been audited by Arthur Andersen, independent public
accountants. The summary financial data of VersaTel as of and for the 3 month
periods ended March 31, 1998 and 1999 are unaudited, but in the opinion of the
management contain all adjustments, consisting only of normal recurring
accruals, which are necessary for a fair presentation of results for interim
periods. You should read the information set forth below in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" and the historical financial statements of
VersaTel included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
---------------------------------------- -----------------------------
1996 1997 1998 1998 1999
------- ------- ------------------ ------- ------------------
NLG NLG NLG $(1) NLG NLG $(1)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF
OPERATIONS DATA:
Revenue.............. 6,428 18,896 39,561 19,393 6,402 15,501 7,599
Operating expenses:
Cost of revenue,
excluding
depreciation and
amortization.... 4,954 17,405 31,821 15,598 5,460 12,485 6,120
Selling, general
and
administrative... 5,485 17,527 47,733 23,399 5,544 20,179 9,892
Depreciation and
amortization.... 453 3,237 6,473 3,173 1,087 3,084 1,512
------- ------- ------- ------- ------- ------- -------
Total operating
expenses...... 10,892 38,169 86,027 42,170 12,091 35,748 17,524
------- ------- ------- ------- ------- ------- -------
Loss from
operations......... (4,464) (19,273) (46,466) (22,777) (5,689) (20,247) (9,925)
Interest expense
(income), net...... 269 534 25,810 12,652 200 17,852 8,751
Currency loss
(gain)............. -- 53 (5,146) (2,522) 115 40,283 19,747
------- ------- ------- ------- ------- ------- -------
Net loss before
income taxes....... (4,733) (19,860) (67,130) (32,907) (6,004) (78,382) (38,423)
Provision for income
taxes.............. -- -- 7 3 -- -- --
------- ------- ------- ------- ------- ------- -------
Net loss........... (4,733) (19,860) (67,137) (32,910) (6,004) (78,382) (38,423)
======= ======= ======= ======= ======= ======= =======
Net loss per share
(basic and
diluted)(2)........ (0.47) (1.10) (2.06) (1.01) (0.31) (2.01) (0.99)
Weighted average
number of shares
outstanding(2)..... 10,008 18,084 32,622 32,622 19,159 38,985 38,985
FINANCIAL DATA:
EBITDA(3)............ (4,011) (16,036) (39,993) (19,604) (4,602) (17,163) (8,413)
Capital
expenditures....... 2,569 14,516 77,255 37,870 2,424 52,226 25,601
Ratio of earnings to
fixed charges(4)... -- -- -- -- -- -- --
Deficiency of
earnings plus fixed
charges to cover
fixed charges(5)... (4,464) (19,326) (41,320) (20,255) (5,804) (60,530) (29,672)
</TABLE>
11
<PAGE> 18
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
--------------------------------------- ------------------------------
1996 1997 1998 1998 1999
------ ------- ------------------ ------- -------------------
NLG NLG NLG $(1) NLG NLG $(1)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and restricted
cash............... 4,443 1,495 583,570 286,064 5,298 559,366 274,199
Working capital
(excluding cash and
restricted cash)... (2,704) (24,774) (46,851) (22,966) (28,792) (89,608) (43,925)
Capitalized finance
cost............... -- -- 28,750 14,093 -- 28,000 13,725
Property, plant and
equipment, net..... 2,340 13,619 38,608 18,925 14,956 41,766 20,474
Construction in
progress........... -- -- 46,019 22,558 -- 92,205 45,199
Goodwill............. -- -- 4,556 2,233 -- 4,354 2,134
Total assets......... 8,160 19,331 723,397 354,606 26,189 757,123 371,139
Total long-term
obligations
(including current
portion)........... 4,185 8,931 688,796 337,645 15,949 748,609 366,965
Total shareholders'
equity (deficit)... 146 (18,214) (34,073) (16,702) (24,218) (112,455) (55,125)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------------------------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1997 1997 1997 1998 1998 1998 1998 1999
-------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Number of billable
minutes
(thousands)(6)..... 5,769 6,230 7,127 12,432 26,863 34,021 48,287 69,165
Average revenue per
billable minute
(NLG).............. 0.87 0.85 0.65 0.51 0.35 0.30 0.26 0.21
Business customers
(at period end).... 1,144 1,459 1,828 2,459 3,562 4,434 5,649 7,180
Residential customers
(at period end).... -- -- 230 519 850 1,074 1,234 1,507
Carrier services
customers (at
period end)........ 1 1 1 3 3 3 4 7
</TABLE>
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) Includes 130,000 ordinary shares approved for issuance by our shareholders
in connection with the acquisition of CS Net.
(3) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a company's
ability to incur and service debt. EBITDA should not be considered as a
substitute for operating earnings, net income, cash flow or other statements
of operations or cash flow data computed in accordance with U.S. GAAP or as
a measure of the Company's results of operations or liquidity. Funds
depicted by this measure may not be available for management's discretionary
use (due to covenant restrictions, debt service payments, the expansion of
our network, and other commitments). Because all companies do not calculate
EBITDA identically, the presentation of EBITDA contained herein may not be
comparable to other similarly entitled measures of other companies.
(4) The ratio of earnings to fixed charges is calculated by dividing (i) income
(loss) from continuing operations before income taxes plus fixed charges by
(ii) fixed charges. Fixed charges consist of interest expense. Earnings plus
fixed charges were insufficient to cover fixed charges by NLG 4.5 million in
1996, NLG 19.3 million in 1997, NLG 41.3 million in 1998, NLG 5.8 million
for the 3 months ended March 31, 1998 and NLG 60.5 million for the 3 months
ended March 31, 1999.
(5) The deficiency of earnings plus fixed charges to cover fixed charges is
calculated by adding (i) income (loss) from continuing operations before
income taxes plus (ii) fixed charges. Fixed charges consist of interest
expense.
(6) Billable minutes are those minutes during which a call is connected to the
VersaTel Network switch and for which we bill a customer.
12
<PAGE> 19
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing VersaTel. Additional risks and uncertainties not presently
known to us or that we currently consider not material may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our ordinary shares could decline,
and you may lose all or part of your investment.
OUR HISTORY OF SUBSTANTIAL NET LOSSES MAY CONTINUE INDEFINITELY AND MAKE IT
DIFFICULT TO FUND OUR OPERATIONS.
For the 3 months ended March 31, 1999 we had a loss from operating
activities of NLG 20.2 million and negative EBITDA of NLG 17.2 million and for
the 3 months ended March 31, 1998 we had a loss from operating activities of NLG
5.7 million and negative EBITDA of NLG 4.6 million. For the year ended December
31, 1998, we had a loss from operating activities of NLG 46.5 million and
negative EBITDA of NLG 40.0 million. For the year ended December 31, 1997, we
had a loss from operating activities of NLG 19.3 million and negative EBITDA of
NLG 16.0 million. For the year ended December 31, 1996 we had a loss from
operating activities of NLG 4.5 million and negative EBITDA of NLG 4.0 million.
In addition, we had an accumulated deficit of NLG 92.3 million and NLG 25.2
million as of December 31, 1998 and December 31, 1997, respectively, and an
accumulated deficit of NLG 170.7 million and NLG 31.2 million as of March 31,
1999 and March 31, 1998, respectively. We expect to continue to incur
significant further operating losses for the foreseeable future as we incur
additional costs in the build out of our network, the expansion of our marketing
and sales force and the introduction of new communications services and
products. Although we have experienced revenue growth since we commenced
operations in 1995, there can be no assurance our revenues will continue to
grow. You should also be aware that the prices of voice, data and Internet
communications services have fallen significantly in Europe in recent years, and
as competition increases, we expect that prices will continue to decline. As the
cost of providing services decreases, we expect these price reductions to be at
least partially offset, but you should be aware that we cannot be certain that
we will achieve or, if achieved, be able to maintain operating profits in the
future.
OUR SUBSTANTIAL DEBT OBLIGATIONS MAY HINDER OUR GROWTH AND PUT US AT A
COMPETITIVE DISADVANTAGE.
We have substantial indebtedness. In May 1998, we issued and sold units
consisting of $225,000,000 13 1/4% Senior Notes due 2008 and warrants to
purchase 3,000,000 (as adjusted) ordinary shares of the Company (the "First High
Yield Offering"). In December 1998, we issued and sold units consisting of
$150,000,000 13 1/4% Senior Notes due 2008 and warrants to purchase 2,000,100
(as adjusted) ordinary shares of the Company (the "Second High Yield Offering").
On June 11, 1999, we borrowed an aggregate of $150.0 million from Lehman
Commercial Paper Inc. and ING (U.S.) Capital, LLC pursuant to an interim loan
agreement (the "Interim Loans") for the purpose of financing in part our
acquisition of Svianed. As of March 31, 1999, after giving effect to the
issuance of the Notes offered hereby, the incurrence and repayment of the
Interim Loans and the acquisition of Svianed as if each had occurred on such
date, VersaTel's total consolidated indebtedness would have been approximately
$ million. Subject to limits imposed by our debt obligations, we may
continue to incur substantial additional debt because the indentures governing
the notes issued in the First High Yield Offering (the "First Notes"), the notes
issued in the Second High Yield Offering (the "Second Notes"; together with the
First Notes, the "Existing Notes") and each series of Notes offered hereby do
not limit the amount of indebtedness that we may incur to finance the cost of
the development of our network. See "Selected Financial Data," the Financial
Statements included elsewhere in this prospectus and "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
13
<PAGE> 20
COVENANTS IN OUR DEBT AGREEMENTS RESTRICT OUR ABILITY TO BORROW AND INVEST,
WHICH COULD IMPAIR OUR ABILITY TO EXPAND OR FINANCE OUR FUTURE OPERATIONS.
The indentures governing the Existing Notes and each series of Notes
contain a number of covenants that impose significant operating and financial
restrictions on us and our subsidiaries. Significant additional covenants are
also contained in our credit facility with Nortel (the "Nortel Facility"). These
restrictions significantly limit, and in some cases prohibit, among other
things, our and certain of our subsidiaries' ability to incur more debt, create
liens on assets, enter into business combinations or engage in certain
activities with our subsidiaries. A failure to comply with these restrictions
would constitute a default under the indentures governing the Existing Notes and
each series of Notes, and the Existing Notes and each series of Notes could
become immediately due and payable, which would seriously adversely affect our
business and our shareholders' equity.
Our high level of indebtedness and the limits imposed by our debt
obligations could have the following effects, among others:
- we may have difficulty in paying the interest on our outstanding debt and
any newly incurred debt,
- we may have difficulty finding sources of financing for working capital,
our capital expenditure requirements and the interest payments on our
outstanding debt,
- we will be unable to use a significant portion of our cash flow in our
business and we may be unable to react to industry or economic changes,
because of the portion of cash flow directed to paying interest and
principal on our debt, and
- we may be unable to react as quickly to changes in our business as our
competitors who have less debt and financial restrictions, which may put
us at a disadvantage and make us more vulnerable to adverse changes in
economic conditions.
DESPITE CURRENT LEVELS OF INDEBTEDNESS, WE MAY STILL BE ABLE TO INCUR
SUBSTANTIALLY MORE DEBT, WHICH COULD INTENSIFY THE RISKS DESCRIBED ABOVE.
The indentures governing the Existing Notes and each series of Notes do not
limit the amount of indebtedness that may be incurred to finance the cost of
development of our Network, and permit us to incur a significant amount of
additional indebtedness in the future. Much of that indebtedness will likely be
secured. Consequently, in the event of a bankruptcy, liquidation, dissolution,
reorganization or similar proceedings, the holders of any secured indebtedness
will be entitled to proceed against the collateral that secures such
indebtedness and such collateral will not be available for satisfaction of any
amounts owed under the Notes. In addition, our failure to comply with the
covenants and restrictions contained in the agreements governing any additional
borrowings could trigger defaults under such agreements. Such defaults could
result in a default under the Notes and could delay or preclude payment of
principal of or interest on the Notes. If new debt is added to our current debt
levels, the related risks that we now face could intensify. We anticipate that
we will incur additional indebtedness in the future.
OUR HOLDING COMPANY STRUCTURE WILL EFFECTIVELY SUBORDINATE THE NOTES TO THE
OBLIGATIONS OF OUR SUBSIDIARIES.
In December 1998, we transferred substantially all of our assets and
liabilities (except the Existing Notes) to our subsidiaries. Since that
transfer, we have been a holding company with no material assets, other than the
stock of our subsidiaries. Our subsidiaries now conduct substantially all of our
operations and directly own substantially all of our assets. You should be aware
that our subsidiaries have no obligation, contingent or otherwise, to pay any
amount pursuant to the Notes or to make any funds available for such payment.
Therefore, our operating cash flow and ability to meet our debt obligations,
including the Notes, will depend on the cash flow provided by our subsidiaries
in the form of loans, dividends or other payments to us as a shareholder. The
ability of our subsidiaries to make such payments to us will depend on their
earnings, tax considerations and legal restrictions. Although the indenture
governing each series of Notes limits the ability of our subsidiaries to enter
into consensual restrictions on
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their ability to pay dividends and to make other payments, such limitations are
subject to a number of significant qualifications. See "Description of the
Notes -- Certain Covenants -- Limitation on Dividend and other Payment
Restrictions Affecting Restricted Subsidiaries." In the event of insolvency,
liquidation, dissolution or reorganization of any of our subsidiaries, the
creditors of each subsidiary would be entitled to payment in full from such
subsidiary's assets. After paying their own creditors, our subsidiaries may not
have any remaining assets for distribution to us as a shareholder and,
consequently, there may not be any assets available for payment to holders of
the Notes. The Notes, therefore, are effectively subordinated to the obligations
of our subsidiaries. At March 31, 1999, after giving effect to the issuance of
the Notes offered hereby, the incurrence and repayment of the Interim Loans and
the acquisition of Svianed as if each had occurred on such date, our
subsidiaries would have had total liabilities of $ million reflected on
our consolidated balance sheet.
POSSIBLE INABILITY TO MEET OUR DEBT SERVICE OBLIGATIONS MAY RESULT IN OUR
OUTSTANDING DEBT BECOMING DUE AND PAYABLE.
The consolidated net interest expense of VersaTel for the year ended
December 31, 1998, and for the 3 months ended March 31, 1999, after giving
effect to the issuance of the Notes offered hereby and the incurrence and
repayment of the Interim Loans as if each had occurred on January 1, 1998 and
January 1, 1999, respectively, would have been approximately $ million and
$ million, respectively, using the applicable exchange rates in effect on
January 1, 1999. The net cash flow of VersaTel for the year ended December 31,
1998, and for the 3 months ended March 31, 1999, after giving effect to the
Third High Yield Offering and the incurrence and repayment of the Interim Loans
as if each had occurred on January 1, 1998 and January 1, 1999, respectively,
would have been approximately $ million and $ million, respectively.
Unlike the holders of the Existing Notes, the holders of the Notes will not have
the benefit of any securities placed in escrow to fund any interest payments on
the Notes. Accordingly, we will have to increase substantially our net cash flow
in order to meet our debt service obligations. In addition, after May 15, 2001,
we will no longer be able to rely on cash that has been set aside in escrow to
meet our debt service obligations on the Existing Notes. There is no certainty
that we will be able to generate sufficient cash flow from operating activities
to pay interest and principal on these Notes, the Existing Notes or any other
outstanding debt. Our ability to improve our operating performance and financial
results will depend not only on our ability to successfully implement our
business plan, but also upon economic, financial, competitive, regulatory and
other factors beyond our control, including fluctuations in exchange rates and
general economic conditions in the Benelux. If we are unable to meet the
repayment obligations, we may have to refinance our debt, including the Notes,
sell our assets or obtain new financing. We cannot assure you that any such
refinancing would be possible or that any such sales of assets or additional
financing could be achieved. If we cannot refinance or otherwise satisfy our
debt obligations we will be in default under such obligations, which could in
turn result in the Notes and other debt becoming immediately due and payable.
WE WILL NEED TO OBTAIN ADDITIONAL CAPITAL TO EXPAND THE NETWORK WHICH MAY NOT BE
AVAILABLE ON ACCEPTABLE TERMS.
We will require significant amounts of capital to further develop and
expand our network, our sales and marketing efforts and our product and service
offerings. We expect that the capital raised from this offering, the First High
Yield Offering, the Second High Yield Offering, the sale of our ordinary shares
(in the form of Shares and ADSs) in the concurrent equity offering (the "Equity
Offering") and the Nortel Facility, together with other available financing and
cash flow from operations, will be sufficient to fund our current capital
requirements and anticipated losses for the next 12 months. However, we
continually re-evaluate our business objectives and are considering further
acquisitions, expansions of our services and acceleration of parts of our
current plans. In the past, we have raised more capital more quickly than we had
originally anticipated for similar reasons.
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If these sources are not sufficient or if our plans or assumptions change
or prove to be incorrect, we may have to delay or abandon some of our
development and expansion plans or we may have to seek additional financing
earlier than anticipated. We may not be able to obtain additional financing or
we may not be able to obtain it on a timely basis or on terms favorable to us.
Our current debt obligations also restrict our ability to raise additional
financing and our subsequent use of any such additional financing. In addition,
any such additional financing is likely to be subject to additional financial
restrictions. A failure to acquire additional capital on acceptable terms may
seriously and adversely affect our business.
WE MAY ENCOUNTER DELAYS IN IMPLEMENTING ELEMENTS OF OUR BUSINESS STRATEGY, WHICH
COULD ADVERSELY AFFECT OUR GROWTH.
Our future success depends upon our ability to build and maintain our own
telecommunications network and to develop successfully our existing and new
products and services. Our success will depend specifically on our ability to
obtain and maintain, among other things, the following:
- experienced and qualified management and staff,
- additional switch sites,
- interconnection with PTTs' and other carriers' networks,
- the necessary licenses,
- additional transmission facilities, and
- the necessary easements and rights-of-way from property owners,
competitors and various levels of government.
We are not certain that our current cost estimates are correct or that we
will meet our current development schedule relating to construction of the
network. In 1998, we experienced a delay in obtaining rights-of-way on
approximately 60 kilometers of public property due to the uncertainty expressed
by some local governments as to the implications of the new telecommunications
act, which was recently adopted by the Netherlands parliament. Although
ultimately we did obtain these rights-of-way, these delays prevented us from
completing part of our network within the time originally anticipated. We and
certain other carriers are currently experiencing difficulties in obtaining a
right-of-way necessary to extend construction into Brussels. In addition, we
experienced additional delays in the planned construction of the network due to
weather-related flooding. Also, the successful implementation of our
construction and expansion strategy will be subject to a variety of other risks,
including operating and technical problems, regulatory uncertainties, delays in
the full implementation of the European Commission directives regarding
telecommunications liberalization, competition, the availability of capital and
the risk of damage to software and hardware resulting from adverse weather
conditions, fire, power loss, natural disasters and other causes. Any
significant increase in costs or any further delay in the schedule could have a
substantial negative effect on our financial condition. Even if our network is
successfully developed, we may not be able to operate it efficiently.
We have entered into agreements for the design and construction of key
components of our network. However, we have not entered into definitive
agreements relating to the development and construction of significant other
portions of our network and we cannot guarantee that we will enter into these
agreements or that any future construction will be completed efficiently. Even
when we do have such agreements, we cannot be certain that the development and
construction will proceed as planned and we have been unsatisfied with some of
such arrangements in the past. Further, our network depends on technology and
products we obtain from vendors that also supply our competitors. Such vendors
might stop supplying us and we might not be able to find suitable replacements.
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The development of our network is based on projections of the growth in
traffic volumes and routing preferences and the most cost-effective means of
constructing our network. If these projections are incorrect, it could have a
material adverse effect on our business.
ANY INABILITY TO MANAGE OUR RAPID GROWTH COULD ADVERSELY AFFECT OUR FINANCIAL
REPORTING, CUSTOMER SERVICE AND REVENUES.
Our growth strategy has placed and will continue to place a significant
strain on our management resources. In particular, the acquisition and
integration of Svianed, SpeedPort, VuurWerk and ITinera will require a
significant amount of management time and resources. Our ability to manage this
growth will require us to substantially enhance our management, financial and
information systems and to effectively develop and train our employee base. Our
billing system had been identified by our auditors as a potential weakness in
our system of internal controls and is in the process of being replaced by an
advanced system designed by Saville Systems. In this respect, management has,
among other things, revised its financial collection of data and call billing
procedures. Managing our growth will become even more challenging as we increase
our target markets and our product and service offerings. The inability to
achieve or effectively manage our growth could materially and adversely affect
our business.
WE MAY HAVE DIFFICULTY INTEGRATING OUR ACQUIRED BUSINESSES.
We have brought senior managers of many of our acquired businesses into our
management team and we are relying on these individuals to assist us in
integrating these acquired businesses into our business strategy. There can be
no guarantee that we will be able to attract and retain managers from any newly
acquired businesses or be successful in integrating any new managers and
businesses from our recent acquisitions.
We expect to realize operating synergies as a result of our recent
acquisitions. However, there is no assurance that we will be able achieve the
benefits that our management expects to realize or that the expected benefits
will be realized within the time frame we contemplate.
ONE CUSTOMER REPRESENTS A SIGNIFICANT PORTION OF OUR REVENUES.
As a result of our acquisition of Svianed, 35.8% of our revenues for the
year ended December 31, 1998, on a combined basis, would have come from the Gak
group of companies. The Gak group is under contract to use our data services
until May 2001. There can be no assurance that we will be able to retain the Gak
group as a customer after May 2001 or that our revenues from the Gak group would
not thereafter be significantly curtailed. We cannot assure you that any such
lost revenues could be replaced. A loss of the revenues derived from the Gak
group, without significant replacement revenue from other sources, could have an
adverse effect on our business.
WE MAY HAVE DIFFICULTIES IN UPGRADING AND PROTECTING OUR NETWORK, WHICH COULD
ADVERSELY AFFECT OUR GROWTH.
The success of our network will also depend on our continued ability to
provide high-quality telecommunications services through upgrading our systems
and our ability to protect our network from external damage. As we grow, the
timing and implementation of these upgrades will become more important. We
cannot guarantee that the quality and availability of our services will not be
disrupted because of our inability to make timely or error-free upgrades to our
network. Also, our network may be subject to external damage, in particular from
construction work, but also from events, such as floods and other accidents,
that can disrupt service. In fact, the construction of our Benelux network was
delayed due to significant rain and flooding of our ducts in The Netherlands
during the last 3 months of 1998. We have established design and management
techniques to address any disruptions that may occur; however, any prolonged
difficulty in accessing our network may threaten our relationship with our
customers and have an adverse impact on our business.
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WE MAY NOT BE ABLE TO IMPLEMENT OUR NEW BILLING AND CUSTOMER INFORMATION SYSTEMS
ON SCHEDULE.
Sophisticated billing and information systems are vital to our growth and
our ability to:
- bill and receive payments from customers,
- reduce credit exposure, and
- monitor costs.
We have reviewed our billing system, in anticipation of our continued
growth. We had planned to replace our existing billing system during the second
quarter of 1999 with a billing system designed by Saville Systems. We now
anticipate that the new system will be implemented by the end of the third
quarter of 1999. We have experienced delays in the implementation of our new
system and have been forced to rely in the meantime on upgrades of our current
system. We may experience further delays, particularly in integrating acquired
businesses into our systems. If circumstances cause further delay in the
implementation of the new billing system, our billing process could be delayed
or interrupted, which could materially and adversely affect our business.
OUR LIMITED HISTORY AND EXPERIENCE COULD PLACE US AT A DISADVANTAGE TO
ESTABLISHED COMPETITORS AND MAY NOT BE A RELIABLE BASIS FOR EVALUATING OUR
PROSPECTS.
We were founded in October 1995 and, as a result, we have limited
experience as an operating company and have generated only limited revenues. We
entered the Belgian market in the third quarter of 1998 and intend to enter the
Luxembourg market in 2000. In both of these markets, we have limited or no
operating experience and services had previously been provided primarily by the
national PTTs. Through our acquisitions of CS Net in November 1998, SpeedPort
and VuurWerk in May 1999, and Svianed and ITinera in June 1999, we have entered
several markets for Internet-based services which represents a new and rapidly
developing market for us. Accordingly, our prospects must be considered in light
of the risks, expenses and delays inherent in establishing operations in markets
with long established competitors and other more recent entrants to the market
and our historical results may not be a reliable basis for evaluating our
prospects.
IF WE DO NOT ADAPT TO THE RAPID CHANGES IN THE TELECOMMUNICATIONS INDUSTRY, WE
COULD LOSE CUSTOMERS OR MARKET SHARE.
The European telecommunications industry is changing rapidly due to, among
other factors, liberalization, privatization of PTTs, technological
improvements, expansion of telecommunications infrastructure and the
globalization of the world's economies and trade. Such changes may happen at any
time and can significantly affect our operations. There can be no assurance that
one or more of these factors will not occur as we expect or will not have
unforeseen effects which could have a material adverse effect on us. There can
also be no assurance, even if these factors turn out as anticipated, that our
strategy will be successful in this rapidly evolving market.
The telecommunications industry is in a period of rapid technological
evolution, marked by the introduction of new products and services, and
increased availability of transmission capacity, as well as the increasing
utilization of Internet-based technologies for voice and data transmission. Our
success will depend substantially on our ability to predict which of the many
possible current and future networks, products and services will be important to
finance, establish and maintain. In particular, as we further expand and develop
our network, we will become increasingly exposed to the risks associated with
the relative effectiveness of our technology and equipment. The cost of
implementation of emerging and future technologies could be significant, and
there can be no assurances that we will select appropriate technology and
equipment or that we will obtain appropriate new technology on a timely basis or
on satisfactory terms. The failure to obtain effective technology and equipment
may adversely affect our
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ability to offer competitive products and services and the viability of our
operations and could have a material adverse effect on our business.
LOSS OF KEY PERSONNEL IN A COMPETITIVE EMPLOYMENT ENVIRONMENT COULD AFFECT OUR
GROWTH AND FUTURE SUCCESS.
Our success depends on the continued employment of Gary Mesch, our managing
director, Greg Mesch, our chief operations officer, Raj Raithatha, our chief
financial officer, Larry Hendrickson, our chief technology officer, Marc van der
Heijden, our chief regulatory counsel, and Jan Niewold, the managing director of
Svianed. You should also be aware that we do not have any "key person"
insurance. There is intense competition for qualified personnel in our industry
in Europe and the limited availability of qualified individuals could become an
issue of increasing concern in the future. Our financial condition depends upon
qualified personnel implementing a successful business plan. The loss of any of
the individuals listed above could adversely affect our business.
WE ARE DEPENDENT ON OUR COMPETITORS TO PROVIDE OUR CUSTOMERS WITH ACCESS TO OUR
NETWORK.
We do not own most of the telecommunications transmission infrastructure
that we presently use. We use extensively the telecommunications transmission
infrastructure of other carriers in the Benelux and we depend on interconnection
agreements with these carriers to connect our customers to our own network. Most
of these carriers are our competitors. Svianed in particular currently depends
heavily upon leased lines procured from KPN Telecom.
Our profitability significantly depends on our ability to achieve access,
on a timely basis and at attractive rates, to the facilities of our competitors,
who may try to limit such access.
Our dependence on third parties to provide our customers with access to our
network makes us susceptible to price fluctuations, service disruptions and
cancellations that are outside of our control. These occurrences historically
have resulted in the loss of some customers and could result in customer losses
in the future. For example, in October 1998, we experienced 2 temporary
disruptions as a result of a malfunction in the software of KPN Telecom, which
led to customers temporarily having to switch off our network. We believe that
we lost a limited number of customers due to those service disruptions. Such
disruptions may occur from time to time in the future.
Svianed's network is comprised of leased lines from KPN Telecom and
Internet uplinks from UUNet. Svianed's profitability depends on its ability to
continue to have access to the facilities of KPN Telecom and UUNet.
WE MAY BE AFFECTED BY THE YEAR 2000 ISSUE WHICH COULD DISRUPT OUR BUSINESS AND
OPERATIONS.
The Year 2000 issue is the result of computer programs using 2 digits
rather than 4 to define the applicable year. Because of this programming
convention, software, hardware or firmware may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures,
miscalculations or errors causing disruptions of operations or other business
problems, including, among others, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
VersaTel has initiated a formal Year 2000 project and recruited an
experienced Year 2000 project manager. We are undertaking a comprehensive
program to address the Year 2000 issue with respect to the following:
- our information technology systems,
- the telephony switching network (including equipment installed at
customers' premises),
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- our non-information technology systems (including buildings, plant,
equipment, and other infrastructure systems that may contain embedded
microcontroller technology),
- the systems of our major vendors (insofar as they relate to our
business), and
- our customers.
This program involves 4 "Steps": (1) a wide ranging assessment of Year 2000
problems that might affect us; (2) the development and implementation of
remedies to address discovered problems; (3) the testing of our systems as
necessary; and (4) an analysis of our most likely worst-case scenario and the
preparation of contingency plans. We expect to complete Steps 1 and 2 of this
program during the second quarter of 1999 and Steps 3 and 4 by the end of the
third quarter of 1999.
We believe that the most likely worst effect of the Year 2000 issue would
be the inability of customers to complete calls. Nortel, the manufacturer of our
switches and transport hardware, has informed us that it believes our equipment
is Year 2000 compliant. We have requested guarantees from Nortel and Cisco
Systems, our supplier of router switches and certain other equipment, with
respect to Year 2000 compliance.
Our new billing system, which we expect to introduce in August 1999, has
been certified to be Year 2000 compliant. Even if it were to fail, we believe
that bills could still be distributed by modifying the time stamp on the call
detail record. The ability of our customer care team to supply quality service
would be seriously affected if our operating support systems failed. We are
asking for certificates of Year 2000 compliance from these manufacturers. Our
ability to collect direct debit payments depends upon financial institutions'
computer systems. We are seeking assurances of Year 2000 compliance from the
financial institutions and the utility suppliers that we use.
We expect to incur specific Year 2000 charges that are estimated to be less
than NLG 1.0 million. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Risks Associated with Year 2000." We can
give no assurance that we will be successful in obtaining valid assurances,
certificates or guarantees, that the Year 2000 issue will not have an adverse
effect on us, that any effects could be resolved or that we will be reimbursed
for any additional expenditure under any of the assurances, certificates or
guarantees that we expect to obtain or otherwise.
Svianed has undertaken a number of measures to ensure that its business
will not be affected as a result of the Year 2000 issue. In 1997, Svianed
appointed a project leader and made an assessment of all systems and equipment
that could potentially be affected by the Year 2000 issue. The initial focus was
to ensure that the services provided by Svianed to its customers would not be
interrupted as a result of the Year 2000 issue. The next phase was to ensure
that Svianed's management control systems would not be affected by the Year 2000
issue. Starting in mid-1997, Svianed has obtained for all its purchases of
hardware and software guarantees as to their Year 2000 compliance. In addition,
the installed base of Cisco routers and Newbridge ATM and Frame Relay switches
have been confirmed by their suppliers to be Year 2000 compliant.
Svianed relies on leased lines from KPN Telecom for the provision of its
services. Svianed understands, based on information it has received from KPN
Telecom, that KPN Telecom has commenced a Year 2000 risk analysis and has
established a remediation plan intended to ensure that KPN Telecom will be Year
2000 compliant. Svianed has received a written confirmation from KPN Telecom
that it will maximize its effort to be Year 2000 compliant. However, Svianed has
not received any guarantee from KPN Telecom as to its Year 2000 compliance, and
we can give no assurance that Svianed's network will not experience any
interruptions as a result of any failure by KPN Telecom to be Year 2000
compliant.
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The most likely worst case scenario for Svianed would be a disruption of
its network management system. Svianed expects to incur costs of approximately
NLG 500,000 in connection with its Year 2000 readiness program, most of which
has already been expensed.
WE EXPECT TO ENCOUNTER INCREASING COMPETITION FROM DOMINANT MARKET PARTICIPANTS
AND NEW ENTRANTS.
The European telecommunications industry is a very competitive market that
is subject to both the continued dominance of PTTs and the arrival of new
entrants.
PTTs have significant competitive advantages over non-PTT market
participants which include:
- cost advantages as a result of economies of scale,
- greater market presence and network coverage,
- greater brand name recognition, customer loyalty and goodwill,
- control over domestic transmission lines and control over the access to
these lines by other participants, and
- close ties to national regulatory authorities that may be reluctant to
adopt policies that would adversely affect their competitive position.
Our policy in this competitive environment has been to price our products
and services at a discount to the PTTs, and to offer high quality customer
service, products and services. However, the prices of long distance calls in
most of our markets have decreased substantially and our larger competitors have
been able to use their greater financial resources to create severe price
competition. We believe that prices will continue to decrease for the
foreseeable future and that PTTs and other providers will continue to improve
their product offerings, which will increase these competitive pressures.
Our competition in the Benelux also comes from newer market entrants
including MCI WorldCom, Telfort, GTS/Esprit Telecom, COLT Telecom and other more
recent Internet-based competitors. Further, we believe that, as a result of the
introduction of the euro, there will be a greater transparency in prices in our
market which may lead to further price competition. Sustained price competition
could have a material adverse effect on our business.
EXCHANGE RATE FLUCTUATIONS MAY ADVERSELY AFFECT OUR BUSINESS.
The proceeds from this offering will be denominated in U.S. dollars and
euros and the proceeds from the Equity Offering will be denominated in U.S.
dollars and euros. The costs and expenses relating to the expansion of our
network and the development of our sales and marketing resources have been and
will continue to be largely denominated in Dutch guilders, Belgian francs and,
increasingly, euros. Therefore, the expansion of our network and the development
of our sales and marketing resources will also be subject to currency exchange
rate fluctuations as we use the remaining proceeds from the First High Yield
Offering and the Second High Yield Offering and the proceeds from the Equity
Offering and this offering to pay our construction and acquisition costs.
The principal and interest due on the Existing Notes and the Dollar Notes
is payable in U.S. dollars. However, our revenues have been and will continue to
be largely denominated in Dutch guilders, Belgian francs and, increasingly, in
euros. Therefore, our ability to pay the interest and principal due on the Notes
will also depend on future exchange rates.
We denominate our financial reports in Dutch guilders while we maintain
significant U.S. dollar denominated assets and liabilities, so our reported
results of operations may be significantly affected by exchange rate movements.
Furthermore, we will become subject to greater foreign exchange fluctuations as
we expand our operations outside the Benelux and begin to receive revenues
denominated in currencies other than from countries that have adopted the euro
as their currency.
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ANY INABILITY TO IDENTIFY FUTURE ACQUISITION OPPORTUNITIES OR ACQUIRE THE
FINANCIAL AND MANAGEMENT RESOURCES TO PURSUE SUCH OPPORTUNITIES MAY HINDER OUR
GROWTH.
As part of our business strategy, we have acquired, entered into strategic
alliances with, and made investments in, companies in business areas that are
complementary to our current operations. Any such future strategic alliances,
acquisitions or investments would involve risks. Our strategy presents risks
inherent in assessing the value, strengths and weaknesses of acquisition and
investment opportunities, and in integrating and managing newly acquired
operations and improving their operating efficiency. In addition, such
acquisitions and investments could divert our resources and consume significant
management time. We cannot assure that any desired strategic alliance,
acquisition or investment can be made in a timely manner or on terms and
conditions acceptable to us. We cannot assure that we will be successful in
identifying attractive acquisition candidates, completing and financing
additional acquisitions on favorable terms, or integrating the acquired
businesses or assets into our existing operations. Our ability to make
acquisitions may depend on the availability of additional debt financing on
acceptable terms and will be subject to compliance with the covenants contained
in our debt instruments, including the indentures governing the Existing Notes
and the Notes.
WE MAY ENCOUNTER DELAYS, OPERATIONAL PROBLEMS AND INCREASED COST IF WE ARE
UNABLE TO ACQUIRE KEY EQUIPMENT FROM OUR MAJOR SUPPLIERS.
We are dependent on third party suppliers of hardware and software
components, including Nortel, Cisco, Hewlett Packard, Microsoft and Netscape.
Although we attempt to maintain a number of vendors for each product, a number
of components that we use in providing our network services are currently
available from only one source. For example, routers are currently available
only from Cisco. A failure by a supplier to deliver quality products to us on a
timely basis or our inability to develop alternate sources if and as required
could result in delays which could have a material adverse effect on us.
Our recourse against suppliers who fail to deliver products to us on a
timely basis is restricted by contractual liability limitations in supply
agreements and purchase orders and, in many cases, by practical considerations
relating to our desire to maintain good relationships with suppliers. Moreover,
we cannot be sure that we will be able to obtain such products on the scale we
require at an affordable cost or at all. Neither can we be certain that our
suppliers will not enter into exclusive arrangements with our competitors or
stop selling their products or components to us at commercially reasonable
prices or at all. Any failure of our sole or limited-source suppliers to provide
products or components that comply with our standards could have a material
adverse effect on us.
WE ARE CONTROLLED BY PARTIES WHOSE INTEREST MAY NOT BE ALIGNED WITH YOURS.
You should be aware that 5 shareholders currently own approximately 75.6%
of our shares on a fully diluted basis. Upon completion of the Equity Offering,
we expect these shareholders will own approximately 53.6% of our shares on a
fully diluted basis. Collectively, these shareholders have the power to exercise
voting and management control, and their interests may be different from your
interests and the interests of our other shareholders.
In the past, we have had disputes among these 5 shareholders arising out of
the shareholders' agreement and other matters. These disputes have in the past
diverted management time and resources. Pursuant to the Settlement Agreement
entered into by us and our shareholders, prior claims by Cromwilld, one of our
shareholders, have been released. We can give no assurance that there will be no
disputes in the future and that such disputes will not have a material adverse
effect on our business.
CHANGES IN THE REGULATORY ENVIRONMENT COULD AFFECT OUR ABILITY TO OFFER OUR
PRODUCTS AND SERVICES.
We expect that the implementation of directives and regulations of the
European Union intended to liberalize the telecommunications market will
essentially enable us to gain access to telecommunications
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networks controlled by PTTs. A number of directives have been implemented by the
EU members, but several directives still remain to be implemented in the member
states, including the Benelux. A delay in the implementation of these directives
and regulations could have a material adverse effect on our business.
Our operations depend on the licenses, authorizations and registrations
that we have obtained in The Netherlands, Belgium and the United Kingdom and the
success of our applications for additional licenses, authorizations and
registrations in these and other jurisdictions. We have no guarantees that we
will be able to maintain or renew these licenses, authorizations and
registrations. The loss of, or failure to obtain, licenses, authorizations or
registrations or a substantial limitation thereof could have a material adverse
effect on our business.
There are currently few laws and regulations that specifically regulate
communications on the Internet. European and U.S. government authorities and
agencies are considering laws and regulations that address issues such as user
privacy, infringement pricing, on-line content regulation, intellectual property
ownership and taxation of on-line products and services. The EU has adopted 2
directives that impose restrictions on the collection and use of personal data,
guaranteeing citizens of EU Member States the right of access to their data, the
right to know where the data originated and the right to recourse in the event
of unlawful processing. However, to the best of our knowledge, no European court
has ever held a telecommunications services provider liable for content
transmitted over its network, although we can give no assurances that no laws or
regulations will be adopted that will impose such liability, or that any future
court rulings will not impose such liability. Any future regulation of the
Internet that imposes restrictions on the way we conduct our business could
seriously affect adversely our business.
THE NATURE OF OUR BUSINESS MAKES US SUSCEPTIBLE TO FRAUD AND BAD DEBT.
As a provider of telecommunications and Internet services, our operations
are potentially exposed to the risks of fraud and bad debt. Specifically, our
revenues for the 3 months ended December 31, 1997 were negatively impacted by a
case of fraud in October 1997, which we estimate resulted in a loss of
approximately NLG 1.0 million. The fraud involved the unauthorized use of one of
our test codes. As a result, a large number of calls were originated over the
course of 4 days and the associated origination and termination costs were
expensed as miscellaneous operating expenses. In addition, some of our regular
customers were unable to complete calls through our network. We lost revenue
from such customers and offered credits to these customers. While we believe
that changes in the technology we employ will curtail potential fraudulent use
of our facilities, we do not have insurance coverage for potential fraud in
place. Although we did not experience any fraudulent use of our facilities in
1998, any recurrence of such fraud could have a material adverse effect on our
business.
Although we make appropriate provisions for non-payment of monies owed to
us by our customers, our level of bad debt may increase. Any significant
increase in the level of bad debt could have a material adverse effect on our
business.
A CHANGE OF CONTROL MAY CAUSE DEFAULT UNDER THE INDENTURES GOVERNING THE
EXISTING NOTES AND THE NOTES.
Pursuant to the terms of the Existing Notes and the Notes, each holder can
require us to repurchase its Notes at a price equal to 101% of the principal
amount thereof in the event a change of control of VersaTel occurs. However, our
existing contractual obligations or an inability to obtain adequate resources
may prevent us from consummating any offering to repurchase the Existing Notes
or the Notes. Our failure to complete an offer to repurchase the Existing Notes
or the Notes would be an event of default under the indentures governing the
Existing Notes and the Notes and would, therefore, seriously adversely affect
our business.
23
<PAGE> 30
NO PUBLIC MARKET CURRENTLY EXISTS FOR THE NOTES AND THE PRICE OF THE NOTES MAY
BE VOLATILE.
There is no existing trading market for the Notes. Although the
underwriters have advised us that they currently intend to make a market in the
Notes, they are not obligated to do so and they may discontinue such
market-making at any time without notice in their sole discretion. Accordingly,
no assurance can be given as to the development or liquidity of any market for
the Notes. The liquidity of, and trading market for, the Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, VersaTel.
24
<PAGE> 31
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. Such statements can be
identified by the use of terminology such as "believes", "expects", "may",
"will", "should", "anticipate", "estimate", "continue" or other similar words.
We have based these forward-looking statements on our current expectations and
projections about future events. These forward-looking statements are subject to
risks, uncertainties, and assumptions about us, including, among other things:
- our anticipated expansion plans for our network and growth strategies,
- our expectation of the impact of this expansion on our revenue potential,
cost basis and margins,
- our expectation of the competitiveness of our services,
- our intention to introduce new products and services,
- anticipated trends and conditions in our industry, including regulatory
reform and the liberalization of telecommunications services across
Europe, and
- our ability to compete, both nationally and internationally.
In light of these risks, uncertainties, and assumptions, the
forward-looking events discussed in this prospectus might not occur. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Given these considerations, readers are cautioned not to place undue reliance on
such forward-looking statements.
25
<PAGE> 32
USE OF PROCEEDS
We estimate that the net proceeds to us from (i) the sale of the Dollar
Notes and Euro Notes in this offering will be approximately $ million (NLG
million), after deducting underwriting discounts and estimated offering
expenses payable by us and assuming that all the Notes offered hereby are issued
as Dollar Notes, and (ii) the sale by us of 18,992,508 ordinary shares offered
in the Equity Offering will be approximately $ million (NLG million)
($ million (NLG million) if the underwriters' over-allotment option is
exercised in full), after deducting underwriting discounts and commissions and
estimated offering expenses payable by us, and assuming that our employees and
certain other persons will purchase 5% of the Shares being offered by us in the
Equity Offering at a 10% discount (in the case of employees) to the initial
public offering price.
Of the aggregate net proceeds of approximately $ million (NLG
million) from this offering and the Equity Offering (assuming no exercise by the
underwriters of their over-allotment option), we expect to use:
- approximately $152.2 million (NLG 310.5 million) to repay $131.25
million and $18.75 million in aggregate principal amount of, plus
accrued interest owing under, the Interim Loans made by Lehman
Commercial Paper Inc. and ING (U.S.) Capital, LLC, respectively,
affiliates of Lehman Brothers Inc., Lehman Brothers International
(Europe), ING Barings Limited and ING Barings LLC, each an
underwriter or an affiliate of an underwriter in this offering or
the Equity Offering;
- approximately $150.0 million (NLG 306.0 million) to fund capital
expenditures for expansion of our network, including approximately
$70.0 million (NLG 142.8 million) for the fiber construction for the
Benelux network and the local access network, approximately $50.0
million (NLG 102.0 million) for points of presence, switches and
related equipment, and approximately $30.0 million (NLG 61.2
million) for other capital expenditures; and
- the remaining amount of approximately $ million (NLG million)
for acquisitions, working capital and other general corporate
purposes, including the funding of operating deficits.
The proceeds from this offering will be used only to repay the Interim
Loans and for acquisitions and the expansion of our network in a manner
consistent with the terms of the indentures governing the Existing Notes.
Although we have no commitments or agreements with respect to any specific
future acquisition, we expect to use a portion of the net proceeds of the Equity
Offering for the acquisition of businesses which are complementary to our own.
Pending the foregoing uses, we intend to invest the net proceeds from this
offering and the Equity Offering in short-term, investment grade,
interest-bearing instruments.
Notwithstanding the above, we cannot specify with certainty the particular
uses for the net proceeds of the Equity Offering. Accordingly, our management
will have broad discretion in the application of the proceeds of the Equity
Offering.
We will not receive any of the proceeds from the Shares or ADSs being sold
in the Equity Offering by the selling shareholders.
26
<PAGE> 33
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 1999. Our
capitalization is presented on an actual basis and on an "as adjusted" basis to
reflect our receipt of the estimated net proceeds, after deducting underwriting
discounts, commissions and estimated offering expenses, from the sale of (i) the
Notes offered hereby and (ii) the offering by us of 18,992,508 ordinary shares
(all of which we have assumed are sold in the form of Shares) in the Equity
Offering and the acquisition of Svianed. You should read this capitalization
table together with "Selected Financial Data for VersaTel," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Consolidated Financial Information" and the historical
financial statements included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
------------------------------------------------
ACTUAL AS ADJUSTED
---------------------- ----------------------
NLG $(1) NLG $(1)
--------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and restricted cash(2).............. 559,366 274,199
========= ========= ========= =========
Current maturities of long-term
debt(3)................................ 71 35 2,571 1,260
Long-term debt (less current portion):
13 1/4% Senior Notes due 2008(4)(5).... 455,773 223,418 455,773 223,418
13 1/4% Senior Notes due 2008(4)(6).... 292,072 143,172 292,072 143,172
% Senior Dollar Notes due 2009(4)... -- --
% Senior Euro Notes due 2009(7)..... -- --
Other debt(3).......................... 693 340 3,193 1,565
--------- --------- --------- ---------
Total debt.......................... 748,609 366,965
--------- --------- --------- ---------
Shareholders' equity:
Ordinary shares, par value NLG 0.05 per
share -- 150,000,000 shares
authorized, and 38,984,810 shares
issued and outstanding; 80,000,000
shares authorized and 59,059,810
shares issued and outstanding, as
adjusted(8)(9)...................... 1,949 955
Additional paid-in capital(9).......... 51,112 25,055
Warrants(5)(6)(9)...................... 5,212 2,555
Accumulated deficit.................... (170,728) (83,690)
--------- --------- --------- ---------
Total shareholders' equity
(deficit)......................... (112,455) (55,125)
--------- --------- --------- ---------
Total capitalization................ 636,154 311,840
========= ========= ========= =========
</TABLE>
- -------------------------
(1) Solely for the convenience of the reader and except as provided in
footnotes 5 and 9 below, Dutch guilder amounts have been translated into
U.S. dollars at the Noon Buying Rate on March 31, 1999 of NLG 2.04 per
$1.00.
(2) The adjustment to cash and restricted cash reflects (i) the receipt of the
estimated net cash proceeds from this offering of $ million (NLG
million), (ii) the receipt by us of the estimated net cash proceeds from
the Equity Offering of $ million (NLG million) (assuming that
900,000 ordinary shares offered in the Equity Offering are sold to
employees of VersaTel at a 10% discount to the initial public offering
price), and (iii) the maintenance of $ million (NLG million)
(reflecting the total proceeds of $ million (NLG million) from this
offering and the Equity Offering less approximately $177.7 million (NLG
362.5 million) used to acquire Svianed) as cash pending application as
provided in "Use of Proceeds." Amounts paid in dollars have been
translated into Dutch guilders at the rate of $1.00 = NLG 2.04.
(3) The adjustment reflects assumed debt of NLG 5.0 million from the Svianed
acquisition.
27
<PAGE> 34
(4) The U.S. dollar indebtedness of the Senior Notes and of the Senior Dollar
Notes has been translated into Dutch guilders at the Noon Buying Rate on
March 31, 1999 of $1.00 per NLG 2.04.
(5) NLG 3.3 million of the aggregate principal amount of the First Notes was
allocated to the warrants issued in connection with the First High Yield
Offering.
(6) NLG 1.9 million of the aggregate principal amount of the Second Notes was
allocated to the warrants issued in connection with the Second High Yield
Offering.
(7) The euro indebtedness of the Senior Euro Notes has been translated into
Dutch guilders at E1.00 per NLG 2.20371.
(8) Actual shares issued and outstanding includes 130,000 ordinary shares that
we are obligated to issue, and which have been approved for issuance by
our shareholders, in connection with the acquisition of CS Net. Adjusted
shares issued and outstanding is based on 39,609,810 ordinary shares
outstanding prior to this offering which includes an aggregate of 755,000
ordinary shares that we are obligated to issue, and which have been
approved for issuance by our shareholders, in connection with the
acquisitions of CS Net, SpeedPort and ITinera, and which we issued to
Cromwilld in connection with the Settlement Agreement. Adjusted shares
issued and outstanding excludes (i) options covering an aggregate of
7,231,500 ordinary shares reserved for issuance to employees upon exercise
of options (348,000 of which are non-dilutive in that the shares
underlying such options are currently outstanding and will be provided to
us by the holders thereof). (ii) 4,482,891 ordinary shares reserved for
issuance upon exercise of then outstanding Warrants and (iii) an aggregate
of 130,000 ordinary shares approved for issuance by our shareholders in
connection with earnout obligations to former shareholders of SpeedPort
and ITinera. Such number also assumes no exercise of the over-allotment
option by the underwriters of the Equity Offering.
(9) Gives effect to the sale of 457,492 Shares or ADSs by certain holders of
warrants in the Equity Offering, upon cashless exercise of 38,800 warrants,
consisting of approximately 10% of the warrants issued in connection with
each of the First High Yield Offering and the Second High Yield Offering.
There has been no material change in the capitalization of VersaTel since
March 31, 1999, except as reflected in the "as adjusted" column.
28
<PAGE> 35
EXCHANGE RATE INFORMATION
DUTCH GUILDERS TO U.S. DOLLARS
The table below sets forth, for the periods and dates indicated, certain
information concerning the Noon Buying Rates for Dutch guilders expressed in
Dutch guilders per U.S. dollar through December 31, 1998 and, for periods
thereafter, the exchange rate of Dutch guilders per U.S. dollar (calculated
based on the Noon Buying Rate for euro). On March 31, 1999, the exchange rate
for Dutch guilders per U.S. dollar (calculated based on the Noon Buying Rate of
euro per U.S. dollar on such date) was NLG 2.04 per $1.00.
<TABLE>
<CAPTION>
PERIOD
PERIOD HIGH LOW AVERAGE(1) PERIOD END
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1994.................................... 1.98 1.67 1.82 1.74
1995.................................... 1.75 1.52 1.60 1.60
1996.................................... 1.76 1.61 1.69 1.73
1997.................................... 2.12 1.73 1.95 2.03
1998.................................... 2.09 1.81 1.98 1.88
1999 (through July 19).................. 2.17 1.87 2.05 2.16
</TABLE>
- -------------------------
(1) The average of the Noon Buying Rates on the last day of each full month
during the period.
Netherlands law does not impose restrictions that would affect the
remittance of dividend or other payments to nonresident holders of the ordinary
shares or any other foreign exchange controls. Fluctuations in the exchange rate
between the Dutch guilder and the U.S. dollar in the past are not necessarily
indicative of fluctuations that may occur in the future.
BELGIAN FRANCS TO U.S. DOLLARS
The table below sets forth, for the periods and dates indicated, certain
information concerning the Noon Buying Rates for Belgian francs expressed in
Belgian francs per U.S. dollar through December 31, 1998 and, for periods
thereafter, the exchange rate of Belgian francs per U.S. dollar (calculated
based on the Noon Buying Rate for euro). On March 31, 1999, the exchange rate
for Belgian francs per U.S. dollar (calculated based on the Noon Buying Rate of
euro per U.S. dollar on such date) was BEF 37.32 per $1.00. The exchange rate of
the Luxembourg franc to the U.S. dollar is the same as that of the Belgian franc
to the U.S. dollar.
<TABLE>
<CAPTION>
PERIOD
PERIOD HIGH LOW AVERAGE(1) PERIOD END
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
1994.................................... 36.53 30.73 33.43 31.85
1995.................................... 32.14 27.94 29.47 29.43
1996.................................... 32.27 29.50 30.97 31.71
1997.................................... 38.82 31.76 35.81 37.08
1998.................................... 38.50 33.19 36.31 34.36
1999 (through July 19).................. 39.79 34.15 37.58 39.54
</TABLE>
- -------------------------
(1) The average of the Noon Buying Rates on the last day of each full month
during the period.
Fluctuations in the exchange rate between the Belgian franc and the U.S.
dollar in the past are not necessarily indicative of fluctuations that may occur
in the future.
29
<PAGE> 36
U.S. DOLLARS TO EURO
Each of The Netherlands, Belgium and Luxembourg has adopted the euro as of
January 1, 1999. The table below sets forth, for the periods and dates
indicated, certain information concerning the Noon Buying Rates for euros
expressed in U.S. dollars per euro.
<TABLE>
<CAPTION>
PERIOD
PERIOD HIGH LOW AVERAGE(1) PERIOD END
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
First Quarter 1999...................... 1.18 1.07 1.11 1.08
Second Quarter 1999..................... 1.08 1.02 1.04 1.03
Third Quarter 1999 (through July 19).... 1.02 1.01 -- 1.02
</TABLE>
- -------------------------
(1) The average of the Noon Buying Rates on the last day of each full month
during the period.
Fluctuations in the exchange rate between the euro and the U.S. dollar in
the past are not necessarily indicative of fluctuations that may occur in the
future.
EUROPEAN MONETARY UNION
Pursuant to the Treaty on European Union, signed at Maastricht on February
7, 1992, the third stage of the European Monetary Union commenced on January 1,
1999. On that date, the euro was introduced and became legal tender in the
member states of the EU which are participating in the third stage of the
European Monetary Union, and those participating member states transferred
authority for conducting monetary policy to the European Central Bank. The
following 11 member states are participating on the third stage of the European
Monetary Union: Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, The Netherlands, Portugal and Spain. From the start of the third
stage of the European Monetary Union, the value of the euro against the
currencies of each of the participating member states was irrevocably fixed.
Participating national currencies will be removed from circulation between
January 1, 2002 and June 30, 2002 and replaced by euro banknotes and coins.
During the transition period from January 1, 1999 through December 31, 2001, the
euro will be available only in "paperless form," pending the production and
release of euro banknotes and coins, while the participating countries' national
currencies will be maintained as non-decimal subdivisions of the euro. The
denomination of "legal instruments" (legislative and statutory provisions, acts
of administration, judicial decisions, contracts, unilateral legal acts,
payments instructions other than banknotes and coins, and other instruments with
legal effect) is not modified by the introduction of the euro itself and
payments originally designated in Dutch guilders, for instance, will continue to
be made in Dutch guilders, unless otherwise agreed by the parties. Under the
so-called "no compulsion -- no prohibition" principle, since January 1, 1999
private and public entities as well as individuals may agree on the use of
either euro (for non-cash payments only) or the participating countries'
national currencies for existing and new transactions. During the transition
period certain legal instruments (mainly government bonds and other debt
instruments) may be unilaterally redenominated in euro. As of January 1, 2002,
all references to the participating countries' national currencies contained in
legal instruments (not redenominated during the transitional period) are to be
understood as references to the euro.
Also, since January 1, 1999 the value of the national currency of a
participating country in the national currency of another country (whether a
participating members state or not) may be determined only through the bilateral
conversion method (by converting the first currency into euro and then
converting this euro equivalent amount into the second currency). The conversion
rates between the euro and the participating member states' national currencies
were irrevocably fixed on December 31, 1998. The conversion rate between the
euro and the Dutch guilder was fixed at NLG 2.20371 per E1.00 and the conversion
rate between the euro and the Belgian franc was fixed at BEF 40.3399 per E1.00.
30
<PAGE> 37
OUR RESPONSE TO THE INTRODUCTION OF THE EURO
We have published our historical financial statements, including our
audited financial statements, in Dutch guilders. We expect to begin preparing
our financial statements in euros commencing with the financial statements for
the fiscal year 2000, but not to restate our historical financial statements in
euros. Our financial statements for 2000 will contain a column converting euro
amounts to Dutch guilders for comparison purposes. We expect to keep our
accounting records in euros starting in 2000. We expect that our share capital
will be redenominated in euros in 2000.
31
<PAGE> 38
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information of VersaTel has
been prepared by VersaTel in accordance with U.S. GAAP and is derived from, and
should be read in conjunction with, the historical audited financial statements
of VersaTel and Svianed included elsewhere in this prospectus. The unaudited pro
forma statement of operations data for the year ended December 31, 1998 give
effect to the Transactions as if they had occurred on January 1, 1998. The
unaudited pro forma statement of operations data for the 3 months ended March
31, 1999 give effect to the Transactions as if they had occurred on January 1,
1999. The unaudited pro forma balance sheet data as of March 31, 1999 give
effect to the Transactions as if they had occurred on such date.
The unaudited pro forma financial information set forth below reflects pro
forma adjustments that are based upon available information and certain
assumptions that VersaTel believes are reasonable. The acquisition of Svianed
will be accounted for under the acquisition method of accounting and,
accordingly, this method of accounting has been applied in the unaudited pro
forma financial information. Under the acquisition method of accounting, the
purchase price is allocated to the assets acquired and liabilities assumed based
on their estimated fair values at the time of the acquisition of Svianed.
Estimates of the fair values of the Svianed assets and liabilities have been
combined with the recorded values of the assets and liabilities of VersaTel in
the unaudited pro forma financial information. The estimates of fair value of
assets and liabilities are based on a number of assumptions which management
believe to be reasonable but which are subject to change. Such changes could
include, among other things, changes in the classification and useful lives of
intangible assets and the related amortization expense from amounts presented in
the pro forma financial information.
The unaudited pro forma financial information is presented for illustrative
purposes only and is not necessarily an indication of the results that would
have been achieved had such transactions been consummated as of the dates
indicated or that may be achieved in the future. The unaudited pro forma
financial information and accompanying notes should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
32
<PAGE> 39
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- -------------------------------------
VERSATEL SVIANED ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------------------
NLG NLG NLG NLG $(1)
<S> <C> <C> <C> <C> <C>
REVENUES......................... 39,561 56,683 96,244 47,178
OPERATING EXPENSES:
Cost of revenues, excluding
depreciation and
amortization................ 31,821 26,878 58,699 28,774
Selling, general and
administrative.............. 47,733 11,890 59,623 29,227
Depreciation and
amortization................ 6,473 8,751 35,119(2) 50,343 24,678
---------- ---------- ---------- ----------
Total operating expenses.... 86,027 47,519 168,665 82,679
---------- ---------- ---------- ----------
Operating result................. (46,466) 9,164 (72,421) (35,501)
OTHER INCOME (EXPENSES):
Foreign currency exchange gains
(losses), net............... 5,146 -- 5,146 2,522
Interest income................ 11,857 85 11,942 5,854
Interest expense -- third
parties..................... (37,522) (435) (3)
Interest expense -- related
parties..................... (145) -- (145) (71)
---------- ---------- ---------- ----------
Total other income
(expense)................. (20,664) (350)
---------- ---------- ---------- ----------
Net result before income taxes... (67,130) 8,814
PROVISION FOR INCOME TAXES....... 7 3,085 (4) 7 3
---------- ---------- ---------- ----------
Net result....................... (67,137) 5,729
========== ========== ========== ==========
NET RESULT PER SHARE (Basic and
Diluted)(5)(6)................. (2.06)
Weighted average number of shares
outstanding(5)(6).............. 32,622,194
FINANCIAL DATA:
EBITDA(7)........................ (39,993) 17,915 (22,078) (10,823)
Capital expenditures............. 77,255 13,256 90,511 44,368
Ratio of earnings to fixed
charges(8)..................... -- 26.2 -- --
Deficiency of earnings plus fixed
charges to cover fixed
charges(9)..................... (41,320) -- (67,275) (32,979)
</TABLE>
33
<PAGE> 40
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) Reflects the amortization, over the current period, of goodwill. Goodwill
reflects the excess of the acquisition price of Svianed over the fair value
of assets and liabilities of Svianed. The book value of tangible assets
acquired and liabilities assumed are assumed to approximate fair value. The
excess of the purchase price over the fair value of tangible assets acquired
and liabilities assumed was allocated to assets acquired based on
management's best estimate, based on discussion with VersaTel's advisers and
preliminary analysis of available financial and non-financial data, of the
fair values of such assets.
<TABLE>
<CAPTION>
NLG
(IN THOUSANDS)
--------------
<S> <C>
Total purchase price (including NLG 4,475 of acquisition
costs).................................................... (362,475)
Fair value of tangible assets acquired and liabilities
assumed................................................... 11,288
--------
Goodwill recorded on acquisition............................ (351,187)
========
</TABLE>
The above goodwill calculation is based on the fair value of assets and
liabilities as if they had been acquired at January 1, 1998. Goodwill is
amortized over a period of 10 years.
(3) Interest expense reflects (i) NLG million of interest expense relating
to this offering (calculated using an assumed interest rate of % per
annum) and (ii) NLG 2.5 million of amortization expenses relating to the
amortization of deferred financing costs incurred in connection with the
acquisition of Svianed and this offering.
(4) Reflects the assumption that VersaTel and Svianed would have filed a
consolidated tax return for the year ended December 31, 1998.
(5) Historical share numbers are adjusted to give effect to a 2-for-1 stock
split on April 13, 1999 and include 130,000 ordinary shares approved for
issuance by our shareholders in connection with the acquisition of CS Net.
Does not include (i) an aggregate of 425,000 shares that we are obligated to
issue in connection with the acquisitions of SpeedPort and ITinera and (ii)
200,000 shares which we issued to Cromwilld in connection with the
Settlement Agreement.
(6) Includes 130,000 ordinary shares approved for issuance by our shareholders
in connection with the acquisition of CS Net.
(7) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a company's
ability to incur and service debt. EBITDA should not be considered as a
substitute for operating earnings, net income, cash flow or other statements
of operations or cash flow data computed in accordance with U.S. GAAP or as
a measure of a company's results of operations or liquidity. Funds depicted
by this measure may not be available for management's discretionary use (due
to covenant restrictions, debt service payments, the expansion of our
network, and other commitments). Because all companies do not calculate
EBITDA identically, the presentation of EBITDA contained herein may not be
comparable to other similarly entitled measures of other companies.
(8) The ratio of earnings to fixed charges is calculated by dividing (i) income
(loss) from continuing operations before income taxes plus fixed charges by
(ii) fixed charges. Fixed charges consist of interest expense.
(9) The deficiency of earnings plus fixed charges to cover fixed charges is
calculated by adding (i) income (loss) from continuing operations before
income taxes plus (ii) fixed charges. Fixed charges consist of interest
expense.
34
<PAGE> 41
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
----------------------- -------------------------------------
VERSATEL SVIANED ADJUSTMENTS COMBINED
---------- ---------- ----------- -----------------------
NLG NLG NLG NLG $(1)
<S> <C> <C> <C> <C> <C>
REVENUES............................ 15,501 15,579 31,080 15,235
OPERATING EXPENSES:
Cost of revenues, excluding
depreciation and
amortization................... 12,485 6,628 19,113 9,369
Selling, general and
administrative................. 20,179 3,734 23,913 11,722
Depreciation and amortization..... 3,084 2,472 8,761(2) 14,317 7,018
---------- ---------- ---------- ----------
Total operating
expenses............... 35,748 12,834 57,343 28,109
---------- ---------- ---------- ----------
Operating result............... (20,247) 2,745 (26,263) (12,874)
OTHER INCOME (EXPENSES):
Foreign currency exchange gains
(losses), net.................. (40,283) -- (40,283) (19,747)
Interest income................... 6,043 26 6,069 2,975
Interest expense -- third
parties........................ (23,895) (70) (3)
Interest expense -- related
parties........................ -- (68) (68) (33)
---------- ---------- ---------- ----------
Total other income
(expenses)................... (58,135) (112)
---------- ---------- ---------- ----------
Net result before income taxes...... (78,382) 2,633
PROVISION FOR INCOME TAXES.......... -- 921 (921)(4) -- --
---------- ---------- ---------- ----------
Net result.......................... (78,382) 1,712
========== ========== ========== ==========
NET LOSS PER SHARE (Basic and
Diluted)(5)(6)...................... (2.01)
Weighted average number of shares
outstanding(5)(6)................. 38,984,810
FINANCIAL DATA:
EBITDA(7)......................... (17,163) 5,217 (11,946) (5,856)
Capital expenditures.............. 52,226 3,746 55,972 27,437
Ratio of earnings to fixed
charges(8)..................... -- 24.5 -- --
Deficiency of earnings plus fixed
charges to cover fixed
charges(9)..................... (60,530) -- (66,546) (32,621)
</TABLE>
35
<PAGE> 42
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) Reflects the amortization, over the current period, of goodwill. Goodwill
reflects the excess of the acquisition price of Svianed over the fair value
of assets and liabilities of Svianed. The book value of tangible assets
acquired and liabilities assumed are assumed to approximate fair value. The
excess of the purchase price over the fair value of tangible assets acquired
and liabilities assumed was allocated to assets acquired based on
management's best estimate, based on discussion with VersaTel's advisers and
preliminary analysis of available financial and non-financial data, of the
fair values of such assets.
<TABLE>
<CAPTION>
NLG
(IN THOUSANDS)
--------------
<S> <C>
Total purchase price (including NLG 4,475 of acquisition (362,475)
costs)....................................................
Fair value of tangible assets acquired and liabilities 12,017
assumed...................................................
--------
Goodwill recorded on acquisition............................ (350,458)
========
</TABLE>
The above goodwill calculation is based on the fair value of assets and
liabilities as if they had been acquired at January 1, 1999. Goodwill is
amortized over a period of 10 years.
(3) Interest expense reflects (i) NLG million of interest expense relating
to this offering (calculated using an assumed interest rate of % per
annum) and (ii) NLG 0.6 million of amortization expense relating to the
amortization of deferred financing costs incurred in connection with the
acquisition of Svianed and this offering.
(4) Reflects the assumption that VersaTel and Svianed would have filed a
consolidated tax return for the year ended December 31, 1999.
(5) Historical share numbers are adjusted to give effect to a 2-for-1 stock
split on April 13, 1999 and include 130,000 ordinary shares approved for
issuance by our shareholders in connection with the acquisition of CS Net.
Does not include (i) an aggregate of 425,000 shares that we are obligated to
issue in connection with the acquisitions of SpeedPort and ITinera and (ii)
200,000 shares which we issued to Cromwilld in connection with the
Settlement Agreement.
(6) Includes 130,000 ordinary shares approved for issuance by our shareholders
in connection with the acquisition of CS Net.
(7) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a company's
ability to incur and service debt. EBITDA should not be considered as a
substitute for operating earnings, net income, cash flow or other statements
of operations or cash flow data computed in accordance with U.S. GAAP or as
a measure of a company's results of operations or liquidity. Funds depicted
by this measure may not be available for management's discretionary use (due
to covenant restrictions, debt service payments, the expansion of our
network, and other commitments). Because all companies do not calculate
EBITDA identically, the presentation of EBITDA contained herein may not be
comparable to other similarly entitled measures of other companies.
(8) The ratio of earnings to fixed charges is calculated by dividing (i) income
(loss) from continuing operations before income taxes plus fixed charges by
(ii) fixed charges. Fixed charges consist of interest expense.
(9) The deficiency of earnings plus fixed charges to cover fixed charges is
calculated by adding (i) income (loss) from continuing operations before
income taxes plus (ii) fixed charges. Fixed charges consist of interest
expense.
36
<PAGE> 43
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------- -------------------------------------
VERSATEL SVIANED ADJUSTMENTS COMBINED
-------- -------- ----------- --------------------
NLG NLG NLG NLG $(1)
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... 329,551 5,318 (2)
Restricted cash, current portion.............. 94,201 -- 94,201 46,177
Accounts receivable less allowance for
doubtful accounts.......................... 11,001 12,218 23,219 11,382
Inventory..................................... 2,992 397 3,389 1,661
Other current assets.......................... 17,439 2,976 20,415 10,007
-------- -------- --------- --------
Total current assets....................... 455,184 20,909
Fixed Assets:
Property and Equipment, net................... 41,766 20,427 62,193 30,487
Construction in Progress...................... 92,205 -- 92,205 45,199
-------- -------- --------- --------
Total fixed assets......................... 133,971 20,427 154,398 75,686
Restricted cash, net of current portion......... 135,614 -- 135,614 66,477
Capitalized finance costs, net.................. 28,000 -- 24,735(3) 52,735 25,850
Goodwill........................................ 4,354 -- 348,746(4) 353,100 173,089
Deferred tax assets............................. -- 158 158 77
-------- -------- --------- --------
Total assets............................... 757,123 41,494 1,612,974 790,673
======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................. 50,556 4,390 54,946 26,935
Due to related parties........................ -- 4,759 4,759 2,333
Accrued liabilities........................... 70,413 6,630 77,043 37,766
Deferred income............................... -- 1,536 1,536 753
Current portion of long term debt............. -- 2,500 2,500 1,225
Current portion of capital lease
obligations................................ 71 -- 71 35
-------- -------- --------- --------
Total current liabilities.................. 121,040 19,815 140,855 69,047
Deferred Income, net of current portion.........
Capital Lease Obligations, net of current
portion....................................... 23 -- 23 11
Long Term Liabilities........................... 670 -- 670 328
Third Notes offered in the Third High Yield
Offering...................................... (5)
Long Term Debt (13 1/4% Senior Notes)........... 747,845 -- 747,845 366,591
Long Term Debt less of current portion.......... -- 7,500 (5,000)(6) 2,500 1,225
Pension obligation.............................. -- 450 450 221
-------- -------- --------- --------
Total liabilities............................... 869,578 27,765
Shareholders' Equity:
Share capital................................... 1,949 5,000 (7)(8)
Additional paid-in capital...................... 51,112 -- (8)
Warrants........................................ 5,212 -- (9)
Retained earnings (accumulated deficit)......... (170,728) 8,729 (8,729)(7) (170,728) (83,690)
-------- -------- --------- --------
Total shareholders' equity................. (112,455) 13,729
-------- -------- --------- --------
Total liabilities and shareholders'
equity................................ 757,123 41,494
======== ======== ========= ========
</TABLE>
37
<PAGE> 44
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) Reflects (i) the net proceeds received by VersaTel from the Equity Offering
of $ million (NLG million), (ii) the proceeds of this offering of
$ million (NLG 510.0 million) net of capitalized finance costs of $12.1
million (NLG 24.7 million) and (iii) the acquisition cost of Svianed of NLG
362.5 million and the early repayment of NLG 5.0 million of long-term debt
of Svianed related thereto. Amounts paid in dollars have been translated
into Dutch guilders at the rate of $1.00 = NLG 2.04. Assumes all ordinary
shares offered in the Equity Offering are issued in the form of Shares.
(3) Reflects financing costs associated with the incurrence of the Interim Loans
and the issuance of the Notes.
(4) Goodwill reflects the excess of the acquisition price of Svianed over the
fair value of assets and liabilities of Svianed. The book value of tangible
assets acquired and liabilities assumed are assumed to approximate fair
value. The excess of the purchase price over the fair value of tangible
assets acquired and liabilities assumed was allocated to assets acquired
based on management's best estimate, based on discussion with VersaTel's
advisers and preliminary analysis of available financial and non-financial
data, of the fair values of such assets.
<TABLE>
<CAPTION>
NLG
(IN THOUSANDS)
--------------
<S> <C>
Total purchase price (including NLG 4,475 of acquisition (362,475)
costs)....................................................
Fair value of tangible assets acquired and liabilities 13,729
assumed...................................................
--------
Goodwill recorded on acquisition............................ (348,746)
========
</TABLE>
The above goodwill calculation is based on the fair value of assets and
liabilities as if they had been acquired at March 31, 1999.
(5) Reflects $ million aggregate principal amount of Senior Dollar Notes and
Senior Euro Notes to be issued in this offering.
(6) Reflects the early repayment of long-term debt as a result of the
acquisition of Svianed.
(7) Reflects the elimination of the shareholders' equity of Svianed.
(8) Reflects the issuance of 18,992,508 shares by VersaTel and 457,492 Warrant
Shares in connection with the Equity Offering, and the issuance of 130,000
ordinary shares that we are obligated to issue and which have been approved
for issuance by our shareholders, in connection with our acquisition of CS
Net. Assumes no exercise of the over-allotment option by the underwriters.
(9) Reflects cashless exercise of warrants representing 457,492 ordinary shares
in connection with the Offering (or approximately 10% of the warrants issued
in connection with each of the First High Yield Offering and the Second High
Yield Offering).
38
<PAGE> 45
SELECTED FINANCIAL DATA FOR VERSATEL
The following selected financial data of VersaTel as of and for the years
ended December 31, 1996, 1997 and 1998 have been prepared in accordance with
U.S. GAAP and have been derived from the historical financial statements of
VersaTel, which have been audited by Arthur Andersen, independent public
accountants. The selected financial data for VersaTel as of and for the 3 month
periods ended March 31, 1998 and 1999 are unaudited, but in the opinion of the
management contain all adjustments, consisting only of normal recurring
accruals, which are necessary for a fair presentation of results for interim
periods. You should read the information set forth below in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations" and the historical audited financial
statements of VersaTel included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------------------------- ----------------------------
1995(1) 1996 1997 1998 1998 1999
------- ------ ------- ------------------ ------ ------------------
NLG NLG NLG NLG $(2) NLG NLG $(2)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................ 52 6,428 18,896 39,561 19,393 6,402 15,501 7,599
Operating expenses:
Cost of revenue, excluding
depreciation and
amortization................... 117 4,954 17,405 31,821 15,598 5,460 12,485 6,120
Selling, general and
administrative................. 538 5,485 17,527 47,733 23,399 5,544 20,179 9,892
Depreciation and amortization.... 11 453 3,237 6,473 3,173 1,087 3,084 1,512
------ ------ ------- ------- ------- ------ ------- -------
Total operating expenses....... 666 10,892 38,169 86,027 42,170 12,091 35,748 17,524
------ ------ ------- ------- ------- ------ ------- -------
Loss from operations............... (614) (4,464) (19,273) (46,466) (22,777) (5,689) (20,247) (9,925)
Interest expense (income), net..... 1 269 534 25,810 12,652 200 17,852 8,751
Currency loss (gain)............... -- -- 53 (5,146) (2,522) 115 40,283 19,747
------ ------ ------- ------- ------- ------ ------- -------
Net loss before income taxes....... (615) (4,733) (19,860) (67,130) (32,907) (6,004) (78,382) (38,423)
Provision for income taxes......... -- -- -- 7 3 -- -- --
------ ------ ------- ------- ------- ------ ------- -------
Net loss......................... (615) (4,733) (19,860) (67,137) (32,910) (6,004) (78,382) (38,423)
====== ====== ======= ======= ======= ====== ======= =======
Net loss per share (Basic and
Diluted)(3)...................... (0.09) (0.47) (1.10) (2.06) (1.01) (0.31) (2.01) (0.99)
Weighted average number of shares
outstanding(3)................... 6,654 10,008 18,084 32,622 32,622 19,159 38,985 38,985
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
-------------------------------------------------- ------------------------------
1995(1) 1996 1997 1998 1998 1999
------- ------ ------- ------------------ ------- -------------------
NLG NLG NLG NLG $(2) NLG NLG $(2)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and restricted cash......... 160 4,443 1,495 583,570 286,064 5,298 559,366 274,199
Working capital (excluding cash
and restricted cash)........... 436 (2,704) (24,774) (46,851) (22,966) (28,792) (89,608) (43,925)
Capitalized finance cost......... -- -- -- 28,750 14,093 -- 28,000 13,725
Property, plant and equipment,
net............................ 224 2,340 13,619 38,608 18,925 14,956 41,766 20,474
Construction in progress......... -- -- -- 46,019 22,558 -- 92,205 45,199
Goodwill......................... -- -- -- 4,556 2,233 -- 4,354 2,134
Total assets..................... 820 8,160 19,331 723,397 354,606 26,189 757,123 371,139
Total long-term obligations
(including current portion).... 614 4,185 8,931 688,796 337,645 15,949 748,609 366,965
Total shareholders' equity
(deficit)...................... (120) 146 (18,214) (34,073) (16,702) (24,218) (112,455) (55,125)
</TABLE>
39
<PAGE> 46
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------------------- -------------------------------
1995(1) 1996 1997 1998 1998 1999
-------- ------- -------- -------------------- ------- --------------------
NLG NLG NLG NLG $(2) NLG NLG $(2)
(IN THOUSANDS, EXCEPT PERCENTAGE, TOTAL CUSTOMERS AND AVERAGE REVENUE PER BILLABLE MINUTE)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL DATA:
SG&A as a percentage of revenue.... 1194.2% 85.3% 92.8% 120.7% 120.7% 86.6% 130.2% 130.2%
EBITDA(4).......................... (603) (4,011) (16,036) (39,993) (19,604) (4,602) (17,163) (8,413)
Capital expenditures............... 213 2,569 14,516 77,255 37,870 2,424 52,226 25,601
Ratio of earnings to fixed
charges(5)....................... -- -- -- -- -- -- -- --
Deficiency of earnings plus fixed
charges to cover fixed
charges(6)....................... (614) (4,464) (19,326) (41,320) (20,255) (5,804) (60,530) (29,672)
CASH FLOW DATA:
Net cash provided by (used in)
operating activities............. (715) (1,718) 5,765 (37,322) (18,295) (905) 9,777 4,793
Net cash used in investing
activities....................... (234) (2,569) (14,516) (82,036) (40,214) (2,424) (52,226) (25,601)
Net cash provided by financing
activities....................... 1,109 8,571 5,807 490,026 240,209 7,132 (14) (7)
OPERATIONS DATA:
Total customers (at period end).... 35 670 2,059 6,887 6,887 2,981 8,694 8,694
Number of billable minutes (in
thousands)(7).................... 51 6,487 23,361 121,603 121,603 12,432 69,165 69,165
Average revenue per billable
minute........................... 1.03 0.99 0.81 0.32 0.16 0.51 0.21 0.11
</TABLE>
- -------------------------
(1) The summary financial data for fiscal year 1995 reflects the financial
results of VersaTel for the period from October 10, 1995, the date of
incorporation, through December 31, 1995.
(2) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(3) As adjusted to give effect to a 2-for-1 stock split on April 13, 1999.
Includes 130,000 shares approved for issuance in November 1998 by the
general meeting of shareholders in connection with the acquisition of CS
Net.
(4) EBITDA consists of earnings (loss) before interest expense, income taxes,
depreciation, amortization and foreign exchange gain (loss). EBITDA is
included because management believes it is a useful indicator of a company's
ability to incur and service debt. EBITDA should not be considered as a
substitute for operating earnings, net income, cash flow or other statements
of operations or cash flow data computed in accordance with U.S. GAAP or as
a measure of a company's results of operations or liquidity. Funds depicted
by this measure may not be available for management's discretionary use (due
to covenant restrictions, debt service payments, the expansion of our
network, and other commitments). Because all companies do not calculate
EBITDA identically, the presentation of EBITDA contained herein may not be
comparable to other similarly entitled measures of other companies.
(5) The ratio of earnings to fixed charges is calculated by dividing (i) income
(loss) from continuing operations before income taxes plus fixed charges by
(ii) fixed charges. Fixed charges consist of interest expense. Earnings plus
fixed charges were insufficient to cover fixed charges by NLG 0.6 million in
1995, NLG 4.5 million in 1996, NLG 19.3 million in 1997, NLG 41.3 million in
1998, NLG 5.8 million for the 3 months ended March 31, 1998 and NLG 60.5
million for the 3 months ended March 31, 1999.
(6) The deficiency of earnings plus fixed charges to cover fixed charges is
calculated by adding (i) income (loss) from continuing operations before
income taxes plus (ii) fixed charges. Fixed charges consist of interest
expense.
(7) Billable minutes are those minutes during which a call is connected to the
VersaTel Network and for which we bill a customer.
40
<PAGE> 47
SELECTED FINANCIAL DATA FOR SVIANED
The following selected financial data of Svianed as of and for the years
ended December 31, 1997 and 1998 have been prepared in accordance with U.S. GAAP
and have been derived from the historical financial statements of Svianed, which
have been audited by KPMG Accountants N.V., independent public accountants. The
selected financial data for Svianed as of and for the 3 month periods ended
March 31, 1998 and 1999 are unaudited, but in the opinion of management contain
all adjustments, consisting only of normal recurring accruals, which are
necessary for a fair presentation of results for interim periods. You should
read the information set forth below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- Svianed" and the historical audited financial
statements of Svianed included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
-------------------------------- -----------------------------
1997 1998 1998 1999
-------- -------------------- ------- ------------------
NLG NLG $(1) NLG NLG $(1)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue.............................................. 45,111 56,683 27,786 11,842 15,579 7,637
Operating expenses:
Cost of revenue, excluding depreciation and
amortization..................................... 23,550 26,878 13,176 6,342 6,628 3,249
Selling, general and administrative................ 8,331 11,890 5,828 2,448 3,734 1,830
Depreciation and amortization...................... 6,754 8,751 4,290 1,882 2,472 1,212
------- ------- ------- ------- ------- -------
Total operating expenses......................... 38,635 47,519 23,294 10,672 12,834 6,291
------- ------- ------- ------- ------- -------
Profit from operations............................... 6,476 9,164 4,492 1,170 2,745 1,346
Interest expense (income), net....................... 431 350 172 88 112 55
------- ------- ------- ------- ------- -------
Net profit before income taxes....................... 6,045 8,814 4,320 1,082 2,633 1,291
Provision for income taxes........................... (2,120) (3,085) (1,512) (379) (921) (452)
Net profit......................................... 3,925 5,729 2,808 703 1,712 839
======= ======= ======= ======= ======= =======
Net profit per share (Basic and Diluted)............. 785.0 1,145.8 561.6 140.6 342.4 167.8
Weighted average number of shares outstanding........ 5,000 5,000 5,000 5,000 5,000 5,000
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF MARCH 31,
----------------------------- -----------------------------
1997 1998 1998 1999
------- ------------------ ------- ------------------
NLG NLG $(1) NLG NLG $(1)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ 2,578 1,468 720 1,009 5,318 2,607
Working capital (excluding cash and restricted
cash).............................................. (808) (5,909) (2,897) (1,314) (4,224) (2,071)
Property, plant and equipment, net................... 14,648 19,153 9,389 17,442 20,427 10,013
Total assets......................................... 28,870 33,655 16,498 28,826 41,494 20,340
Total long-term obligations (including current
portion)........................................... 7,700 5,300 2,598 7,725 10,450 5,123
Total shareholders' equity (deficit)................. 11,288 12,017 5,891 11,991 13,729 6,730
</TABLE>
41
<PAGE> 48
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ --------------------------
1997 1998 1998 1999
------- ------------------- ------ ----------------
NLG NLG $(1) NLG NLG $(1)
(IN THOUSANDS, EXCEPT PERCENTAGE)
<S> <C> <C> <C> <C> <C> <C>
FINANCIAL DATA:
SG&A as a percentage of revenue........................... 18.5% 21.0% 21.0% 20.7% 24.0% 24.0%
EBITDA(2)................................................. 13,230 17,915 8,782 3,052 5,217 2,558
Capital expenditures...................................... 8,454 13,256 6,498 4,676 3,746 1,836
CASH FLOW DATA:
Net cash provided by (used in) operating activities....... 6,622 19,646 9,630 3,107 2,596 1,273
Net cash used in investing activities..................... (8,454) (13,256) (6,498) (4,676) (3,746) (1,836)
Net cash provided by financing activities................. (2,500) (7,500) (3,676) -- 5,000 2,451
</TABLE>
- -------------------------
(1) Solely for the convenience of the reader, Dutch guilder amounts have been
translated into U.S. dollars at the Noon Buying Rate on March 31, 1999 of
NLG 2.04 per $1.00.
(2) EBITDA consists of earnings (loss) before interest income, interest expense,
income taxes, depreciation, amortization and foreign exchange gain (loss).
EBITDA is included because management believes it is a useful indicator of a
company's ability to incur and service debt. EBITDA should not be considered
as a substitute for operating earnings, net income, cash flow or other
statements of operations or cash flow data computed in accordance with U.S.
GAAP or as a measure of a company's results of operations or liquidity.
Funds depicted by this measure may not be available for management's
discretionary use (due to covenant restrictions, debt service payments, the
expansion of our network, and other commitments). Because all companies do
not calculate EBITDA identically, the presentation of EBITDA contained
herein may not be comparable to other similarly entitled measures of other
companies.
42
<PAGE> 49
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
the Financial Statements contained elsewhere in this prospectus. See "Selected
Financial Data." Information contained below and elsewhere in this prospectus,
including information with respect to VersaTel's plans and strategy for its
business, may include forward-looking statements. See "Disclosure Regarding
Forward-Looking Statements."
OVERVIEW
We are a rapidly growing, competitive network operator focused primarily on
the Benelux, which consists of The Netherlands, Belgium and Luxembourg. Our
objective is to become the leading fully integrated provider of local access,
facilities-based broadband services, including voice, data and Internet services
to our customers in this region. During the past year, we have substantially
expanded our product offering from our initial offering of long distance voice
services. We currently offer a broad portfolio of voice, data and Internet
services to our business customers and a broad range of connectivity,
termination, co-location and hosting services to other telecommunications, data
and Internet service providers.
We are building a high bandwidth network throughout the Benelux to directly
connect to our customers and we are extending our network to connect to certain
key international destinations. As of May 31, 1999, our construction passed 12
city centers, 6 business parks and 5,200 buildings. We intend to complete our
international rings connecting the Benelux network, London and Paris and
connecting the Benelux network, Frankfurt, Dusseldorf and Paris by December
1999. We have completed our international connection from the Benelux network to
London and to Frankfurt. We currently have both a Nortel DMS 100 digital circuit
switch and a Cisco data switch in both Amsterdam and Antwerp. We expect to have
an additional Nortel DMS switch and an additional Cisco data switch installed in
each of Rotterdam, in the third quarter of 1999, and Brussels, in 2000. The
Nortel DMS switches enable us to deliver voice and ISDN telecommunications
services and the Cisco data switches allow us to support multiple data
communications protocols including ATM, IP (Internet Protocol), IPX (Novell),
Frame Relay and others.
On June 11, 1999, we acquired Svianed, the third largest provider of data
services in The Netherlands in terms of revenues. Svianed complements VersaTel's
strategy by providing data services to approximately 50 customers, primarily in
the financial services and banking industry, including the principal social
insurance organization and the largest financial institution in The Netherlands.
Through our acquisition of Svianed, we will be able to significantly accelerate
the deployment of our broadband data services product offerings by combining our
market presence with Svianed's data network management expertise. We intend to
directly connect Svianed's customers to, and transition Svianed's traffic onto,
our network in order to reduce our reliance on leased lines. We believe this
will significantly enhance the quality of our service offering to Svianed's
customers and reduce our costs. Since our financial results do not yet reflect
any of Svianed's operations, we have set forth below a separate discussion of
Svianed's historical results of operations. See "-- Svianed."
In May 1999, we acquired SpeedPort and VuurWerk and, in June 1999, we
acquired ITinera, each of which provides co-location, hosting and international
Internet services to business customers and other Internet service providers.
Also, in November 1998, we acquired CS Net, which provides Internet-based,
business-to-business transaction services for trade groups in specific
industries.
43
<PAGE> 50
REVENUES
Historically, our revenues were derived primarily from the provision of
long distance telecommunications services in The Netherlands and more recently
in Belgium. VersaTel's customer base predominately consists of small- and
medium-sized businesses and to a lesser extent residential customers. With the
acquisition of Svianed, a significant portion of our revenues in future periods
will be derived from the provision of data and Internet services to larger
customers. We also provide carrier services to other telecommunications, data
and Internet service providers.
Our revenues to date have been derived primarily from minutes of
telecommunications traffic billed. The percentage of our revenues that consist
of fixed monthly fees will increase substantially as a result of our acquisition
of Svianed. We expect this percentage to further increase as we continue to
deploy our network. The following table sets forth the total revenues and
billable minutes of use attributable to our operations for the years ended
December 31, 1997 and December 31, 1998, and for the 3 months ended March 31,
1998 and March 31, 1999, as well as our total number of customers, based on the
number of invoices issued, as of December 31, 1997 and December 31, 1998 and as
of March 31, 1998 and March 31, 1999.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------- ------------------
1997 1998 1998 1999
------- -------- ------- -------
(AT PERIOD END)
<S> <C> <C> <C> <C>
CUSTOMERS
Business customers............................ 1,828 5,649 2,459 7,180
Residential customers......................... 230 1,234 519 1,507
Carrier services customers.................... 1 4 3 7
------ ------- ------- -------
Total...................................... 2,059 6,887 2,981 8,694
REVENUES (NLG IN THOUSANDS)
Business customers
Telephony.................................. 16,948 34,472 5,620 13,294
Internet/data.............................. -- 897 -- 828
Residential customers......................... 11 386 33 232
Carrier services customers.................... 1,937 3,806 749 1,147
------ ------- ------- -------
Total...................................... 18,896 39,561 6,402 15,501
BILLABLE MINUTES OF USE (IN THOUSANDS)
Business customers............................ 21,469 102,980 10,355 54,218
Residential customers......................... 42 1,817 105 1,298
Carrier services customers.................... 1,850 16,806 1,972 13,649
------ ------- ------- -------
Total...................................... 23,361 121,603 12,432 69,165
</TABLE>
44
<PAGE> 51
In 1997, all our revenues were generated in The Netherlands. In October
1998, we started generating revenues in Belgium. The geographical composition of
our revenues for the fiscal years ended December 31, 1997 and December 31, 1998
and for the 3 months ended March 31, 1998 and March 31, 1999 was as follows:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
------------------ ---------------
1997 1998 1998 1999
------- ------- ----- ------
(NLG IN THOUSANDS)
<S> <C> <C> <C> <C>
The Netherlands..................................... 18,896 39,324 6,402 14,644
Belgium............................................. -- 237 -- 857
------ ------ ----- ------
Total.......................................... 18,896 39,561 6,402 15,501
</TABLE>
Currently, small- to medium-sized businesses generate the majority of
VersaTel's revenues. We have also derived increasing amounts of revenue from
providing services, including switched voice and co-location services, to other
telecommunications, data and Internet service providers. As a result of our
acquisition of Svianed a substantial portion of our revenues will be derived
from providing data- and Internet services to larger customers. We have recently
changed our approach to reaching residential customers by offering carrier
select hosting services to switchless resellers, who themselves target the
residential market. We believe that this approach is a more cost-effective way
of reaching residential customers. As our network expands and as we have
available capacity, we intend to increase our marketing efforts in the carrier
services segment to increase the use of our network and to capture revenues and
margins from markets we do not target directly.
Our revenues, which are derived both from minutes of telecommunications
traffic billed and fixed fees, are allocated to the period in which the traffic
or fees have occurred. We expect that the percentage of our revenues
attributable to fixed fees will increase in future periods principally as a
result of the Svianed acquisition. We generally price our telecommunications
services at a discount to the local PTTs and expect to continue this pricing
strategy as we expand our operations. In general, PTTs have been reducing their
rates over the last several years. As a result, we have experienced and expect
to continue to experience declining revenues per minute. KPN Telecom reduced its
prices per minute of telecommunications traffic billed in May and July 1998 and
most recently in January 1999 and May 1999 with reductions of approximately
10.0%, 15.0%, 10.0% and 20.0%, respectively, which are expected to have an
adverse impact on margins in the near term. Additionally, we expect to increase
our national billable minutes, which are priced at lower rates than
international minutes. As national and wholesale billable minutes increase as a
percentage of total billable minutes, average revenue per billable minute will
further decline. However, due to technological improvements, liberalization of
the European telecommunications market and increased available transmission
capacity, both from third parties and as we build out our network, we expect
costs per minute to decline as well. Management believes that the decline of per
minute prices will out-pace the decline in per minute costs in 1999, resulting
in downward pressure on operating margins. Management believes that over the
long term, this trend will reverse and operating margins will thereby improve;
however, there can be no assurances that this will occur. If reductions in costs
do not in fact out-pace reductions in revenues, VersaTel may experience a
substantial reduction in its margins on calls which, absent a significant
increase in billable minutes of traffic carried or increased charges for other
services, would have a material adverse effect on our business and financial
results. In addition, the introduction of the euro may lead to a greater
transparency for prices in the European telecommunications market, which may
lead to further competition and price decreases.
45
<PAGE> 52
COST OF REVENUES
Our cost of revenues derived from telecommunications services is comprised
of origination costs, certain network costs and termination costs and is both
fixed and variable. Origination costs represent the cost of carrying traffic
from the customer to our network. Origination charges for calls transported to
our network are variable and are incurred on a per minute basis, including the
call set-up charges. Origination charges for business and residential customers
are charged by the PTTs to VersaTel.
We have experienced a significant decrease in origination costs and expect
that these will continue to decrease significantly over time due to competition
and regulatory orders. In July 1998, the Netherlands regulatory authority
Onafhankelijke Post en Telecommunicatie Autoriteit ("OPTA"), ruled that
origination and termination charges be reduced by 55% and 30%, respectively. In
addition, as we continue to build out our network, we intend to connect directly
as many business customers as economically feasible to the network, thereby
eliminating origination charges for these customers. These decreases would be
offset to some extent by amortization and depreciation charges associated with
the construction of our network. There can be no assurance that the trend in
decreasing access costs will continue. As a result, if origination costs do not
continue to decrease, anticipated decreases in revenues per minute would cause
us to experience a decline in gross margins per billable minute which would have
a material adverse effect on our business and financial performance.
Network costs represent the cost of transporting traffic between our
switches and points of interconnection and consist of depreciation and
amortization costs and the cost of leased lines. To date, our network costs and
Svianed's network costs have primarily consisted of the cost of leased lines as
well as, in the case of Svianed, Internet uplink costs. In the near term, we
expect that Svianed's network costs will increase our fixed costs as a
percentage of cost of revenues. However, as we continue to build out our
network, we expect depreciation and amortization costs to increase. We expect
this increase to be off-set, at least partially, by a reduction in the cost of
leased lines. In addition, as we provision Svianed's traffic onto our network,
we will experience a significant reduction in the cost of leased lines currently
attributable to Svianed. Depreciation and amortization costs are not included in
cost of revenues. As a result, network costs as a percentage of cost of revenues
will decline. See "-- Depreciation and Amortization."
Termination costs are the per minute costs associated with using carriers
to carry a call from the point of interconnection to the final destination.
Through least-cost routing, our switches direct calls to the most cost-efficient
carrier for the required destination. As we build out our network to new points
of interconnection, we expect to be able to reduce average termination costs per
minute. For example, once VersaTel establishes a direct link from Amsterdam to
Rotterdam, VersaTel will no longer pay for national termination costs on that
route and will only pay local and regional termination costs from the point of
interconnection in Rotterdam to the final destination in that city. We also
believe that per minute termination costs will continue to decrease due to
several additional factors, including: (i) the incremental build out of our
network, which will increase the number of carriers with which we interconnect;
(ii) the increase of minutes originated by VersaTel, which should lead to higher
volume discounts available to VersaTel; (iii) more rigorous implementation of
the European Commission directives requiring cost-based termination rates and
leased line rates; and (iv) the emergence of new telecommunication service
providers and the construction of new transmission facilities, which should
result in increased competition. There can be no assurance, however, that the
trend of decreasing termination costs will continue.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses are comprised primarily of
salaries, employee benefits, office and administrative expenses, professional
and consulting fees and marketing costs. These expenses have increased as we
have developed and expanded our workforce, and they are expected to continue to
46
<PAGE> 53
increase as we expand and establish new operations. Selling, general and
administrative expenses as a percentage of revenue will continue to vary from
period to period as a result of start-up costs relating to expansion into new
regions. Although we believe that all options issued for employees were issued
at their current fair market value. We may also incur additional compensation
expenses during the current and future fiscal periods attributable to (i) the
issuance of options to employees to the extent that the exercise prices thereof
are deemed to be below the fair market value thereof, and (ii) the issuance of
ordinary shares to employees at a discounted price in connection with this
offering.
We have grown substantially since our inception and we intend to continue
to grow by adding more sales, marketing and customer support staff and by
establishing additional sales offices. This growth involves substantial training
and start-up costs, a large portion of which will be reflected as fixed costs
and will be recorded as selling, general and administrative charges.
Accordingly, our results of operations will vary depending on the timing and
speed of our expansion strategy and, during a period of rapid expansion,
selling, general and administrative expenses will be relatively higher than
during more stable periods of growth. See "Business -- Sales and
Marketing -- Sales and Marketing Staff."
We expect that we will incur a one-time charge during the second and or
third quarters of the current fiscal year in connection with the Settlement
Agreement which will be comprised of (i) the difference between the NLG 7.50
price of the 200,000 shares issued to Cromwilld pursuant to the Settlement
Agreement and the fair market value of those shares, and (ii) legal and other
expenses incurred in connection therewith.
DEPRECIATION AND AMORTIZATION
VersaTel capitalizes and depreciates its fixed assets, including switching
equipment and fiber optic cable, over periods ranging from 3 to 25 years. In
addition, VersaTel capitalizes and amortizes the cost of installing dialers at
customer sites. The development of our network will require large capital
expenditures and larger depreciation charges in the future. Increased capital
expenditures will adversely affect our future operating results due to increased
depreciation charges and interest expense. See "Business -- Strategy" and
"Business -- Network."
FOREIGN EXCHANGE
VersaTel has substantial U.S. dollar denominated assets and liabilities and
its revenues are generated and costs incurred in certain other currencies,
primarily the Dutch guilder. VersaTel is therefore exposed to fluctuations in
the U.S. dollar and other currencies, which may result in foreign exchange gains
and/or losses. As both The Netherlands and Belgium have adopted the euro,
VersaTel will no longer be exposed to any fluctuations between the Dutch guilder
and the Belgian franc. At this moment only a limited number of equipment
purchases and consultancy activities are billed to VersaTel in currencies other
than Dutch guilders. VersaTel from time to time hedges a portion of its foreign
currency risk in order to lock into a rate for a given time.
RESULTS OF OPERATIONS
FOR THE 3 MONTHS ENDED MARCH 31, 1999 COMPARED TO THE 3 MONTHS ENDED MARCH 31,
1998
REVENUES increased by NLG 9.1 million to NLG 15.5 million for the 3 months
ended March 31, 1999 from NLG 6.4 million for the 3 months ended March 31, 1998,
representing an increase of 142.1%. The growth in revenues resulted primarily
from the addition of new customers, the introduction of national long distance
services in The Netherlands, the acquisition of CS Net, the introduction of
services in Belgium and an increase in wholesale traffic. Revenues for the 3
months ended March 31, 1999 as compared to the same period in 1998 were
negatively impacted by general price reductions initiated by KPN Telecom in May
1998, July 1998 and, most recently, January 1999 of approximately
47
<PAGE> 54
10.0%, 15.0% and 10%, respectively. VersaTel responded to these price reductions
by reducing its own prices, and VersaTel's revenues would have been higher
without such price reductions.
Billable minutes of use increased by 56.8 million to 69.2 million for the 3
months ended March 31, 1999 from 12.4 million for the 3 months ended March 31,
1998, representing an increase of 456.3%. The number of customers increased by
5,713 to 8,694 for the 3 months ended March 31, 1999 from 2,981 as of March 31,
1998.
COST OF REVENUES increased by NLG 7.0 million to NLG 12.5 million for the 3
months ended March 31, 1999 from NLG 5.5 million for the 3 months ended March
31, 1998, primarily reflecting an increase in billable minutes, increasing
interconnect capacity and short-term network capacity requirements (leased
lines) in Belgium. This increase was partially offset by declines in per minute
international termination and origination costs resulting from the migration of
customers from the DISA and VPN codes to the "1611" carrier select code.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased by NLG 14.7 million
to NLG 20.2 million for the 3 months ended March 31, 1999 from NLG 5.5 million
for the 3 months ended March 31, 1998, representing an 264.0% increase. This
primarily resulted from an increase in the cost of staff (including temporary
personnel and consultants) in the areas of network operations, customer service,
sales and marketing, installation services, accounting personnel, additional
facilities cost, expenses related to the expansion of our Belgium operations and
additional expenses as a result of the acquisition of CS Net.
DEPRECIATION AND AMORTIZATION EXPENSES increased by NLG 2.0 million to NLG
3.1 million for the 3 months ended March 31, 1999 from NLG 1.1 million for the 3
months ended March 31, 1998. This increase was primarily related to capital
expenditures incurred in connection with the deployment of an additional Nortel
DMS 100 switch in Antwerp, the expansion and deployment of the network and an
increase in the number of dialers installed due to customer growth and the
purchase of computer equipment and office furniture for new employees.
CURRENCY EXCHANGE LOSSES, NET, increased by NLG 40.2 million to NLG 40.3
million for the 3 months ended March 31, 1999 from NLG 0.1 million for the 3
months ended March 31, 1998 as a result of a net loss of VersaTel's U.S. dollar
denominated assets and liabilities on the balance sheet.
INTEREST INCOME increased by approximately NLG 6.0 million to NLG 6.0
million for the 3 months ended March 31, 1999 from NLG 14.0 thousand for the 3
months ended March 31, 1998. This increase was primarily related to VersaTel's
positive cash balance as a result of the First High Yield Offering and the
Second High Yield Offering.
INTEREST EXPENSE increased by NLG 23.7 million to NLG 23.9 million for the
3 months ended March 31, 1999 from NLG 0.2 million for the 3 months ended March
31, 1998. This increase is primarily related to the accrual of interest expense
on the Existing Notes.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE FISCAL YEAR ENDED
DECEMBER 31, 1997
REVENUES increased by NLG 20.7 million to NLG 39.6 million for the fiscal
year ended December 31, 1998 from NLG 18.9 million for the fiscal year ended
December 31, 1997, representing an increase of 109.4%. The growth in revenues
resulted primarily from the addition of new customers, the introduction of
national long distance services in The Netherlands, the acquisition of CS Net,
the introduction of services in Belgium and an increase in wholesale traffic.
Revenues for the fiscal year ended December 31, 1998 as compared to the same
period in 1997 were negatively impacted by general price reductions initiated by
KPN Telecom in May 1998 and July 1998 of approximately 10.0% and approximately
15.0%, respectively. VersaTel responded to these price reductions by reducing
its own prices and VersaTel's revenues would have been higher without such price
reductions.
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<PAGE> 55
Billable minutes of use increased by 98.2 million to 121.6 million for the
fiscal year ended December 31, 1998 from 23.4 million for the fiscal year ended
December 31, 1997, representing an increase of 420.5%. The number of customers
increased by 4,828 to 6,887 as of December 31, 1998 from 2,059 as of December
31, 1997.
COST OF REVENUES increased by NLG 14.4 million to NLG 31.8 million for the
fiscal year ended December 31, 1998 from NLG 17.4 million for the fiscal year
ended December 31, 1997, primarily reflecting an increase in billable minutes,
increasing interconnect capacity and short-term network capacity requirements
(leased lines) in Belgium. This increase was partially offset by declines in per
minute international termination and origination costs resulting from the
migration of customers from the DISA and VPN codes to the "1611" carrier select
code.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE increased by NLG 30.2 million
to NLG 47.7 million for the fiscal year ended December 31, 1998 from NLG 17.5
million for the fiscal year ended December 31, 1997, representing an 172.3%
increase. This primarily resulted from an increase in the cost of staff
(including temporary personnel and consultants) in the areas of network
operations, customer service, sales and marketing, installation services,
accounting personnel, a major brand advertising campaign and one time related
start-up expenses for Belgium operations network expenses.
DEPRECIATION AND AMORTIZATION EXPENSES increased by NLG 3.3 million to NLG
6.5 million for the fiscal year ended December 31, 1998 from NLG 3.2 million for
the fiscal year ended December 31, 1997. This increase was primarily related to
capital expenditures incurred in connection with the deployment of the Nortel
DMS 100 switches in Amsterdam and Antwerp, the expansion and deployment of the
network and an increase in the number of dialers installed due to customer
growth and the purchase of computer equipment and office furniture for new
employees.
CURRENCY EXCHANGE GAINS, NET, increased to NLG 5.1 million for the fiscal
year ended December 31, 1998 from a loss of NLG 53,000 for the fiscal year ended
December 31, 1997 as a result of the net gains of VersaTel's U.S. dollar
denominated assets and liabilities on the balance sheet.
INTEREST INCOME increased by approximately NLG 11.9 million to NLG 11.9
million for the fiscal year ended December 31, 1998 from NLG 21,000 for the
fiscal year ended December 31, 1997. This increase was primarily related to
VersaTel's positive cash balance as a result of the First High Yield Offering
and the Second High Yield Offering.
INTEREST EXPENSE increased by NLG 37.1 million to NLG 37.7 million for the
fiscal year ended December 31, 1998 from NLG 0.6 million for the fiscal year
ended December 31, 1997. This increase is primarily related to the accrual of
interest expense on the Existing Notes.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE FISCAL YEAR ENDED
DECEMBER 31, 1996
REVENUES increased by NLG 12.5 million to NLG 18.9 million in the fiscal
year ended December 31, 1997 from NLG 6.4 million in the fiscal year ended
December 31, 1996, representing a 194.0% increase. The growth in revenues
resulted primarily from an increased number of customers, as well as increased
usage from existing customers. In both years, all revenues were generated in The
Netherlands.
Billable minutes of use increased by 16.9 million to 23.4 million in the
fiscal year ended December 31, 1997 from 6.5 million in the fiscal year ended
December 31, 1996, representing a 260.1% increase. The number of customers
increased by 1,389 to 2,059 as of December 31, 1997, from 670 as of December 31,
1996.
VersaTel's revenues in 1997 were negatively impacted by KPN Telecom's in
June 1997 introduction of a volume-based business customer discount plan
allowing for discounts of approximately 10.0% and by a general price reduction
in October 1997 of approximately 28.0%. In order to maintain VersaTel's price
discount relative to KPN Telecom's prices, VersaTel also introduced a discount
plan in June 1997 and
49
<PAGE> 56
again reduced its prices in October 1997. As a result of the overall reduction
in prices, VersaTel's revenues for the fourth quarter of 1997 were 13.0% lower
than its revenues of NLG 5.3 million for the third quarter of 1997. However,
billable minutes of use for the fourth quarter were 14.4% higher than the
billable minutes of use for the third quarter. VersaTel expects KPN Telecom to
continue to lower its prices and create new discount plans on a regular basis
and VersaTel expects to adjust its pricing accordingly.
COST OF REVENUES increased by NLG 12.4 million to NLG 17.4 million in the
fiscal year ended December 31, 1997 from NLG 5.0 million in the fiscal year
ended December 31, 1996, representing a 251.3% increase. As a percentage of
revenues, cost of revenues increased to 92.1% in the fiscal year ended December
31, 1997 from 77.1% in the fiscal year ended December 31, 1996, primarily as a
result of tariff reductions by VersaTel to respond to those implemented by KPN
Telecom which exceeded reductions in origination and termination costs.
VersaTel's revenues for the 3 months ended December 31, 1997 were
negatively impacted by a case of fraud in October 1997, which VersaTel estimates
affected approximately 4 days of customer traffic. The fraud involved the
unauthorized use of one of VersaTel's test codes. As a result, a large number of
calls were originated, primarily through ethnic calling shops, over the course
of 4 days and the associated origination and termination costs of NLG 0.6
million were expensed as miscellaneous operating expenses. In addition, as a
result of excessive call volumes, some customers were unable to complete calls
through our network and reverted to KPN Telecom for service. VersaTel lost
revenues from such customers and offered credits to these customers to cover the
price differential between KPN Telecom and VersaTel retroactively. As a result,
VersaTel estimates the total losses from the incident to be approximately NLG
1.0 million. VersaTel has filed the case with the local police authorities.
VersaTel believes that the risk of future fraud has been reduced with the
introduction of the "1611" access code (which prevents the type of fraud that
occurred from the unauthorized use of a test code from occurring) and by
tracking multiple calls with the same access code.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased by NLG 12.0 million
to NLG 17.5 million in the fiscal year ended December 31, 1997 from NLG 5.5
million in the fiscal year ended December 31, 1996, primarily as a result of
VersaTel's increased sales, and an increase in customer service, billing,
collections and accounting staff required to support revenue growth. Staff
levels grew by 38, to 70 employees at December 31, 1997 from 32 employees at
December 31, 1996, an increase of approximately 118.8%. As a percentage of
revenues, selling, general and administrative expenses increased to 92.8% in the
fiscal year ended December 31, 1997 from 85.3% in the fiscal year ended December
31, 1996, as a result of VersaTel's continuing investments in back-office
infrastructure and in people. Bad debt expense was NLG 81,000 for the fiscal
year ended December 31, 1997, or 0.4% of revenues.
DEPRECIATION AND AMORTIZATION EXPENSES increased by NLG 2.7 million to NLG
3.2 million in the fiscal year ended December 31, 1997, from NLG 0.5 million in
the fiscal year ended December 31, 1996, primarily due to increased capital
expenditures incurred in connection with the expansion and deployment of our
network.
INTEREST EXPENSE, NET increased by NLG 0.2 million to NLG 0.5 million in
the fiscal year ended December 31, 1997 from NLG 0.3 million in the fiscal year
ended December 31, 1996, primarily due to increased shareholders' loans.
50
<PAGE> 57
SVIANED
OVERVIEW
Svianed is the third largest provider of data services in The Netherlands
in terms of revenues. Svianed provides its data services to 50 customers,
primarily in the financial services and banking industry, including the
principal social insurance organization and the largest financial institution in
The Netherlands. These customers are served on a network which connects to over
600 buildings and utilizes over 700 leased lines covering approximately 6,000
kilometers. The Svianed network has 50 regional points of presence and
transports traffic at speeds of up to 150 Mbps.
Svianed has evolved from an internal unit responsible for network
management within the Gak Group into a company that provides data, voice and
value added network services to both the Gak Group as well as other customers.
Svianed was incorporated as a separate company in July 1995. The Gak Group is
responsible for the execution of and payments under a number of social insurance
laws in The Netherlands, such as the Unemployment Act and the Disability Act. In
addition, the Gak Group offers insurance services on a commercial basis to a
wide variety of clients.
REVENUES
Svianed's revenues are currently derived primarily from the provision of
data services in The Netherlands. Svianed's revenues to date have been derived
mostly from fixed monthly fees under long term contracts. In addition, Svianed
derives a portion of its revenues from minutes of telecommunications traffic
billed. Svianed's revenues are derived from data, voice and value added network
services and are generated primarily from large-sized customers.
Prior to 1996, all of Svianed's revenues were derived from the Gak Group.
In 1996, Svianed started generating revenues from other customers. In 1998,
39.2% of Svianed's revenues were derived from other customers, compared to 29.0%
in 1997 and 16.0% in 1996. The following table sets forth the total revenues
attributable to Svianed's operations for the year ended December 31, 1997 and
December 31, 1998 and for the 3 months ended March 31, 1998 and March 31, 1999,
as well as a break down of revenues from the Gak Group versus other customers
for such periods.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------- ------------------
1997 1998 1998 1999
------- -------- ------- -------
(NLG IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUES BY SERVICE
Data.......................................... 29,213 36,016 6,757 10,305
Voice......................................... 14,300 18,439 4,625 4,395
Value Added Network Services.................. 1,598 2,228 460 879
------ ------- ------- -------
Total...................................... 45,111 56,683 11,842 15,579
REVENUES BY CUSTOMER
Gak Group..................................... 32,037 34,460 8,467 9,429
Others........................................ 13,074 22,223 3,375 6,150
------ ------- ------- -------
Total...................................... 45,111 56,683 11,842 15,579
</TABLE>
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<PAGE> 58
In 1997 and 1998, almost all of Svianed's revenues were generated in The
Netherlands. The geographical composition of Svianed's revenues for the fiscal
years ended December 31, 1997 and December 31, 1998 and for the 3 months ended
March 31, 1998 and March 31, 1999 was as follows:
<TABLE>
<CAPTION>
THREE MONTHS
FISCAL YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
------------------ ----------------
1997 1998 1998 1999
------- ------- ------ ------
(NLG IN THOUSANDS)
<S> <C> <C> <C> <C>
The Netherlands.................................... 45,071 56,022 11,746 15,414
Belgium............................................ 40 661 96 165
------ ------ ------ ------
Total......................................... 45,111 56,683 11,842 15,579
</TABLE>
COST OF REVENUES
Svianed's cost of revenues is primarily fixed and consists of the cost of
leased lines and internet uplink costs. Currently, almost all of Svianed's
leased lines are leased from KPN Telecom. The prices for such leased lines are
set by OPTA. As a reseller of voice traffic, a portion of Svianed's cost of
revenues is also variable on a per minute basis.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses are comprised primarily of
salaries, employee benefits, office and administrative expenses and overhead
charges from the Gak Group as well as other charges for services and facilities
provided by the Gak Group. These expenses have increased as Svianed has
developed and expanded its workforce. Selling, general and administrative
expenses as a percentage of revenue have remained stable over the last years.
DEPRECIATION AND AMORTIZATION
Svianed capitalizes and depreciates its fixed assets, including its Cisco
routers and Newbridge Frame Relay and ATM switches, over periods ranging from 2
to 5 years.
FOREIGN EXCHANGE
Almost all of Svianed's revenues are generated in Dutch guilders and all of
its assets and liabilities are denominated in Dutch guilders. However, a
majority of equipment purchases are billed to Svianed in currencies other than
Dutch guilders.
RESULTS OF OPERATIONS
FOR THE 3 MONTHS ENDED MARCH 31, 1999 COMPARED TO THE 3 MONTHS ENDED MARCH 31,
1998
REVENUES increased by NLG 3.8 million to NLG 15.6 million for the 3 months
ended March 31, 1999 from NLG 11.8 million for the 3 months ended March 31,
1998, representing an increase of 31.6%. The growth in revenues resulted
primarily from the addition of new customers and additional revenues from
existing customers.
Revenues generated from services provided to the Gak Group increased by NLG
0.9 million to NLG 9.4 million for the 3 months ended March 31, 1999 from NLG
8.5 million for the 3 months ended March 31, 1998, representing an increase of
11.4%. Revenues generated from services provided to other customers increased by
NLG 2.8 million to NLG 6.2 million for the 3 months ended March 31, 1999 from
NLG 3.4 million for the 3 months ended March 31, 1998, representing an increase
of 82.2%.
COST OF REVENUES increased by NLG 0.3 million to NLG 6.6 million for the 3
months ended March 31, 1999 from NLG 6.3 million for the 3 months ended March
31, 1998, primarily reflecting an increase in the number of leased lines. This
increase was partially offset by declines in prices per leased
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<PAGE> 59
line. In addition, Internet uplink costs increased as a result of increased
capacity requirements, which was partially off-set by a decrease in the cost per
Mb for this capacity.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE increased by NLG 1.3 million to
NLG 3.7 million for the 3 months ended March 31, 1999 from NLG 2.4 million for
the 3 months ended March 31, 1998, representing a 52.5% increase. This increase
primarily resulted from an increase in the cost of staff.
DEPRECIATION AND AMORTIZATION EXPENSES increased by NLG 0.6 million to NLG
2.5 million for the 3 months ended March 31, 1999 from NLG 1.9 million for the 3
months ended March 31, 1998. This increase was primarily related to capital
expenditures incurred in connection with the investments in customer-related
equipment and investments in the expansion of the network.
INTEREST INCOME increased by NLG 10,000 to NLG 26,000 for the 3 months
ended March 31, 1999 from NLG 16,000 for the 3 months ended March 31, 1998. This
increase was primarily due to an increase in Svianed's positive cash balance.
INTEREST EXPENSE increased by NLG 34,000 to NLG 138,000 for the 3 months
ended March 31, 1999 from NLG 104,000 for the 3 months ended March 31, 1998.
This increase was primarily due to a loan of Gak Holding B.V.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE FISCAL YEAR ENDED
DECEMBER 31, 1997
REVENUES increased by NLG 11.6 million to NLG 56.7 million for the fiscal
year ended December 31, 1998 from NLG 45.1 million for the fiscal year ended
December 31, 1997, representing an increase of 25.7%. The growth in revenues
resulted primarily from the addition of new customers and additional revenues
from existing customers.
Revenues generated from services provided to the Gak Group increased by NLG
2.5 million to NLG 34.5 million for the fiscal year ended December 31, 1998 from
NLG 32.0 million for the fiscal year ended December 31, 1997, representing an
increase of 7.6%. Revenues generated from services provided to other customers
increased by NLG 9.1 million to NLG 22.2 million for the fiscal year ended
December 31, 1998 from NLG 13.1 million for the fiscal year ended December 31,
1997, representing an increase of 70.0%.
COST OF REVENUES increased by NLG 3.3 million to NLG 26.9 million for the
fiscal year ended December 31, 1998 from NLG 23.6 million for the fiscal year
ended December 31, 1997, primarily reflecting an increase in the number of
leased lines. This increase was partially offset by declines in prices per
leased line. In addition, Internet uplink costs increased as a result of
increased capacity requirements, which was partially off-set by a decrease in
the cost per Mb for this capacity.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE increased by NLG 3.6 million to
NLG 11.9 million for the fiscal year ended December 31, 1998 from NLG 8.3
million for the fiscal year ended December 31, 1997, representing an 42.7%
increase. This increase primarily resulted from an increase in the cost of
staff.
DEPRECIATION AND AMORTIZATION EXPENSES increased by NLG 2.0 million to NLG
8.8 million for the fiscal year ended December 31, 1998 from NLG 6.8 million for
the fiscal year ended December 31, 1997. This increase was primarily related to
capital expenditures incurred in connection with the investments in
customer-related equipment and investments in the expansion of the network.
INTEREST INCOME decreased by NLG 26,000 to NLG 85,000 for the fiscal year
ended December 31, 1998 from NLG 111,000 for the fiscal year ended December 31,
1997. This decrease was primarily due to a decrease in Svianed's positive cash
balance.
INTEREST EXPENSE decreased by NLG 107,000 to NLG 435,000 for the fiscal
year ended December 31, 1998 from NLG 542,000 for the fiscal year ended December
31, 1997. This decrease is primarily due to the repayment of an outstanding
loan.
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<PAGE> 60
LIQUIDITY AND CAPITAL RESOURCES
We have incurred significant operating losses and negative cash flows as a
result of the development of our business and network. Prior to the First High
Yield Offering, VersaTel had financed its growth primarily through equity and
subordinated loans from its shareholders. In May 1998, VersaTel issued notes and
warrants in the First High Yield Offering and raised net proceeds, after
transaction expenses, of $216.2 million, $80.6 million of which was invested in
U.S. government securities placed in escrow to fund the first 6 interest
payments on the notes issued in the First High Yield Offering. In December 1998,
VersaTel issued notes and warrants in the Second High Yield Offering and raised
net proceeds, after transaction expenses, of $139.5 million, $45.7 million of
which was invested in U.S. government securities placed in escrow to fund the
first 5 interest payments on the notes issued in the Second High Yield Offering.
VersaTel has since used a significant amount of the remaining net proceeds of
the First High Yield Offering and the Second High Yield Offering to make capital
expenditures related to the expansion and development its network, to fund
operating losses and for other general corporate purposes. On June 11, 1999,
VersaTel borrowed $131.25 million in Interim Loans from Lehman Commercial Paper
Inc., an affiliate of Lehman Brothers Inc. and Lehman Brothers International
(Europe), and $18.75 million in Interim Loans from ING (U.S.) Capital, LLC, an
affiliate of each of ING Barings Limited and ING Barings LLC. The proceeds of
the Interim Loans, together with remaining proceeds from the Existing Notes,
were used to fund the purchase price of Svianed of approximately NLG 362.5
million. The Interim Loans bear interest at a minimum rate of 10.5% per annum
and mature on June 10, 2000. The proceeds from the issuance of the Notes offered
hereby will be used in part to repay the Interim Loans in full.
The general rate of inflation has been low in the Benelux in recent years.
We do not expect that inflationary pressures in the future, if any, will have a
material effect on our results of operations or financial condition.
Although we currently maintain significant cash balances, we will require
substantial additional capital to continue funding the expansion and development
of our network, including the expansion of local access infrastructure. Also, we
are continually re-evaluating our business objectives and are considering
further expansions of our services and the acceleration of our network
construction. We expect that the net proceeds of this offering and the Equity
Offering, combined with the Nortel Facility and the remaining proceeds from the
First High Yield Offering and the Second High Yield Offering and together with
other available financings and cash flows from operations, will provide us with
sufficient capital to fund planned capital expenditures and anticipated losses
for the next 12 months. We expect to raise additional funds through public or
private financings or from financial institutions.
We will be required to meet our debt service obligations on the Notes out
of cash reserves and net cash flow beginning in February 2000. In addition,
starting November 15, 2001, our funds that have been placed in escrow to cover
interest payments on the Existing Notes will have been exhausted. As a result,
we will need to increase substantially our net cash flow in order to meet our
debt service obligations.
To date, VersaTel has made limited use of bank facilities and capital lease
financing. In May 1999, VersaTel has reached an agreement with Nortel, pursuant
to which Nortel will extend vendor financing to VersaTel of up to E45.4 million
(approximately NLG 100.0 million) to be used to finance the purchase of
equipment from Nortel. To date, no amounts have been drawn under this facility.
VersaTel may seek to raise senior secured debt financing in the future to fund
the expansion of its network and for general corporate purposes.
Net cash provided by operating activities was NLG 9.8 million for the 3
months ended March 31, 1999 compared to NLG 0.9 million for the 3 months ended
March 31, 1998. This increase was primarily the result of an increase in current
liabilities which exceeded the operating loss incurred during the first quarter
of 1999. Net cash provided by operating activities was NLG 37.3 million for the
fiscal year ended
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December 31, 1998 compared to NLG 5.8 million for the fiscal year ended December
31, 1997. This increase was primarily the result of operating losses incurred
during 1998.
Net cash used in investing activities was NLG 52.2 million in the 3 months
ended March 31, 1999 and NLG 2.4 million in the 3 months ended March 31, 1998.
Net cash used in investing activities was NLG 82.0 million in the fiscal year
ended December 31, 1998 and NLG 14.5 million in the fiscal year ended December
31, 1997. Substantially all the cash utilized by investing activities in both
fiscal years resulted from an increase in capital expenditures to expand our
network. We do not expect any material disruption nor any material expenditures
in connection with the transition of its billing and information systems to the
year 2000.
Net cash used in financing activities was NLG 14.0 thousand in the 3 months
ended March 31, 1999 and NLG 7.1 million in the 3 months ended March 31, 1998.
Net cash provided by financing activities in the 3 months ended March 31, 1998
resulted mainly from NLG 7.2 million of prepaid capital contributions from 2 of
our shareholders. Net cash provided by financing activities was NLG 490.0
million in the fiscal year ended December 31, 1998 and NLG 5.8 million in the
fiscal year ended December 31, 1997. Net cash provided by financing activities
in the fiscal year ended December 31, 1998, resulted mainly from NLG 419.6
million raised in the First High Yield Offering and NLG 268.5 million raised in
the Second High Yield Offering. Net cash provided by financing activities for
the year ended December 31, 1998, does not include the NLG 211.6 million of the
proceeds of the First High Yield Offering and the Second High Yield Offering
which is still invested in U.S. government securities and placed in escrow to
fund the remaining interest payments on the Existing Notes until and including
May 15, 2001. Net cash provided by financing activities in the fiscal year ended
December 31, 1997 resulted mainly from NLG 1.5 million of capital contributions
and NLG 4.5 million of subordinated loans obtained from one of our shareholders.
In February 1998, as part of a recapitalization, 2 of the 3 shareholders of
VersaTel, Telecom Founders B.V. and NeSBIC Venture Fund C.V., a subsidiary of
Fortis, invested an additional NLG 7.2 million in equity capital in VersaTel.
Although this contribution was received in February 1998, the formal
shareholders meeting approving the amount to be labeled as capital was not
executed until April 17, 1998. In addition, NeSBIC and Cromwilld converted their
subordinated convertible shareholder loans totaling NLG 3.6 million into
ordinary shares of VersaTel, and NeSBIC converted its NLG 4.5 million bridge
loan into ordinary shares of VersaTel. The third component of this
recapitalization was comprised of a new equity investment by Paribas
Deelnemingen N.V. of NLG 12.8 million. Lastly, VersaTel received from Telecom
Founders, NeSBIC, Paribas Deelnemingen N.V. and Nederlandse Participatie
Maatschappij an additional NLG 15.0 million in equity capital immediately prior
to the closing of the First High Yield Offering. As a result of this
recapitalization, VersaTel's share capital increased from NLG 7.0 million to NLG
50.1 million. See "Principal Shareholders."
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our financial department manages our funding, liquidity and exposure to
foreign exchange rate risks. It is our policy not to enter into any transactions
of a speculative nature.
Our debt obligations that are denominated in U.S. dollars expose us to
risks associated with changes in the exchange rates between the U.S. dollar and
the Dutch guilder and Belgian franc (which currencies are now both pegged to the
euro) in which our revenues are denominated. However, in conjunction with the
First High Yield Offering and the Second High Yield Offering, we have placed in
escrow and pledged for the benefit of the holders of the Existing Notes U.S.
government securities sufficient to pay interest due on the Existing Notes until
and including the scheduled interest payment on May 15, 2001. The Existing Notes
will mature on May 15, 2008 and VersaTel is not required to make any mandatory
redemptions (other than an offer to repurchase the Notes upon a change in
control of VersaTel) prior to maturity of the Existing Notes. Since the interest
rates on each of the First Notes and the Second Notes
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<PAGE> 62
is fixed, we have limited our exposure to risks due to fluctuations of interest
rates. At March 31, 1999 the fair value of the Existing Notes outstanding was
approximately $390.0 million.
The costs and expenses relating to the construction of our Network and the
development of our sales and marketing resources will largely be in Dutch
guilders, Belgian francs and, increasingly, euros. Therefore, the construction
of our network and the development of our sales and marketing resources will
also be subject to currency exchange rate fluctuations as we exchange the
proceeds from the First High Yield Offering and the Second High Yield Offering
to pay our construction costs. However, as of March 31, 1999 we had exchanged
all but $11.2 million of the proceeds from the First High Yield Offering and the
Second High Yield Offering into Dutch guilders. Prior to the application of the
net proceeds from the First High Yield Offering and the Second High Yield
Offering, such funds have been invested in short-term investment grade
securities. VersaTel from time to time hedges a portion of its foreign currency
risk in order to lock into a rate for a given time. In addition, we will become
subject to greater foreign exchange fluctuations as we expand our operations
outside The Netherlands and receive more revenues denominated in currencies
other than Dutch guilders, although the introduction of the euro has largely
eliminated these risks as all 3 Benelux countries have adopted the euro as their
legal currency. See "Exchange Rate Information -- European Monetary Union."
RISKS ASSOCIATED WITH THE YEAR 2000
The Year 2000 issue is the result of computer programs using 2 digits
rather than 4 to define the applicable year. Because of this programming
convention, software, hardware or firmware may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in system failures,
miscalculations or errors causing disruptions of operations or other business
problems, including, among others, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
THE YEAR 2000 AND VERSATEL'S READINESS
We have initiated a formal Year 2000 project and recruited an experienced
Year 2000 project manager. We are undertaking a comprehensive program to address
the Year 2000 issue with respect to the following:
- our information technology systems,
- the telephony switching network (including equipment installed at
customers' premises),
- our non-information technology systems (including buildings, plant,
equipment, and other infrastructure systems that may contain embedded
microcontroller technology),
- the systems of our major vendors (insofar as they relate to our
business), and
- our customers.
This program involves 4 "Steps": (1) a wide ranging assessment of Year 2000
problems that might affect VersaTel; (2) the development and implementation of
remedies to address discovered problems; (3) the testing of our systems where
necessary; and (4) an analysis of the most likely worst case scenario and the
preparation of contingency plans. We expect to complete Steps 1 and 2 of this
program during the second quarter of 1999 and Steps 3 and 4 during the third
quarter of 1999.
STEPS 1-2: ASSESSMENT OF YEAR 2000 ISSUES, DEVELOPMENT AND IMPLEMENTATION OF
REMEDIES
THE INFORMATION TECHNOLOGY SYSTEMS. VersaTel is currently undergoing a
major program to replace all of its existing operating support systems for
billing, customer care and mediation and expects to have completed the
replacement program by the end of the third quarter of 1999. In selecting the
new operating support systems, VersaTel asks for guarantees of Year 2000
compliance from its manufacturers. VersaTel is also checking all its custom
designed software for Year 2000 compliance.
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VersaTel uses Windows 95 and Windows NT 4.0 as its operating systems.
VersaTel expects to upgrade all of its Windows 95 operating systems to Windows
98, which is Year 2000 compliant, during the second quarter of 1999. VersaTel
expects to install the latest service pack for its NT 4.0 operating system,
which is Year 2000 compliant, during the second quarter of 1999. VersaTel does
not presently use any other desktop or server operating systems.
THE TELEPHONY SWITCHING NETWORK. VersaTel has consulted with Nortel, the
manufacturer of its DMS 100 telephony switches and transport layer, and believes
that Nortel's equipment is Year 2000 compliant. VersaTel has requested a
guarantee from Nortel regarding this compliance. We have requested a similar
guarantee from Cisco Systems, our supplier of router switches and certain other
equipment.
THE NON-INFORMATION TECHNOLOGY SYSTEMS. VersaTel's office buildings have
the following embedded systems: monitor alarms (intrusion and sensors),
personnel registration plus floor access, fire alarm, climate control and
electrical power maintenance (generators). VersaTel's facilities management team
is currently investigating if the embedded systems are Year 2000 compliant and
intends to ensure that they will be by the end of the second quarter of 1999.
MAJOR VENDORS' SYSTEMS. VersaTel is asking all of its major vendors to
demonstrate their approach to the Year 2000 problem and to give guarantees that
the millennium will not interrupt their services to VersaTel. VersaTel is
informing its vendors that Year 2000 compliance in their services and products
is an essential element of the existing business relationship. The managers
responsible for each vendor relationship are asking for these guarantees and the
response to date has been positive. VersaTel is now formalizing these requests,
sending letters, and compiling a list of vendors' responses.
CUSTOMERS' SYSTEMS. VersaTel's customer services department intends to
discuss with customers the Year 2000 issue, including whether or not such
customer is Year 2000 compliant and to suggest to customers that, where this
issue has not been resolved, the customer seek advice. We can give no assurances
that VersaTel's customers will either take such advice or be Year 2000 compliant
on a timely basis.
STEP 3: TESTING OF VERSATEL'S SYSTEMS
As VersaTel has tested its various systems and processes and them to be
Year 2000 compliant, it no longer plans to conduct a full operational test of
its entire business. VersaTel may, however, continue to test various systems and
processes through the remainder of the year, both on its own and together with
certain customers.
STEP 4: MOST LIKELY WORST CASE SCENARIO
VersaTel believes that the most likely worst effect of the Year 2000 issue
would be the inability of customers to complete calls. Nortel, the manufacturer
of VersaTel's switches, has conducted extensive Year 2000 tests with the EURO-8
software and has informed VersaTel that it believes VersaTel's switches are Year
2000 compliant. VersaTel has requested a guarantee from Nortel regarding this
compliance. We have requested a similar guarantee from Cisco Systems, our
supplier of router switches and certain other equipment.
If VersaTel's Year 2000 compliant billing system fails to function
correctly, VersaTel believes that bills could still be distributed by modifying
the call detail record's timestamp to reflect a pre-Year 2000 date.
The ability of VersaTel's customer care team to supply quality service
would be significantly affected if the operating support systems were not
available. Service provisioning, additional services and the development of new
customers could not continue effectively if the automated provisioning systems
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were to fail. VersaTel is asking for certificates from the manufacturers of
these systems stating that they are Year 2000 compliant.
VersaTel's ability to collect revenues depends upon certain financial
institutions' computer systems, because approximately 50.0% of its retail
customers pay by way of direct debit facilities. VersaTel is seeking assurances
from these financial institutions that they are Year 2000 compliant.
VersaTel believes that it is unlikely that any of the above situations will
occur due to the assurances of Year 2000 compliance that it expects to receive
from its vendors, software and systems programmers, customers and financial
institutions. In the event that one or more of the situations should occur,
VersaTel would attempt to rectify the problem with the appropriate entities.
However, we can give no assurance that VersaTel will be successful in obtaining
valid assurances or guarantees, that the Year 2000 issue will not have a
material adverse effect on VersaTel, that any Year 2000 effects will be resolved
or that VersaTel will be reimbursed for any additional expenditure under any of
the assurances or guarantees that it expects to obtain or otherwise.
COSTS RELATED TO THE YEAR 2000 ISSUE
To date, VersaTel has incurred approximately NLG 300,000 in costs for its
Year 2000 readiness program. A substantial portion of costs for the Year 2000
issue will be included in the replacement of the current generation of operating
support systems. VersaTel is replacing these systems to support its business
growth and not specifically to remedy the Year 2000 problem. VersaTel expects to
incur additional specific Year 2000 readiness charges that are estimated to be
less than NLG 1.0 million.
THE YEAR 2000 AND SVIANED'S READINESS
Svianed has undertaken a number of measures to ensure that its business
will not be affected as a result of the Year 2000 issue. In 1997, Svianed
appointed a project leader and made an assessment of all systems and equipment
that could potentially be affected by the Year 2000 issue. The initial focus was
to ensure that the services provided by Svianed to its customers would not be
interrupted as a result of the Year 2000 issue. The next phase was to ensure
that Svianed's management control systems would not be affected by the Year 2000
issue. Starting in mid-1997, Svianed has obtained for all its purchases of
hardware and software guarantees as to their Year 2000 compliance. In addition,
the installed base of Cisco routers and Newbridge ATM and Frame Relay switches
have been confirmed by their suppliers to be Year 2000 compliant.
Svianed relies on leased lines from KPN Telecom for the provision of its
services. Svianed understands, based on information it has received from KPN
Telecom, that KPN Telecom has commenced a Year 2000 risk analysis and has
established a remediation plan intended to ensure that KPN Telecom will be Year
2000 compliant. Svianed has received a written confirmation from KPN Telecom
that it will maximize its effort to be Year 2000 compliant. However, Svianed has
not received any guarantee from KPN Telecom as to its Year 2000 compliance, and
we can give no assurance that Svianed's network will not experience any
interruptions as a result of any failure by KPN Telecom to be Year 2000
compliant.
The most likely worst case scenario for Svianed would be a disruption of
its network management system. Svianed expects to incur costs of approximately
NLG 500,000 in connection with its Year 2000 readiness program, most of which
has already been expensed.
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BUSINESS
OVERVIEW
VersaTel is a rapidly growing, competitive network operator focused
primarily on the Benelux. Our objective is to become the leading fully
integrated provider of local access, facilities-based broadband services,
including voice, data and Internet services to our customers in this region. We
currently provide high-quality, competitively priced, telecommunications, data
and Internet services in The Netherlands and Belgium primarily to 4 targeted
market segments:
- business services -- small- and medium-sized businesses located
throughout the Benelux,
- local access services -- high bandwidth users within the Benelux which
are near and directly connected to our network,
- data services -- high bandwidth data customers with multiple sites
throughout the Benelux, and
- carrier services -- telecommunications, data and Internet service
providers.
With over 13,500 business customers and over 375 employees, we are a
leading alternative to KPN Telecom and Belgacom, the former monopoly
telecommunications carriers in The Netherlands and Belgium, respectively. Our
revenues grew from NLG 18.9 million for the year ended December 31, 1997 to NLG
39.6 million for the year ended December 31, 1998 and our revenues for the 3
months ended March 31, 1999 were NLG 15.5 million.
On June 11, 1999, we acquired Svianed, the third largest provider of data
services in The Netherlands. Svianed complements VersaTel's strategy by
providing data services to approximately 50 customers, primarily in the
financial services and banking industry, including the principal social
insurance organization and the largest financial institution in The Netherlands.
These customers are served on a network which connects to over 600 buildings and
utilizes over 700 leased lines covering approximately 6,000 kilometers. The
Svianed network has 50 regional points of presence and transports traffic at
speeds of up to 150 Mbps. Svianed had revenues of NLG 56.7 million and EBITDA of
NLG 17.9 million for the year ended December 31, 1998. For the 3 months ended
March 31, 1999, Svianed had revenues of NLG 15.6 million and EBITDA of NLG 5.2
million. The revenues for VersaTel and Svianed on a combined basis would have
been NLG 96.2 million for the year ended December 31, 1998 and NLG 31.1 million
for the 3 months ended March 31, 1999.
We are building a fully integrated broadband network to provide end-to-end
connectivity to our customers. Our network has been designed to pass through all
the major population and business centers in the Benelux and to connect city
centers, business parks and buildings along its route. Our network design
consists of 3 fully integrated elements:
- Benelux network -- multiple, integrated fiber optic rings connecting all
major population and business centers in the Benelux,
- local access infrastructure -- high bandwidth fiber optic and radio
connectivity to customers along our Benelux network route including city
centers, business parks and buildings, and
- international network -- fiber optic rings initially connecting London,
Dusseldorf, Frankfurt, Paris and the Benelux network.
As of May 31, 1999, we have constructed over 850 kilometers of our network
in the Benelux which we intend to have in service in the third quarter of 1999.
We intend to build an additional 650 kilometers of our network, including local
access infrastructure, by the end of 1999. As of May 31, 1999, our construction
passed 12 city centers, 6 business parks and 5,200 buildings along the route of
our network. We intend to complete our international rings connecting the
Benelux network, London and Paris and
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connecting the Benelux network, Frankfurt, Dusseldorf and Paris by December
1999. We have completed our international connection from the Benelux network to
London and to Frankfurt. We intend to directly connect Svianed's customers to,
and transition Svianed's traffic onto, our network in order to reduce our
reliance on leased lines. We believe this will significantly enhance the quality
of our service offering to Svianed's customers and reduce our costs.
During the past year, we have substantially expanded our product offering
from our initial offering of long distance voice services. We currently offer a
full portfolio of voice, data and Internet services to our business customers
and a broad range of connectivity, termination, co-location and hosting services
to other telecommunications, data and Internet service providers. Through our
acquisition of Svianed we will be able to significantly accelerate the
deployment of our broadband data services product offering by combining our
market presence with Svianed's data and network management expertise.
In addition to Svianed, we have recently extended our product and service
offerings and expanded our customer base through the following strategic
acquisitions:
- VuurWerk -- a leading provider of web hosting, co-location, access and
e-commerce services in The Netherlands and Belgium. VuurWerk is one of
the largest providers of web hosting services in The Netherlands, with
more than 10,000 domain name registrations and approximately 6,000
customers.
- SpeedPort -- a provider of Internet co-location and connectivity
solutions for high bandwidth and mission critical Internet and e-commerce
applications. SpeedPort will use VersaTel's international fiber
connectivity to build its IP-based network to serve its customers.
- CS Net -- enables Internet-based trade communities to conduct
business-to-business transactions in specific industries. It currently
provides these services to 6 trade communities with 10,000 end users.
- ITinera -- a Belgium-based Internet service provider with over 950
business customers.
Over time, we intend to market most products and services of these
companies under the VersaTel brand. SpeedPort, however, will continue to market
its interest solutions under its current brands.
THE BENELUX MARKET OPPORTUNITY
VersaTel was founded in 1995 to capitalize on the opportunities created by
the liberalization of the telecommunications market in the Benelux. We believe
that the Benelux provides an excellent opportunity for competitive
communications service providers for several reasons, including:
- HIGH POPULATION DENSITY. With approximately 26.2 million people in a
relatively small geographical area, the Benelux market is characterized
by one of the world's highest population densities, approximately 351
persons per square kilometer, compared to approximately 107 persons per
square kilometer in western Europe as a whole.
- HIGH GROWTH POTENTIAL. Data and telecommunications revenues as a
percentage of gross domestic product ("GDP") of 5.3% in 1997 were still
relatively low compared to 6.3% in the United Kingdom and 7.0% in the
United States, each with a more developed communications market.
- RAPIDLY EXPANDING DATA AND INTERNET MARKETS. The market for data and
Internet services is growing rapidly in the Benelux. According to
International Data Corporation, the estimated annual growth of the market
for Internet access services will be 30.4% and 45.2% in The Netherlands
and Belgium, respectively, from 1997 to 2001.
- HIGH INTENSITY OF COMMUNICATIONS TRAFFIC. The Benelux is a major
transportation and trade gateway which generates a relatively high level
of communications traffic. According to EITO
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(the European Information Technology Observatory), the total Benelux
telecommunication services market amounted to $14.2 billion in 1997. If
ranked as a single country, the Benelux would have been the fifth largest
telecommunications market in western Europe behind Germany, France, the
United Kingdom and Italy.
- TRADITIONALLY UNDERSERVED MARKET. At present, the Benelux communications
market is dominated by the former monopoly carriers, KPN Telecom,
Belgacom and P&T Luxembourg in The Netherlands, Belgium and Luxembourg,
respectively. We believe these carriers have not traditionally focused on
providing high quality customer service to our targeted customers.
- DEMAND FOR END-TO-END, BROADBAND SERVICES. We believe that business
customers will increasingly demand high bandwidth end-to-end
communications services, as they rapidly adopt Internet-based
applications as essential business and communications tools, such as
electronic commerce.
The following chart illustrates the relative importance of the Benelux
telecommunications market:
[TOP 10 INTERNATIONAL TRAFFIC MARKETS BAR CHART]
<TABLE>
<CAPTION>
- ------------- -----
<S> <C>
United States 22700.00
United Kingdom 6600.00
Germany 5333.00
Canada 4286.00
France 3545.00
BENELUX (2) 2395.00
Italy 2352.00
Switzerland 2164.00
Japan 1792.00
Hong Kong 1718.00
</TABLE>
- -------------------------
(1) Source: Telegeography 1999. All outgoing MiTT market data is 1997
information.
(2) The Benelux market figure is the aggregate figure of all outgoing MiTTs of
The Netherlands, Belgium and Luxembourg, net of intra-Benelux outgoing
international MiTTs.
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VersaTel currently operates in The Netherlands and in Belgium and plans to
extend its operations to Luxembourg in the future. The following table provides
a brief overview of the Benelux market:
<TABLE>
<S> <C>
Population(1)............................................... 26.2 million
Population Density(2)....................................... 351
persons/km(2)()
Per capita GDP in 1997(1)................................... $24,033
Total telecom expenditures in 1997(3)....................... $14.2 billion
Telecom expenditures as % of GDP in 1997(3)................. 2.6%
Benelux telecom expenditures as % of western Europe's
telecom expenditures in 1997(3)........................... 8.2%
Number of Internet devices in 1997(4)....................... 1,831,000
Expected annual growth Internet devices 1997-2001(4)........ 35.9%
Total Internet access revenues in 1997(4)................... $24.1 million
Expected annual growth Internet access revenues
1997-2001(4).............................................. 34.7%
</TABLE>
- -------------------------
(1) Source: The Economist Intelligence Unit and Quest Economics Database
(2) Source: International Telecommunications Union, 1998
(3) Source: The European Information Technology Observatory (EITO), 1997
(4) Source: International Data Corporation, 1998
BUSINESS STRATEGY
Our objective is to become the leading local access, facilities-based
operator for broadband voice, data and Internet services in the Benelux. The
principal elements of our strategy are:
- DEPLOY OUR BROADBAND NETWORK. We are deploying our fully integrated
broadband network to allow us to provide voice, data and Internet
services, as well as to support all major protocols. We believe that our
high capacity network will allow us to grow our customer base rapidly,
increase our margins and expand our service offerings. We have designed
our network to pass the major points of interconnection of other service
providers and to connect to major Internet exchanges. We believe we will
be one of the highest quality ISPs in the Benelux. In addition, we have
already started constructing our local access infrastructure in areas
where we have completed the Benelux network. We intend to complete 2 of
our international rings in December 1999. Also, we are deploying the
latest network technologies, such as IP over DWDM (dense wave division
multiplexing), and intend to add services to this platform as it proves
reliable. We intend to continue to actively participate in the
development of new network technologies in order to maximize the capacity
of our network and to expand our service offerings.
- FOCUS ON TARGETED CUSTOMER SEGMENTS WITH SPECIALIZED TEAMS. We have
identified 4 groups -- broadband local access customers, small- and
medium-sized businesses, broadband data services customers and other
telecommunications, data and Internet service providers -- as our
targeted customer segments. We have tailored our sales force, customer
care and billing system to meet the specific needs of each of our target
customer segments. We plan to continue to leverage our network, team
approach and operations to deliver services to meet our targeted
customers' needs.
- PROVIDE INNOVATIVE PRODUCTS AND SERVICES. We seek to continue to be
market leaders in providing our customers with advanced products and
services and plan to provide customized solutions to fit local market
needs. We intend to leverage our high bandwidth Network to offer
integrated services to our customers. By providing broadband services to
our customers we will be able to meet their demand for a single source
provider, competitive prices, high quality of service and guaranteed
access to bandwidth. By directly connecting our customers to our network
and by
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providing multiple services, we believe customers will be less likely to
switch to other service providers and that these customers will provide
relatively higher revenues and margins. Through our acquisition of
Svianed we will be able to significantly accelerate the deployment of our
broadband data services product offerings by combining our market
presence with Svianed's data and network management expertise.
- EXPAND CARRIER SERVICES. We plan to generate substantial revenue and
additional traffic on our network through sales to telecommunications,
data and Internet service providers lacking network infrastructure. Our
fully integrated broadband network, high quality systems and peering
arrangements are intended to allow us to offer a broad portfolio of
carrier services, high bandwidth connectivity, co-location, call
termination and hosting. In addition, we are able to provide our carrier
service customers with support systems, such as customer care and billing
solutions. This approach enables us to use our high capacity network to
obtain revenues and margins from market segments, such as residential
customers, that we do not currently target.
- FOCUS ON SUPERIOR CUSTOMER SERVICE. VersaTel strives to maintain a
competitive advantage over competitors in its target markets by providing
superior customer service in terms of responsiveness, accuracy and
quality. We believe that the Benelux market has been particularly
underserved by the PTTs and that providing a high level of customer
service is a key element to establishing customer loyalty and attracting
new customers. We were the first provider in the market of detailed
monthly billing statements and monthly call management reports which
identify savings to customers and enable them to manage their
telecommunications expenditures more effectively. We have invested in a
leading operational support system software and hardware to insure that
our back-office systems enable us to maintain a competitive advantage in
the market.
- PURSUE SELECTIVE ACQUISITIONS AND STRATEGIC RELATIONSHIPS. We plan to
continue to acquire other competitive telecommunications, data and
Internet service providers in order to accelerate the growth of our
customer base, our network and our service portfolio. As part of our
strategy, our acquisition of Svianed will accelerate our time to market
with our data services product offering, enhance our sales force and
expand our market presence in the Benelux. Through our acquisitions of CS
Net in November 1998, SpeedPort and VuurWerk in May 1999 and Svianed and
ITinera in June 1999, we have significantly expanded our Internet
services product offerings and expertise. In addition, we are actively
pursuing additional strategic relationships with alternative carriers in
Germany, France and the United Kingdom in order to establish
interconnection agreements, to partner in infrastructure projects and to
expand our geographic reach.
THE VERSATEL NETWORK
We are building a high bandwidth network designed to provide flexible,
broadband local access to business customers with connectivity to all major
business and population centers in the Benelux and to key international
destinations (the "VersaTel Network" or the "Network"). Our Network will have
the ability to carry voice, data and Internet traffic and will support all major
protocols, including Frame Relay, ATM and IP. We connect with the major Internet
exchanges in Amsterdam, Brussels, London, Paris, Dusseldorf and Frankfurt and
through our acquisition of SpeedPort we will be increasing the number and
quality of peering arrangements with leading carriers of IP traffic to enhance
our presence in the rapidly expanding European Internet services market.
NETWORK DESIGN PRINCIPLES
Our Network is designed to be scaleable, flexible, reliable and efficient:
- SCALEABILITY. We are constructing our Network to offer very high
capacity in all Network components, including ducts, fibers, DWDM, SDH
and operating support system platforms. We
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are placing 8 ducts, each capable of carrying over 300 fibers, on most
routes. We believe this will be enough to provide excess capacity for
future growth and will allow us to trade and sell a portion of our excess
capacity to other operators. We have installed DWDM equipment on our
initial fibers, which allows us to transmit multiple frequencies of light
on the same fiber strand. As a result, the capacity of a single fiber can
be increased by 16 times. Our SDH equipment will be capable of
transmitting at the rate of 10 Gbps (STM-64), with the ability to make 20
Gbps available, if necessary. Our design will enable us to deliver high
bandwidth to our customers while providing substantial potential for
future expansion.
- FLEXIBILITY. We believe our Network design will enable us to respond to
changes in service offerings, Network standards and protocols. We
currently have a Nortel DMS 100 digital circuit switch and a Cisco data
switch in both Amsterdam and Antwerp. We expect to have an additional
Nortel DMS switch and an additional Cisco data switch installed in
Rotterdam in the third quarter of 1999 and Brussels in 2000. The Nortel
DMS switches enable us to deliver voice and ISDN telecommunications
services and the Cisco data switches allow us to support multiple data
communications protocols including IP, IPX (Novell), ATM, Frame Relay and
others.
- RELIABILITY. The Network provides redundancy at multiple levels by using
a self-healing, shared protection ring structure to provide dual
direction routing capability in the event of cable damage or equipment
failure. SDH equipment automates most of the functions of routing and
connecting service bandwidth and reroutes these functions in the event of
failure. Our data and voice/ISDN networks also have alternate routing
capability to assure high availability of the services they deliver. We
have selected very reliable equipment from world class vendors, such as
Nortel and Cisco.
- EFFICIENCY. We believe we are constructing our Network in the most
efficient manner by routing the Network to target all the major business
parks and city centers in the Benelux and by installing high capacity
Network elements which will provide us with excess capacity to allow for
future growth. Also, this efficiency is maintained in our Network
operations by our use of the highest quality components and equipment and
by ensuring we continue to properly manage our Network.
NETWORK ELEMENTS
The VersaTel Network will consist of the following integrated elements:
- BENELUX NETWORK. We are constructing a high capacity, broadband network
that will offer local access connectivity to thousands of business
customers with flexible bandwidth fiber facilities. The Benelux network
will extend to all major commercial and population centers in the
Benelux, including most interconnection points with PTTs, other
telecommunications network operators and major Internet exchanges. We
have designed the Network route to pass through as many businesses as
possible by going through business communities and past major bandwidth
users. Approximately 90,000 businesses are located within one kilometer
of the network and approximately 270,000 businesses are located within 5
kilometers of the route. Physical access points will be provided near
each group of potential customers, at average intervals of 1.5
kilometers. While these features have increased the initial cost of our
network and the time to construct it, we expect that the total cost of
connecting to buildings will be lower and the time required for
connections will be reduced. A small portion of our network is being
constructed jointly with other carriers and some rural sections are being
completed by purchases of dark fiber and pending the completion of
construction, through leased lines. The initial phase of the Benelux
network consisting of 315 kilometers that connects our switches in
Amsterdam and Antwerp was placed in service in May 1999. An additional
200 kilometers of dark fiber and 535 kilometers of fiber-ready duct have
been constructed. By the end of 1999, we intend to have in service 4
self-
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healing rings consisting of 1,200 kilometers. By the middle of 2000, the Benelux
network is expected to consist of approximately 2,200 kilometers of fiber optic
rings.
- LOCAL ACCESS INFRASTRUCTURE. We are extending the Benelux network into
city centers, business parks and buildings with fiber optic rings and
radio systems to directly connect to customers. We started constructing
fiber optic infrastructure in business parks in January 1999. We intend
to connect our first customers shortly after the initial rings of the
Benelux network become operational, which we expect to occur by the third
quarter of 1999. We plan to construct over 300 kilometers of local access
infrastructure in 1999. Also, we began testing point-to-multipoint radio
systems technology at 2 sites in The Netherlands in the third quarter of
1998 and we plan to begin testing in Belgium by the third quarter of
1999. In addition, we are considering using unbundled local loop access
to reach customers when it becomes available.
- INTERNATIONAL NETWORK. We are establishing an international network that
will extend the Benelux network to several major interconnection and
Internet exchange points in Western Europe. Initially, these points will
be London, which we connected in March 1999, Frankfurt, which we
connected in May 1999, and Dusseldorf and Paris, which we expect to
connect by the end of 1999. The international network will consist of one
or more fiber pairs in fully redundant ring structures. We are also
considering acquiring fiber optic capacity to the United States to
improve our Network's Internet connectivity for SpeedPort's utilization.
Most of the international network will consist of fiber or SDH capacity
obtained from other operators, but we plan to own and operate the
transmission equipment.
As of May 31, 1999, our network passed the following city centers and
business parks in The Netherlands and Belgium:
<TABLE>
<CAPTION>
CITY CENTERS BUSINESS PARKS
- ---------------------------------------------- ----------------------------------
<S> <C> <C>
- - Amersfoort - Leiden - Amsterdam -- Bullewijk
- - Amsterdam - Rotterdam - Amsterdam -- Sloterdijk
- - Delft - Utrecht - Haarlem -- Waarderpolder
- - Haarlem - Antwerp - The Hague -- Plaspoelpolder
- - The Hague - Gent - Rotterdam -- Spaansepolder
- - Hilversum - Mechelen - Utrecht -- Lage Weide
</TABLE>
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[NETWORK DESIGN GRAPH]
SERVICE PLATFORMS
Our Network incorporates service platforms to deliver each of the major
service categories we offer or plan to offer. An SDH transmission platform
provides highly reliable transmission capacity for our other services and for
capacity leased to other operators, service providers and customers. A digital
circuit switching platform delivers voice and ISDN services. A data
communications platform based on ATM supports all major data protocols with high
quality service. An Internet services platform will support the Internet
services we provide to end users and our offering of outsourced services to ISPs
and content providers. In parallel, we are implementing an additional new
platform of IP equipment connected directly to DWDM/fiber which is intended to
support all types of services. By integrating the
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functions of SDH, ATM and circuit switching, this platform should provide a
lower cost and a more flexible design than traditional equipment. We plan to
carry services, including voice, data and Internet services, on this platform as
the quality of service management becomes proven.
DATA CENTERS
We intend to establish large scale data centers in Amsterdam, Antwerp,
Rotterdam and Brussels. We are designing these data centers to house our
transmission, IP routing and switching facilities. At these data centers, we
also expect to offer hosting, co-location and interconnection services to high-
volume customers, such as ISPs, in a secure, controlled site with direct access
to our Network. Through the acquisition of SpeedPort, we have acquired a data
center with 150 square meters of raised floor space for equipment housing and
fiber connectivity to both the SARA and NIKHEF parts of the Amsterdam Internet
Exchange. We are presently constructing a new Amsterdam data center which will
provide 1,000 square meters of raised floor space for equipment housing and will
also have direct fiber connectivity to both parts of the Amsterdam Internet
Exchange. In addition, SpeedPort will be constructing Internet co-location
facilities in London, Paris and Frankfurt.
PEERING AND TRANSIT ARRANGEMENTS
Our peering arrangements allow us to exchange traffic with these ISPs
without these ISPs, or us, having to pay transit costs. We will establish
peering arrangements with ISPs when equal traffic volumes are expected to be
exchanged. We currently have peering arrangements with 32 ISPs, including
Belgacom, Euronet, PSINet Europe, Demon Internet, @Home Benelux, World Online,
A2000 and other major ISPs in the Internet market in western Europe. We expect
to enter into additional peering arrangements with network-based ISPs in order
to support SpeedPort and our other Internet services. In addition we expect to
sell approximately 60 transit connections to ISPs and content providers.
NETWORK MANAGEMENT
We monitor our Network 24 hours a day and 7 days a week at our Network
operations center. Our Network operations center is able to identify Network
interruptions as soon as they occur and allows us to reroute traffic to ensure
termination. Our Network operations center has an uninterrupted power supply and
redundant communications access and computer processors. We own and control our
own points of presence in the Benelux which allows us immediate access for rapid
restoration when necessary. We have provided for a back-up Network operations
center in the event our primary Network operations center is forced off-line.
NETWORK IMPLEMENTATION
VersaTel has entered into a framework agreement with Nortel to supply most
initial transmission equipment, including SDH, radio, voice/ISDN switching and
the SDH network management system. This agreement includes vendor financing for
all Nortel products and services. A similar agreement with Cisco is providing
the data communications platform and Cisco's support services. We have
agreements with 4 leading construction companies in The Netherlands for Network
construction. Although Meijsen Ondergrondse Infrastructuren B.V. had originally
been contracted to oversee the construction of our Network, we have now
allocated construction responsibility to 3 additional contractors. We are now
adding another construction contractor in Belgium as well. These construction
companies are responsible for obtaining rights of way, civil engineering,
physical construction and testing of our Network. We have retained experienced
agents in both The Netherlands and Belgium to assist the construction companies
in obtaining rights of way.
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PRODUCTS AND SERVICES
VersaTel currently offers a wide range of business and carrier products and
services and continually evaluates potential product and service offerings,
including competitors' offerings, in order to retain and expand its customer
base and to increase revenue per customer.
BUSINESS PRODUCTS AND SERVICES OFFERINGS
We currently offer the following products and services to business
customers:
LONG DISTANCE TELEPHONY. VersaTel offers international and national long
distance telephony services to over 8,000 business and residential customers in
The Netherlands and over 600 business customers in Belgium. Our telephony
service is offered through our "1611" carrier select code and dial-around and
least-cost routing software installed in our customer PBXs.
ISDN SERVICES. We offer ISDN primary rate services to our customers in the
Benelux. This service primarily targets the business market with digital PBX's
and high volumes of outgoing and incoming traffic. Currently, ISDN is the
fastest growing service for business telephony in the western European market.
LAN TO LAN INTERCONNECT SERVICES. We offer high speed LAN (local area
network) to LAN interconnect services for multi-site business customers. This
service targets business customers that need to interconnect their multiple LANs
to share centralized computer data and applications efficiently. We will provide
end-to-end management of the wide area network, including the routers, at
customers' premises.
DEDICATED INTERNET CONNECTIVITY. We also offer dedicated high speed
Internet access services to business customers. This service provides high
bandwidth access to the Internet, e-mail facilities, news feed from news groups
and web space for hosting web-sites.
REMOTE ACCESS SERVICES. We offer efficient remote access services to
business customers enabling employees to access the corporate LAN from home.
These home offices will have secured access to the corporate network, data and
applications. This service will also be applied to tele-banking and tele-
shopping applications.
IP-BASED ELECTRONIC TRANSACTION SERVICES. CS Net provides Internet-based
business-to-business transaction services to vertical trade communities that act
as comprehensive sources of information, interaction and electronic commerce for
their users.
DIAL-IN INTERNET ACCESS SERVICES. We offer dial-in Internet access
services for the small- and medium-sized businesses. Our plan is to package our
long distance telephony service with an attractive Internet access service.
WEB HOSTING SERVICES. VuurWerk provides web hosting services targeting the
business market. This service consists of an integrated package of a domain
name, e-mail accounts, web space for hosting corporate web-sites and on-line
web-site statistics.
For a description of Svianed's current products and services see
"-- Svianed -- Products and Services".
We also expect to introduce the following retail products and services to
business customers within the next 12 months:
- virtual private network,
- toll/toll-free services,
- dial-in LAN interconnect services,
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- data VPN and Voice Over IP services,
- carrier pre-select (equal access) telephony, and
- Internet and telecommunications services over MDF access and xDSL
technology.
CARRIER PRODUCTS AND SERVICES
We currently offer the following products and services:
CALL TERMINATION SERVICES. We offer switched services to other
telecommunications service providers, including international and national call
termination services in the Benelux. As we complete our international network,
we will be able to offer call termination services in Germany, France and the
United Kingdom.
CO-LOCATION AND FACILITIES MANAGEMENT. We provide co-location services for
carriers wishing to extend and expand their networks by housing their own
computing and telecommunications equipment inside our secured premises within
the Benelux and selected international locations.
NETWORK CAPACITY FACILITIES. We sell and trade rights of way, ducts, dark
fiber, wave length and STM-16 capacity to other carriers.
VIRTUAL POINT-OF-PRESENCE DIAL-IN SERVICES. We offer virtual
point-of-presence services for telecommunications, data and Internet service
providers in order to allow cost-efficient dial-in capability and effective
remote access capabilities for their customers.
INTERNET TRANSIT SERVICES. We offer Internet transit services to
telecommunications and Internet service providers seeking transit services
between major Internet exchanges.
We expect to introduce the following carrier products and services in the
future:
- leased circuits (E1, E3, T3 and STM-1),
- switching, billing and customer care services for resellers,
- ISP hosting services, and
- Voice Over IP gateway and clearing house services.
SALES AND MARKETING
VersaTel seeks to capitalize on its position as a competitive
communications services provider that offers comprehensive customer service and
competitively priced communications services in the Benelux with a focus on
small and medium-sized businesses. We believe that we have created a prominent
brandname in our target market that we expect to successfully apply throughout
the Benelux. Over time we intend to market the products and services of our
acquired businesses under a common VersaTel brandname. We market our products
and services through several marketing channels, including database marketing,
targeted telemarketing, brand and promotional advertising, direct mail and our
direct sales force.
Our sales force is composed of direct sales personnel, telemarketers and
independent sales agents. Marketing is currently conducted by 40 direct sales
personnel in Amsterdam and Rotterdam and 16 in Antwerp. In the future, we expect
to significantly expand our direct sales force and open an additional sales
office in Brussels. With our recent acquisitions of Vuurwerk Internet B.V.,
SpeedPort N.V., ITinera Services N.V. and Svianed B.V., we have added
approximately 25 additional direct sales personnel. Our sales personnel make
direct calls to prospective and existing business customers, analyze business
customers' usage and service needs, and demonstrate how VersaTel's service
package will improve a customer's communications capabilities and costs. Each
member of our sales force is required to
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complete our intensive training program. In addition, we have a telemarketing
group that screens prospective customers and verifies call volumes.
We have also established a sales agent program under which sales agents
receive commissions, but are not employed by us. Agents are provided with an
advertising and sales promotion budget based on the volume of their sales. We
currently have approximately 100 such sales agents in The Netherlands and
approximately 50 in Belgium and intend to continue to increase the size of this
program. Sales agents primarily sell our business services offerings.
Our sales force is organized in the following 4 groups to target the
primary customer segments with a focused product portfolio that matches the
needs of these customer segments:
BUSINESS SERVICES. Our business services sales force targets our core
target market of small- and medium-sized businesses throughout The Netherlands
and Belgium. The customers targeted by this group currently access the Network
indirectly by manually dialing, using an auto-dialer, or through pre-programmed
PBX's, our "1611" carrier select code. As a result of OPTA's recent ruling, we
will be able to reach these customers through carrier pre-select (equal access)
and unbundled local loop access. The services offered to these customers also
include ISDN, Internet and LAN to LAN interconnection services.
LOCAL ACCESS SERVICES. Our local access services sales force targets
potential customers along the Benelux network with a high bandwidth service
package consisting of voice, data and Internet products. Unlike most other
competitive alternative communications services providers who focus primarily on
the main international cities, we will be able to offer high bandwidth services
to our customers at any point along the Benelux network. The customers targeted
by this team will access the Network directly through leased lines or, upon its
deployment, through our own local access infrastructure.
DATA SERVICES. Through our acquisition of Svianed, our data services sales
force targets potential customers with multiple locations throughout the Benelux
with high bandwidth requirements. These potential customers include medium- to
large-sized organizations that are located more than 5 kilometers from the
Network or do not seek a direct connection to the Network.
CARRIER SERVICES. Our carrier services sales force markets our product
portfolio to other telecommunications and Internet services providers, including
switchless resellers, in the Benelux and the countries reached by our
international network. Our focus is on developing a broad range of services that
addresses the specific needs of carrier customers targeting the Benelux.
CUSTOMERS
We market our services on a retail basis to business customers and on a
wholesale basis to other carriers and service providers.
SMALL- AND MEDIUM-SIZED BUSINESSES. Our target customers are small- and
medium-sized businesses (businesses with fewer than 500 employees). However,
with the acquisition of Svianed, we will now be able to offer high bandwidth
data services to large-sized customers. We focus particularly on those business
and industry segments which have historically generated significant volumes of
national and international traffic, such as financial services, information
technology services, transportation and import and export. We believe that the
small- and medium-sized business segment has been underserved by the PTTs and
the major alternative service providers. Traditionally, the PTTs and the other
major carriers have focused on offering their lowest rates and best services
primarily to larger, higher-volume business customers. Through our acquisition
of CS Net, we are able to offer business-to-business transaction services to
vertical trade communities.
CARRIER CUSTOMERS. Our carrier customers are global and regional network
operators, Internet service providers and switchless resellers serving specific
market segments in the Benelux. We focus
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primarily on high capacity and high volume customers. We believe that new
entrants to the telecommunications services market that provide voice, data or
Internet services in the Benelux region will require quality carrier services
and high bandwidth services to develop their market position.
RESIDENTIAL CUSTOMERS. Our initial focus with respect to residential
customers had been to market our services to employees of our business customers
and to residential customers in certain niche markets characterized by
high-volume calling patterns. Recently, we have refocused our efforts and we now
intend to target the residential market by offering carrier hosting services to
switchless resellers who target the residential market. We believe that this
approach is a more cost-effective way of reaching the residential market
segment.
CUSTOMER SERVICE
Our goal is to maintain an advantage over our competitors in our target
markets by providing superior customer service. We believe that providing a high
level of customer service is a key element to establishing customer loyalty and
attracting new customers. We have dedicated customer service representatives who
initiate contact with our customers on a routine basis to ensure customer
satisfaction and market new products. Customer service representatives are
available 24 hours a day, 365 days a year. In addition, we provide detailed
monthly billing statements and monthly call management reports which identify
savings to customers and enable them to manage their telecommunications
expenditures more effectively.
We also believe that technology plays an important role in customer
satisfaction. Advanced technological equipment is crucial to enabling the
provision of a high quality of service to our customers. It is our policy to
reduce technical risks as much as possible by buying proven products from world
leaders in the applicable technology. We have installed sophisticated
status-monitoring and diagnostic equipment at our Network operations center and
plan to install similar units on our SDH equipment. This equipment allows us to
identify and remedy network problems before they are detected by customers. By
providing superior customer service and through the effective use of technology,
we expect to maintain a competitive advantage in our target markets.
We use the Internet and Internet technology in our communications with our
customers. The information technology industry is demonstrating that providing
customer access to their own information records, through Internet-based
technologies, can result in increased customer satisfaction and loyalty while
reducing costs. We intend to begin to provide this type of Internet-based system
for sales, service ordering, customer inquiries, fault management and billing
with usage information in the third quarter of 1999.
BILLING AND INFORMATION SYSTEMS
We are in the process of replacing our current billing, customer care and
sales support system with advanced systems designed by Saville Systems and
Clarify. Our new billing system and customer care and sales support system will
be introduced in stages and we expect the first stage to be completed by the end
of the second quarter of 1999. We do not expect any material disruption in our
billing or information systems as a result of the Year 2000. In addition, we
have planned and budgeted replacements and enhancements to our information
systems to handle our growth in the size and complexity of our business, our
customer base and our product portfolio in areas such as work flow, fixed asset
management, sales support and service provisioning.
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SVIANED
Svianed, the third largest provider of data services in The Netherlands,
provides data services to approximately 50 customers, primarily in the financial
services and banking industries, including the principal social insurance
organization and the largest financial institution in The Netherlands. These
customers are served on a network which connects to over 600 buildings and
utilizes over 700 leased lines covering approximately 6,000 kilometers. The
Svianed network has 50 regional points of presence and transports traffic at
speeds of up to 150 Mbps. Prior to VersaTel's acquisition of Svianed, Svianed
was owned by Gak Holdings B.V., a government-controlled organization partially
responsible for the implementation of social security laws within The
Netherlands.
NETWORK
Svianed has an extensive network in The Netherlands comprised of leased
lines, regionally dispersed points of presence, data and Internet switches and
routers which serve 50 customers and over 100,000 end users. The following chart
describes the Svianed network:
[MAP of the Netherlands with Svianed's Network]
<TABLE>
<S> <C>
- - 50 regional points of presence - approximately 750 Cisco routers
- - over 700 leased lines covering 6,000 - 300 ISDN primary rate interface (PRI)
kilometers
- speeds of up to 150 Mbps
- - over 600 directly connected customer
buildings
- - 83 ATM and Frame Relay switches
</TABLE>
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PRODUCTS AND SERVICES
Many of Svianed's products and services are complementary to VersaTel's
products and services, any duplication will be rationalized over the next 18
months.
Svianed provides the following products and services to its customers:
LAN TO LAN INTERCONNECT. Connecting LANs at geographically dispersed
locations both within and outside The Netherlands.
LAN AND WAN MANAGEMENT. Svianed supplies and manages all active components
of a customer's LAN including ethernet switches.
REMOTE DIAL-IN. Regional dial-in connections to customers to their own
business networks for remote access.
TELEPHONY SERVICES. Svianed offers traditional voice communications,
particularly telephone exchanges and network facilities including management.
INTERNET ACCESS. Svianed provides access to the Internet, including mail,
web hosting and news services, in addition to security services, integration of
speech and data communications and computer telephony integration.
CO-LOCATION. Svianed offers customers the opportunity to co-locate their
network equipment at Svianed points of presence.
CUSTOMERS
Svianed currently has approximately 50 customers, the largest of which is
the Gak Group, who composed approximately 60.8% of Svianed's 1998 revenue. In
addition to the Gak Group, Svianed's other major clients include: ING Groep
(financial services), Achmea Groep (financial services and insurance), Belgacom
(telecommunications), Kluwer (publishing), Assurantie Data Network (insurance)
and Sociale Zekerheid (insurance). Additionally, Svianed provides dial-in
services and LAN/WAN management to a large Netherlands-based pension fund, as
well as one of the largest insurance companies in The Netherlands.
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COMPETITION
Until recently, the telecommunications market in each EU Member State has
been dominated by its respective PTT. Since the implementation of a series of
European Commission directives beginning in 1990, the EU Member States have
started to liberalize their respective telecommunications markets, permitting
alternative telecommunications providers to enter the market. Liberalization has
coincided with technological innovation to create an increasingly competitive
market, characterized by still-dominant PTTs as well as an increasing number of
new market entrants. Competition in the European long distance
telecommunications industry is driven by numerous factors, including price,
customer service, type and quality of services and customer relationships.
In The Netherlands, Belgium and Luxembourg, we compete or will compete
primarily with the national PTTs. As the former monopoly providers of
telecommunications services in these countries, the PTTs have an established
market presence, fully built networks and financial and other resources that are
substantially greater than ours. In addition, the national PTTs own and operate
virtually all of the infrastructure which we must currently access to provide
our services. We estimate that in each of these countries the national PTT still
controls the vast majority of the telecommunications market.
In addition, various new providers of telecommunications services have
entered the market in each of these countries, targeting various segments of the
market in these countries. Companies such as Telfort, a company formed by
British Telecom and Nederlandse Spoorwegen N.V., the Netherlands railroad
company, as well as Global One Communications, MCI Worldcom, GTS/Esprit Telecom
and EnerTel, compete with KPN Telecom for contracts with large multinational
companies in The Netherlands. MCI Worldcom, British Telecom, AT&T, TeleNet,
France Telecom, COLT Telecom, Unisource, a subsidiary of KPN Telecom, and
GTS/Esprit Telecom compete with Belgacom for contracts with large multinational
companies in Belgium.
The following table sets forth some of our most important competitors in
the areas of voice, data, Internet and carrier services:
<TABLE>
<CAPTION>
MARKET THE NETHERLANDS BELGIUM
- ------ -------------------- --------------------
<S> <C> <C>
Voice............................. KPN Telecom Belgacom
Telfort MCI Worldcom
MCI Worldcom GTS/Esprit Telecom
GTS/Esprit Telecom
COLT Telecom
Data.............................. KPN Telecom Belgacom
Global One MCI Worldcom
Telfort
Internet.......................... KPN Telecom Belgacom
MCI Worldcom/UUNet TeleNet
Wirehub
EuroNet
Carrier Services.................. KPN Telecom Belgacom
MCI Worldcom MCI Worldcom
EnerTel/WorldPort GTS/Esprit Telecom
GTS/Esprit Telecom
</TABLE>
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REGULATION
In Europe, the traditional system of monopoly PTTs has ensured the
development of broad access to telecommunications services; however, it has also
restricted the growth of high-quality and competitively priced voice and data
services. The liberalization in European telecommunications market is intended
to address these market deficiencies by ending PTTs' monopolies, allowing new
telecommunications service providers to enter the market and increasing the
competition within the European telecommunications market. The inefficiencies of
the traditional monopoly system, combined with the EU liberalization
initiatives, have created the current market opportunity for VersaTel's product
and service offerings.
The current regulatory framework in the EU and in the countries in which we
provide our services or intend to provide our services is briefly described
below. There can be no assurance that future regulatory, judicial and
legislative changes will not have a material adverse effect on us, that national
or international regulators or third parties will not raise material issues with
regard to our compliance or noncompliance with applicable regulations or that
any changes in applicable laws or regulations will not have a material adverse
effect on us.
EUROPEAN UNION
Starting in 1987, the EC Green Paper on Telecommunications charted the
course for the current changes in the EU telecommunications industry by
advancing principles such as separation of operators from regulators,
transparency of procedures and information, cost orientation of tariffs, access
to monopoly infrastructure networks and the liberalization of services. In 1990,
the EU Member States approved 2 directives that established these principles in
EU law: the Open Network Provision ("ONP") Framework Directive and the EC
Services Directive. These 2 directives set forth the basic rules for access to
the PTT public networks and the liberalization of the provision of all
telecommunications services within the EU except for voice telephony.
The ONP Framework Directive established the conditions under which
competitors and users could gain cost-oriented access to the PTTs' public
networks. The EC Services Directive abolished the existing monopolies on, and
permitted the competitive provision of, all telecommunications services with the
exception of voice telephony. The intended effect of the Services Directive was
to permit the competitive provision of all services, other than voice telephony,
including value-added services and voice services to closed user groups. As a
result, many new entrants entered the market, labeling their services as closed
user group services, while in fact providing voice telephony services.
In 1992, the EC approved the ONP Leased Line Directive, which required the
PTTs to lease lines to competitors and end-users, and to establish cost
accounting systems for those products by the end of 1993. The national
regulatory authorities were to use this cost information to set cost-oriented
tariffs for leased lines. The purpose of the ONP Leased Lines Directive is to
ensure that, in a competitive market, all users continue to have access to
leased lines from at least one operator, under harmonized conditions of access
and use.
In 1996, the EC issued the Full Competition Directive, which requires EU
Member States to permit alternative infrastructure providers, such as existing
networks of cable companies, railroads, electric and other utility companies, to
resell capacity on these networks for the provision of services other than voice
telephony from July 1996. This allows VersaTel to lease transmission capacity
from companies other than the PTTs. The Full Competition Directive also
established January 1, 1998 as the date by which the EU Member States had to
establish a legal framework which removes all remaining restrictions on the
provision of telecommunications services, including voice telephony. Although
Spain, Greece, Portugal, Ireland and Luxembourg were each allowed to delay
implementation for various periods, only Greece had not implemented the Full
Competition Directive as of January 1, 1999. Subject to the foregoing, each EU
Member State is obliged, under EU law, to enforce the terms of the Full
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Competition Directive. Enforceability of the Full Competition Directive may be
challenged at the EU level or at the EU Member State level.
In addition to the Full Competition Directive, the EC issued the Licensing
Directive in April 1997 and the Interconnection Directive in June 1997. The
Licensing Directive establishes a common framework for general authorizations
and individual licenses in the field of telecommunication services. The
Licensing Directive is intended to allow telecommunications operators to benefit
from an EU-wide market for telecommunications and establish a common framework
for national authorization regimes and seeks to facilitate cross-border networks
and services. The Interconnection Directive standardizes regulatory frameworks
to be implemented by EU Member States and their national regulatory authorities,
including the regulation of public telecommunications networks and services. The
Interconnection Directive governs the manner in which alternative network
operators and service providers are permitted to interconnect with the PTTs'
public networks. The Interconnection Directive requires national regulators to
ensure that interconnection agreements with parties with significant market
power provide for access at cost-oriented rates.
The Interconnection Directive has been amended to provide for carrier
selection (ensuring that end-users can select the long distance or international
carrier of their choice on a call-by-call basis) as of January 1, 1998, and
carrier pre-selection (ensuring that end-users can select the long distance or
international carrier of their choice prior to the time calls are made) and
number portability (the ability of end-users to keep their numbers when changing
operators) by January 1, 2000. Carrier selection and carrier pre-selection are
required to be made available by carriers with significant market power. The
Interconnection Directive indicates that significant market power could be
assumed if the carrier's market share exceeds 25%, but Member States may adopt
different standards.
Despite these regulatory initiatives supporting the liberalization of the
telecommunications market, most EU Member States are still in the initial stages
of liberalizing their telecommunications markets and establishing competitive
regulatory structures to replace the monopolistic environment in which the PTTs
previously operated. For example, most EU Member States have only recently
established a national regulatory authority. In addition, the implementation,
interpretation and enforcement of these EC directives differ significantly among
the EU Member States. While some EU Member States have embraced the
liberalization process and achieved a high level of openness, others have
delayed the full implementation of the directives and maintain several levels of
restrictions on full competition.
There are currently few laws and regulations that specifically regulate
communications on the Internet. European and U.S. Government authorities and
agencies are considering laws and regulations that address issues such as user
privacy, pricing, on-line content regulation and taxation of on-line products
and services. In November 1995, the EC adopted a general directive regarding
certain privacy rights of citizens of EU Member States and in December 1997, the
EU adopted another directive designed to specifically address privacy rights in
the area of telecommunications services. These directives impose restrictions on
the collection and use of personal data, guaranteeing citizens of EU Member
States the right of access to their data, the right to know where the data
originated and the right to recourse in the event of unlawful processing.
Although, to the best of our knowledge, no European court has ever held a
telecommunications services provider liable for content transmitted over its
network, we can give no assurances that no laws or regulations will be adopted
that will impose such liability, or that any future court rulings will not
impose such liability. Any future regulation of the Internet could impose
restrictions on the way we conduct our business and could seriously affect our
business.
An overview of the regulatory framework in the individual markets where we
operate or intend to operate is described below. This discussion is intended to
provide a general outline, rather than a comprehensive discussion of the more
relevant regulations and current regulatory posture of these jurisdictions. We
require licenses, authorizations or registrations in all countries in which we
operate to
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provide our services. Licenses, authorizations and/or registrations have been
obtained in The Netherlands and Belgium and we have received an International
Facilities License in the United Kingdom. We have applied for a network license
in Germany. We intend to apply for such licenses and registrations in Luxembourg
and France in the near future. Although we expect that these licenses and
registrations will be granted, there can be no assurance that we will be able to
obtain such licenses, authorizations or registrations or that our operations
will not become subject to other regulatory authorization or registration
requirements in the countries in which we operate or plan to operate.
THE NETHERLANDS
The Telecommunications Act of 1998 provides the current regulatory
framework in The Netherlands. This new telecommunications act came into force on
December 15, 1998, and remedied the old legislative and regulatory patchwork
that had existed as a result of the implementation of a series of EC directives.
The new telecommunications act contains provisions that give registered
telecommunication services providers rights-of-way, subject to certain
conditions, thereby facilitating the construction of the VersaTel Network.
As part of the liberalization of the Netherlands telecommunications market,
the new independent supervisory authority, OPTA, was established by the Ministry
of Traffic and Waterways. OPTA started its activities on August 1, 1997. OPTA's
main tasks include ensuring compliance with the telecommunications laws and
regulations in The Netherlands, granting licenses for telecommunications
activities and resolving disputes among market participants, such as disputes
regarding interconnection rates. The rulings of OPTA, to date, have given us
confidence that new providers of telecommunications services will be granted
fair and equal access to the market in The Netherlands.
The Telecommunications Act also requires providers of public
telecommunications services to comply with the specific privacy provisions
contained in the act, which are based on the privacy directive of December 1997.
In general, providers of public telecommunications services must ensure the
protection of personal data and privacy of subscribers and remove the processed
data on subscribers with respect to the actual use of the network. In The
Netherlands, ISPs are considered to be providers of public telecommunications
service providers referred to in the Telecommunications Act. As a result, ISPs
are also bound by the specific privacy provisions for providers of public
telecommunications services contained in the Telecommunications Act.
In August 1997, we obtained one of the first Netherlands registrations to
operate as a telecommunications service provider of public voice telephony
(other than KPN Telecom). In September 1997, we obtained an infrastructure
license with rights-of-way for the construction and operation of
telecommunications facilities in a limited geographic area. In December 1998, we
obtained the first authorizations under the new telecommunications act to
operate as a public telecommunications services provider and network operator.
We have received licenses which allow us to test point-to-multipoint radio
technology in The Netherlands. It is expected that the Netherlands Government
will conduct an auction on frequencies for this point-to-multipoint radio
technology (fixed-wireless access) by the end of 1999. Since May 1999, we have
been able to offer our customers our own subscriber numbers, all of which start
with "750".
Since our founding in October 1995, we have adopted a proactive regulatory
strategy. In October 1996, we successfully challenged KPN Telecom's use of our
invoice records to offer our customers additional discounts. In a warning letter
to KPN Telecom, the Directorate for Competition (DG IV) of the EC held this to
be an abuse of power by KPN Telecom. Not only did the EC require KPN Telecom to
stop using information regarding the calling behavior of customers for
competitive activities, such as approaching our customers with discounts and
other special offers, it also questioned the legitimacy of KPN Telecom's
discount plans for business customers. The EC requires that such discounts be
based on actual cost savings and not on predatory pricing tactics. OPTA, to whom
the EC
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had delegated this matter, has recently ruled that these discount plans indeed
violate competition law principles and has required KPN Telecom to change them.
We were one of the first voice telephony competitors in The Netherlands to
interconnect with KPN Telecom and to implement a carrier select code in all of
KPN Telecom's telephone switches. The introduction of carrier pre-selection in
The Netherlands, which is expected to be introduced on January 1, 2000, will
allow customers the option to pre-select a carrier other than KPN Telecom for
all their international and national long distance calls. We continue to seek to
obtain lower interconnection rates from KPN Telecom. In July 1998, OPTA ruled
that KPN Telecom's origination and termination charges had to be reduced by
approximately 55% and 30%, respectively. The terms and conditions of
interconnection have had and will continue to have a material effect on the
competitive position of VersaTel.
In December 1998, OPTA issued a ruling on KPN Telecom's end-user tariffs,
which were deemed contrary to the principles on cost orientation. As a result,
KPN Telecom lowered its end-user tariffs for its national long distance services
by approximately 10% as of January 1, 1999. It is expected that OPTA's ruling
will have some negative effects on competition in the market in The Netherlands.
In December 1998, VersaTel filed a complaint with OPTA asserting that the
limited access provided by KPN Telecom to the KPN Telecom network hampered
VersaTel's growth. Our customers often experienced busy signals when they tried
to dial into the VersaTel Network through our access code. Other Netherlands
telecommunications services providers voiced similar complaints. OPTA recently
ruled that KPN Telecom must allow us access to their entire interconnection
network. In addition, OPTA ruled that KPN Telecom would be responsible for the
additional costs associated with the implementation of such ruling. The ruling
does not affect KPN Telecom's access rates.
In March 1999, OPTA issued a ruling, requiring KPN Telecom to offer
unbundled access to local customer access lines at the MDF in KPN Telecom's
central exchange offices. Unbundled local access may enable us to offer a high
bandwidth package to those customers that are not directly connected to our
Network.
BELGIUM
Belgium started the liberalization of its telecommunications market in 1991
with an amendment to the Belgian public post and telecommunications act. It
provided the basis for the privatization of Belgacom, and allowed new entrants
to the telecommunications services market to provide all services, with the
exception of voice telephony, upon obtaining a license. At the same time a new
regulatory entity was introduced, the Belgium Institute for Post and
Telecommunications (Belgisch Instituut voor Post en Telecommunicatie), under the
Ministry of Economy and Telecommunications.
A further amendment to this act was adopted by the Belgian Parliament in
December 1997, to implement the liberalization of voice telephony and
infrastructure. The amended act was published in the Belgian Official Journal on
January 19, 1998, but in order to implement the amended act certain
administrative regulations are required. To prevent any delays in providing
access to the market for new entrants, the Ministry of Economy and
Telecommunications issued a notice which opened the way for temporary licenses
for service providers and infrastructure operators.
On the basis of the amended telecommunications act, we applied for a
licence to construct and operate public telecommunications infrastructure and a
license to provide voice telephony nationwide. Both licenses where granted in
June 1998. For marketing purposes, we have reserved the same carrier select code
"1611" as we currently use in The Netherlands. In August, 1998, we obtained
interconnection with Belgacom for carrier selection and call termination
services in advance of concluding a definitive interconnect agreement in
November 1998.
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In July 1998, various Royal Decrees were published to replace the temporary
regime with a definitive one. On that basis, we had to file new applications for
an infrastructure license and a license for voice services. On November 9, 1998,
we were the first alternative telecommunications services provider to obtain a
definitive license for the provision of voice services. On December 21, 1998, we
obtained a definitive infrastructure license in Belgium and thereby obtained
rights of way in all of Belgium and a special interconnect tariff which is 15%
below the tariff for voice service providers.
In October 1998, we were granted geographic number ranges for the main
cities in Belgium, including Brussels, Antwerp, Kortrijk and Gand, in which we
plan to start operations. In addition, we obtained number ranges for toll-free
(0800) phone services and premium rate services.
Pursuant to the new telecommunications act, Belgacom is required as of
January 1, 2000, to introduce number portability and carrier pre-selection
(equal access). We expect that Belgacom will request the Belgian regulatory
entity, the Belgisch Instituut voor Post en Telecommunicatie, to delay these
introductions by 4 to 6 months.
The Belgisch Instituut voor Post en Telecommunicatie is also expected to
grant licenses for the utilization of point-to-multipoint systems for broadband
fixed wireless access. However, the procedure of assignment has not been chosen
by the Belgisch Instituut voor Post en Telecommunicatie. VersaTel intends to
file applications once such procedures are implemented.
LUXEMBOURG
The Luxembourg telecommunications market has been liberalized since July 1,
1998, 6 months after liberalization in most other EU Member States. Until that
date, P&T Telecom Luxembourg, a state-owned company, had a 100% monopoly in the
provision of basic voice telephony and telecommunications infrastructure. A new
regulatory entity, the Luxembourg Institute of Telecommunications (Institut
Luxembourgeois des Telecommunications), has been installed to oversee the newly
deregulated market. Under this new regulatory regime, competition is expected to
develop along the same lines as in the other Benelux countries.
In the second quarter of 1998, the Institut Luxembourgeois des
Telecommunications, in co-operation with the Ministry of Telecommunications,
published most of the secondary legislation and rulings with the intention to
provide a full liberalization of the telecommunications market. However, in the
third quarter of 1998, the EC initiated an infringement procedure against
Luxembourg asserting the insufficient implementation of the liberalization
directives and certain other directives. It primarily concerned the definition
of "universal service," the vocal telephony licensing procedure, the financing
of the Institut Luxembourgeois des Telecommunications and the adaptation of the
Luxembourg law in line with the EC Satellite Directive. In most instances, the
situation was assessed as resulting mainly from delays in the adoption of the
secondary legislation.
In January 1999, the Luxembourg government started a consultation period
which may lead to an assignment procedure for frequencies to operate
point-to-multi point systems for broadband fixed wireless access.
PROPERTIES
Our principal executive offices are located at Paalbergweg 36,
Amsterdam-Zuidoost, The Netherlands. The lease agreement for this location will
expire in May 2003. Our Belgian offices are located at Noorderlaan 133 in
Antwerp. The lease agreement for this location will expire in May 2007. We are
currently looking for additional or new office space in Amsterdam to accommodate
our future needs.
VuurWerk's offices are located at Gedempte Oude Gracht 82-E, 2011 GV
Haarlem, The Netherlands. The lease agreement for this location will expire on
September 31, 2000.
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SpeedPort's offices are located at Kruislaan 400, 1098 SM Amsterdam, The
Netherlands. The lease agreement for this location expires November 1, 1999.
CSNet's offices are located at Brugweg 56, 2741 KZ Wadinxveen, The
Netherlands. The lease agreement for this location expires on November 1, 1999.
ITinera's offices are located at Dam 171, 8500 Kortrijk, Belgium. The lease
agreement for this location expires on August 31, 2006.
Svianed's offices are located at Jan Tooropstraat 109, 1040 HD Amsterdam,
The Netherlands. The lease agreement for this location expires on January 1,
2000.
EMPLOYEES
As of May 31, 1999, VersaTel had 289 full-time employees and approximately
100 full-time consultants. In addition, we employ approximately 50 temporary
employees at any given time. None of our employees is represented by a labor
union or covered by a collective bargaining agreement, and we have never
experienced a work stoppage. We consider our employee relations to be good. With
our recent acquisitions of Vuurwerk Internet B.V., SpeedPort N.V., ITinera
Services N.V. and Svianed B.V., we have added 9, 18, 19 and 60 employees,
respectively.
INTELLECTUAL PROPERTY
We have registered the trademark (woordmerk) "VersaTel" with the Benelux
trademark bureau (Benelux Merkenbureau). Applications for similar registrations
are pending in the other EU Member States. We have obtained rights to the
Internet domain name "www.versatel.com" and initiated formal registration
procedures with Internic, the European Union domain registration authority.
LEGAL PROCEEDINGS
We have filed complaints in the past with the European Commission, OPTA and
the Minister of Transport and Waterways of The Netherlands as part of its
regulatory strategy. We also make routine filings with the regulatory agencies
and governmental authorities in the countries in which we operate or intend to
operate.
Cromwilld, one of our shareholders, objected to the Recapitalization, the
First Offering and the Second Offering and threatened to challenge in court
certain of VersaTel's actions in connection with the Recapitalization, the First
Offering and the Second Offering. In January 1999, Cromwilld filed, pursuant to
Article 2:345 of the Netherlands Civil Code, a petition with the Enterprise
Chamber (Ondernemingskamer) of the Court of Appeals in Amsterdam requesting the
appointment of one or more experts to investigate the management and affairs of
VersaTel. In May 1999, the Enterprise Chamber denied Cromwilld's request.
On July 20, 1999, we entered into, along with our shareholders and certain
other parties, a Settlement Agreement with one of our major shareholders,
Cromwilld Limited, in order to resolve disputes arising out of our shareholders'
agreement and other matters. The major terms of the Settlement Agreement provide
for:
- the transfer of 146,988 of our ordinary shares held by Telecom Founders
B.V. to Cromwilld;
- the issuance of 200,000 of our shares on July 20, 1999 to Cromwilld at a
price of NLG 7.50 per ordinary share;
- the ability for Cromwilld to include 1,800,000 of its ordinary shares in
this offering;
- certain piggyback registration rights in favor of Cromwilld that will
take effect 180 days from the date hereof;
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- the payment by us of $300,000 for Cromwilld's fees and expenses related
to the Settlement Agreement and certain other matters;
- the acknowledgement by all parties to our shareholders' agreement that
the shareholders' agreement will be terminated concurrently with the
closing of this offering;
- the withdrawal by Cromwilld of its pending legal proceedings against us
and our shareholders;
- Cromwilld's full cooperation with this offering; and
- the obligation of our shareholders, including Cromwilld, to procure the
resignation or dismissal of Cromwilld's nominee, Denis O'Brien, from our
Supervisory Board, after the closing of this offering.
VersaTel is from time to time involved in routine litigation in the
ordinary course of business. We believe that no currently pending litigation to
which VersaTel is a party will have a material adverse effect on our financial
position or results of operations.
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MANAGEMENT
The members of the supervisory board and the management board of VersaTel
and other significant employees of VersaTel and their respective ages and
positions are set forth below.
MANAGEMENT BOARD
R. Gary Mesch is the sole managing director (statutair directeur) of
VersaTel.
SUPERVISORY BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Leo W.A.M. van Doorne..................... 39 Chairman
Denis O'Brien, Jr.* ...................... 41 Member
Johan G. Wackwitz......................... 44 Member
James R. Meadows.......................... 46 Member
</TABLE>
* Pursuant to the Settlement Agreement, our shareholders, including Cromwilld,
are obligated to procure the resignation of Denis O'Brien from the Supervisory
Board after the closing of this offering.
EXECUTIVE OFFICERS AND KEY MANAGEMENT
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
R. Gary Mesch............................. 46 Managing Director
W. Greg Mesch............................. 39 Chief Operations Officer
Raj Raithatha............................. 36 Chief Financial Officer
Larry Hendrickson......................... 56 Chief Technology Officer
Marc A.J.M. van der Heijden............... 40 Chief Regulatory Counsel
Jan J. Niewold............................ 52 Managing Director Svianed
Roel van der Wiele........................ 50 Senior Manager Operations Svianed
Philip Mathuis............................ 34 Manager Belgium Operations
John J.L. de Rooij........................ 40 Manager Business Services
Jaap J.R. Zuiderveld...................... 35 Manager Local Access Services
Gert Post................................. 35 Manager Carrier Services
Attila Gultuna............................ 33 Manager Product Marketing
Stephanie C.M. Kies....................... 31 Manager Marketing Communications
Leo Y.J. van der Veen..................... 43 Finance Manager
Ike Knuivers.............................. 44 Manager Network Operations
Hein A.M. Boot............................ 35 Manager Network Development
Ronan Murphy.............................. 32 Manager IT Operations & Development
</TABLE>
SUPERVISORY BOARD
Under Netherlands law and the articles of association of VersaTel, the
management of VersaTel is entrusted to the management board (Directie) under the
supervision of the supervisory board (Raad van Commissarissen). Under the laws
of The Netherlands, supervisory directors cannot at the same time be managing
directors of the same company. The primary responsibility of the supervisory
board is to supervise the policies pursued by the management board and the
general course of affairs of VersaTel
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and its business. In fulfilling their duties, the members of the supervisory
board are required to act in the best interests of VersaTel and its business.
Pursuant to the articles of association, the supervisory board consists of
such number of members as may be determined by the general meeting of
shareholders. The members of the supervisory board are appointed by the general
meeting of shareholders. Resolutions of the supervisory board require the
approval of a majority of the members. The supervisory board meets each time
this is deemed necessary by one of its members. Every retiring supervisory
director may be reappointed, provided that such supervisory director has not
attained the age of 72. A member of the supervisory board must retire not later
than on the day of the general meeting of shareholders held in the fiscal year
in which such member reaches the age of 72.
A member of the supervisory board may at any time be suspended or removed
by the general meeting of shareholders. The members of the supervisory board may
receive such compensation as may be determined by the general meeting of
shareholders.
We expect that Sander van Brummelen, a member of the board of directors of
Gak Groep N.V., will become a member of our Supervisory Board effective on July
23, 1999.
MANAGEMENT BOARD
The management of VersaTel is entrusted to the management board under the
supervision of the supervisory board. The articles of association provide that
the management board may from time to time adopt written policies governing its
internal organization. Such written policies require the approval of the
supervisory board. In addition, the articles of association list certain actions
which require prior approval of the supervisory board. Such actions include,
among other things: (i) borrowing or lending money; (ii) participating directly
or indirectly in the capital of another company; (iii) making any investments;
and (iv) providing security in the name of VersaTel or its property.
The management board consists of such number of members as may be
determined by the general meeting of shareholders. In addition, the general
meeting of shareholders appoints the members of the management board.
The general meeting of shareholders has the power to suspend or dismiss
members of the management board. The supervisory board also has the power to
suspend members of the management board. If a member of the management board is
temporarily prevented from acting, the remaining members of the management board
shall temporarily be responsible for the management of VersaTel. If all members
of the management board are prevented from acting, a person appointed by the
supervisory board (who may be a member of the supervisory board) will be
temporarily responsible for the management of VersaTel. The compensation and
other terms and conditions of employment of the members of the management board
are determined by the general meeting of shareholders.
BIOGRAPHIES
R. GARY MESCH has served as Managing Director of VersaTel individually or
through his position as President of Open Skies International Inc. ("Open
Skies") since October 1995. In 1991 he founded and became President of Open
Skies, a telecommunications consultancy with operations based in Amsterdam,
which provided consulting for early stage development of competitive European
telecommunications businesses. From 1991 to 1995 Open Skies advised such clients
as Unisource, PTT Telecom International, Inmarsat, NEC and Eurocontrol. In 1984
he founded and until 1990 he managed the commercial operations of NovaNet, a
Denver-based provider of satellite-based data communications networks. NovaNet
was acquired by ICG Communications in 1993. From 1981 to 1983 he served as
director of sales for Otrona Advanced Systems, a Colorado-based manufacturer of
high performance computer systems. From 1975 to 1981 he served as a senior
systems engineer with Westinghouse
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Electric. Mr. Gary Mesch holds a B.S. in Electrical Engineering from the
University of Colorado and an M.B.A. from Denver University.
LEO W.A.M. VAN DOORNE has served as Chairman of the Supervisory Board of
VersaTel nominated by NeSBIC since December 1995. Since 1996, Mr. van Doorne has
been the Managing Director of NeSBIC Groep B.V., a venture capital company and a
subsidiary of Fortis, an international group of more than 200 companies
operating in the fields of insurance, banking and investments. Worldwide, Fortis
has over 58,000 employees. From 1994 to 1996 he served as Managing Director of
NeSBIC Venture Management B.V. From 1990 to 1994 he was Regional Director of
Banque de Suez Nederland N.V. Mr. van Doorne serves as a member of the
supervisory board of various other companies. Mr. van Doorne holds a degree in
law from the University of Utrecht.
DENIS O'BRIEN, JR. has served as a member of the Supervisory Board of
VersaTel nominated by Cromwilld since December, 1996. Mr. O'Brien is Chairman of
the Board and Chief Executive Officer of Esat Telecom Group plc, a public
company listed on NASDAQ which he founded in 1991. In addition to his positions
with Esat, Mr. O'Brien has been the Chairman of the Board of Esat Digifone since
1996. Prior to the founding of ESAT Telecom plc, he was employed by Guinness
Peat Aviation ("GPA Group"), from 1983 to 1985. Mr. O'Brien holds an M.B.A. from
Boston College.
JOHAN G. WACKWITZ has served as a member of the Supervisory Board of
VersaTel nominated by Paribas since August 1998. Mr. Wackwitz is a member of the
management board of COBEPA S.A. and Paribas Deelnemingen N.V. From 1991 to 1993
he was employed by Paribas in its capital markets division and responsible for
the Benelux within the investment banking group. From 1979 to 1991 he served at
various management positions at Bankers Trust Company. Mr. Wackwitz serves as a
member of the supervisory board of various other companies. Mr. Wackwitz holds a
degree in economics from the Rijks Universiteit Groningen and an M.B.A. from
Columbia University.
JAMES R. MEADOWS has served as a member of the Supervisory Board of
VersaTel nominated by Telecom Founders since August 1998. Mr. Meadows is Senior
Vice President and co-founder of PrimeTEC International, Inc., a U.S.-based
international telecommunications services provider, since 1997. From 1989 to
1997 he served as Director Government Affairs at Capital Network System, Inc.
(CNSI), a telecommunications services provider. Mr. Meadows is a member of the
Board of Directors of Lone Star 2000, a public policy foundation, and of
Comptel. Mr. Meadows holds a degree in history from the University of Texas at
Austin.
W. GREG MESCH has served as Chief Operations Officer of VersaTel since
April 1998. From VersaTel's inception in 1995 until August 1998, he served as a
member of the Supervisory Board of VersaTel nominated by Telecom Founders and
has performed operations consulting roles for VersaTel. From 1993 to 1997, Mr.
Mesch was the Chief Operations Officer of Esat Telecom plc, a public company
listed on NASDAQ. From 1986 to 1992, he served as Chief Executive Officer of
Nova Net, a Denver-based provider of satellite-based data communications
networks, which he founded with his brother Mr. Gary Mesch. Mr. Mesch has been a
Director of In-Touch Associates Ltd., a U.K.-based telecommunications consulting
firm, since 1997 and is an Advisory Board Member to NeSBIC Converging
Technologies Fund. Mr. Mesch has an M.B.A. from Denver University.
RAJ RAITHATHA has served as Chief Financial Officer of VersaTel since April
1998. From 1994 to April 1998 he has served as Chief Financial Officer and
Director of Business Development of ACC Corp.'s European Operations. From 1992
to 1994 he served as Finance Director of Bay Trading Company. From 1989 to 1992
he served as divisional finance director at Securiguard Group plc and from 1987
to 1989 he was financial controller at Harrison Willis. From 1983 to 1987 he was
employed by KPMG Peat Marwick. Mr. Raithatha holds a degree in economics and
mathematics from the University of Cardiff, Wales.
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LARRY HENDRICKSON has served as Chief Technology Officer of VersaTel since
April 1998. From 1994 to 1998 he was senior consultant and partner of DDV
Telecommunications Strategies, a Benelux-based telecommunications consulting
company, and from 1993 to 1994 he was an independent telecommunications
consultant. From 1986 to 1993 he served at various management positions at
Cincinnati Bell, including President of Europe Group, President and Chief
Executive Officer of LDN Communications (Cincinnati Bell) and President of the
Mobile Communications Division of Cincinnati Bell Information Systems. From 1964
to 1986 he was employed by AT&T. Mr. Hendrickson holds a B.S. in management from
the Massachusetts Institute of Technology and completed the Advanced Management
Program at Harvard Business School.
MARC A.J.M. VAN DER HEIJDEN has served as Chief Regulatory Counsel to
VersaTel since June 1998. Mr. van der Heijden served as regulatory counsel to
VersaTel on matters of telecommunications law and regulatory policy since
October 1995 as an independent consultant. As an independent consultant on
telecommunications law he has acted as advisor to the EC, the governments of The
Netherlands and the United Kingdom, and various telephone companies, such as
France Telecom and KPN Telecom, and financial institutions, such as ABN AMRO and
Nederlandse Investerings Bank. He worked as an expert for KPMG Peat Marwick on
bidding processes for mobile telephony and sale of cable companies. Mr. Van der
Heijden holds a degree in law.
JAN J. NIEWOLD has served as Managing Director of Svianed since 1995. From
1986 to 1995 he held various positions in the EDP (Electronic Data Processing)
department of Gak. From 1982 to 1986 he was a network consultant employed by
Shell Nederland and Shell International. From 1972 to 1982 he was responsible
for the datacommunications network of the Netherlands National Aerospace
Laboratorium. From 1969 to 1972 he was a systems programmer at AKZO. Mr. Niewold
holds a degree in chemical engineering.
ROEL VAN DER WIELE has served as deputy director of Svianed since 1997. He
joined Svianed in 1995 as manager of the network operations department. From
1972 to 1995 he held various positions in the EDP department of Gak.
PHILIP MATHUIS has served as Manager Belgium Operations since January 1999.
From 1998 to 1999 he was Vice President of New Business Development for ASCOM
Tateco B.V., a telecommunications service provider. From 1997 to 1998, he served
as Business Development Director for Ericsson Paging Systems B.V. Holland, a
joint venture between ASCOM and Ericsson A.B. From 1988 to 1997 he served in
various other management positions at Ascom. Mr. Mathius holds an M.B.A. from
the Paris School of Management.
JOHN J.L. DE ROOIJ has served as Manager Business Services of VersaTel
since October 1995. From 1989 to 1995 he served as sales manager at Lanier
Office Products, initially as sales manager for fax and copier products for The
Netherlands and subsequently for the entire Benelux. The last 3 years at
Lanier's he acted as the European Training Manager. From 1986 to 1989 he served
as account manager for Wang Laboratories, The Netherlands. Mr. de Rooij holds a
degree in biology.
JAAP J.R. ZUIDERVELD has served as Manager Local Access Services of
VersaTel since January 1999. From 1996 to 1999 he worked at KPN Telecom. At KPN
Telecom he held several sales management positions, lastly as manager in the
IT/Software sector. From 1993 to 1996 he served as Global Account Manager and in
various other sales positions at BT(Worldwide) Ltd. From 1989 to 1993 he served
as account manager and in various other sales positions at Rank Xerox, The
Netherlands. Mr. Zuiderveld holds a degree in business administration.
GERT POST has served as Manager Carrier Services of VersaTel since May
1999. From 1991 to 1996 he held various management and sales positions at BT
(Worldwide) Ltd. From 1996 to 1999 he held various positions at Telfort B.V.,
most recently as a Business Unit Manager, responsible for Telfort's
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carrier and wholesale services. From 1985 to 1991 he served as an Account
Manager for KPN Telecom. Mr. Post holds degrees in business administration and
electrical engineering.
ATTILA GULTUNA has served as Manager Product Marketing of VersaTel since
November 1998. From 1997 to 1998 he was Manager Marketing and Business
Intelligence at Enertel, a facilities-based carrier in The Netherlands. From
1989 to 1997 he worked at KPN Telecom, in several positions in network
development, strategic planning and product marketing in the area of both data
and voice services. Mr. Gultuna holds a degree in electrical engineering.
STEPHANIE C.M. KIES has served as Manager Marketing Communications of
VersaTel since April 1999. From 1990 to March 1999 she worked at various
marketing positions at TNT, a global express distribution company, lastly in the
positions of Manager of Marketing Communications Benelux and Project Manager of
Corporate Identity Benelux.
LEO Y.J. VAN DER VEEN has served as Finance Manager of VersaTel since
November 1997. From 1995 to 1997 he worked as European Finance Manager at Morton
Automotive Safety Products. From 1994 to 1995 he served as controller Benelux of
Stratus Computers. From 1983 to 1993 he served as Director Finance &
Administration Benelux and in various other financial positions at NCR Benelux.
Mr. van der Veen holds a masters degree in international management from the
American Graduate School of International Management and degrees in business
administration and mechanical engineering.
IKE KNUIVERS has served as Manager Network Operations of VersaTel since
September 1998. From 1995 to 1998 he worked as Manager Network Services at
CasTel, a cable and telecommunications company in The Netherlands. From 1993 to
1995 he has served as Manager Projects of EDON, a utility company. From 1986 to
1993 he worked in various IT positions at HCS. From 1982 to 1986 he served as
Training Manager Air Traffic Control systems for Holland Signaal in Apeldoorn.
Mr. Knuivers holds a degree in electronics and computer science.
HEIN A.M. BOOT has served as Manager Network Development of VersaTel since
April 1999. From 1997 to March 1999 he worked at various positions at Telfort
B.V., a Netherlands based telecommunications service provider formed by British
Telecom and Nederlands Spoorwegen N.V., lastly as Manager Implementation and
Provisioning. From 1991 to 1996 he worked at various positions at BT (Worldwide)
Ltd., including Manager Systems Engineering. From 1989 to 1991 he worked at KPN
Telecom. Mr. Boot holds a degree in electrical engineering.
RONAN MURPHY has served as Manager IT Operations & Development of VersaTel
since March 1998. From 1996 to 1997 he worked as IT Manager at Esat Telecom
Group plc. During 1995 he was a consultant at various software companies in
Dublin. From 1989 to 1994 he served as development manager at AGS (a subsidiary
of NYNEX) and The Walt Disney Company. Mr. Murphy holds a degree in mathematics.
EXECUTIVE COMPENSATION
The total aggregate compensation for the supervisory board of VersaTel for
services in all capacities for 1998 was NLG 34,477. The total aggregate
compensation (including amounts paid pursuant to management and consulting
agreements) of all executive officers and key management (including the managing
director) of VersaTel as a group for 1998 was NLG 3,474,151. The total aggregate
compensation for the management board of VersaTel for services in all capacities
for 1998 was NLG 326,483. In 1998, options covering 1,100,000 ordinary shares
were granted to members of the management board and no options were granted to
members of the supervisory board. In 1999, we added a number of additional key
managers and we, therefore, expect the total aggregate compensation for all
executive officers and key management to increase for 1999. See "Material
Relationships and Related Transactions -- Additional Agreements."
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During 1998, VersaTel did not accrue any amounts to provide pension,
retirement and similar benefits to the executive officers of VersaTel or to any
of the managing or supervisory directors of VersaTel.
STOCK OPTION PLANS
1997 STOCK OPTION PLAN
In December 1996, our shareholders approved the 1997 Stock Option Plan. The
1997 Plan provides for the grant of options to certain key employees of VersaTel
to purchase depositary receipts representing an equal number of ordinary shares
of VersaTel. Under the 1997 Plan, no options have been granted with an
expiration date of more than 5 years after the granting of the option. The
option exercise price is determined in the particular grant of the option.
The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it to VersaTel or to another party
designated by VersaTel at the applicable purchase price. Unless otherwise
specified in the particular grant of the option, the purchase price will be the
fair market value of the ordinary shares minus a penalty discount. The 1997 Plan
contains provisions in the event of a dispute regarding the fair market value of
the ordinary shares. The penalty discount, if any, is determined by the length
of employment of the particular option holder.
Pursuant to the Shareholders' Agreement, Telecom Founders, Cromwilld and
NeSBIC must make available the shares underlying the depositary receipts to be
issued under the 1997 Plan. As of the date of this prospectus, 398,000 options
to purchase 398,000 depositary receipts had been granted under the 1997 Plan and
VersaTel does not intend to grant any more options under the 1997 Plan.
1998 STOCK OPTION PLAN
In March 1998, our shareholders approved the 1998 Stock Option Plan. The
1998 Plan allows VersaTel to grant options to employees to purchase depositary
receipts representing an equal number of ordinary shares of VersaTel. The option
period will commence at the date of the grant and will last 5 years. The option
exercise price shall be the economic value of the depositary receipt at the date
of the grant of the option. The 1998 Plan contains specific provisions for the
determination of the economic value of the depositary receipts.
The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it, within one year after the exercise
of the option, to VersaTel or to another party designated by VersaTel, at a
purchase price equal to the economic value of the depositary receipts.
As of the date of this prospectus, 5,000,000 options to purchase 5,000,000
depositary receipts have been granted under the 1998 Plan and the Company does
not intend to grant any more options under the 1998 Plan.
1999 STOCK OPTION PLAN
In January 1999, our shareholders approved the 1999 Stock Option Plan. The
1999 Plan allows VersaTel to grant options to employees to purchase depositary
receipts representing an equal number of ordinary shares of VersaTel. The option
period will commence at the date of the grant and will last 5 years. The option
exercise price shall be determined by VersaTel.
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The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it, within one year after the exercise
of the option, to VersaTel or to another party designated by VersaTel, at a
purchase price equal to the economic value of the depositary receipts. The 1999
Plan contains specific provisions for the determination of the economic value of
the depositary receipts.
As of the date of this prospectus, 1,908,500 options to purchase depositary
receipts have been granted under the 1999 Plan. VersaTel expects to grant an
additional 591,500 options under the 1999 Plan.
The depositary receipts issued under the 1997 Plan, the 1998 Plan and the
1999 Plan will be administered by the Stichting Administratiekantoor VersaTel.
As of the date of this prospectus, there have been 5,543,000 options granted to
our executive officers and key management. No options have been granted to any
of our supervisory board members.
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PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of the ordinary shares of VersaTel as of July 21, 1999 and as adjusted
to reflect the sale of Shares and ADSs in the Equity Offering, by each
beneficial owner of 5.0% or more of the ordinary shares and by the executive
officers and directors of VersaTel as a group.
<TABLE>
<CAPTION>
PERCENT OF SHARES
OUTSTANDING(1)
-----------------------------
NUMBER BEFORE EQUITY AFTER EQUITY
NAME OF BENEFICIAL OWNER OF SHARES OFFERING OFFERING
- ------------------------ ---------- ------------- ------------
<S> <C> <C> <C>
Telecom Founders B.V.(2)(3)........................... 6,603,596 16.7% 11.2%
NeSBIC Venture Fund C.V.(3)(4)........................ 15,162,896 38.3 25.7
Cromwilld Limited(3)(5)............................... 7,653,036 19.3 9.9
Paribas Deelnemingen N.V.............................. 7,282,340 18.4 12.3
NPM Capital N.V. ..................................... 2,352,942 5.9 4.0
---------- ---- ----
Total............................................... 39,054,810 98.6% 63.1%
All directors and executive officers as a group(6).... 14,256,632 36.0% 10.5%
</TABLE>
- -------------------------
(1) Percentages reflect the issuance of an aggregate of 555,000 ordinary shares
that we are obligated to issue and that have been approved for issuance by
our shareholders in connection with the acquisitions of CS Net, SpeedPort
and ITinera, but exclude 130,000 shares approved for issuance by our
shareholders in connection with earn-out obligations relating to the
acquisitions of SpeedPort and ITinera. Does not give effect to dilution from
the exercise of warrants covering 4,482,891 ordinary shares issued in the
First High Yield Offering and the Second High Yield Offering that not being
exercised in the Equity Offering or to options granted to employees covering
7,231,500 ordinary shares (348,000 of which are non-dilutive in that the
shares underlying such options are currently outstanding and will be
provided to us by the holders thereof) (all as adjusted to give effect to
the 2-for-1 stock split on April 13, 1999). See "Management -- Stock Option
Plans."
Percentage of shares outstanding after the offering is based on the
39,609,810 ordinary shares assumed to be outstanding prior to the Equity
Offering plus (i) the 18,992,508 shares offered by Versatel in the Equity
Offering and (ii) the 457,492 warrant shares being offered.
(2) Reflects the 146,988 shares transferred by Telecom Founders to Cromwilld in
connection with the settlement agreement. Telecom Founders B.V., a
Netherlands company, is a wholly owned subsidiary of Relyt Holdings N.V., a
Netherlands Antilles company owned by R. Gary Mesch. The Company understands
that Telecom Founders B.V. has issued depositary receipts representing
nearly half of its shareholding in VersaTel to certain persons including
officers and directors of VersaTel. Telecom Founders intends to exchange
some of those depositary receipts for ordinary shares of VersaTel at or
following the Equity Offering.
(3) Includes an aggregate 348,000 ordinary shares that may be forfeited by
Telecom Founders B.V., NeSBIC Venture Fund C.V. and Cromwilld Limited
pursuant to options exercised under the 1997 option plan. Includes 146,988
shares transferred to Cromwilld by Telecom Founders and 200,000 shares
issued to Cromwilld at a price of NLG 7.50 per share in connection with the
Settlement Agreement.
(4) Includes 1,274,510 ordinary shares held by NeSBIC Groep B.V., an affiliate
of NeSBIC Venture Fund C.V.
(5) Cromwilld Limited, an Isle of Man company, is controlled by Denis O'Brien, a
member of the Supervisory Board of VersaTel. Pursuant to the Settlement
Agreement, Mr. O'Brien will resign from the Supervisory Board upon the
closing of this offering. Includes (i) 200,000 shares purchased on July 20,
1999 at NLG 7.50 per share and (ii) the receipt of 146,488 shares from
Cromwilld on July 20, 1999, in each case pursuant to the Settlement
Agreement.
(6) Reflects (i) the 6,603,596 shares held by Telecom Founders B.V., beneficial
ownership of which may be attributed to Mr. Mesch and/or certain other
officers and directors of VersaTel upon the exchange of their depositary
receipts in Telecom Founders, and (ii) 7,653,036 shares held by Cromwilld
Limited, beneficial ownership of which may be attributed to Mr. O'Brien.
Percentage of shares outstanding after the offering reflects Mr. O'Brien's
anticipated resignation from the Supervisory Board following the offering
pursuant to the Settlement Agreement.
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MATERIAL RELATIONSHIPS AND RELATED TRANSACTIONS
SHAREHOLDERS' AGREEMENT
In December 1996, Telecom Founders, NeSBIC and Cromwilld entered into a
participation and shareholders' agreement, which contains, among other things,
provisions relating to the appointment of members of the Management Board and
the Supervisory Board, and provisions with respect to the funding of the
Company. The shareholders' agreement also contains provisions restricting the
transfer of shares of the Company. If a shareholder wishes to transfer its
shares, it must first offer the other shareholders the right to purchase such
shares. In addition, no shareholder may transfer its shares unless the
transferee has accepted and agreed to be bound by the provisions of the
shareholders' agreement, nor will the Company issue shares to any person unless
such person accepts and agrees to be bound by the shareholders' agreement. In
connection with their investment in VersaTel as part of the recapitalization,
Paribas and Nederlandse Participatie Maatschappij agreed to be bound by the
terms of the Shareholders' Agreement pursuant to deeds of accession and
acknowledgment.
Pursuant to the Settlement Agreement, the shareholders' agreement will
terminate upon the completion of this offering.
ADDITIONAL AGREEMENTS
Mr. Greg Mesch is a director of In-Touch Associates Ltd., a London-based
telecommunications consulting company that performs services for the Company.
The amounts paid by the Company in respect of these services are not material.
RELATIONSHIPS
Lehman Brothers Inc., an affiliate of Lehman Brothers International
(Europe), was an initial purchaser in the First High Yield Offering. Lehman
Brothers Inc. and Lehman Brothers International (Europe) were initial purchasers
in the Second High Yield Offering. Lehman Brothers Inc., Lehman Brothers
International (Europe), ING Barings Limited and ING Barings LLC are underwriters
in the Equity Offering. Hambrecht & Quist LLC, an underwriter in the Equity
Offering, will act as a qualified independent underwriter, as defined in Rule
2720 of the Conduct Rules of the National Association of Securities Dealers,
Inc., in this offering. ING Barings Limited and ING Barings LLC are each
affiliates of the other. Lehman Commercial Paper Inc., an affiliate of each of
Lehman Brothers Inc. and Lehman Brothers (International) Europe, and ING (U.S.)
Capital, LLC, an affiliate of each of ING Barings Limited and ING Barings LLC,
are lenders under the Interim Loans, which will be repaid with a portion of the
net proceeds from this offering.
Affiliates of Lehman Brothers may provide loans to the Chief Executive
Officer, Chief Operating Officer and Chief Technology Officer of VersaTel in an
aggregate amount of approximately NLG 6.0 million to fund the exercise price of
certain employee options that may be exercised by them at the time of the
closing of the Equity Offering. Any such loans would be made on commercial
terms, including a pledge of the shares received upon such exercise and
reimbursement of legal fees and other expenses.
LOCK-UP ARRANGEMENTS
Along with our executive officers, and some of our shareholders and
directors, we have agreed, subject to certain exceptions, not to sell or
otherwise dispose of any ordinary shares (other than the Shares and ADSs offered
by VersaTel in the Equity Offering) for a period of 180 days after the date of
the prospectus relating to the Equity Offering without the prior written consent
of Lehman Brothers Inc.
Because we do not have a history of net profits, AEX regulations prohibit
any member of our supervisory board or management board, subject to the
exception described below, from disposing, after
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the date of the Equity Offering, of any ordinary shares acquired by such member
before the date of the Equity Offering. Under AEX regulations, any holder of 5%
or more of our outstanding share capital before the date of the Equity Offering
may not, for three years after the date of the Equity Offering, sell,
collectively with all other holders of 5% or more of our outstanding share
capital acquired before the date of the Equity Offering, in the aggregate more
than 25% of the number of our ordinary shares outstanding before the date of the
Equity Offering. This lock-up requirement applies unless we report a profit, in
which case such shareholders are entitled to dispose collectively of a maximum
of (i) 50% of the shares issued and outstanding before the date of the Equity
Offering if a profit was made for one year or (ii) 75% of the shares issued and
outstanding before the date of the Equity Offering if a profit was made for two
years.
Under AEX regulations, holders of 5% or more of our outstanding share
capital may dispose of their remaining interest if such disposition (i) is
consummated through a public secondary offering involving a due diligence
investigation and the issuance of a prospectus, (ii) complies with the listing
rules of the AEX and (iii) occurs at least one year after the date of the Equity
Offering. In addition, the lock-up arrangements will not prohibit any member of
our supervisory board or management board from disposing of any ordinary shares
acquired after the date of the Equity Offering pursuant to the exercise of
options which were granted under our stock option plans prior to the Equity
Offering.
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DESCRIPTION OF MATERIAL INDEBTEDNESS
THE FIRST HIGH YIELD OFFERING
In the First High Yield Offering in May 1998, VersaTel issued units
consisting of $225,000,000 in aggregate principal amount of 13 1/4% Senior Notes
due 2008 and warrants to purchase 3,000,000 (as adjusted) ordinary shares. The
units were sold to Lehman Brothers, Inc., as initial purchaser, who subsequently
sold them to institutional investors in reliance on exemptions under the
Securities Act. The notes and the warrants were separated in August 1998. In
December 1998, VersaTel completed a public exchange offer pursuant to which all
the notes issued in the First High Yield Offering were exchanged for
substantially identical notes registered under the Securities Act that are not
subject to transfer restrictions. For the purposes of this prospectus, the terms
"First Notes," "Second Notes" and "Existing Notes" shall refer to notes issued
initially and to notes exchanged therefor pursuant to the exchange offers
described in this section. The warrants issued in the First High Yield Offering
remain subject to transfer restrictions. As a result of the consummation of such
exchange offer, we are now subject to the information reporting requirements of
the Exchange Act. Interest on the First Notes will be paid semi-annually on May
15 and November 15, beginning November 15, 1998. In connection with the First
High Yield Offering, we purchased, pledged and placed in escrow U.S. government
securities in an amount sufficient to fund the first 6 interest payments on the
First Notes (through the interest payment date on May 15, 2001). The First Notes
are redeemable at our option, in whole or in part, at any time on or after May
15, 2003, at 106.625% of their principal amount, plus accrued interest,
declining to 100% of their principal amount, plus accrued interest, on or after
May 15, 2006. The First Notes may also be redeemed at the option of VersaTel, in
whole but not in part, at any time at a redemption price equal to the aggregate
principal amount thereof, plus liquidated damages, if any, to the date fixed by
VersaTel for redemption, and all additional amounts, if any, then due and which
will become due as a result of the redemption or otherwise, in the event of
changes affecting Netherlands taxes or as a result of any change in the
application of Netherlands tax laws or regulations that require VersaTel to pay
additional amounts that VersaTel determines cannot be avoided by taking
reasonable steps. The First Notes rank equal in right of payment to the Second
Notes, the Notes and all other senior indebtedness of VersaTel and will be
senior in right of payment to any future subordinated indebtedness of VersaTel.
The indenture governing the First Notes contains covenants applicable to
VersaTel and certain of its subsidiaries, limitations and requirements with
respect to indebtedness, restricted payments, dividends and other payments
affecting restricted subsidiaries, the issuance and sale of capital stock of
restricted subsidiaries, transactions with stockholders and affiliates, liens,
asset sales, issuances of guarantees of indebtedness by restricted subsidiaries,
sale-leaseback transactions, consolidations and mergers and provision of
financial statements and reports. The indenture also requires VersaTel to
commence and consummate an offer to purchase the First Notes for 101% of their
aggregate principal amount, upon events constituting or which may constitute a
change of control of VersaTel. In addition, under certain circumstances,
VersaTel is required by the indenture to offer to purchase the First Notes with
the proceeds of the sale of certain assets. The indenture also provides for
events of default which, if any of them occurs, would permit or require the
principal of, premium, if any, interest and any other monetary obligations on
the First Notes to become or to be declared to be immediately due and payable.
Holders of First Notes may under certain circumstances be entitled to receive
additional payments in respect of taxes and similar charges in respect of
payments on the First Notes. The terms of such covenants, such required offers
to purchase, such events of default and their consequences and such additional
payments, as well as related definitions, set forth in the indenture governing
the First High Yield Offering are substantially identical to those applicable to
the Second Notes, except that the indenture governing the Second High Yield
Offering also includes an optional redemption provision whereby VersaTel may,
for the first 3 years after such offering, redeem up to 35% of the Second Notes
with the net proceeds of
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certain public equity offerings by VersaTel. The indenture governing the First
Notes is subject to, and governed by, the Trust Indenture Act of 1939, as
amended.
THE SECOND HIGH YIELD OFFERING
In the Second High Yield Offering in December 1998, VersaTel issued units
consisting of $150,000,000 in aggregate principal amount of 13 1/4% Senior Notes
due 2008 and warrants to purchase 2,000,100 (as adjusted) ordinary shares. The
units were sold to Lehman Brothers, Inc., Lehman Brothers International (Europe)
and Paribas Corporation, as initial purchasers, who subsequently sold them to
institutional investors in reliance on exemptions under the Securities Act. The
notes and the warrants were separated in January 1999. In February 1999,
VersaTel completed a public exchange offer pursuant to which all the notes
issued in the Second High Yield Offering were exchanged for substantially
identical notes registered under the Securities Act that are not subject to
transfer restrictions. The warrants issued in the Second High Yield Offering
remain subject to certain transfer restrictions. Interest on the Second Notes
will be paid semi-annually on May 15 and November 15, beginning May 15, 1999. In
connection with the Second High Yield offering, we purchased, pledged and placed
in escrow U.S. government securities in an amount sufficient to fund the first 5
interest payments on the Second Notes (through interest payment date on May 15,
2001). The Second Notes are redeemable at the option of VersaTel, in whole or in
part, at any time on or after May 15, 2003, at 106.625% of their principal
amount, plus accrued interest, declining to 100% of their principal amount, plus
accrued interest, on or after May 15, 2006. In addition, at any time prior to
November 15, 2001, VersaTel may, at its option, redeem from time to time up to
35% of the aggregate principal amount of the Second Notes at a redemption price
equal to 113 1/4% of the aggregate principal amount thereof plus accrued and
unpaid interest, additional amounts, if any, and liquidated damages, if any, to
the date of redemption with the proceeds of one or more public equity offerings
by VersaTel, provided that at least 65% of the aggregate original principal
amount of the Second Notes remains outstanding immediately after the occurrence
of such redemption. The Second Notes may also be redeemed at our option of
VersaTel, in whole but not in part, at any time at a redemption price equal to
the aggregate principal amount thereof, plus liquidated damages, if any, to the
date fixed by VersaTel for redemption, and all additional amounts, if any, then
due and which will become due as a result of the redemption or otherwise, in the
event of changes affecting Netherlands taxes or as a result of any change in the
application of Netherlands tax laws or regulations that require VersaTel to pay
additional amounts that VersaTel determines cannot be avoided by taking
reasonable steps. The Second Notes rank equal in right of payment to the First
Notes, the Notes and all other senior indebtedness of VersaTel and will be
senior in right of payment to any future subordinated indebtedness of VersaTel.
The indenture governing the Second Notes contains covenants applicable to
VersaTel and certain of its subsidiaries, including limitations and requirements
with respect to indebtedness, restricted payments, dividends and other payments
affecting restricted subsidiaries, the issuance and sale of capital stock of
restricted subsidiaries, transactions with stockholders and affiliates, liens,
asset sales, issuances of guarantees of indebtedness by restricted subsidiaries,
sale-leaseback transactions, consolidations and mergers and provision of
financial statements and reports. The indenture also requires VersaTel to
commence and consummate an offer to purchase the Second Notes, for 101% of the
aggregate principal amount, upon certain events constituting or which may
constitute a change of control of VersaTel. In addition, under certain
circumstances, VersaTel is required by the indenture to offer to purchase the
Second Notes with the proceeds of the sale of certain assets. The indenture also
provides for events of default which, if any of them occurs, would permit or
require the principal of, premium, if any, interest and any other monetary
obligations on the Second Notes to become or to be declared to be immediately
due and payable. Holders of Second Notes may under certain circumstances be
entitled to receive additional payments in respect of taxes and similar charges
in respect of payments on the Second Notes. The indenture governing the Second
Notes is also subject to, and governed by, the Trust Indenture Act.
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NORTEL VENDOR FINANCING
In May 1999, VersaTel Telecom Europe B.V., as borrower, VersaTel Telecom
International N.V., as guarantor, and Nortel Networks International Finance &
Holding B.V., as agent and security agent, entered into a E45.4 million
(approximately NLG 100.0 million) multi-draw amortizing term loan facility,
governed by a loan agreement (the "Nortel Facility"). The purpose of the
facility is to finance the acquisition of telecommunications equipment from
Nortel. Interest is payable quarterly in arrears at a floating rate based on the
Euro Interbank Offered Rate. The Nortel Facility is solely secured by a lien on
the equipment acquired with the proceeds advanced under the Nortel Facility. In
addition, the Nortel Facility is guaranteed by VersaTel Telecom International
N.V., VersaTel Telecom Netherlands B.V. and VersaTel Telecom Belgium N.V. As of
the date hereof, no advances have been made under the Nortel Facility. The
Nortel Facility also contains covenants applicable to VersaTel and its
affiliates. The covenants include, but are not limited to, restrictions on the
incurrence of additional indebtedness, the issuance of capital stock,
amalgamations and mergers, asset sales and acquisitions and joint ventures. In
addition, under certain circumstances, VersaTel Europe may be required to repay
the facility upon the occurrence of a change of control. The Nortel Facility
provides for events of default which, if any of them occurs, would permit or
require the principal, interest and any other monetary obligations under the
Nortel Facility to become or to be declared immediately due and payable.
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DESCRIPTION OF THE NOTES
GENERAL
Each of the Dollar Notes and the Euro Notes will be issued by VersaTel
pursuant to an indenture (the "Dollar Indenture" and the "Euro Indenture,"
respectively, and together the "Indentures") in each case between VersaTel and
United States Trust Company of New York, as trustee (each a "Trustee" and
together the "Trustees"). The Indentures will be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and by their
terms will be subject to and governed by the Trust Indenture Act. Holders of
Notes are referred to each Indenture and the Trust Indenture Act for a statement
thereof. The following summary of certain provisions of the Indentures does not
purport to be complete and is qualified in its entirety by reference to each
Indenture, including the definitions therein of certain terms used below. The
definitions of certain terms used in the following summary are set forth below
under "-- Certain Definitions."
VersaTel will make an application to list the Notes of each series on the
Luxembourg Stock Exchange. If and so long as any Notes are listed on the
Luxembourg Stock Exchange, VersaTel will maintain a special agent or, as the
case may be, a paying and transfer agent in Luxembourg. See "Listing and General
Information."
RANKING
The Notes will be general unsecured obligations of VersaTel and will rank
senior in right of payment to all future indebtedness of VersaTel that is, by
its terms or by the terms of the agreement or instrument governing such
indebtedness, expressly subordinated in right of payment to the Notes, and pari
passu in right of payment with all existing and future senior indebtedness of
VersaTel, including the Existing Notes.
VersaTel has transferred substantially all of its assets and liabilities
(other than the Existing Notes) to its Restricted Subsidiaries. VersaTel,
therefore, is a holding company with limited assets and operates its business
through its Restricted Subsidiaries. Any right of VersaTel and its creditors,
including holders of the Notes, to participate in the assets of any of
VersaTel's Subsidiaries upon any liquidation or administration of any such
Subsidiary will be subject to the prior claims of the creditors of such
Subsidiary. The claims of creditors of VersaTel, including holders of the Notes,
will be effectively subordinated to all existing and future third-party
indebtedness and liabilities, including trade payables, of VersaTel's
Subsidiaries. At March 31, 1999, after giving effect to the issuance of the
Notes offered hereby, the incurrence and repayment of the Interim Loans and the
acquisition of Svianed as if each had occurred on such date, VersaTel's
Subsidiaries would have had total liabilities of NLG million ($
million) reflected on VersaTel's consolidated balance sheet. VersaTel and its
Subsidiaries may incur other debt in the future, including secured debt.
The Notes will not be entitled to any security and will not be entitled to
the benefit of any guarantees, except under the circumstances described under
"-- Certain Covenants -- Limitation on Issuances of Guarantees of Indebtedness
by Restricted Subsidiaries."
PRINCIPAL, MATURITY AND INTEREST
The Dollar Notes will be limited in aggregate principal amount to
$ , of which $ will be offered in this offering, and the Euro
Notes will be limited in aggregate principal amount to
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E , of which E will be offered in this offering. Each series
of Notes will mature on , 2009. The redemption price at
maturity will be 100%. The Dollar Notes will bear interest at the rate of %
per annum and the Euro Notes will bear interest at the rate of % per annum,
in each case payable semi-annually in arrears on each and
(each an "Interest Payment Date"), commencing on ,
2000 to the Person in whose name the Note (or any predecessor Note) is
registered at the close of business on the preceding or
, as the case may be. Interest on the Notes will start to accrue
on the Closing Date. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. VersaTel may issue additional Notes of each series
("Additional Notes") from time to time after this offering up to an aggregate
principal amount of $ million (in the case of Dollar Notes) or
E million (in the case of Euro Notes), subject to the provisions of the
Indentures described below under "-- Certain Covenants" and applicable law. Each
series of Notes offered hereby and any Additional Notes subsequently issued
under each Indenture would be treated as a single class for all purposes under
such Indenture, including, without limitation, waivers, amendments, redemptions
and offers to purchase. Principal of, premium, if any, interest and Additional
Amounts, if any, on the Notes will be payable at the office or agency of
VersaTel maintained for such purpose within the City and State of New York or,
at the option of VersaTel, payment of interest and Additional Amounts, if any,
may be made by check mailed to the holders of the Notes at their respective
addresses set forth in the register of holders of Notes. Until otherwise
designated by VersaTel, VersaTel's office or agency in New York will be the
office of each Trustee maintained for such purpose. The Dollar Notes will be
issued in minimum denominations of $1,000 (in principal amount) and integral
multiples thereof and the Euro Notes will be issued in minimum denominations of
E1,000 (in principal amount) and integral multiples thereof. If any Notes are
listed on the Luxembourg Stock Exchange, VersaTel will appoint Kredietbank S.A.
Luxembourgeoise, or such other Person located in Luxembourg and reasonably
acceptable to each Trustee, as an additional paying and transfer agent. Upon the
issuance of Definitive Notes, Holders will be able to receive principal,
interest and Additional Amounts, if any, on the Notes and will be able to
transfer Definitive Notes at the Luxembourg office of such paying and transfer
agent, subject to the right of VersaTel to mail payments in accordance with the
terms of each Indenture. In case of a transfer of a Definitive Note in part, new
Definitive Notes will be available at the office of the Transfer Agent. Payment
of principal on the Definitive Notes will be made upon their surrender at an
office of the paying agent in Luxembourg.
MANDATORY REDEMPTION
VersaTel will not be required to make mandatory redemptions or sinking fund
payments prior to maturity of the Notes.
OPTIONAL REDEMPTION
Except as described below and in the following paragraph or under
"Redemption for Taxation Reasons," the Notes will not be redeemable at
VersaTel's option prior to , 2004. From and after , 2004,
the Notes will be subject to redemption at the option of VersaTel, in whole or
in part, upon not less than 30 nor more than 60 days' prior notice, published in
a leading newspaper having a general circulation in New York (which is expected
to be The Wall Street Journal) and in Amsterdam (which is expected to be Het
Financieele Dagblad) (and, if and so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
a newspaper having a general calculation in Luxembourg (which is expected to be
the Luxemburger Wort)) as well as, in the case of Definitive Notes, mailed by
first-class mail to each Holder's registered address, at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest and Additional Amounts, if any, to the applicable redemption
date (and, in the case of Definitive Notes, subject to the right of Holders of
record on the relevant record date to receive interest and Additional
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Amounts, if any, due on the relevant interest payment date in respect thereof),
if redeemed during the twelve-month period beginning on of each of the
years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- ----------
<S> <C>
2004....................................... %
2005....................................... %
2006....................................... %
2007 and thereafter........................ 100.000%
</TABLE>
In addition, at any time on or prior to , 2002, VersaTel may, at
its option, redeem up to 35% of the aggregate principal amount of the Notes of
each series originally issued under each Indenture on the Issue Date at a
redemption price equal to % of the aggregate principal amount the
Dollar Notes or the Euro Notes, as the case may be, plus accrued and unpaid
interest and Additional Amounts, if any, to the date of redemption (and in the
case of Definitive Notes, subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date and Additional Amounts, if any, in respect thereof), with the Net Cash
Proceeds of one or more Public Equity Offerings received by, or invested in,
VersaTel; provided that, in each case, at least 65% of the aggregate original
principal amount of each series of Notes remains outstanding immediately after
the occurrence of such redemption; and provided, further, that notice of any
such redemption must be given to Holders within 30 days of the date of the
closing of any such Public Equity Offering. In the event of any redemption of
the Notes, payments will be made as described under "-- Principal, Maturity and
Interest."
The aggregate principal amount of Notes to be redeemed shall be allocated
by VersaTel between the Dollar Notes and the Euro Notes in its sole discretion.
In the case of any partial redemption, selection of the Notes for redemption
will be made by the relevant Trustee in compliance with the requirements of the
principal securities exchange, if any, on which such Notes are listed or, if
such Notes are not so listed or such exchange prescribes no method of selection,
on a pro rata basis, by lot or by such other method as such Trustee in its sole
discretion shall deem to be fair and appropriate, although no Note of $1,000 in
original principal amount (in the case of Dollar Notes) and no Note of E1,000 in
original principal amount or less (in the case of Euro Notes) shall be redeemed
in part. If any Note is to be redeemed in part only, the notice of redemption
relating to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued and delivered to the Depositary, or, in the case of
Definitive Notes, issued in the name of the Holder thereof in each case upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on the Notes or portions thereof called for redemption.
REDEMPTION FOR TAXATION REASONS
The Notes may be redeemed, at the option of VersaTel in whole but not in
part, at any time upon giving not less than 30 nor more than 60 days' notice to
the Holders (which notice shall be irrevocable), at a redemption price equal to
the principal amount thereof, together with accrued and unpaid interest, to the
date fixed by VersaTel for redemption (a "Tax Redemption Date"), and all
Additional Amounts (see "-- Withholding Taxes"), if any, then due and which will
become due on the Tax Redemption Date as a result of the redemption or
otherwise, if VersaTel determines that, as a result of (i) any change in, or
amendment to, the laws or treaties (or any regulations or rulings promulgated
thereunder) of The Netherlands (or any political subdivision or taxing authority
thereof) or any other Relevant Taxing Jurisdiction (as defined in
"-- Withholding Taxes")affecting taxation which becomes effective on or after
the Issue Date, or (ii) any change in or new or different position regarding the
application, administration or interpretation of such laws, treaties,
regulations or rulings (including a holding,
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judgment or order by a court of competent jurisdiction), which change,
amendment, application or interpretation becomes effective on or after the Issue
Date, VersaTel is, or on the next Interest Payment Date would be, required to
pay Additional Amounts, and VersaTel determines that such payment obligation
cannot be avoided by VersaTel taking reasonable measures.
Notwithstanding the foregoing, no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which VersaTel would be
obligated to make such payment or withholding if a payment in respect of the
Notes were then due. Prior to the publication or, where relevant, mailing of any
notice of redemption of the Notes pursuant to the foregoing, VersaTel will
deliver to each Trustee an opinion of an independent tax counsel of recognized
international standing to the effect that the circumstances referred to above
exist. Each Trustee shall accept such opinion as sufficient evidence of the
satisfaction of the conditions precedent described above, in which event it
shall be conclusive and binding on the Holders.
CERTAIN COVENANTS
LIMITATION ON INDEBTEDNESS
(a) VersaTel will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness; provided, however, that if no Default
or Event of Default shall have occurred and be continuing at the time, or would
occur as a consequence, of the Incurrence of any such Indebtedness, VersaTel may
Incur Indebtedness if immediately thereafter the ratio of (i) the aggregate
principal amount of Indebtedness of VersaTel and its Restricted Subsidiaries on
a consolidated basis outstanding as of the Transaction Date to (ii) the pro
forma Consolidated Cash Flow (the "Indebtedness to Consolidated Cash Flow
Ratio") for the preceding two full fiscal quarters multiplied by two, determined
on a pro forma basis as if any such Indebtedness had been Incurred and the
proceeds thereof had been applied at the beginning of such two fiscal quarters,
would be greater than zero and less than or equal to 5.0 to 1.
(b) Notwithstanding the foregoing, (except for Indebtedness under
subsection (vii) below) VersaTel and (except for Indebtedness under subsections
(v), (vi) and (x)(A) below) any Restricted Subsidiary may Incur each and all of
the following:
(i) Indebtedness (other than Acquired Indebtedness) Incurred to
finance the cost (provided that such Indebtedness is Incurred at any time
on or before, or within 90 days following, the incurrence of such cost)
(including the cost of design, development, construction, acquisition,
installation or integration) of assets used in the Permitted Business or
Equity Interests of (A) a Restricted Subsidiary that owns principally such
assets from a Person other than VersaTel or a Restricted Subsidiary of
VersaTel or (B) any Person that is principally engaged in the Permitted
Business, that would become a Restricted Subsidiary and owns principally
such assets; provided that (x) any such Indebtedness of a Restricted
Subsidiary must be Incurred under one or more Credit Facilities, under one
or more Capitalized Leases or from the vendor of the assets, property or
services acquired with the proceeds of such Indebtedness, (y) the amount of
such Indebtedness of a Restricted Subsidiary may not exceed the Fair Market
Value of the assets so acquired and (z) the amount of such Indebtedness of
VersaTel, Incurred to acquire Equity Interests under clauses (A) and (B)
above, may not exceed the Fair Market Value of such assets of any
Restricted Subsidiary or any such Person so acquired;
(ii) Indebtedness of any Restricted Subsidiary owing to and held by
VersaTel, Indebtedness of VersaTel owing to and held by any Restricted
Subsidiary or Indebtedness of any Restricted Subsidiary owing to and held
by any other Restricted Subsidiary; provided that any subsequent issuance
or transfer of any Capital Stock which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer
of such Indebtedness (other than to VersaTel or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence of
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such Indebtedness not permitted by this clause (ii); and provided, further,
that Indebtedness of VersaTel owing to and held by a Restricted Subsidiary
must be unsecured and subordinated in right of payment to the Notes;
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness of
VersaTel or a Restricted Subsidiary, other than Indebtedness Incurred under
clauses (ii), (iv), (vii), (viii) and (xii) of this paragraph, and any
refinancings thereof in an amount not to exceed the amount so refinanced or
refunded (plus premiums, accrued interest, and reasonable fees and
expenses); provided that such new Indebtedness shall only be permitted
under this clause (iii) if (A) in case the Notes are refinanced in part or
the Indebtedness to be refinanced or refunded is pari passu with the Notes,
such new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made pari passu with, or subordinate in right of
payment to, the remaining Notes, (B) in case the Indebtedness to be
refinanced is subordinated in right of payment to the Notes, such new
Indebtedness, by its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is issued or remains outstanding,
is expressly made subordinate in right of payment to the Notes at least to
the extent that the Indebtedness to be refinanced or refunded is
subordinated to the Notes, (C) the Stated Maturity of such new
Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, is no earlier than the Stated Maturity of the Indebtedness
being refinanced or refunded and (D) such new Indebtedness, determined as
of the date of Incurrence of such new Indebtedness, has a Weighted Average
Life to Maturity which is not less than the remaining Weighted Average Life
to Maturity of the Indebtedness to be refinanced or refunded; and provided,
further, that in no event may Indebtedness of VersaTel be refinanced or
refunded by means of any Indebtedness of any Restricted Subsidiary pursuant
to this clause (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal
bonds or letters of credit supporting Trade Payables, in each case provided
in the ordinary course of business, (B) under Currency Agreements and
Interest Rate Agreements; provided that such agreements do not increase the
Indebtedness of the obligor outstanding at any time other than as a result
of fluctuations in foreign currency exchange rates or interest rates or by
reason of fees, indemnities and compensation payable thereunder, and (C)
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, or from Guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of
VersaTel or any of its Restricted Subsidiaries pursuant to such agreements,
in any case Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary of VersaTel (other than Guarantees of
Indebtedness Incurred for the purpose of financing such acquisition by the
Person acquiring all or any portion of such business, assets or Restricted
Subsidiary), in a principal amount not to exceed the gross proceeds
actually received by VersaTel or any Restricted Subsidiary in connection
with such disposition;
(v) Indebtedness, to the extent that the net proceeds thereof are
promptly (A) used to repurchase Notes tendered in a Change of Control Offer
or (B) deposited to defease all of the Notes as described below under
"Legal Defeasance and Covenant Defeasance";
(vi) Indebtedness of VersaTel represented by the Notes;
(vii) Indebtedness represented by a Guarantee of the Notes and
Guarantees of other Indebtedness of VersaTel by a Restricted Subsidiary, in
each case permitted by and made in accordance with the "Limitation on
Issuances of Guarantees of Indebtedness by Restricted Subsidiaries"
covenant;
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(viii) Indebtedness under one or more Credit Facilities, in an
aggregate principal amount at any one time outstanding not to exceed the
greater of (x) NLG 70.0 million and (y) 80.0% of Eligible Accounts
Receivable at any one time outstanding, subject to any permanent reductions
required by any other terms of either Indenture;
(ix) Acquired Indebtedness; provided that the aggregate amount of such
Acquired Indebtedness (other than the Indebtedness Incurred under one or
more Credit Facilities, under one or more Capitalized Leases or from the
vendor of assets, property or services acquired with the proceeds of such
Indebtedness) of the Person that is to become a Restricted Subsidiary or be
merged or consolidated with or into VersaTel or any Restricted Subsidiary
in the contemplated transaction, outstanding at the time of such
transaction does not exceed the Fair Market Value of the plant, property
and equipment (excluding property, plant and equipment securing any of the
Credit Facilities or vendor financings or subject to any Capital Leases
referred to in this clause (ix)) of any Restricted Subsidiary so acquired;
(x) Indebtedness of (A) VersaTel not to exceed, at any one time
outstanding, 2.00 times the Net Cash Proceeds from (1) the issuance and
sale, other than to a Subsidiary, of Equity Interests (other than
Redeemable Stock and excluding any Ordinary Shares issued in connection
with the Recapitalization) of VersaTel and (2) capital contributions made
in VersaTel (other than by a Subsidiary) less, in each case, the amount of
such proceeds used to make Restricted Payments as provided in clause (C)(2)
of the first paragraph or clause (iii) or (iv) of the second paragraph of
the "Limitation on Restricted Payments" covenant and (B) VersaTel or
Acquired Indebtedness of a Restricted Subsidiary (provided that any such
Indebtedness of such Restricted Subsidiary must be incurred under one or
more Credit Facilities, under one or more Capitalized Leases or from the
vendor of the assets, property or services acquired with the proceeds of
such Indebtedness) not to exceed, at any one time outstanding, the fair
market value of any Telecommunications Assets acquired by VersaTel or such
Restricted Subsidiary in exchange for Equity Interests of VersaTel issued
after the Issue Date; provided, however, that in determining the fair
market value of any such Telecommunications Assets so acquired, if the
estimated fair market value of such Telecommunications Assets exceeds (x)
$2.0 million (as estimated in good faith by the Board of Directors), then
the fair market value of such Telecommunications Assets will be determined
by a majority of the Board of Directors of VersaTel, which determination
will be evidenced by a resolution thereof, and (y) $10.0 million (as
estimated in good faith by the Board of Directors), then VersaTel will
deliver to each Trustee a written appraisal as to the fair market value of
such Telecommunications Assets prepared by an internationally recognized
investment banking or public accounting firm (or, if no such investment
banking or public accounting firm is qualified to prepare such an
appraisal, by an internationally recognized appraisal firm); and provided
further that such Indebtedness (other than the Indebtedness Incurred under
one or more Credit Facilities, under one or more Capitalized Leases or from
the vendor of assets, property or services acquired with the proceeds of
such Indebtedness) does not mature prior to the Stated Maturity of the
Notes and the Weighted Average Life to Maturity of such Indebtedness is
longer than that of the Notes;
(xi) Indebtedness outstanding as of the Issue Date; and
(xii) Indebtedness (in addition to Indebtedness permitted under
clauses (i) through (xi) above) in an aggregate principal amount
outstanding at any one time not to exceed the greater of (A) NLG 100
million and (B) an amount equal to 5% of VersaTel's consolidated net
tangible assets as of such date.
(c) For purposes of determining any particular amount of Indebtedness under
this "Limitation on Indebtedness" covenant, Guarantees, Liens or obligations
with respect to letters of credit supporting Indebtedness otherwise included in
the determination of such particular amount shall not be included; provided,
however, that the foregoing shall not in any way be deemed to limit the
provisions of
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"-- Limitation on Issuances of Guarantees of Indebtedness by Restricted
Subsidiaries." For purposes of determining compliance with this "Limitation on
Indebtedness" covenant, (A) in the event that an item of Indebtedness meets the
criteria of more than one of the types of Indebtedness described in the above
clauses, VersaTel, in its sole discretion, shall classify (and from time to time
may reclassify) such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of such clauses and (B) the
principal amount of Indebtedness issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with U.S. GAAP.
LIMITATION ON RESTRICTED PAYMENTS
VersaTel will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend or make any distribution
on account of any Equity Interest in VersaTel or any Restricted Subsidiary to
the holders thereof, including any dividend or distribution payable in
connection with any merger or consolidation (other than (A) dividends or
distributions payable solely in Equity Interests (other than Redeemable Stock)
of VersaTel, (B) dividends or distributions made only to VersaTel or a
Restricted Subsidiary and (C) pro rata dividends or distributions on Capital
Stock of a Restricted Subsidiary held by Persons other than VersaTel or a
Restricted Subsidiary), (ii) purchase, redeem, retire or otherwise acquire for
value any Equity Interests of VersaTel or any Equity Interests of any Restricted
Subsidiary (other than any such Equity Interests owned by VersaTel or any
Restricted Subsidiary), (iii) make any principal payment or redeem, repurchase,
defease, or otherwise acquire or retire for value, in each case, prior to any
scheduled repayment, or maturity, any Indebtedness of VersaTel that is
subordinated in right of payment to the Notes, or (iv) make any Investment,
other than a Permitted Investment, in any Person (all such payments or any other
actions described in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments") unless, at the time of, and after giving effect to,
the proposed Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing;
(B) VersaTel could Incur at least $1.00 of additional Indebtedness
under the first paragraph of the "Limitation on Indebtedness" covenant; and
(C) the aggregate amount expended for all Restricted Payments (the
amount so expended, if other than in cash, to be determined in good faith
by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) after the Issue Date is less than the sum
of (1) Cumulative Consolidated Cash Flow minus 150% of Cumulative
Consolidated Fixed Charges, plus (2) 100% of the aggregate Net Cash
Proceeds received by VersaTel after the Issue Date as a capital
contribution or from the issuance and sale of its Equity Interests (other
than Redeemable Stock, and excluding any Ordinary Shares issued in
connection with the Offering or the Recapitalization) to a Person (other
than a Restricted Subsidiary of VersaTel), plus (3) the aggregate amount by
which Indebtedness (other than any Indebtedness subordinated in right of
payment to the Notes) of VersaTel or any Restricted Subsidiary is reduced
on VersaTel's balance sheet upon the conversion or exchange (other than by
a Restricted Subsidiary of VersaTel) subsequent to the Issue Date into
Equity Interests (other than Redeemable Stock and less the amount of any
cash, or the fair value of property, distributed by VersaTel or any
Restricted Subsidiary upon such conversion or exchange) and plus (4)
without duplication of any amount included in the calculation of
Consolidated Net Income, in the case of repayment of, or return of capital
in respect of, any Investment constituting a Restricted Payment made after
the Issue Date, an amount equal to the lesser of the repayment of, the
return of capital with respect to, such Investment and the cost of such
Investment, in either case less the cost of the disposition of such
Investment and net of taxes.
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The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof if, at said date
of declaration, such payment would comply with the provisions of each Indenture;
(ii) the redemption, repurchase, defeasance or other acquisition or retirement
for value of Indebtedness that is subordinated in right of payment to the Notes
including premium, if any, and accrued and unpaid interest, with the proceeds
of, or in exchange for, Indebtedness Incurred under clause (iii) of paragraph
(b) of the "Limitation on Indebtedness" covenant; (iii) the repurchase,
redemption or other acquisition of Equity Interests in VersaTel in exchange for,
or out of the Net Cash Proceeds of, a substantially concurrent capital
contribution or offering of Equity Interests (other than Redeemable Stock) in
VersaTel to any Person (other than a Restricted Subsidiary); (iv) the
repurchase, redemption or other acquisition of Indebtedness of VersaTel which is
subordinated in right of payment to the Notes in exchange for, or out of the Net
Cash Proceeds of, a substantially concurrent capital contribution or offering of
Equity Interests (other than Redeemable Stock) in VersaTel to any Person (other
than a Restricted Subsidiary); (v) the purchase of any subordinated Indebtedness
at a purchase price not greater than 101% of the principal amount thereof
following a Change of Control pursuant to an obligation in the instruments
governing such subordinated Indebtedness to purchase or redeem such subordinated
Indebtedness as a result of such Change of Control; provided, however, that no
such purchase or redemption shall be permitted until VersaTel has completely
discharged its obligations described under "-- Repurchase of Notes upon a Change
of Control" (including the purchase of all Notes tendered for purchase by
holders) arising as a result of such Change of Control; (vi) repurchases of
warrants issued in connection with the First Offering and the Second Offering;
and (vii) repurchases of Equity Interests of VersaTel from employees of VersaTel
or any of its Restricted Subsidiaries deemed to occur upon exercise of stock
options if such Equity Interests represent a portion of the exercise price of
such options; provided that any payments made pursuant to this clause (vii) may
not exceed in aggregate $500,000 in any fiscal year of VersaTel; provided that,
in the case of clauses (ii) through (vii), no Default or Event of Default shall
have occurred and be continuing or occur as a consequence of the actions or
payments set forth therein.
Each Restricted Payment permitted pursuant to the immediately preceding
paragraph (other than the Restricted Payment referred to in clauses (ii), (iii)
and (iv) thereof) shall be included in calculating whether the conditions of
clause (C) of the first paragraph of this "Limitation on Restricted Payments"
covenant have been met with respect to any subsequent Restricted Payments. In
the event the proceeds of an issuance of Equity Interests (other than Redeemable
Stock) of VersaTel are used for the redemption, repurchase or other acquisition
of the Notes, then the Net Cash Proceeds of such issuance shall be included in
clause (C) of the first paragraph of this "Limitation on Restricted Payments"
covenant only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of the Notes.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
VersaTel will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (i) pay dividends or make any other
distributions permitted by applicable law on any Equity Interests of such
Restricted Subsidiary owned by VersaTel or any other Restricted Subsidiary, (ii)
pay any Indebtedness owed to VersaTel or any other Restricted Subsidiary, (iii)
make loans or advances to VersaTel or any other Restricted Subsidiary, or (iv)
transfer any of its property or assets to VersaTel or any other Restricted
Subsidiary.
The foregoing provisions shall not prohibit any encumbrances or
restrictions: (i) existing under or by reason of any agreement in effect on the
Issue Date, and any amendments, supplements, extensions, refinancings, renewals
or replacements of such agreements; provided that the encumbrances and
restrictions in any such amendments, supplements, extensions, refinancings,
renewals or replacements are no more restrictive than those encumbrances or
restrictions that are then in effect and that are being
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amended, supplemented, extended, refinanced, renewed or replaced; (ii) existing
under or by reason of applicable law; (iii) existing with respect to any
Restricted Subsidiary acquired by VersaTel or any Restricted Subsidiary after
the Issue Date, or the property or assets of such Restricted Subsidiary, and
existing at the time of such acquisition and not incurred in contemplation
thereof, which encumbrances or restrictions are not applicable to any Person or
the property or assets of any Person other than such Person or the property or
assets of such Person so acquired, and any amendments, supplements, extensions,
refinancings, renewals or replacements of agreements containing such
encumbrances or restrictions; provided that the encumbrances and restrictions in
any such amendments, supplements, extensions, refinancings, renewals or
replacements are no more restrictive than those encumbrances or restrictions
that are then in effect and that are being amended, supplemented, extended,
refinanced, renewed or replaced; (iv) in the case of clause (iv) of the first
paragraph of this "Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary
manner the subletting, assignment or transfer of any property or asset that is,
or is subject to, a lease, purchase mortgage obligation, license, conveyance or
contract or similar property or asset, (B) existing by virtue of any transfer
of, agreement to transfer, option or right with respect to, or Lien on, any
property or assets of VersaTel or any Restricted Subsidiary not otherwise
prohibited by each Indenture or (C) arising or agreed to in the ordinary course
of business, not relating to any Indebtedness, and that do not, individually or
in the aggregate, materially detract from the value of property or assets of
VersaTel or any Restricted Subsidiary to VersaTel or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed pursuant to an agreement
that has been entered into for the sale or disposition of all or substantially
all of the Capital Stock in, or property and assets of, such Restricted
Subsidiary; provided that such restriction shall terminate if such transaction
is abandoned or if such transaction is not consummated within six months of the
date such agreement was entered into; or (vi) contained in the terms of any
Indebtedness or any agreement pursuant to which such Indebtedness was issued if
(A) the encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not materially
more disadvantageous to the holders of the Notes than is customary in comparable
financings (as determined by the Board of Directors) and (C) the Board of
Directors determines that any such encumbrance or restriction will not
materially affect VersaTel's ability to make principal or interest payments on
the Notes. Nothing contained in this "Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries" covenant shall prevent VersaTel
or any Restricted Subsidiary from creating, incurring, assuming or suffering to
exist any Liens otherwise permitted in the "Limitation on Liens" covenant that
limit the right of the debtor to dispose of the assets securing such
Indebtedness.
LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
VersaTel will not, and will not permit any Restricted Subsidiary, directly
or indirectly, to issue, transfer, convey, sell, lease or otherwise dispose of
any shares of Capital Stock (including options, warrants or other rights to
purchase shares of such Capital Stock) of such Restricted Subsidiary or any
other Restricted Subsidiary to any Person (other than (i) to VersaTel or a
Wholly Owned Restricted Subsidiary, (ii) issuances of director's qualifying
shares, (iii) as required by applicable law, issuances or sales to foreign
nationals of the jurisdiction in which a Restricted Subsidiary is organized, and
(iv) Strategic Minority Capital Stock Issues), unless (A) immediately after
giving effect to such issuance, transfer, conveyance, sale, lease or other
disposition, such Restricted Subsidiary would no longer constitute a Restricted
Subsidiary and (B) any Investment in such Person remaining after giving effect
to such issuance, transfer, conveyance, sale, lease or other disposition would
have been permitted to be made under the "Limitation on Restricted Payments"
covenant if made on the date of such issuance, transfer, conveyance, sale, lease
or other disposition (valued as provided in the definition of "Investment").
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LIMITATION ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES
VersaTel will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction or series of
transactions (including, without limitation, the purchase, sale, lease or
exchange of property or assets, or the rendering of any service) with any direct
or indirect holder (or any Affiliate of such holder) of 5% or more of any class
of Capital Stock of VersaTel or with any Affiliate of VersaTel or any Restricted
Subsidiary, unless (i) such transaction or series of transactions is on terms
that are no less favorable to VersaTel or such Restricted Subsidiary than could
reasonably be obtained in a comparable arm's-length transaction with a Person
that is not such a holder or Affiliate, (ii) if such transaction or series of
transactions involves aggregate consideration in excess of $2.0 million, then
VersaTel shall deliver to each Trustee a resolution set forth in an Officers'
Certificate adopted by a majority of the Board of Directors, including a
majority of the independent, disinterested directors, approving such transaction
or series of transactions and certifying that such transaction or series of
transactions comply with clause (i) above, and (iii) if such transaction or
series of transactions involves aggregate consideration in excess of $5.0
million, then VersaTel will deliver to each Trustee a written opinion as to the
fairness to VersaTel or such Restricted Subsidiary of such transaction or series
of transactions from a financial point of view from an internationally
recognized investment banking firm (or, if an investment banking firm is
generally not qualified to give such an opinion, by an internationally
recognized appraisal firm or accounting firm).
The foregoing limitation does not limit and will not apply to (i) any
transaction between VersaTel and any of its Restricted Subsidiaries or between
Restricted Subsidiaries; (ii) the payment of reasonable and customary regular
fees to directors of VersaTel who are not employees of VersaTel; and (iii)
payment of dividends or other distributions in respect of Equity Interests of
VersaTel or any Restricted Subsidiary permitted by the "Limitation on Restricted
Payments" covenant.
LIMITATION ON LIENS
VersaTel will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist any Lien (other
than Permitted Liens) on any asset or property of VersaTel or any Restricted
Subsidiary without making effective provisions for all of the Notes and all
other amounts due under each Indenture to be directly secured equally and
ratably with (or, if the obligation or liability to be secured by such Lien is
subordinated in right of payment to the Notes, prior to) the obligation or
liability secured by such Lien.
LIMITATION ON ASSET SALES
VersaTel will not, and will not permit any Restricted Subsidiary to, make
any Asset Sale unless (i) VersaTel or the Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the assets sold or disposed of and (ii) at least 80% of the
consideration received for such Asset Sale consists of cash or Cash Equivalents
or Replacement Assets or the assumption of Indebtedness which ranks equal in
right of payment with the Notes.
VersaTel shall, or shall cause the relevant Restricted Subsidiary to, apply
the Net Cash Proceeds from an Asset Sale within 270 days of the receipt thereof
to (A) permanently repay unsubordinated Indebtedness of VersaTel or Indebtedness
of any Restricted Subsidiary, in each case owing to a Person other than VersaTel
or any of its Restricted Subsidiaries, (B) invest in Replacement Assets, or (C)
in any combination of repayment, prepayment, and reinvestment permitted by the
foregoing clauses (A) and (B).
Each Indenture will provide that any Net Cash Proceeds from the Asset Sale
that are not invested as provided and within the time period set forth in the
second paragraph of this "Limitation on Asset Sales" covenant will be deemed to
constitute "Excess Proceeds." If at any time the aggregate amount of Excess
Proceeds exceeds $5.0 million, VersaTel shall, within 30 business days
thereafter, make an offer
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to all Holders of Notes (an "Asset Sale Offer") to purchase on a pro rata basis
the maximum principal amount of Notes, that is an integral multiple of $1,000
(in the case of Dollar Notes) or E1,000 (in the case of Euro Notes) that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the outstanding principal amount thereof, plus accrued and
unpaid interest thereon, plus Additional Amounts, if any, to the date fixed for
the closing of such offer (and, in the case of Definitive Notes, subject to the
right of a Holder of record on the relevant record date to receive interest due
on the relevant interest payment date and Additional Amounts, if any, in respect
thereof), in accordance with the procedures set forth in each Indenture.
VersaTel will commence an Asset Sale Offer with respect to Excess Proceeds
within thirty business days after the date that Excess Proceeds exceeds $5.0
million by publishing or, where relevant, mailing the notice required pursuant
to the terms of each Indenture, with a copy to each Trustee. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, subject to applicable law, VersaTel may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the selection of such Notes for purchase will be made by each
Trustee in the same manner as the Notes are redeemed, as described under
"-- Optional Redemption." Upon completion of any such Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
VersaTel will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder and will comply
with the applicable laws of any non-U.S. jurisdiction in which an Asset Sale
Offer is made, in each case, to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset
Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of an Indenture, VersaTel will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in such Indenture by virtue thereof.
LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY RESTRICTED SUBSIDIARIES
VersaTel will not permit any Restricted Subsidiary, directly or indirectly,
to guarantee, assume or in any other manner become liable with respect to any
Indebtedness of VersaTel unless (i) such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to each Indenture providing for a
Guarantee of all of VersaTel's obligations under the Notes and such Indenture on
terms substantially similar to the guarantee of such Indebtedness, except that
if such Indebtedness is by its express terms subordinated in right of payment to
the Notes, any such assumption, Guarantee or other liability of such Restricted
Subsidiary with respect to such Indebtedness shall be subordinated in right of
payment to such Restricted Subsidiary's assumption, Guarantee or other liability
with respect to the Notes substantially to the same extent as such Indebtedness
is subordinated to the Notes and (ii) such Restricted Subsidiary waives, and
will not in any manner whatsoever claim or take the benefit or advantage of, any
rights of reimbursement, indemnity or subrogation or any other rights against
VersaTel or any other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Guarantee; provided that any Restricted
Subsidiary may guarantee Indebtedness of VersaTel under a Credit Facility if
such Indebtedness is Incurred in accordance with the "-- Limitation on
Indebtedness" covenant.
Notwithstanding the foregoing, any Guarantee of all of VersaTel's
obligations under the Notes and the Indentures by a Restricted Subsidiary may
provide by its terms that it will be automatically and unconditionally released
and discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of VersaTel, of all of VersaTel's and each Restricted Subsidiary's
Equity Interests in, or all or substantially all of the assets of, such
Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the
Indentures) or (ii) the release or discharge of the guarantee which resulted in
the creation of such Guarantee, except a discharge or release by or as a result
of payment under such guarantee.
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BUSINESS OF VERSATEL; RESTRICTION ON TRANSFERS OF EXISTING BUSINESS
VersaTel will not, and will not permit any Restricted Subsidiary to, be
principally engaged in any business or activity other than a Permitted Business.
In addition, VersaTel and any Restricted Subsidiary will not be permitted,
directly or indirectly, to transfer to any Unrestricted Subsidiary (i) any of
the licenses, permits or authorizations used in the Permitted Business of
VersaTel and any Restricted Subsidiary or (ii) any material portion of the
"property and equipment" (as such term is used in VersaTel's consolidated
financial statements) of VersaTel or any Restricted Subsidiary used in the
licensed service areas of VersaTel and any Restricted Subsidiary.
PROVISION OF FINANCIAL STATEMENTS AND REPORTS
VersaTel will file on a timely basis with the Commission, to the extent
such filings are accepted by the Commission and whether or not VersaTel has a
class of securities registered under the Exchange Act, (i) all annual and
quarterly financial statements and other financial information that would be
required to be contained in a filing with the Commission on Forms 20-F and 10-Q
if VersaTel were required to file such Forms (which financial statements shall
be prepared in accordance with U.S. GAAP), including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual financial information, a report thereon by VersaTel's certified
independent accountants and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if VersaTel were required to file such
reports. Such quarterly financial information shall be filed with the Commission
within 45 days following the end of each fiscal quarter of VersaTel, and such
annual financial information shall be furnished within 90 days following the end
of each fiscal year of VersaTel. Such annual financial information shall include
the geographic segment financial information required to be disclosed by
VersaTel under Item 101(d) of Regulation S-K under the Securities Act. VersaTel
will also be required (a) to file with each Trustee, and provide to each holder,
without cost to such holder, copies of such reports and documents within 15 days
after the date on which VersaTel files such reports and documents with the
Commission or the date on which VersaTel would be required to file such reports
and documents if VersaTel were so required, and (b) if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, to supply at VersaTel's cost copies of such reports and
documents to any prospective holder promptly upon request. In addition, for so
long as the Notes remain outstanding and VersaTel is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act nor exempt
from reporting under Rule 12g3-2(b) of the Exchange Act, VersaTel shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, any information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act and, to any beneficial holder of Notes, information of
the type that would be filed with the Commission pursuant to the foregoing
provisions, upon the request of any such holder, if and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such stock exchange
shall require, copies of all reports and information described above will be
available during normal business hours at the office of the listing agent in
Luxembourg.
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, VersaTel will make an offer to
purchase all or any part (equal to $1,000 in principal amount (in the case of
Dollar Notes) and equal to E1,000 in principal amount (in the case of Euro
Notes) and, in each case, in integral multiples thereof) of each series of Notes
pursuant to the offer described below (the "Change of Control Offer") at a price
in cash (the "Change of Control Payment") equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon to the date of
repurchase, plus Additional Amounts, if any, to the date of repurchase (and in
the case of Definitive Notes, subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date and Additional Amounts, if any,
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in respect thereof). Each Indenture provides that within 30 days following any
Change of Control, VersaTel will publish notice of such in a leading newspaper
having a general circulation in New York (which is expected to be the Wall
Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad) (and, if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or, in the case of Definitive Notes, mail a notice to each
Holder (and if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, will publish
notice in a newspaper having a general circulation in Luxembourg (which is
expected to be Luxemburger Wort)), with a copy to each Trustee, with the
following information: (i) that a Change of Control Offer is being made pursuant
to the covenant entitled "Repurchase of Notes upon a Change of Control" and that
all Notes properly tendered pursuant to such Change of Control Offer will be
accepted for payment; (ii) that the purchase price and the purchase date, which
will be no earlier than 30 days nor later than 60 days from the date such notice
is published, or where relevant, mailed, except as may be otherwise required by
applicable law (the "Change of Control Payment Date"); (iii) that any Note not
properly tendered will remain outstanding and continue to accrue interest; (iv)
that unless VersaTel defaults in the payment of the Change of Control Payment,
all Notes accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on the Change of Control Payment Date; (v) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the applicable paying
agent and at the address specified in the notice prior to the close of business
on the third Business Day preceding the Change of Control Payment Date; (vi)
that Holders will be entitled to withdraw their tendered Notes and their
election to require VersaTel to purchase such Notes; provided, however, that the
applicable paying agent receives, not later than the close of business on the
last day of the offer period, a facsimile transmission or letter setting forth
the name of the Holder, the principal amount of Notes tendered for purchase, and
a statement that such Holder is withdrawing his tendered Notes and his election
to have such Notes purchased; and (vii) that Holders whose Notes are being
purchased only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the principal amount of the Notes surrendered, which
unpurchased portion must be equal to $1,000 in principal amount (in the case of
Dollar Notes) or E1,000 in principal amount (in the case of Euro Notes) or, in
each case, in an integral multiple thereof.
VersaTel will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder and will comply
with the applicable laws of any non-U.S. jurisdiction in which a Change of
Control Offer is made, in each case, to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to a Change
of Control Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of either Indenture, VersaTel will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations contained in such Indenture by virtue
thereof. The provisions relating to VersaTel's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the Holders of a majority in principal
amount of the Notes.
Each Indenture will provide that on the Change of Control Payment Date,
VersaTel will, to the extent permitted by law, (i) accept for payment all Notes
of each series or portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) deposit with each paying agent an amount equal to the
aggregate Change of Control Payment in respect of the Notes or portions thereof
so tendered and (iii) deliver, or cause to be delivered, to each Trustee for
cancellation the Notes so accepted together with an Officers' Certificate
stating that such Notes or portions thereof have been tendered to and purchased
by VersaTel. Each Indenture will provide that each paying agent will promptly
either (x) pay to the Holder against presentation and surrender (or, in the case
of partial payment, endorsement) of the
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Global Notes or (y) in the case of Definitive Notes, mail to each Holder of
Notes the Change of Control Payment for such Notes, and each Trustee will
promptly authenticate and deliver to the Holder of the Global Notes a new Global
Note or Notes or, in the case of Definitive Notes, mail to each Holder a new
Definitive Note, as applicable, equal in principal amount to any unpurchased
portion of the Notes surrendered, if any; provided, however, that each new
Definitive Note will be in a principal amount of $1,000 (in the case of Dollar
Notes) or a principal amount of E1,000 (in the case of Euro Notes) or, in each
case, in an integral multiple thereof. VersaTel will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
If VersaTel is unable to repay all of its Indebtedness that would prohibit
repurchase of the Notes or is unable to obtain the consents of the holders of
Indebtedness, if any, of VersaTel outstanding at the time of a Change of Control
whose consent would be so required to permit the repurchase of Notes, then
VersaTel will have breached such covenant. This breach will constitute an Event
of Default under each Indenture if it continues for a period of 30 consecutive
days after written notice is given to VersaTel by the relevant Trustee or the
holders of at least 25% in aggregate principal amount of the Notes outstanding.
In addition, the failure by VersaTel to repurchase Notes at the conclusion of
the Change of Control Offer will constitute an Event of Default without any
waiting period or notice requirements.
There can be no assurances that VersaTel will have sufficient funds
available at the time of any Change of Control to make any debt payment
(including repurchases of Notes) required by the foregoing covenant (as well as
any covenant that may be contained in other securities of VersaTel which might
be outstanding at the time). The above covenant requiring VersaTel to repurchase
the Notes will, unless the consents referred to above are obtained, require
VersaTel to repay all Indebtedness then outstanding which by its terms would
prohibit such Note repurchase, either prior to or concurrently with such Note
repurchase.
The existence of a Holder's right to require VersaTel to repurchase such
Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire VersaTel in a transaction that would constitute a
Change of Control.
CONSOLIDATION, MERGER AND SALE OF ASSETS
VersaTel will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or in
a series of related transactions) to, any Person or permit any Person to merge
with or into VersaTel, and VersaTel will not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in
the sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of VersaTel or VersaTel and its
Restricted Subsidiaries, taken as a whole, to any other Person or Persons,
unless: (i) VersaTel will be the continuing Person, or the Person (if other than
VersaTel) (the "Surviving Entity") formed by such consolidation or into which
VersaTel is merged or that acquired or leased such property and assets of
VersaTel will be a corporation organized and validly existing under the laws of
The Netherlands, Germany, France, Belgium, the United Kingdom or the United
States of America, any state thereof or the District of Columbia and shall
expressly assume, by supplemental indentures, executed and delivered to each
Trustee, all of the obligations of VersaTel with respect to the Notes under each
Indenture; (ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a pro forma basis, VersaTel, or any
Person becoming the successor obligor of the Notes, shall have a Consolidated
Net Worth equal to or greater than the Consolidated Net Worth of VersaTel
immediately prior to such transaction; (iv) immediately after giving effect to
such transaction on a pro forma basis VersaTel, or any Person becoming the
successor obligor of the Notes, as the case may be, (A) prior to the third
anniversary of the Issue Date, would have an Indebtedness to
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Consolidated Cash Flow Ratio no greater than such ratio immediately prior to
such transaction or (B) on or after the third anniversary of the Issue Date,
could Incur at least $1.00 of Indebtedness under the first paragraph of the
"Limitation on Indebtedness" covenant; (v) VersaTel delivers to each Trustee an
Officers' Certificate (attaching the arithmetic computations to demonstrate
compliance with clauses (iii) and (iv)) and an Opinion of Counsel, in each case
stating that such consolidation, merger or transfer and such supplemental
indentures comply with each Indenture; and (vi) VersaTel shall have delivered to
each Trustee an opinion of tax counsel reasonably acceptable to such Trustee
stating that (A) Holders will not recognize income, gain or loss for U.S.
federal or Netherlands income tax purposes as a result of such transaction and
(B) no taxes on income (including taxable capital gains) will be payable under
the tax laws of the Relevant Taxing Jurisdiction by a Holder who is or who is
deemed to be a non-resident of the Relevant Taxing Jurisdiction in respect of
the acquisition, ownership or disposition of the Notes, including the receipt of
principal of, premium and interest paid pursuant to such Notes.
EVENTS OF DEFAULT
The following constitute "Events of Default" under each Indenture: (a) a
default for 30 days or more in the payment when due of interest on the Notes or
Additional Amounts, if any, with respect to the Notes; (b) a default in the
payment of principal of (or premium, if any, on) any Note when the same becomes
due and payable at maturity, upon acceleration, redemption or otherwise; (c) a
default in the payment of principal or interest on Notes required to be
purchased pursuant to an Asset Sale Offer as described under "Limitation on
Asset Sales" or pursuant to a Change of Control Offer as described under
"Repurchase of Notes upon a Change of Control"; (d) a failure to perform or
comply with the provisions described under "Consolidation, Merger and Sale of
Assets"; (e) a default in the performance of or breach of any other covenant or
agreement of VersaTel in such Indenture or under either series of Notes and such
default or breach continues for a period of 30 consecutive days after written
notice by the relevant Trustee or the holders of 25% or more in aggregate
principal amount of such series of Notes; (f) a default occurs on any other
Indebtedness of VersaTel or any Restricted Subsidiary if either (x) such default
is a failure to pay principal of such Indebtedness when due after any applicable
grace period and the principal amount of such Indebtedness is in excess of $5.0
million or (y) as a result of such default, the maturity of such Indebtedness
has been accelerated prior to its scheduled maturity and such default has not
been cured within the shorter of (i) 60 days and (ii) the applicable grace
period, and such acceleration has not been rescinded, and the principal amount
of such Indebtedness together with the principal amount of any other
Indebtedness of VersaTel and its Restricted Subsidiaries that is also in default
as to principal, or the maturity of which has been accelerated, aggregates $5.0
million or more; (g) failure to pay final judgments and orders against VersaTel
or any Restricted Subsidiary (not covered by insurance) aggregating in excess of
$5.0 million (treating any deductibles, self-insurance or retention as not so
covered), which final judgments remain unpaid, undischarged and unstayed for a
period in excess of 30 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid, discharged or stayed to exceed $5.0 million; (h) a
court having jurisdiction in the premises enters a decree or order for (A)
relief in respect of VersaTel or any of its Significant Subsidiaries in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, (B) appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of VersaTel or
any of its Significant Subsidiaries or for all or substantially all of the
property and assets of VersaTel or any of its Significant Subsidiaries or (C)
the winding up or liquidation of the affairs of VersaTel or any of its
Significant Subsidiaries and, in each case, such decree or order shall remain
unstayed and in effect for a period of 30 consecutive days; or (i) VersaTel or
any of its Significant Subsidiaries (A) commences a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consents to the entry of an order for relief in an involuntary case
under any such law, (B) consents to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
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similar official of VersaTel or any of its Significant Subsidiaries or for all
or substantially all of the property and assets of VersaTel or any of its
Significant Subsidiaries or (C) effects any general assignment for the benefit
of creditors.
If an Event of Default (other than an Event of Default specified in clauses
(h) or (i) above) occurs and is continuing under either Indenture, the relevant
Trustee or the Holders of at least 25% in aggregate principal amount of the
relevant series of Notes then outstanding, by written notice to VersaTel, may
declare the principal of, premium, if any, accrued and unpaid interest and other
monetary obligations (including Additional Amounts, if any) on all the then
outstanding Notes of such series to be immediately due and payable. Upon such a
declaration, such principal of, premium, if any, interest and other monetary
obligations on such Notes shall be immediately due and payable. In the event of
a declaration of acceleration because an Event of Default set forth in clause
(f) above has occurred and is continuing, such declaration of acceleration shall
be automatically rescinded and annulled if the event of default triggering such
Event of Default pursuant to clause (f) shall be remedied or cured by VersaTel
and/or the relevant Restricted Subsidiaries or waived by the holders of the
relevant Indebtedness within 60 days after the declaration of acceleration with
respect thereto. If an Event of Default specified in clauses (h) or (i) above
occurs, the principal of, premium, if any, accrued interest and other monetary
obligations on the Notes then outstanding shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
either Trustee or any Holder. Holders of at least a majority in principal amount
of each series of outstanding Notes, by written notice to VersaTel and to the
relevant Trustee, may waive all past defaults and rescind and annul a
declaration of acceleration and its consequences if (i) all existing Events of
Default, other than the nonpayment of the principal of, premium, if any,
interest and other monetary obligations on such series of Notes that have become
due solely by such declaration of acceleration, have been cured or waived and
(ii) the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction. For information as to the waiver of defaults, see
"-- Amendment, Supplement and Waiver".
Holders of Notes may not enforce each Indenture or the Notes except as
provided in each Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Notes of either series may
direct the relevant Trustee in its exercise of any trust or power. Each
Indenture will provide that each Trustee thereunder may withhold from Holders of
Notes notice of any continuing Default (except a Default relating to the payment
of principal, premium, if any, interest, or Additional Amounts, if any) if it
determines that withholding notice is in their interest. Each Indenture will
further provide that each Trustee thereunder shall have no obligation to
accelerate the Notes if, in the best judgment of such Trustee, acceleration is
not in the best interest of the Holders.
Each Indenture will require that VersaTel will deliver annually an
Officers' Certificate to each Trustee thereunder certifying that a review has
been conducted of the activities of VersaTel and VersaTel's performance under
such Indenture and that VersaTel has fulfilled all obligations thereunder or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default and the nature and status thereof. VersaTel will also be
obligated to notify each Trustee of any default or defaults in the performance
of any covenants or agreements under each Indenture within five business days of
becoming aware of any such default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of VersaTel
shall have any liability for any obligations of VersaTel under the Notes or
either Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Holder of the Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver and release may not be
effective to waive liabilities under the U.S. federal securities laws, and it is
the view of the Commission that such a waiver is against public policy.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The obligations of VersaTel under each Indenture will terminate (other than
certain obligations) and will be released upon payment in full of all of the
Notes of each series. VersaTel may, at its option and at any time, elect to have
all of its obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") and cure all then existing Events of Default except for (i) the
rights of Holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, interest and Additional Amounts, if any, on such
Notes when such payments are due or on the redemption date solely out of the
trust created pursuant to each Indenture, (ii) VersaTel's obligations with
respect to Notes concerning issuing temporary Notes, or, where relevant,
registration of such Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of each
Trustee, and VersaTel's obligations in connection therewith and (iv) the Legal
Defeasance provisions of each Indenture. In addition, VersaTel may, at its
option and at any time, elect to have the obligations of VersaTel released with
respect to certain covenants that are described in the Indentures ("Covenant
Defeasance"), and thereafter any omission to comply with such obligations shall
not constitute a Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment on other
indebtedness, bankruptcy, receivership, rehabilitation and insolvency events)
described under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance with
respect to either series of Notes,
(i) VersaTel must irrevocably deposit, or cause to be irrevocably
deposited, with the relevant Trustee, in trust, for the benefit of the
Holders of (A) the Dollar Notes, cash in U.S. dollars, U.S. Government
Securities or a combination thereof and (B) the Euro Notes, cash in euros,
European Government Securities or a combination thereof, in such amounts as
will be sufficient, in the opinion of an internationally recognized firm of
independent public accountants, to pay the principal of, premium, if any,
interest and Additional Amounts, if any, due on the outstanding Notes on
the stated maturity date or on the applicable redemption date, as the case
may be, of such principal, premium, if any, interest and Additional
Amounts, if any, due on the outstanding Notes of each series;
(ii) in the case of Legal Defeasance, VersaTel shall have delivered to
the relevant Trustee (A) an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that, subject to customary
assumptions and exclusions, (1) VersaTel has received from, or there has
been published by, the U.S. Internal Revenue Service a ruling or (2) since
the Issue Date, there has been a change in the applicable U.S. federal
income tax law such that a ruling is no longer required, in either case to
the effect that, and based thereon such opinion of counsel in the United
States shall confirm that, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such Legal
Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Legal Defeasance had not occurred and (B) an opinion of
counsel in The Netherlands reasonably acceptable to such Trustee to the
effect that (1) Holders will not recognize income, gain or loss for
Netherlands income tax purposes as a result of such Legal Defeasance and
will be subject to Netherlands income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred and (2) payments from the defeasance trust will
be free and exempt from any and all withholding and other income taxes of
whatever nature imposed or levied by or on behalf of The Netherlands or any
political subdivision thereof or therein having the power to tax;
(iii) in the case of Covenant Defeasance, VersaTel shall have
delivered to the relevant Trustee (A) an opinion of counsel in the United
States reasonably acceptable to such Trustee confirming
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that, subject to customary assumptions and exclusions, the Holders of the
outstanding Notes will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to such tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred and (B) an opinion of counsel in The Netherlands reasonably
acceptable to such Trustee to the effect that (1) Holders will not
recognize income, gain or loss for Netherlands income tax purposes as a
result of such Covenant Defeasance and will be subject to Netherlands
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred and
(2) payments from the defeasance trust will be free and exempt from any and
all withholding and other income taxes of whatever nature imposed or levied
by or on behalf of The Netherlands or any political subdivision thereof or
therein having the power to tax;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of such
deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material
agreement or instrument to which VersaTel is a party or by which VersaTel
is bound;
(vi) VersaTel shall have delivered to the relevant Trustee an opinion
of counsel to the effect that, as of the date of such opinion and subject
to customary assumptions and exclusions following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally under any applicable Netherlands and U.S. federal or state law,
and that such Trustee has a perfected security interest in such trust funds
for the ratable benefit of the Holders;
(vii) VersaTel shall have delivered to the relevant Trustee an
Officers' Certificate stating that the deposit was not made by VersaTel
with the intent of defeating, hindering, delaying or defrauding any
creditors of VersaTel or others; and
(viii) VersaTel shall have delivered to the relevant Trustee an
Officers' Certificate and an opinion of counsel in the United States (which
opinion of counsel may be subject to customary assumptions and exclusions)
each stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have been
complied with.
SATISFACTION AND DISCHARGE
Each Indenture will be discharged and will cease to be of further effect as
to all Notes issued thereunder when either (i) all such Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust and thereafter repaid to VersaTel) have been delivered to
each Trustee thereunder for cancellation; or (ii) (A) all such Notes not
theretofore delivered to such Trustee for cancellation have become due and
payable by reason of the making of a notice of redemption or otherwise or will
become due and payable within one year and VersaTel has irrevocably deposited or
caused to be deposited with such Trustee as trust funds in trust an amount of
money sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to such Trustee for cancellation for principal, premium,
if any, and accrued and unpaid interest and Additional Amounts, if any, to the
date of maturity or redemption; (B) no Default with respect to such Indenture or
the Notes issued thereunder shall have occurred and be continuing on the date of
such deposit or shall occur as a result of such deposit and such deposit will
not result in a breach or violation of, or constitute a default under, any other
instrument to which VersaTel is a party or by which it is bound; (C) VersaTel
has paid, or caused to be paid, all sums payable by it under such Indenture; and
(D) VersaTel has delivered irrevocable instructions to each Trustee under such
Indenture to apply the deposited money toward the
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payment of such Notes at maturity or the redemption date, as the case may be. In
addition, VersaTel must deliver an Officers' Certificate and an opinion of
counsel to the relevant Trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
WITHHOLDING TAXES
All payments made by VersaTel on the Notes (whether or not in the form of
Definitive Notes) will be made without withholding or deduction for, or on
account of, any present or future taxes, duties, assessments or governmental
charges of whatever nature (collectively, "Taxes") imposed or levied by or on
behalf of The Netherlands or any jurisdiction in which VersaTel or any Surviving
Entity is organized or is otherwise resident for tax purposes or any political
subdivision thereof or any authority having power to tax therein or any
jurisdiction from or through which payment is made (each a "Relevant Taxing
Jurisdiction"), unless the withholding or deduction of such Taxes is then
required by law or the interpretation or administration thereof. If any
deduction or withholding for, or on account of, any Taxes of any Relevant Taxing
Jurisdiction, shall at any time be required on any payments made by VersaTel
with respect to Notes of either series, including payments of principal,
redemption price, interest or premium, VersaTel will pay such additional amounts
(the "Additional Amounts") as may be necessary in order that the net amounts
received in respect of such payments by the Holders of such Notes or the
relevant Trustee, as the case may be, after such withholding or deduction, equal
the respective amounts which would have been received in respect of such
payments in the absence of such withholding or deduction; except that no such
Additional Amounts will be payable with respect to:
(i) any payments on a Note held by or on behalf of a Holder or
beneficial owner who is liable for such Taxes in respect of such Note by
reason of the Holder or beneficial owner having some connection with the
Relevant Taxing Jurisdiction (including being a citizen or resident or
national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the Relevant Taxing
Jurisdiction) other than by the mere holding of such Note or enforcement of
rights thereunder or the receipt of payments in respect thereof;
(ii) any Taxes that are imposed or withheld as a result of a change in
law after the Issue Date where such withholding or imposition is by reason
of the failure of the Holder or beneficial owner of the Note to comply with
any request by VersaTel to provide information concerning the nationality,
residence or identity of such Holder or beneficial owner or to make any
declaration or similar claim or satisfy any information or reporting
requirement, which is required or imposed by a statute, treaty, regulation
or administrative practice of the Relevant Taxing Jurisdiction as a
precondition to exemption from all or part of such Taxes;
(iii) except in the case of the winding up of VersaTel, any Note
presented for payment (where presentation is required) in the Relevant
Taxing Jurisdiction; or
(iv) any Note presented for payment (where presentation is required)
more than 30 days after the relevant payment is first made available for
payment to the Holder.
Such Additional Amounts will also not be payable where, had the beneficial
owner of the Note been the Holder of the Note, he would not have been entitled
to payment of Additional Amounts by reason of clauses (i) to (iv) inclusive
above.
Upon request, VersaTel will provide each Trustee with documentation
satisfactory to each Trustee evidencing the payment of Additional Amounts.
Copies of such documentation will be made available to the Holders upon request.
VersaTel will pay any present or future stamp, court or documentary taxes,
or any other excise or property taxes, charges or similar levies which arise in
any jurisdiction from the execution, delivery or registration of the Notes or
any other document or instrument referred to therein, or the receipt of any
payments with respect to the Notes, excluding any such taxes, charges or similar
levies imposed by any
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jurisdiction outside of The Netherlands, the United States of America or any
jurisdiction in which a Paying Agent is located, other than those resulting
from, or required to be paid in connection with, the enforcement of the Notes or
any other such document or instrument following the occurrence of any Event of
Default with respect to the Notes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, each Indenture
and the Notes of each series issued thereunder may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes of each series then outstanding (including consents obtained in
connection with a tender offer or exchange offer for such series of Notes), and
any existing Default or Event of Default and its consequences or compliance with
any provision of each Indenture or the Notes issued thereunder may be waived
with the consent of the Holders of a majority in principal amount of the
outstanding Notes of such series (including consents obtained in connection with
a tender offer or exchange offer for such Notes).
Each Indenture will provide that, with respect to each series of Notes,
without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a nonconsenting Holder of Notes): (i) reduce
the principal amount of either series of Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any such Note or alter or waive the provisions with respect to
the redemption of such Notes, (iii) reduce the rate of or change the time for
payment of interest on any such Notes, (iv) waive a Default in the payment of
principal of, or premium, interest or Additional Amounts, if any, on, such Notes
(except a rescission of acceleration of such Notes by the Holders of at least a
majority in aggregate principal amount of such Notes and a waiver of the payment
default that resulted from such acceleration with respect to such Notes), or in
respect of a covenant or provision contained in such Indenture which cannot be
amended or modified without the consent of all Holders, (v) make any Note
payable in money other than that stated in such Notes, (vi) make any change in
the provisions of such Indenture relating to waivers of past Defaults or the
rights of Holders of such Notes to receive payments of principal of, or premium,
interest or Additional Amounts, if any, on, such Notes, (vii) make any change in
the amendment and waiver provisions in such Indenture, (viii) make any change in
the provisions of such Indenture described under "-- Withholding Taxes" that
adversely affects the rights of any Holder of the Notes issued thereunder, (ix)
amend the terms of such Notes or such Indenture in a way that would result in
the loss of an exemption from any of the Taxes described thereunder or an
exemption from any obligation to withhold or deduct Taxes as described
thereunder unless VersaTel agrees to pay Additional Amounts in respect thereof,
or (x) impair the right of any Holder of such Notes to receive payment of
principal of, or interest on, such Holder's Notes on or after the due dates
therefor or to institute suit for the enforcement of any payment on or with
respect to such Holder's Notes.
Each Indenture will provide that, notwithstanding the foregoing, without
the consent of any Holder of Notes, VersaTel and each Trustee together may amend
or supplement such Indenture or the Notes issued thereunder (i) to cure any
ambiguity, omission, defect or inconsistency, (ii) to provide for uncertificated
Notes in addition to or in place of certificated Notes, (iii) to provide for the
assumption of VersaTel's obligations to Holders of such Notes in order to comply
with the covenant relating to mergers, consolidations and sales of assets, (iv)
to make any change that would provide any additional rights or benefits to the
Holders of such Notes or that does not adversely affect the legal rights under
such Indenture of any such Holder, (v) to add covenants for the benefit of the
Holders or to surrender any right or power conferred upon VersaTel, or (vi) to
comply with requirements of the Commission in order to effect or maintain the
qualification of such Indenture under the Trust Indenture Act.
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The consent of the Holders is not necessary under either Indenture to
approve the particular form of any proposed amendment. It is sufficient if such
consent approves the substance of the proposed amendment.
NOTICES
Notices regarding the Notes of both series will be (i) published in a
leading newspaper having a general circulation in New York (which is expected to
be The Wall Street Journal) and in Amsterdam (which is expected to be Het
Financieele Dagblad) (and, if and so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
a newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) or (ii) in the case of Definitive Notes, mailed to
Holders by first-class mail at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, published in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)). Notices given by publication
will be deemed given on the first date on which publication is made and notices
given by first-class mail, postage prepaid, will be deemed given five calendar
days after mailing.
CONCERNING EACH TRUSTEE
Each Indenture will contain certain limitations on the rights of each
Trustee, should it become a creditor of VersaTel, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. Each Trustee will be permitted to engage in
other transactions; provided, however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue, or resign.
Each Indenture will provide that the Holders of a majority in principal
amount of the outstanding Notes issued thereunder will have the right to direct
the time, method and place of conducting any proceeding for exercising any
remedy available to the relevant Trustee, subject to certain exceptions. Each
Indenture will provide that in case an Event of Default shall occur (which shall
not be cured), the relevant Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent person in the conduct of his own
affairs. Subject to such provisions, each Trustee will be under no obligation to
exercise any of its rights or powers under the relevant Indenture at the request
of any Holder of such Notes, unless such Holder shall have offered to such
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
GOVERNING LAW
Each Indenture and the Notes issued thereunder will be, subject to certain
exceptions, governed by, and construed and interpreted in accordance with, the
law of the State of New York.
ENFORCEABILITY OF JUDGMENTS
Since most of the operating assets of VersaTel and its Subsidiaries are
outside the United States, any judgment obtained in the United States against
VersaTel or a Subsidiary, including judgments with respect to the payment of
principal, premium, if any, interest, Additional Amounts, if any, redemption
price and any purchase price with respect to the Notes, may not be collectible
within the United States.
VersaTel has been informed by its Netherlands counsel, Stibbe Simont
Monahan Duhot, that in such counsel's opinion the laws of The Netherlands
applicable therein permit an action to be brought in a court of competent
jurisdiction in The Netherlands on a judgment of a United States federal court
or a court of the State of New York sitting in the borough of Manhattan in the
City of New York respecting the enforcement of the Notes and the Indentures;
subject to certain exceptions the principal of which may be summarized as
follows: a final judgment for the payment of money obtained in a United States
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court, which is not subject to appeal or any other means of contestation and is
enforceable in the United States, would in principle be upheld by a Netherlands
court of competent jurisdiction when asked to render a judgment in accordance
with such final judgment by a United States court, without substantive
re-examination or relitigation on the merits of the subject matter thereof;
provided that such judgment has been rendered by a court of competent
jurisdiction, in accordance with rules of proper procedure, that it has not been
rendered in proceedings of a penal or revenue nature, that its content and
possible enforcement are not contrary to public policy or public order of The
Netherlands, and that such judgment does not concern the recognition of punitive
damages which have no bearing on the amount of damages incurred.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indentures. Reference is made to each Indenture for the full definition of all
terms as well as any other capitalized term used herein for which no definition
is provided. For purposes of the Indentures, unless otherwise specifically
indicated, the term "consolidated" with respect to any Person refers to such
Person consolidated with its Restricted Subsidiaries, and excludes from such
consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary
were not an Affiliate of such Person. For purposes of the following definitions
and the Indentures generally, all calculations and determinations shall be made
in accordance with U.S. GAAP and shall be based upon the consolidated financial
statements of VersaTel and its subsidiaries prepared in accordance with U.S.
GAAP.
"Acquired Indebtedness" is defined to mean Indebtedness of a Person
existing at the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into VersaTel or any Restricted Subsidiary or assumed in
connection with an Asset Acquisition by VersaTel or a Restricted Subsidiary and
not incurred in connection with, or in anticipation of, such Person becoming a
Restricted Subsidiary, such merger or consolidation or such Asset Acquisition;
provided that Indebtedness of such Person which is redeemed, defeased, retired
or otherwise repaid at the time of or immediately upon the consummation of the
transactions by which such Person becomes a Restricted Subsidiary or is merged
or consolidated with or into VersaTel or any Restricted Subsidiary or such Asset
Acquisition shall not be Indebtedness.
"Affiliate" is defined to mean, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Asset Acquisition" is defined to mean (i) any capital contribution (by
means of transfers of cash or other property to others or payments for property
or services for the account or use of others, or otherwise) by VersaTel or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by VersaTel or any Restricted Subsidiary,
in either case pursuant to which such Person shall become a Restricted
Subsidiary or shall be consolidated, merged with or into VersaTel or any
Restricted Subsidiary or (ii) an acquisition by VersaTel or any of its
Restricted Subsidiaries of the property and assets of any Person (other than
VersaTel or any of its Restricted Subsidiaries) that constitute substantially
all of an operating unit or line of business of such Person or which is
otherwise outside the ordinary course of business.
"Asset Sale" is defined to mean any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by VersaTel or any of its
Restricted Subsidiaries to any Person (other than VersaTel or any of its
Restricted Subsidiaries) of (i) all or any of the Equity Interests in any
Subsidiary, (ii) all or substantially all of the
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property and assets of an operating unit or line of business of VersaTel or any
of its Restricted Subsidiaries or (iii) any other property and assets of
VersaTel or any of its Restricted Subsidiaries outside the ordinary course of
business (including the receipt of proceeds paid on account of the loss of or
damage to any property or asset and awards of compensation for any asset taken
by condemnation, eminent domain or similar proceedings). For the purposes of
this definition, the term "Asset Sale" shall not include (a) any transaction
consummated in compliance with "-- Consolidation, Merger and Sale of Assets" and
the creation of any Lien not prohibited by "-- Certain Covenants -- Limitation
on Liens"; provided, however, that any transaction consummated in compliance
with such "-- Consolidation, Merger and Sale of Assets" description involving a
sale, conveyance, assignment, transfer, lease or other disposal of less than all
of the properties or assets of VersaTel and the Restricted Subsidiaries shall be
deemed to be an Asset Sale with respect to the properties or assets of VersaTel
and Restricted Subsidiaries that are not so sold, conveyed, assigned,
transferred, leased or otherwise disposed of in such transaction; (b) sales of
property or equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of VersaTel or any Restricted
Subsidiary, as the case may be; and (c) any transaction consummated in
compliance with "-- Certain Covenants -- Limitation on Restricted Payments." In
addition, solely for purposes of "-- Certain Covenants -- Limitation on Asset
Sales," any sale, conveyance, transfer, lease or other disposition of any
property or asset, whether in one transaction or a series of related
transactions, involving assets with a Fair Market Value not in excess of $1.0
million in any fiscal year shall be deemed not to be an "Asset Sale."
"Board of Directors" is defined to mean the Supervisory Board of VersaTel.
"Board Resolution" is defined to mean a duly authorized resolution of the
Board of Directors.
"Capital Stock" is defined to mean, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, including, without
limitation, if such Person is a partnership, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Capitalized Lease" is defined to mean, as applied to any Person, any lease
of any property (whether real, personal or mixed) of which the discounted
present value of the rental obligations of such Person as lessee, in conformity
with U.S. GAAP, is required to be capitalized and reflected as a liability on
the balance sheet of such Person; and "Capitalized Lease Obligation" is defined
to mean, at the time any determination thereof is to be made, the discounted
present value of the rental obligations under such lease.
"Cash Equivalents" is defined to mean, (a) securities issued or directly
and fully guaranteed or insured by the U.S. government or any agency or
instrumentality thereof having maturities of not more than 360 days from the
date of acquisition; (b) certificates of deposit and eurodollar time deposits
with maturities of 360 days or less from the date of acquisition, bankers'
acceptances with maturities not exceeding 360 days and overnight bank deposits,
in each case with any commercial bank having capital and surplus in excess of
$500 million; (c) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a) and (b) entered
into with any financial institution meeting the qualifications specified in
clause (b) above; (d) commercial paper rated P-1, A-1 or the equivalent thereof
by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group,
respectively, and in each case maturing within six months after the date of
acquisition; (e) marketable direct obligations of the United Kingdom, The
Netherlands, Belgium, Germany or France or obligations fully and unconditionally
guaranteed by such sovereign nation (or any agency thereof), of the type and
maturity described in clauses (a) through (d) above of foreign obligors, which
have ratings described in such clauses or equivalent ratings from comparable
foreign rating agencies; and (f) investments in money market funds which invest
substantially all their assets in securities of the types described in clauses
(a) through (e) above.
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"Change of Control" is defined to mean such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
(other than a Permitted Holder) becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total
voting power of the then outstanding Voting Stock of VersaTel on a fully diluted
basis; (ii) individuals who at the beginning of any period of two consecutive
calendar years constituted the Board of Directors (together with any directors
who are members of the Board of Directors on the date hereof and any new
directors whose election by the Board of Directors or whose nomination for
election by VersaTel's stockholders was approved by a vote of at least two
thirds of the members of the Board of Directors then still in office who either
were members of the Board of Directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of such Board of Directors then
in office; (iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of VersaTel to any such
"person" or "group" (other than to a Restricted Subsidiary); or (iv) the merger
or consolidation of VersaTel with or into another corporation or the merger of
another corporation with or into VersaTel with the effect that immediately after
such transaction any such "person" or "group" of persons or entities shall have
become the beneficial owner of securities of the surviving corporation of such
merger or consolidation representing a majority of the total voting power of the
then outstanding Voting Stock of the surviving corporation.
"Commission" is defined to mean the United States Securities and Exchange
Commission, as from time to time constituted, or, if at any time after the
execution of the Indentures such commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Consolidated Cash Flow" is defined to mean with respect to any Person for
any period, the (i) Consolidated Net Income of such Person for such period plus,
to the extent deducted in computing such Consolidated Net Income (and without
duplication) Consolidated Fixed Charges, (ii) any provision for taxes (other
than taxes (either positive or negative) attributable to extraordinary and non
recurring gains or losses or sales of assets), (iii) any amount attributable to
depreciation and amortization expense and (iv) all other non-cash items reducing
Consolidated Net Income (excluding any non-cash charge to the extent that it
requires or represents an accrual of, or reserve for, cash charges in any future
period), less all non-cash items increasing Consolidated Net Income (excluding
any items which represent the reversal of an accrual of, or reserve for,
anticipated cash charges at any prior period), all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in accordance
with U.S. GAAP; provided, however, that there shall be excluded therefrom the
Consolidated Cash Flow of (if positive) of any Restricted Subsidiary (calculated
separately for such Restricted Subsidiary in the same manner as provided above)
that is subject to a restriction which prevents the payment of dividends or the
making of distributions to VersaTel or another Restricted Subsidiary to the
extent of such restriction.
"Consolidated Fixed Charges" is defined to mean, with respect to any Person
for any period, Consolidated Interest Expense plus dividends declared and
payable on Preferred Stock.
"Consolidated Interest Expense" is defined to mean with respect to any
Person for any period, the aggregate amount of interest in respect of
Indebtedness (including capitalized interest, amortization of original issue
discount on any Indebtedness and the interest portion of any deferred payment
obligation) calculated in accordance with U.S. GAAP; all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers'
acceptance financing; the net costs associated with Interest Rate Agreements;
and interest on Indebtedness that is Guaranteed or secured by such Person or any
of its Restricted Subsidiaries), less the principal component of rentals in
respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid
or to be accrued by such Person and its Restricted
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Subsidiaries during such period; excluding, however, any amount of such interest
of any Restricted Subsidiary to the extent the net income of such Restricted
Subsidiary is excluded in the calculation of Consolidated Net Income pursuant to
the last proviso of such definition.
"Consolidated Net Income" is defined to mean with respect to any Person for
any period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period determined on a consolidated basis and in
conformity with U.S. GAAP; provided that the following items shall be excluded
in computing Consolidated Net Income (without duplication): (i) the net income
(or loss) of any Restricted Subsidiary accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with such Person or any
of its Restricted Subsidiaries or all or substantially all of the property and
assets of such Restricted Subsidiary are acquired by such Person or any of its
Restricted Subsidiaries; (ii) any gains or losses (on an after-tax basis) but
not losses attributable to Asset Sales; (iii) all extraordinary gains and gains
from Currency Agreements or Interest Rate Agreements and gains from the
extinguishment of debt; (iv) the net income (or loss) of any other Person (other
than net income (or loss) attributable to a Restricted Subsidiary) in which such
other Person (other than such Person or any of its Restricted Subsidiaries) has
a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Restricted Subsidiaries
by such other Person during such period; (v) net gains attributable to write-ups
of assets or write-downs of liabilities (determined after taking into account
losses attributable to write-downs of assets or write-ups of liabilities up to
but not in excess of such gains); and (vi) the cumulative effect of a change in
accounting principles after the Issue Date; and provided, further, that there
shall be further excluded therefrom the net income (but not the net loss) of any
Restricted Subsidiary (calculated separately for such Restricted Subsidiary in
the same manner as provided above) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to VersaTel or
another Restricted Subsidiary to the extent of such restriction.
"Consolidated Net Worth" is defined to mean, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of such Person and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of
determination), less any amounts attributable to Redeemable Stock or any equity
security convertible into or exchangeable for Indebtedness, the cost of treasury
stock and the principal amount of any promissory notes receivable from the sale
of Equity Interests in VersaTel or any of its Restricted Subsidiaries, each item
to be determined in conformity with U.S. GAAP (excluding the effects of foreign
currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52).
"Credit Facilities" is defined to mean one or more senior credit
agreements, senior loan agreements or similar senior facilities with banks or
other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Cumulative Consolidated Cash Flow" is defined to mean, for the period
beginning on the Issue Date through and including the end of the last fiscal
quarter (taken as one accounting period) preceding the date of any proposed
Restricted Payment, Consolidated Cash Flow of VersaTel and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with U.S. GAAP.
"Cumulative Consolidated Fixed Charges" is defined to mean, for the period
beginning on the Issue Date through and including the end of the last fiscal
quarter (taken as one accounting period) preceding the date of any proposed
Restricted Payment, Consolidated Fixed Charges of VersaTel and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with U.S. GAAP.
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"Currency Agreement" is defined to mean any foreign exchange contract,
currency swap agreement and any other arrangement or agreement designed to
provide protection against fluctuations in currency values.
"Default" is defined to mean any event that is, or after notice or passage
of time or both would be, an Event of Default.
"Eligible Accounts Receivable" is defined to mean the accounts receivables
(net of any reserves and allowances for doubtful accounts in accordance with
U.S. GAAP) of any Person that are not more than 60 days past their due date and
that were entered into in the ordinary course of business on normal payment
terms as shown on the most recent consolidated balance sheet of such Person
filed with the Commission, all in accordance with U.S. GAAP.
"Equity Interests" is defined to mean Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"European Government Securities" is defined to mean direct obligations of,
or obligations guaranteed by, Belgium, France, Germany or The Netherlands, for
the payment of which obligations or guarantee the full faith and credit of
Belgium, France, Germany or The Netherlands, as the case may be, is pledged,
which are not callable or redeemable at the option of the issuer thereof and
which are payable in euros.
"Fair Market Value" is defined to mean, with respect to any asset or
property, the price (after taking into account any liabilities relating to such
assets) which could be negotiated in an arm's-length free market transaction,
for cash, between a willing seller and a willing and able buyer, neither of
which is under any compulsion to complete the transaction; provided, however,
that the Fair Market Value of any such asset or assets shall be determined
conclusively by the Board of Directors acting in good faith, which determination
shall be evidenced by a resolution of such Board delivered to each Trustee.
"Guarantee" is defined to mean any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof) of any other Person; provided that
the term "Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Incur" is defined to mean, with respect to any Indebtedness, to incur,
create, issue, assume, Guarantee or otherwise become liable for or with respect
to, or become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an Incurrence of Indebtedness by reason of the
acquisition of more than 50% of the Equity Interests in any Person; provided
that the accrual of interest shall not be considered an Incurrence of
Indebtedness.
"Indebtedness" is defined to mean, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person,
whether or not contingent (A) in respect of borrowed money, (B) evidenced by
bonds, debentures, notes or other similar instruments or letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto), (C) representing the balance deferred and unpaid of the purchase price
of property or services, which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such services, except Trade Payables, (D)
representing Capitalized Lease Obligations, (ii) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness, (iii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person, (iv) the maximum fixed
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redemption or repurchase price of Redeemable Stock of such Person at the time of
determination and (v) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements. The amount
of Indebtedness of any Person at any date shall be the outstanding balance at
such date of all unconditional obligations as described above and, with respect
to contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation; provided (x) that the amount
outstanding at any time of any Indebtedness issued with original issue discount
is the face amount of such Indebtedness less the remaining unamortized portion
of the original issue discount of such Indebtedness at such time as determined
in conformity with U.S. GAAP and (y) that Indebtedness shall not include any
liability for federal, state, local or other taxes.
"Interest Rate Agreement" is defined to mean any interest rate swap
agreement, interest rate cap agreement, interest rate insurance, and any other
arrangement or agreement designed to provide protection against fluctuations in
interest rates.
"Investment" in any Person is defined to mean any direct or indirect
advance, loan or other extension of credit (including, without limitation, by
way of Guarantee or similar arrangement; but excluding advances to customers in
the ordinary course of business that are, in conformity with U.S. GAAP, recorded
as accounts receivable on the balance sheet of such Person or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other tangible or intangible property to others or any payment for any property
or services for the account or use of others), or any purchase or acquisition of
Equity Interests, bonds, notes, debentures, or other similar instruments issued
by, any other Person. For purposes of the definition of "Unrestricted
Subsidiary," the "Limitation on Restricted Payments" covenant and the
"Limitation on Issuance and Sale of Capital Stock of Restricted Subsidiaries"
covenant described above, (i) "Investment" shall include (a) the Fair Market
Value of the assets (net of liabilities) of any Restricted Subsidiary of
VersaTel at the time that such Restricted Subsidiary of VersaTel is designated
an Unrestricted Subsidiary and shall exclude the Fair Market Value of the assets
(net of liabilities) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary of VersaTel and
(b) the Fair Market Value, in the case of a sale of Equity Interests in
accordance with the "Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries" covenant such that a Person no longer constitutes a
Restricted Subsidiary, of the remaining assets (net of liabilities) of such
Person after such sale, and shall exclude the fair market value of the assets
(net of liabilities) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary of VersaTel and
(ii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its Fair Market Value at the time of such transfer.
"Issue Date" is defined to mean the date on which the Notes of each series
are originally issued under each respective Indenture.
"Lien" is defined to mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind in respect of an asset, whether or not
filed, recorded or otherwise perfected under applicable law (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any sale with recourse against the seller or any Affiliate
of the seller, or any option or other agreement to sell or give any security
interest).
"Most Recent Balance Sheet" is defined to mean, with respect to any Person,
the most recent consolidated balance sheet of such Person reported on by a
recognized firm of independent accountants without qualification as to scope.
"Net Cash Proceeds" is defined to mean, (a) with respect to any Asset Sale,
the proceeds of such Asset Sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or Cash Equivalents (except to the extent such
obligations are financed or
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sold with recourse to VersaTel or any Restricted Subsidiary of VersaTel) and
proceeds from the conversion of other property received when converted to cash
or Cash Equivalents, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
agreements), (iii) payments made to repay Indebtedness or any other obligation
outstanding at the time of such Asset Sale that either (A) is secured by a Lien
on the property or assets sold or (B) is required to be paid as a result of such
sale and (iv) appropriate amounts to be provided by VersaTel or any Restricted
Subsidiary of VersaTel as a reserve against any liabilities associated with such
Asset Sale, including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as determined in conformity with U.S. GAAP; provided that such amounts
which cease to be held as reserves shall be deemed Net Cash Proceeds; and (b)
with respect to any capital contribution or any issuance or sale of Equity
Interests (other than Redeemable Stock), the proceeds of such capital
contribution, issuance or sale in the form of cash or Cash Equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or Cash Equivalents (except to the extent (1) such
obligations are financed, directly or indirectly, with money borrowed from
VersaTel or any Restricted Subsidiary or otherwise financed or sold with
recourse to VersaTel or any Restricted Subsidiary or (2) the capital
contribution or purchase of the Equity Interests is otherwise financed, directly
or indirectly, by VersaTel or any Restricted Subsidiary, including through funds
contributed, extended, guaranteed or otherwise advanced by VersaTel or any
Affiliate) and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of attorney's fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"Officers' Certificate" is defined to mean a certificate signed on behalf
of VersaTel by two officers of VersaTel, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of VersaTel that meets the requirements set forth
in the Indentures.
"Permitted Business" is defined to mean the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) constructing, creating,
developing or marketing communications related network equipment, software and
other devices for use in a telecommunications business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in clause (i) or (ii) above.
"Permitted Holder" is defined to collectively mean Telecom Founders B.V.,
NeSBIC Venture Fund C.V., Cromwilld Limited, Paribas Deelnemingen N.V.,
Nederlandse Participatie Maatschappij N.V. and any Affiliate of the foregoing
Persons.
"Permitted Investment" is defined to mean (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, VersaTel or a Restricted
Subsidiary; (ii) payroll, travel and similar advances to cover matters that are
expected at the time of such advance ultimately to be treated as expenses in
accordance with U.S. GAAP; (iii) stock, obligations or securities received in
satisfaction of judgments; (iv) Investments in any Person (the primary business
of which is related, ancillary or complementary to the business of VersaTel on
the date of such Investment) at any one time outstanding (measured on the date
each such Investment was made without giving effect to subsequent changes in
value) in an aggregate amount not to exceed the greater of (x) $10.0 million and
(y) 5.0% of VersaTel's total consolidated assets as of the end of the most
recently
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completed fiscal quarter; (v) Investments in Cash Equivalents; (vi) Investments
made as a result of the receipt of noncash consideration from any Asset Sale
made in compliance with the "Limitation on Asset Sales" covenant; (vii)
Investments made in the ordinary course of the telecommunications business in
the Permitted Business and on ordinary business terms in the Permitted Business
in consortia formed to construct transmission infrastructure for use primarily
in the Permitted Business, provided such Investment entitles VersaTel to rights
of way or rights of use on such transmission infrastructure; and (viii)
Investments made in the ordinary course of the telecommunications business and
on ordinary business terms as partial payment for constructing a network
relating principally to the Permitted Business.
"Permitted Liens" is defined to mean (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (ii) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of VersaTel or any of its
Restricted Subsidiaries; (v) Liens (including extensions and renewals thereof)
upon real or personal property of a Restricted Subsidiary purchased or leased
after the Issue Date; provided that (a) such Lien is created solely for the
purpose of securing Indebtedness Incurred by such Restricted Subsidiary in
compliance with the "Limitation on Indebtedness" covenant (1) to finance the
cost of the item of property or assets subject thereto and such Lien is created
prior to, at the time of or within six months after the later of the acquisition
and the Incurrence of such Indebtedness or (2) to refinance any Indebtedness of
a Restricted Subsidiary previously so secured, (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost and (c) any
such Lien shall not extend to or cover any property or assets other than such
item of property or assets; (vi) any interest or title of a lessor in the
property subject to any Capitalized Lease or operating lease of a Restricted
Subsidiary which, in each case, is permitted under the relevant Indenture; (vii)
Liens on property of, or on Equity Interests in or Indebtedness of, any Person
existing at the time such Person becomes, or becomes a part of, any Restricted
Subsidiary; provided that such Liens were not created, incurred or assumed in
contemplation of such transaction and do not extend to or cover any property or
assets of VersaTel or any Restricted Subsidiary other than the property or
assets so acquired; (viii) Liens arising from the rendering of a final judgment
or order against VersaTel or any Restricted Subsidiary of VersaTel that does not
give rise to an Event of Default; (ix) Liens encumbering customary initial
deposits and margin deposits and other Liens that are either within the general
parameters customary in the industry or incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements; (x) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
VersaTel or any of its Restricted Subsidiaries in the ordinary course of
business in accordance with the past practices of VersaTel and its Restricted
Subsidiaries prior to the Issue Date; (xi) Liens existing on the Issue Date or
securing the Notes or any Guarantee of the Notes; (xii) Liens granted after the
Issue Date on any assets or Equity Interests in VersaTel or its Restricted
Subsidiaries created in favor of the Holders; (xiii) Liens created in connection
with the incurrence of any Indebtedness permitted to be Incurred under clause
(iii) of paragraph (b) of the "Limitation on Indebtedness" covenant; provided
that the Indebtedness which it refinances is secured by similar Liens; (xiv)
Liens securing Indebtedness under Credit Facilities incurred in compliance with
clause (viii) of paragraph (b) of the "Limitation on Indebtedness"
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covenant; and (xv) any Liens arising in respect of any escrow or similar account
established in connection with the issuance of any notes (including Additional
Notes) which are pari passu with the Notes and arising under any escrow or
similar agreement executed in connection with the issuance of any such notes.
"Preferred Stock" is defined to mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) which is preferred as to the payment of dividends
or distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over Equity Interests of
any other class in such Person.
"Pro forma Consolidated Cash Flow" is defined to mean with respect to any
Person for any period, the Consolidated Cash Flow of such Person for such period
calculated on a pro forma basis to give effect to any Asset Sale or Asset
Acquisition (including acquisitions of other Persons by merger, consolidation or
purchase of Equity Interests) during such period as if such Asset Sale or Asset
Acquisition had taken place on the first day of such period and income (or
losses) ceased to accrue or accrued, as the case may be, therefrom from such
date.
"Public Equity Offering" is defined to mean an underwritten primary public
offering of Ordinary Shares of VersaTel pursuant to an effective registration
statement under the Securities Act.
"Redeemable Stock" is defined to mean, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Redeemable Stock or (iii) is redeemable or must be purchased, upon the
occurrence of certain events or otherwise, by such Person at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Notes; provided, however, that any
Capital Stock that would not constitute Redeemable Stock but for provisions
thereof giving holders thereof the right to require such Person to purchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the first anniversary of the Stated Maturity of the
Notes shall not constitute Redeemable Stock if (x) the "asset sale" or "change
of control" provisions applicable to such Capital Stock are not more favorable
to the holders of such Capital Stock than the terms applicable to the Notes and
described under "-- Certain Covenants -- Limitation on Asset Sales" and
"-- Repurchase of Notes upon a Change of Control" and (y) any such requirement
only becomes operative after compliance with such terms applicable to the Notes
including the purchase of any Notes tendered pursuant thereto.
"Replacement Assets" is defined to mean any property, plant or equipment of
a nature or type that are used or usable in Permitted Businesses.
"Restricted Subsidiary" is defined to mean, at any time, any direct or
indirect Subsidiary of VersaTel that is then not an Unrestricted Subsidiary.
"Share Capital" is defined to mean, at any time of determination, the
stated capital of the Equity Interests (other than Redeemable Stock) and
additional paid-in capital of VersaTel as set forth on the Most Recent Balance
Sheet of VersaTel at such time.
"Stated Maturity" is defined to mean, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"Strategic Minority Capital Stock Issues" is defined to mean issuances or
sales of common stock of a Restricted Subsidiary, principally engaged in
business outside The Netherlands, to a Person which is
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principally engaged in the Permitted Business and which has an equity market
capitalization, a net asset value or annual revenues of at least $500 million,
which issuances or sales do not represent more than 49% of the outstanding
common stock of such Restricted Subsidiary; provided that any such Strategic
Minority Capital Stock Issue is made to only one such Person with respect to any
Restricted Subsidiary.
"Subsidiary" is defined to mean, with respect to any Person (i) any
corporation, association or other business entity of which more than 50% of the
outstanding Voting Stock is at the time of determination owned, directly or
indirectly, by such Person or one or more other Subsidiaries of such Person and
(ii) any partnership, joint venture, limited liability company or similar entity
of which (A) more than 50% of the capital accounts, distribution rights, total
equity and voting interests or general or limited partnership interests, as
applicable, are owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person or a combination thereof
whether in the form of membership, general, special or limited partnership or
otherwise and (B) such Person or any Restricted Subsidiary of such Person is a
controlling general partner, co-venturer, manager or similar position or
otherwise controls such entity.
"Telecommunications Assets" is defined to mean, with respect to any Person,
assets used in the Permitted Business (or Equity Interests of a Person that
becomes a Restricted Subsidiary, the assets of which consist principally of such
Telecommunications Assets) that are purchased or acquired by VersaTel or a
Restricted Subsidiary after the Issue Date.
"Trade Payables" is defined to mean any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by VersaTel or any of its Restricted Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods and
services.
"Transaction Date" is defined to mean, with respect to the Incurrence of
any Indebtedness by VersaTel or any of its Restricted Subsidiaries, the date
such Indebtedness is to be Incurred and, with respect to any Restricted Payment,
the date such Restricted Payment is to be made.
"Unrestricted Subsidiary" is defined to mean (i) any Subsidiary of VersaTel
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors in the manner provided below) and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of VersaTel (including any newly acquired or newly formed Subsidiary
of VersaTel) to be an Unrestricted Subsidiary unless such Subsidiary, or any of
its Subsidiaries, owns any Equity Interests or Indebtedness of, or owns or holds
any Lien on any property of, VersaTel or any Restricted Subsidiary; provided
that (a) VersaTel certifies in an Officers' Certificate that such designation
complies with the covenants described under "Limitation on Restricted Payments",
(b) such Subsidiary is not party to any agreement, contract, arrangement or
understanding with VersaTel or any Restricted Subsidiary of VersaTel unless the
terms of any such agreement, contract, arrangement or understanding are no less
favorable to VersaTel or such Restricted Subsidiary than those that might
reasonably be obtained in a comparable arm's-length transaction at the time from
Persons who are not Affiliates of VersaTel, (c) neither VersaTel nor any of its
Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe
for additional Equity Interests in such Subsidiary or any Subsidiary of such
Subsidiary or (2) to maintain or preserve such Subsidiary's financial condition
or to cause such Subsidiary to achieve any specified levels of operating results
and (d) such Subsidiary and its Subsidiaries has not at the time of designation,
and does not thereafter, Incur any Indebtedness other than Unrestricted
Subsidiary Indebtedness. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of VersaTel; provided that immediately
after giving effect to such designation (x) VersaTel could Incur $1.00 of
additional Indebtedness under the first paragraph of the "Limitation on
Indebtedness" covenant described above on a pro forma basis taking into account
such designation and (y) no Default or Event of Default shall have occurred and
be continuing. Any such designation by the Board of Directors shall be evidenced
to each Trustee by promptly filing with
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such Trustee a copy of the resolution of the Board of Directors giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Unrestricted Subsidiary Indebtedness" is defined to mean Indebtedness of
any Unrestricted Subsidiary (i) as to which neither VersaTel nor any Restricted
Subsidiary is directly or indirectly liable (by virtue of VersaTel or any such
Restricted Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Indebtedness), and (ii) which, upon the
occurrence of a default with respect thereto, does not result in, or permit any
holder of any Indebtedness of VersaTel or any Restricted Subsidiary to declare,
a default on such Indebtedness of VersaTel or any Restricted Subsidiary or cause
the payment thereof to be accelerated or payable prior to its Stated Maturity.
"U.S. GAAP" is defined to mean, at any date of determination, generally
accepted accounting principles as in effect in the United States of America
which are applicable at the date of determination and which are consistently
applied for all applicable periods.
"U.S. Government Securities" is defined to mean direct obligations of, or
obligations guaranteed by, the United States of America, for the payment of
which obligations or guarantee the full faith and credit of the United States is
pledged and which are not callable or redeemable at the option of the issuer
thereof.
"Voting Stock" is defined to mean with respect to any Person, Capital Stock
of any class or kind ordinarily entitled to vote for the election of directors
thereof at a meeting of Stockholders called for such purpose, without the
occurrence of any additional event or contingency.
"Weighted Average Life to Maturity" is defined to mean, at any date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i)(a) the sum of the products of the number of years from such date of
determination to the dates of each successive scheduled principal payment of, or
redemption or similar payment with respect to, such Indebtedness multiplied by
(b) the amount of such principal payment, by (ii) the sum of all such principal
payments.
"Wholly Owned Restricted Subsidiary" is defined to mean any Restricted
Subsidiary all of the outstanding voting Equity Interests (other than directors'
qualifying shares) of which are owned, directly or indirectly, by VersaTel.
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BOOK-ENTRY, DELIVERY AND FORM
The Dollar Notes will be represented by one global note in registered,
global form without interest coupons (collectively, the "Global Dollar Note").
The Global Dollar Note initially will be deposited upon issuance with the
relevant Trustee as custodian for The Depositary Trust Company in New York, New
York (the "Depositary"), and registered in the name of the Depositary or its
nominee, in each case for credit to an account of a direct or indirect
participant as described below.
The Euro Notes will be represented by one global note in registered, global
form without interest coupons (collectively, the "Global Euro Note"; together
with the Global Dollar Note, the "Global Notes"). The Global Euro Note initially
will be deposited upon issuance with the relevant Trustee as custodian for the
Depositary and registered in the name of the Depositary or its nominee for
credit to the subscribers' respective accounts at Euroclear and Cedel Bank
("CEDEL").
Payments of any amounts owing in respect of the Global Notes will be made
through one or more paying agents to the Depositary or its nominee in proportion
to their respective interests as the registered owner thereof. All amounts
payable under the Dollar Notes will be payable in dollars and all amounts
payable under the Euro Notes will be payable in euros, except as described
below. None of VersaTel, any Trustee, the transfer agent or any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
VersaTel expects that the Depositary or any nominee thereof, upon receipt
of any payments made in respect of the Global Notes, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of the Global Notes as shown on the records of
the Depositary. VersaTel also expects that payments by participants to owners of
beneficial interests in the Global Notes held through such participants will be
governed by standing instructions and customary practice, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Payments to beneficial owners of the Global Euro Note in respect of
principal and interest on the Euro Notes will be made in euros, except as may
otherwise be agreed between any applicable securities clearing system and any
holders. Payments will be subject in all cases to any fiscal or other laws and
regulations applicable thereto. None of VersaTel, the relevant Trustee or any
paying agent shall be liable to any holder of the Global Euro Note or other
person for any commissions, costs, losses or expenses in relation to or
resulting from any currency conversion or rounding effected in connection
therewith.
Investors may be subject to foreign exchange risks that may have important
economic and tax consequences to them.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to the Depositary, a nominee of the Depositary or to a
successor of the Depositary or its nominee. Beneficial interests in the Global
Notes may not be exchanged for Notes in certificated form except in the limited
circumstances described below.
In addition, transfer of beneficial interests in Global Notes will be
subject to the applicable rules and procedures of the Depositary and its direct
or indirect participants (including, if applicable, those of Euroclear and
CEDEL), which may change from time to time.
The Notes may be presented for registration of transfer and exchange at the
offices of the Registrar and the offices of our transfer agent in Luxembourg.
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DEPOSITARY PROCEDURES
The Depositary has advised VersaTel that the Depositary is a
limited-purpose trust company created to hold securities for its participating
organizations (collectively, the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of Participants. The Participants
include securities brokers and dealers (including the underwriters), banks,
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
"Indirect Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of the Depositary only through the Participants
or Indirect Participants. The ownership interest and transfer of ownership
interest of each actual purchaser of each security held by or on behalf of the
Depositary are recorded on the records of the Participants and Indirect
Participants.
The Depositary has also advised VersaTel that pursuant to procedures
established by it, (i) upon deposit of the Global Notes, the Depositary will
credit the accounts of Participants designated by the underwriters with portions
of the principal amount of such securities, as the case may be, and (ii)
ownership of such interests in the Global Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depositary (with respect to Participants) or by Participants and the
Indirect Participants (with respect to other owners of beneficial interests in
such securities).
Investors in the Global Notes may hold their interests therein directly
through the Depositary, if they are Participants in such system, or indirectly
through organizations (including Euroclear and CEDEL) that are Participants in
such system. Euroclear and CEDEL will hold interests in the Global Notes on
behalf of their Participants through customers' securities accounts in their
respective names on the books of their respective depositories, which are Morgan
Guaranty Trust Company of New York, Brussels office, as operator of Euroclear,
and Citibank, N.A. as operator of CEDEL. The depositories, in turn, will hold
such interests in the Global Notes in customers' securities accounts in the
depositories' names on the books of the Depositary. All interests in the Global
Notes, including those held through Euroclear or CEDEL, may be subject to the
procedures and requirements of the Depositary. Those interests held by Euroclear
or CEDEL may also be subject to the procedures and requirements of such system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in the Global Notes to such persons may be limited
to that extent. Because the Depositary can act only on behalf of Participants,
which in turn act on behalf of Indirect Participants and certain banks, the
ability of a person having a beneficial interest in the Global Notes to pledge
such interest to persons or entities that do not participate in the Depositary
system, or otherwise take actions in respect of such interests, may be affected
by the lack of physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Notes will not
have Notes registered in their names, will not receive physical delivery of
Notes in certificated form and will not be considered the registered owners or
holders thereof under the applicable Indenture for any purpose.
Payments in respect of the principal, premium, Additional Amounts (as
defined), if any, and interest on the Global Notes registered in the name of the
Depositary or its nominee will be payable by the paying agent to the Depositary
or its nominee in its capacity as the registered holder of such Global Note
under the relevant indenture. Under the terms of each Indenture, VersaTel and
the relevant Trustee will treat the persons in whose names the applicable series
of Notes, including the Global Notes, are registered as the owners thereof for
the purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither VersaTel, each Trustee nor any agent of
VersaTel or such
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Trustee has or will have any responsibility or liability for (i) any aspect of
the Depositary's records or any Participant's or Indirect Participant's records
relating to or payments made on account of beneficial ownership interests in the
Global Notes, or for maintaining, supervising or reviewing any of the
Depositary's records or any Participant's or Indirect Participant's records
relating to the beneficial ownership interests in the Global Notes or (ii) any
other matter relating to the actions and practices of the Depositary or any of
its Participants or Indirect Participants.
The Depositary has advised VersaTel that its current practices, upon
receipt of any payment in respect of the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the Global Notes, as the
case may be, as shown on the records of the Depositary. Payments by Participants
and the Indirect Participants to the beneficial owners of Notes will be governed
by standing instructions and customary practices and will not be the
responsibility of the Depositary, either Trustee or VersaTel. None of VersaTel
or either Trustee will be liable for any delay by the Depositary or its
Participants in identifying the beneficial owners of the Notes, and VersaTel and
each Trustee may conclusively rely on and will be protected in relying on
instructions from the Depositary or its nominee as the registered owner of the
Notes for all purposes.
Except for trades involving only Euroclear and CEDEL participants,
interests in the Global Notes will trade in the Depositary's Same-Day Funds
Settlement System and secondary market trading activity in such interests will,
therefore, settle in immediately available funds, subject in all cases to the
rules and procedures of the Depositary and its Participants.
Transfers between Participants in the Depositary will be effected in
accordance with the Depositary's procedures, and will be settled in same-day
funds. Transfers between participants in Euroclear and CEDEL will be effected in
accordance with their respective rules and operating procedures.
Cross market transfers between Participants in the Depositary, on the one
hand, and Euroclear or CEDEL participants, on the other hand, will be effected
through the Depositary in accordance with the Depositary's rules on behalf of
Euroclear or CEDEL, as the case may be, by its respective depository; however,
such cross market transactions will require delivery of instructions to
Euroclear or CEDEL, as the case may be, by the counterparty in such system in
accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or CEDEL, as the case may be, will, if
the transaction meets its settlement requirements, deliver instructions to its
respective depository to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Dollar Note or Global
Euro Note in the Depositary, and making or receiving payment in accordance with
normal procedures for same-day fund settlement applicable to the Depositary.
Euroclear participants and CEDEL participants may not deliver instructions
directly to the depositories for Euroclear or CEDEL.
Due to time zone differences, the securities accounts of a Euroclear or
CEDEL participant purchasing an interest in the Global Notes from a Participant
in the Depositary will be credited, and any such crediting will be reported to
the relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear or CEDEL) immediately
following the settlement date of the Depositary. Cash received in Euroclear or
CEDEL as a result of sales of interests in the Global Notes by or through a
Euroclear or CEDEL participant to a Participant in the Depositary will be
received with value on the settlement date of the Depositary but will be
available in the relevant Euroclear or CEDEL cash account only as of the
business day for Euroclear or CEDEL following the Depositary's settlement date.
The Depositary has advised VersaTel that it will take any action permitted
to be taken by a Holder of Notes only at the direction of one or more
Participants to whose account the Depositary interests in
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the Global Notes are credited and only in respect of such portion of the
aggregate principal amount of the Dollar Notes or Euro Notes as to which such
Participant or Participants has or have given direction. However, if there is an
Event of Default under the Notes, the Depositary reserves the right to exchange
the applicable Global Note for legended Notes in certificated form, and to
distribute such Notes to its Participants.
The information in this section concerning the Depositary, Euroclear and
CEDEL and their book-entry systems has been obtained from sources that VersaTel
believes to be reliable, but VersaTel takes no responsibility for the accuracy
thereof.
Although the Depositary, Euroclear and CEDEL have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Notes among
participants in the Depositary, Euroclear and CEDEL, they are under no
obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. None of VersaTel, the underwriters
or either Trustee will have any responsibility for the performance by the
Depositary, Euroclear or CEDEL or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
DEFINITIVE SECURITIES
If (i) at any time the Depositary is unwilling or unable to continue as a
depositary, or either of Euroclear and CEDEL ceases to be a clearing agency, for
either Global Note and a successor depositary or clearing agency, as the case
may be, is not appointed by VersaTel within 90 days or (ii) certain other events
occur, as provided in the applicable Indenture, then definitive securities will
be issued in exchange for the applicable Global Note, which certificates will
bear the legend referred to in "Notice to Investors."
SAME DAY SETTLEMENT AND PAYMENT.
Each indenture will require that payments in respect of each series of
Notes represented by the Global Notes (including principal, premium, if any,
interest and Additional Amounts, if any) be made by wire transfer of immediately
available funds to the accounts specified by the Depositary. With respect to
Definitive Notes, VersaTel will make all payments of principal, premium, if any,
interest and Additional Amounts, if any, by wire transfer of immediately
available funds to the accounts specified by the holders thereof or, if no such
account is specified, by mailing a check to each such holder's registered
address. VersaTel expects that secondary trading in the Definitive Notes will
also be settled in immediately available funds.
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TAX CONSIDERATIONS
NETHERLANDS TAX CONSIDERATIONS
The following is a summary of the principal Netherlands tax consequences
relevant to the ownership and disposition of Notes to U.S. Holders (as defined
below for the purposes of this section "Netherlands Tax Considerations"). This
summary is not exhaustive of all the possible tax consequences that may be
relevant to Holders in light of their particular circumstances and potential
investors are advised to consult their own tax advisors in order to determine
the final tax consequences of the ownership and disposition of Notes in their
own particular circumstances. In particular, this summary does not cover all tax
consequences applicable to joint venture vehicles, such as LLC's and partnership
structures.
This summary is based on the tax laws of The Netherlands, as well as the
Convention between the United States of America and the Kingdom of The
Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (the "Treaty"), to the extent they were
published and effective as of January 5, 1999. Changes made to these laws or
Treaty after that date may have retroactive effect, and may effect the tax
consequences described herein.
The outline is based on the assumption that the U.S. Holder:
(i) is not and has not been for at least five years, a resident or
deemed resident of The Netherlands for purposes of Netherlands tax
legislation;
(ii) does not have or will not obtain an enterprise or an interest in
an enterprise which, in whole or in part, is carried on through a permanent
establishment or a permanent representative in The Netherlands and to which
enterprise or part of an enterprise the Notes are attributable;
(iii) is not directly entitled (the term directly means, in this
context, not through the beneficial ownership of shares or similar
securities) to all or a share of the profits of an enterprise that is
managed and controlled in The Netherlands while the Notes form part of the
assets of, or are otherwise attributable to, such enterprise;
(iv) does not have or will not obtain a substantial interest (as
defined below) or deemed substantial interest in VersaTel according to the
criteria under Netherlands tax law currently in force or in the event such
Holder does have such an interest, this substantial interest qualifies as
asset of, or is otherwise attributable to an enterprise;
(v) does not carry out and has not carried out employment activities
on the territory of The Netherlands, or as director or board member of an
entity resident in The Netherlands or as a civil servant of a Netherlands
public body with which the holding of the Notes is connected; and
(vi) can obtain full benefit under the Treaty
(hereinafter, "U.S. Holder").
SUBSTANTIAL INTEREST
A shareholder that owns, either via shares or options, directly or
indirectly, 5% or more of any class of shares, or 5% or more of the total issued
share capital of a company resident in The Netherlands (a "Substantial
Interest") is subject to special rules. Profit participation rights which give
the holder rights to 5% or more of the annual profit or 5% or more of the
liquidation proceeds of the target company will also qualify as substantial
interest. With respect to individuals, certain attribution rules exist in
determining the presence of a Substantial Interest.
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NETHERLANDS INCOME TAX
A U.S. Holder of Notes is not subject to Netherlands Corporate Income Tax
("NCIT") or Netherlands Individual Income Tax ("NIIT") under the above
assumptions.
INTEREST, WITHHOLDING TAX AND TAX TREATY LIMITATIONS
Interest paid to a U.S. Holder that does not have a Substantial Interest is
not subject to NCIT or NIIT. Furthermore, according to article 12 of the Treaty,
interest paid to a U.S. Holder entitled to the benefits of the Treaty can only
be subject to NCIT or NIIT in the country of residence of the recipient of the
interest. As a result, no NCIT or NIIT will be due on interest paid to a U.S.
Holder that has a Substantial Interest, provided they can obtain full benefit of
the Treaty.
The Netherlands will not levy withholding taxes on the payment of interest
under the Notes, provided that the interest payment is not dependent on the
profits of the Company. If such link can be established there is a risk that the
interest would be subject to Netherlands withholding tax as described under
"Dividend withholding tax". For this discussion it is assumed that such link
cannot be established.
CAPITAL GAINS
Under Netherlands laws, capital gains realized upon disposition of any or
all of the Notes by a U.S. Holder are only taxable if the U.S. Holder has a
Substantial Interest or if the U.S. Holder has an enterprise or an interest in
an enterprise that is, in whole or in part, carried on through a permanent
establishment or a permanent representative in The Netherlands and to which
Netherlands enterprise, the Notes are attributable. Moreover, as a result of
article 14 of the Treaty, the right to tax capital gains realized upon
disposition of any or all of the Notes by a U.S. Holder entitled to the benefits
of the Treaty, is allocated to the United States, unless allocable to a
Netherlands enterprise referred to above.
NET WEALTH TAX
A U.S. Holder of the Notes will not be subject to Netherlands net wealth
tax in respect thereof provided that:
(i) such U.S. Holder is not an individual or, if he or she is an
individual, provided that the Holder is neither a resident of The
Netherlands nor deemed to be a resident of The Netherlands;
(ii) the U.S. Holder does not have an enterprise or an interest in an
enterprise that is, in whole or in part, carried on through a permanent
establishment or a permanent representative in The Netherlands and to which
enterprise or part of an enterprise, as the case may be, to which
enterprise the Notes are attributable; and
(iii) such U.S. Holder is not directly entitled (the term directly
means, in this context, not through the beneficial ownership of shares or
similar securities) to all or a share of the profits of an enterprise that
is managed and controlled in The Netherlands while the Notes form part of
the assets of, or are otherwise attributable to, such enterprise.
GIFT, ESTATE OR INHERITANCE TAXES
No gift, estate or inheritance taxes will arise in The Netherlands in
respect of the transfer of a Note by way of gift by a person who is neither a
resident nor a deemed resident of The Netherlands, or on the death of such
person, provided that:
(i) the transfer is not construed as a gift made by or on behalf of a
person who is a resident or a deemed resident of The Netherlands;
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(ii) the Notes do not form part of the assets of, and are not
otherwise attributable to, an enterprise owned by the donor or the deceased
or in which the donor or the deceased owned an interest and which in whole
or in part is carried on through a permanent establishment or a permanent
representative in The Netherlands; and
(iii) such Notes form part of the assets of, and are not otherwise
attributable to an enterprise that is managed and controlled in The
Netherlands and to which all or a share of the profits thereof the Holder
of a note is directly entitled (the term directly means, in this context,
not as the beneficial owner of shares or similar securities).
EUROPEAN UNION PROPOSALS
In May 1998, the European Commission presented to the Council of Ministers
of the European Union a proposal to oblige member states to adopt either a
"withholding tax system" or an "information reporting system" in relation to
interest, discounts and premiums. It is currently unclear whether this proposal
will be adopted. The "withholding tax system" would require a paying agent
established in a member state to withhold tax at a minimum rate of 20%, from any
interest, discount or premium paid to an individual resident in another member
state unless such an individual presents a certificate obtained from the tax
authorities of the member state in which he is resident confirming that those
authorities are aware of the payment due to that individual. The "information
reporting system" would require a member state to supply to other member states
details of any payment of interest, discount or premium made by paying agents
within its jurisdiction to an individual resident in another member state. For
these purposes, the term "paying agent" is widely defined and includes an agent
who collects interest, discounts or premiums on behalf of an individual
beneficially entitled to them. If this proposal is adopted, it will not apply to
payments of interest, discounts and premiums made before January 1, 2001.
U.S. TAX CONSIDERATIONS
The following discussion describes the material U.S. federal income tax
considerations that may be relevant to a prospective purchaser of Notes that is
a U.S. Holder (as defined below) and, subject to the limitations and
qualifications stated herein, represents the opinion of Shearman & Sterling,
special tax counsel to the Company, as to the material U.S. federal income tax
consequences to a U.S. Holder of the receipt of interest on, and disposition of,
the Notes (as well as the treatment of market discount and premium, if any, with
respect to a Note). This discussion is based on the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury regulations,
revenue rulings, administrative interpretations and judicial decisions (all as
of the date hereof and all of which are subject to change, possibly with
retroactive effect, and different interpretations). Except as specifically set
forth herein, this summary deals only with Notes purchased by a U.S. Holder on
original issuance and held as capital assets within the meaning of Section 1221
of the Code. This discussion does not address all of the tax consequences that
may be relevant to prospective purchasers in light of their particular
circumstances or to persons subject to special tax rules, such as insurance
companies, financial institutions, dealers in securities or foreign currencies,
tax-exempt investors, persons holding the Notes as a position in a "straddle,"
as part of a short sale, hedging, conversion or other integrated transaction,
persons owning, actually or constructively, 10% or more of the voting stock of
the Company, or persons whose functional currency (as defined in Section 985 of
the Code) is not the U.S. dollar. The Notes are expected to be issued at their
principal amount and, accordingly, this summary assumes that the Notes will not
be issued with original issue discount for U.S. federal income tax purposes.
Persons considering the acquisition of Notes should consult with their own tax
advisors with regard to the application of the U.S. federal income tax laws to
their particular situations as well as any other tax consequences of purchasing,
holding or disposing of Notes, including the applicability and effect of the
laws of any state, local or foreign jurisdiction.
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As used in this section, the term "U.S. Holder" means a beneficial owner of
a Note who or that is for U.S. federal income tax purposes (i) a citizen or
individual resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate the income of which is subject to
U.S. federal income taxation regardless of its source, or (iv) a trust if (A) a
U.S. court is able to exercise primary supervision over the administration of
the trust, and one or more U.S. persons have the authority to control all
substantial decisions of the trust or (B) the trust has a valid election in
effect under applicable U.S. Treasury regulations to be treated as a U.S.
person.
PAYMENT OF INTEREST
Interest on the Notes will be taxable to a U.S. Holder as ordinary income
at the time it is paid or accrued in accordance with the U.S. Holder's method of
accounting for tax purposes. In addition to interest, a U.S. Holder will be
required to include in income Additional Amounts, if any, paid on the Notes.
Except as discussed below, the amount of interest a U.S. Holder will be required
to include in income in respect of the Notes will not be reduced for any
withholding tax imposed by The Netherlands or any other foreign jurisdiction,
notwithstanding that such withheld tax would not in fact be received by such
U.S. Holder. Thus, a U.S. Holder may be required to recognize income on the
Notes in an amount greater than the cash received in respect of payments made on
the Notes. Subject to applicable limitations in the Code (including certain
minimum holding period requirements), a U.S. Holder may be entitled to claim a
foreign tax credit for the amount of any applicable withholding tax imposed in
respect of such payments. Alternatively, a U.S. Holder may claim a deduction for
the amount of such foreign income taxes withheld in a taxable year, but only if
such U.S. Holder does not elect to claim a foreign tax credit in respect of any
foreign taxes paid by it in the taxable year. Interest income on the Notes
generally will constitute foreign source income and generally will be considered
"passive income" (or "high withholding tax interest" if the applicable
withholding tax is imposed at a rate of 5% or more) or "financial services
income" for foreign tax credit purposes. The rules relating to foreign tax
credits are extremely complex and the availability of a foreign tax credit
depends on numerous factors. Prospective purchasers of Notes should consult
their own tax advisors concerning the application of the U.S. foreign tax credit
rules to their particular situations.
A cash basis U.S. Holder receiving an interest payment in euros will be
required to include in income the U.S. dollar value of such payment (determined
using the spot rate in effect on the date such payment is received) regardless
of whether such payment is subsequently converted into U.S. dollars. Generally,
no exchange gain or loss will be recognized by such a cash basis U.S. Holder if
such euros are converted to U.S. dollars on the date received. The U.S. federal
income tax consequences of the conversion of euros into U.S. dollars is
described below. See "-- Transactions in Euros."
An accrual basis U.S. Holder will be required to include in income the U.S.
dollar value of the euro interest that accrues on a Euro Note in a taxable year,
determined by translating such interest at the average rate of exchange for the
relevant interest accrual period or, with respect to an interest accrual period
that spans two taxable years, at the average rate for the portion of such
interest accrual period within the taxable year. The average rate of exchange
for an interest accrual period (or portion thereof) is the simple average of the
exchange rates for each business day of such period (or such other average that
is reasonably derived and consistently applied). An accrual basis U.S. Holder
may elect to translate accrued interest on a Euro Note using the spot rate in
effect on the last day of an interest accrual period (or the last day of the
taxable year for the portion of such period within the taxable year). In
addition, a U.S. Holder may elect to use the spot rate in effect on the date of
receipt (or payment) for such purpose if such date is within five business days
of the last date of an interest accrual period (or portion thereof). Any such
election must be made in a statement filed with the electing U.S. Holder's
return for a taxable year, and is applicable to all debt instruments held by the
U.S. Holder at any time during or after such year, unless changed with the
consent of the Internal Revenue Service (the "IRS").
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Upon receipt of an interest payment in respect of accrued interest on a
Euro Note, an accrual basis U.S. Holder will recognize ordinary gain or loss in
an amount equal to the difference, if any, between the U.S. dollar value of the
payment received in respect of such accrued interest (determined using the spot
rate in effect on the date such payment is received) and the U.S. dollar value
of the amount previously included in income with respect to such accrued
interest (as determined in the manner described in the preceding paragraph). Any
such gain or loss will be treated as ordinary income or loss but generally will
not be treated as interest income or expense, except to the extent provided by
future regulations or administrative pronouncements of the IRS. The U.S. federal
income tax consequences of the conversion of euros into U.S. dollars is
described below. See "-- Transactions in Euros."
MARKET DISCOUNT AND PREMIUM
If a U.S. Holder purchases a Note for an amount that is less than its
principal amount, the amount of the difference will be treated as "market
discount" for U.S. federal income tax purposes, unless such difference is less
than a specified de minimis amount.
Unless a U.S. Holder elects to accrue market discount as described below,
such U.S. Holder will be required to treat any partial principal payment on, or
any gain realized on the sale, exchange, retirement or other disposition of, a
Note having market discount as ordinary income to the extent of the lesser of
(i) the amount of such payment or realized gain and (ii) the market discount
that has not previously been included in income and is treated as having accrued
on such Note at the time of such payment or disposition. Market discount on a
Note, if any, will be considered to accrue on a straight-line basis during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue on a constant-yield basis.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note having market discount until the maturity of the Note
or its earlier disposition. A U.S. Holder may elect to include market discount
in income currently as it accrues (on either a straight-line or a constant-yield
basis), in which case such U.S. Holder will not be subject to the rules
described above regarding the treatment of gain as ordinary income upon the
disposition of, and the receipt of certain cash payments on, a Note and
regarding the deferral of interest deductions.
In the case of a Euro Note, any accrued market discount not previously
taken into income shall be translated into U.S. dollars at the spot rate on the
date a U.S. Holder disposes of the Euro Note (or receives a partial principal
payment to which the accrued market discount relates). No part of such accrued
market discount is treated as exchange gain or loss. With respect to a U.S.
Holder of a Euro Note that elects to include market discount in income currently
as it accrues, such accrued market discount shall be treated in a similar manner
as accrued interest on a Euro Note held by an accrual basis U.S. Holder. See
"-- Payment of Interest."
If a U.S. Holder purchases a Note for an amount that is greater than its
principal amount, such U.S. Holder will be considered to have purchased such
Note at a "premium" equal in amount to such excess, and may elect (in accordance
with applicable Code provisions) to amortize such premium, on a constant yield
method over the remaining term of the Note (subject to special rules concerning
early call provisions). If an election to amortize the premium on a Note, if
any, is not made, the premium will decrease the gain or increase the loss
otherwise recognized on a taxable disposition of the Note. In the case of a Euro
Note, the amount of amortizable premium, if any, is determined in euros and, in
effect, translated into U.S. dollars using the exchange conventions applicable
to payments of interest. See "-- Payment of Interest" above. A U.S. Holder that
elects to amortize premium on a Euro Note will recognize foreign exchange gain
or loss equal to the difference between the U.S. dollar value of the foreign
currency amount so amortized, determined on the date the Euro Note was acquired,
and the U.S. dollar value of such amount, as determined in the preceding
sentence.
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An election to include market discount in income currently, or to amortize
premium, once made, applies to all debt obligations held or subsequently
acquired by the electing U.S. Holder on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS.
DISPOSITIONS
Upon the sale, exchange or retirement of a Note, a U.S. Holder generally
will recognize taxable gain or loss in an amount equal to the difference, if
any, between such U.S. Holder's adjusted tax basis in such Note and the amount
realized on such sale, exchange or retirement. For this purpose, the amount
realized on the sale, exchange or retirement of a Note will not include any
amount attributable to accrued but unpaid interest, which will be taxable as
such to the extent not previously included in income. For purposes of
determining the amount of any gain or loss recognized by a U.S. Holder on the
sale, exchange or retirement of a Euro Note for euros, the amount realized upon
such sale, exchange or retirement will be the U.S. dollar value of the euros
received based on the spot exchange rate in effect on either (i) the date of the
sale, exchange or retirement or (ii) as set forth below, the settlement date. A
U.S. Holder's tax basis in a Note generally will be the purchase price of such
Note on the date of purchase (or, in the case of a Euro Note, the U.S. dollar
value of the purchase price determined by translating the purchase price into
U.S. dollars at the spot rate in effect on the date of purchase), increased by
any market discount with respect to the Note previously included in income by
the U.S. Holder and reduced by any premium with respect to the Note which the
U.S. Holder has amortized. If a Note is acquired or disposed of through an
established securities market within the meaning of the Treasury regulations,
the U.S. dollar cost to, or amount realized by, a cash or an electing accrual
basis U.S. Holder will be determined based on the spot rate in effect on the
settlement date for such acquisition or disposition, as the case may be. Except
with respect to gains or losses attributable to changes in currency exchange
rates, as described below, and market discount, as described above, any gain or
loss recognized by a U.S. Holder on the sale, exchange or retirement of a Note
generally will be capital gain or loss and, in the case of certain non-corporate
U.S. Holders, may be subject to U.S. federal income tax at a preferential rate
if the U.S. Holder's holding period for the Note exceeds one year. Gain or loss
realized by a U.S. Holder on the sale, exchange, or other disposition of a Note
generally will be treated as income or loss, as the case may be, from sources
within the United States for purposes of applicable foreign tax credit
limitations, unless the gain or loss, as the case may be, is attributable to an
office or fixed place of business maintained by the U.S. Holder outside of the
United States and certain other conditions are met. A U.S. Holder's ability to
deduct capital losses in respect of a Note is subject to limitations.
Gain or loss recognized by a U.S. Holder on the sale, exchange or
retirement of a Euro Note that is attributable to fluctuations in the rate of
exchange between the U.S. dollar and the euro will be treated as ordinary income
or loss and generally will not be treated as interest income or expense except
to the extent provided by future regulations or administrative pronouncements of
the IRS. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the payments with respect to
foreign currency principal determined on the date such payment is received or
such Euro Note is disposed of and including any payment with respect to accrued
interest, and (ii) the U.S. dollar value of payments with respect to foreign
currency principal determined on the date such United States Holder acquired
such Note, and the U.S. dollar value of accrued interest income and market
discount previously included in income with respect to such Euro Note (generally
determined by translating such interest or market discount at the average
exchange rate for the applicable accrual period or the spot rate as described in
"-- Payments of Interest"). Such foreign currency gain or loss is recognized on
the sale, exchange or retirement of a Euro Note only to the extent of total gain
or loss recognized on such sale or retirement.
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As a result of certain limitations with respect to the availability of
foreign tax credits under the Code, a U.S. Holder may not be able to claim a
foreign tax credit for Netherlands withholding taxes, if any, imposed on the
proceeds received upon a sale, exchange, repurchase by the Company or other
disposition of Notes. Prospective investors should consult their own tax
advisors concerning the application of the U.S. foreign tax credit rules to
their particular situations.
TRANSACTIONS IN EUROS
Euros received by a U.S. Holder as interest on, or proceeds from the sale,
exchange or retirement of, a Euro Note generally will have a tax basis equal to
their U.S. dollar value at the time such interest is received or at the time
payment is received in consideration of such sale, exchange or retirement. The
amount of gain or loss recognized by a U.S. Holder on a sale or other
disposition of such euros will be equal to the difference between (i) the amount
of U.S. dollars, or the fair market value in U.S. dollars of the other currency
or property received in such sale or other disposition and (ii) the U.S.
Holder's tax basis of such euros.
A U.S. Holder that purchases a Euro Note with previously owned euros will
recognize foreign exchange gain or loss in an amount equal to the difference, if
any, between such U.S. Holder's tax basis in such euros and the U.S. dollar
value of such Euro Note on the date of purchase. Generally, any such gain or
loss will be ordinary income or loss and will not be treated as interest income
or expense, except to the extent provided by future regulations or
administrative pronouncements of the IRS. However, a U.S. Holder that converts
U.S. dollars to euros and immediately uses such euros to purchase a Euro Note
ordinarily would not recognize any foreign exchange gain or loss in connection
with such conversion or purchase.
BACKUP WITHHOLDING
"Backup" withholding and information reporting requirements may apply to
certain payments of principal of and interest on a Note and to certain payments
of proceeds of the sale or retirement of a Note. The Company, its agent, a
broker, the Trustee or any paying agent, as the case may be, will be required to
withhold tax from any payment that is subject to backup withholding at a rate of
31.0% of such payment if the U.S. Holder fails to furnish his taxpayer
identification number (social security number or employer identification
number), to certify that such U.S. Holder is not subject to backup withholding,
or to otherwise comply with the applicable requirements of the backup
withholding rules. Certain U.S. Holders (including, among others, corporations)
are not subject to the backup withholding and reporting requirements. Any
amounts withheld under the backup withholding rules from a payment to a U.S.
Holder generally may be claimed as a credit against such holder's U.S. federal
income tax liability provided that the required information is furnished to the
IRS.
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UNDERWRITING
The underwriters named below, acting through Lehman Brothers International
(Europe), have severally but not jointly agreed, subject to the terms and
conditions of an underwriting agreement dated , 1999 (the form of which
is filed as an exhibit to the Registration Statement of which this prospectus is
a part), to purchase from us, and we have agreed to sell to the underwriters,
the aggregate principal amount of Dollar Notes and Euro Notes set forth opposite
their respective names below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AGGREGATE PRINCIPAL
AMOUNT OF DOLLAR AMOUNT OF EURO
UNDERWRITERS NOTES NOTES
- ------------ ------------------- -------------------
<S> <C> <C>
Lehman Brothers International (Europe)................ $ E
ING Barings LLC.......................................
-------- --------
Total....................................... $ E
======== ========
</TABLE>
The underwriting agreement provides that the obligation of the underwriters
to purchase the Notes is subject to the satisfaction of certain conditions,
including the delivery of legal opinions by legal counsel. Subject to the terms
and conditions of the underwriting agreement, the underwriters must purchase all
of the Notes from us if they purchase any of them.
The underwriters will pay us the offering price less the underwriting
discount specified on the cover of this prospectus. We estimate that we will
incur approximately $12.1 million of expenses in connection with the offering of
the Notes.
The underwriters have advised us that they will offer the Notes directly to
the public initially at the offering price and in part to certain dealers at the
offering price less a selling concession not to exceed % of the total dollar
amount and % of the total euro amount of the Notes. The underwriters may
allow, and these dealers may reallow a concession not to exceed % of the
total dollar amount and % of the total euro amount of the notes to other
dealers. After the initial offering of the Notes, the underwriters may change
the public offering price, the concession to selected dealers and the
reallowance to other dealers.
Each underwriter has represented and agreed to all of the following:
- it has not offered or sold and, prior to the date six months after the
date of issue of the Notes, will not offer or sell any Notes to persons
in the United Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to
the public in the United Kingdom within the meaning of the Public Offers
of Securities Regulations 1995,
- it has complied and will comply with all applicable provisions of the
Financial Services Act 1986 and the Regulation with respect to anything
done by it in relation to the Notes in, from or otherwise involving the
United Kingdom, and
- it has only issued or passed on, and will only issue or pass on, to any
person in the United Kingdom any document received by it in connection
with the issue of the Notes if that person is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise be issued or passed upon.
The Notes are new securities for which there currently is no market. The
underwriters have advised us that they presently intend to make a market in the
Notes as permitted by applicable laws and regulations. The underwriters are not
obligated to make a market in the Notes, however, and they may discontinue this
market making at any time in their sole discretion. Accordingly, we cannot
assure you
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that there will be adequate liquidity or adequate trading markets for the Notes,
or, if a market does develop, at what prices the Notes will trade. If the
underwriters cease to act as market makers for the Notes for any reason, we
cannot assure you that another firm or person will make a market in the Notes.
In connection with this offering, the underwriters may engage in certain
transactions that stabilize the price of the Notes. These transactions may
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the Notes. If the underwriters create a short position in the Notes
by selling more Notes than are listed on the cover page of this prospectus, then
the underwriters may reduce that short position by purchasing Notes in the open
market. In general, the purchase of a security for the purpose of stabilization
or reducing a short position could cause the price of that security to be higher
than it might otherwise be in the absence of those purchases.
Neither we nor the underwriters make any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of either series of Notes. In addition, neither we nor the
underwriters make any representation that anyone will engage in these
transactions or that these transactions, once commenced, will not be
discontinued without notice.
This prospectus may be used in connection with offers and sales of Notes
offered initially outside the United States and Canada insofar as such Notes are
reoffered or resold from time to time in the United States in transactions that
require registration under the Securities Act.
No action has been taken or will be taken in any jurisdiction by us or the
underwriters that would permit a public offering of the Notes in any
jurisdiction where action for such purpose is required, other than in the United
States. Persons into whose possession this prospectus comes are required by
VersaTel and the underwriters to inform themselves about, and to observe any
restrictions as to, this offering and the distribution of this prospectus.
This prospectus is not, and under no circumstances is to be construed as,
an advertisement or a public offering of the Notes in Canada or any province or
territory thereof. Any offer or sale of the Notes in Canada will be made only
pursuant to an exemption from the prospectus filing requirement and an exemption
from the dealer registration requirement (where such an exemption is not
available, offers or sales shall be made only by a registered dealer) in the
relevant Canadian jurisdiction where such offer or sale is made.
Under Rule 2710(c)(8) of the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), if more than 10% of the net proceeds of a
public offering of debt securities are to be paid to members of the NASD that
are participating in the offering, or affiliated or associated persons, the
yield on the debt securities distributed to the public must be no lower than
that recommended by a "qualified independent underwriter," as defined in Rule
2720 of the Conduct Rules of the NASD. Because Lehman Commercial Paper Inc., an
affiliate of each of Lehman Brothers Inc. and Lehman Brothers International
(Europe) and the arranger and a lender of the Interim Loans, and ING (U.S.)
Capital, LLC, an affiliate of each of ING Barings Limited and ING Barings LLC
and a lender of the Interim Loans, will receive more than 10% of the net
proceeds of this offering as a result of the repayment of amounts outstanding
under the Interim Loans, Hambrecht & Quist LLC (the "Independent Underwriter"),
an underwriter in the Equity Offering, will act as a qualified independent
underwriter in connection with this offering. The Independent Underwriter in its
role as qualified independent underwriter has performed due diligence
investigations and reviewed and participated in the preparation of this
prospectus and the registration statement of which this prospectus forms a part.
The Independent Underwriter will not receive any additional fees for serving as
a qualified independent underwriter in connection with this offering. The yield
on the Notes sold to the public will be no lower than that recommended by such
qualified independent underwriter.
Some of the underwriters have, directly or indirectly, performed investment
and commercial banking or financial advisory services to us, for which they have
received customary fees and
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commissions, and they expect to provide these services to us and our affiliates
in the future, for which they also expect to receive customary fees and
commissions. Lehman Brothers Inc., an affiliate of Lehman Brothers International
(Europe), was an initial purchaser in the First High Yield Offering and the
Second High Yield Offering. Lehman Brothers International (Europe) was an
initial purchaser in the Second High Yield Offering. Lehman Brothers Commercial
Paper Inc., an affiliate of each of Lehman Brothers Inc. and Lehman Brothers
International (Europe), and ING (U.S.) Capital, LLC, an affiliate of each of ING
Barings Limited and ING Barings LLC, are lenders of the Interim Loans which will
be repaid with a portion of the net proceeds of this offering. Lehman Brothers
Inc., Lehman Brothers International (Europe), ING Barings Limited and ING
Barings LLC are underwriters in the Equity Offering and will receive
compensation for such services.
Affiliates of Lehman Brothers may provide loans to the Chief Executive
Officer, Chief Operating Officer and Chief Technology Officer of VersaTel in an
aggregate amount of approximately NLG 6.0 million to fund the exercise price of
certain employee options that may be exercised by them at the time of the
closing of the Equity Offering. Any such loans could be made on commercial
terms, including a pledge of the shares received upon such exercise and
reimbursement of legal fees and other expenses.
We have agreed to indemnify the underwriters and the Independent
Underwriter against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the underwriters may be required to
make in respect of any of those liabilities.
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LEGAL MATTERS
The validity of the Notes offered hereby will be passed upon for VersaTel
by Shearman & Sterling, New York, New York. Certain legal matters will be passed
upon for the underwriters by Simpson Thacher & Bartlett, London, England. The
validity of the Notes with respect to Netherlands corporate law will be passed
upon for VersaTel by Stibbe Simont Monahan Duhot, Amsterdam, The Netherlands and
certain matters of Netherlands tax law will be passed upon for VersaTel by
Arthur Andersen, Amsterdam, The Netherlands. Certain matters of Netherlands law
will be passed upon for the underwriters by Nauta Dutilh, Amsterdam, The
Netherlands.
EXPERTS
The financial statements of VersaTel as of December 31, 1996, 1997 and 1998
and for each of the years then ended, included in this prospectus, have been
audited by Arthur Andersen, and are included herein in reliance upon the
authority of said firm as expert in preparing said reports.
The financial statements of Svianed B.V. as of December 31, 1997 and 1998
and for each of the years in the two-year period ended December 31, 1998 have
been included in this prospectus in reliance upon the report of KPMG Accountants
N.V., and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, or the
"Commission," a Registration Statement on Form F-1 under the Securities Act, and
the rules and regulations promulgated thereunder, with respect to the Notes
offered hereby. This prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. Statements contained in this prospectus as
to the contents of any contract or other document that is filed as an exhibit to
the Registration Statement are not necessarily complete and each such statement
is qualified in all respects by reference to the full text of such contract or
document.
You may read and copy all or any portion of the Registration Statement and
the exhibits thereto at the Commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. You can request copies of these documents, upon payment of a
duplication fee, by writing to the Commission. Please call the Commission at
1-800-SEC-0330 for further information on the operation of the Commission's
public reference rooms. Also, the Commission maintains a World Wide Web site on
the Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.
As a result of the registration under the Securities Act of the Existing
Notes, we are subject to the information and period reporting requirements of
the Exchange Act of 1934 and, in accordance therewith, we file periodic reports
and other information with the Commission through its Electronic Data Gathering,
Analysis and Retrieval ("EDGAR") system. Such periodic reports and other
information will be available for inspection and copying at the public reference
facilities, regional offices and Web site of the Commission referred to above.
We will also make available such reports at the office of the paying agent in
Luxembourg when the Notes are listed on the Luxembourg Stock Exchange.
In addition, pursuant to the indentures governing the Existing Notes and
the warrant agreements governing the warrants, we have agreed to file with the
Securities and Exchange Commission all annual financial statements and other
financial information that are required to be contained in a filing with the
Commission on Form 20-F. Furthermore, we have agreed to file with the Commission
all quarterly financial statements and other financial information that would be
required to be contained in a filing with the Commission on Form 10-Q, if we
were required to file such form. Such quarterly information will be filed with
the Commission within 45 days following the end of each fiscal quarter, and such
annual information will be filed within 90 days following the end of each fiscal
year of VersaTel.
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GENERAL LISTING INFORMATION
LISTING
Application has been made to list the Notes on the Luxembourg Stock
Exchange. The Articles of Association of the Company and the legal notice
relating to the issue of the Notes will be deposited prior to the listing with
the Registrar of the District Court in Luxembourg (Greffier en Chef du Tribunal
d'Arrondissement a Luxembourg), where such documents are available for
inspection and where copies thereof can be obtained upon request. As long as the
Notes are listed on the Luxembourg Stock Exchange, an agent for making payments
on, and transfers of, Notes will be maintained in Luxembourg.
AUTHORIZATION
VersaTel has obtained all necessary consents, approvals and authorizations
in connection with the issue of the Notes. The issue of the Notes was authorized
by a resolution of the Supervisory Board of VersaTel passed on July 22, 1999.
NO MATERIAL CHANGE
Except as disclosed in this prospectus, there has been no material change
in the financial position of VersaTel since March 31, 1999 and no material
adverse change in the financial position or prospects of VersaTel since March
31, 1999.
LITIGATION
VersaTel is not involved in any litigation or arbitration proceedings which
relate to claims or amounts which are material in the context of the issue of
the Notes or that may have, or have had during the 12 months preceding the date
of this prospectus, a material adverse effect on the financial position of
VersaTel, nor, so far as any of them is aware, is any such proceeding pending or
threatened.
DOCUMENTS AVAILABLE
Copies of the following documents may be inspected at the specified office
of the Paying and Transfer Agent in Luxembourg.
- Articles of Association of VersaTel; and
- the Indentures relating to the Notes (which include the form of the note
certificates).
In addition, copies of the most recent consolidated financial statements of
VersaTel for the preceding financial year, and any interim quarterly financial
statements published by VersaTel, will be available at the specified office of
the Paying and Transfer Agent in Luxembourg for as long as the Notes are listed
on the Luxembourg Stock Exchange.
CLEARING SYSTEMS
The Notes have been accepted for clearance through the facilities of
Euroclear and Cedel. See "Book-Entry, Delivery and Form." The CUSIP number of
the Euro Notes is 925301 . The CUSIP number for the Dollar Notes is
925301 . The Common Code for the Notes is .
NOTICES
All notices shall be deemed to have been given upon (i) the mailing by
first class mail, postage prepaid, of such notices to holders of the Notes at
their registered addresses as recorded in the Register;
142
<PAGE> 149
and (ii) so long as the Notes are listed on the Luxembourg Stock Exchange and it
is required by the rules of the Luxembourg Stock Exchange, publication of such
notice to the holders of the Notes in English in a leading newspaper having
general circulation in Luxembourg (which is expected to be the Luxembourg Wort)
or, if such publication is not practicable, in one other leading English
language daily newspaper with general circulation in Europe, such newspaper
being published on each business day in morning editions, whether or not is
shall be published in Saturday, Sunday or holiday editions.
143
<PAGE> 150
VERSATEL TELECOM INTERNATIONAL N.V.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Balance Sheets as of December 31, 1998, 1997
and 1996.................................................. F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1998, 1997 and 1996.......................... F-4
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1998, 1997 and 1996.............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996.......................... F-6
Notes to Financial Statements............................... F-7
Unaudited Consolidated Balance Sheets as of March 31, 1999
and 1998.................................................. F-17
Unaudited Consolidated Statements of Operations for the
Three Months Ended March 31, 1999 and 1998................ F-18
Unaudited Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998................ F-19
Notes to the Unaudited Consolidated Financial Statements as
of March 31, 1999 and for the Three Months Ended March 31,
1998 and 1998............................................. F-20
</TABLE>
F-1
<PAGE> 151
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To VersaTel Telecom International N.V.
We have audited the consolidated balance sheets as of December 31, 1996,
1997 and 1998 of VERSATEL TELECOM INTERNATIONAL N.V. (formerly known as VERSATEL
TELECOM B.V.) and the consolidated statements of operations, shareholders'
equity and cash flows for each of the years then ended. These consolidated
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in The Netherlands which do not differ in any significant respect from
United States generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of VersaTel Telecom
International N.V. as of December 31, 1996, 1997 and 1998 and the result of its
operations and their cash flows for each of the years then ended, in conformity
with United States generally accepted accounting principles.
ARTHUR ANDERSEN
Amsterdam, The Netherlands
April 13, 1999
F-2
<PAGE> 152
VERSATEL TELECOM INTERNATIONAL N.V.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998, 1997 AND 1996
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS,
EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- ------
NLG NLG NLG
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash..................................................... 372,014 1,346 4,290
Restricted cash, current portion......................... 89,752 76 100
Accounts receivable, net................................. 7,902 1,804 1,209
Inventory, net........................................... 1,083 418 135
Prepaid expenses and other............................... 12,909 1,995 33
------- ------- ------
Total current assets.................................. 483,660 5,639 5,767
------- ------- ------
Fixed Assets:
Property and Equipment, net.............................. 38,608 13,619 2,340
Construction In Progress................................. 46,019 -- --
------- ------- ------
Total fixed assets.................................... 84,627 13,619 2,340
------- ------- ------
Restricted cash, net of current portion.................. 121,804 73 53
Capitalized finance costs, net........................... 28,750 -- --
Goodwill, net............................................ 4,556 -- --
------- ------- ------
Total assets.......................................... 723,397 19,331 8,160
======= ======= ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable......................................... 39,863 20,674 1,958
Due to related parties................................... 806 249 218
Accrued liabilities...................................... 28,005 7,691 1,653
Deferred income, current portion......................... -- 98 --
Current portion of capital lease obligations............. 71 279 253
------- ------- ------
Total current liabilities............................. 68,745 28,991 4,082
Deferred Income, net of current portion.................... -- 341 --
Capital Lease Obligations, net of current portion.......... 37 108 327
Subordinated Convertible Shareholder Loans................. -- 8,105 3,605
Long Term Liabilities...................................... 670 -- --
Long Term Debt (13 1/4% Senior Notes)...................... 688,018 -- --
------- ------- ------
Total Liabilities..................................... 757,470 37,545 8,014
------- ------- ------
Shareholders' Equity:
Ordinary shares, NLG 0.05 par value...................... 1,949 958 891
Additional paid-in capital................................. 51,112 6,037 4,604
Warrants................................................... 5,212 -- --
Accumulated deficit........................................ (92,346) (25,209) (5,349)
------- ------- ------
Total shareholders' equity............................ (34,073) (18,214) 146
------- ------- ------
Total liabilities and shareholders' equity....... 723,397 19,331 8,160
======= ======= ======
</TABLE>
F-3
<PAGE> 153
VERSATEL TELECOM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS,
EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
NLG NLG NLG
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING REVENUES................................ 39,561 18,896 6,428
OPERATING EXPENSES:
Cost of Revenues, excluding depreciation........ 31,821 17,405 4,954
Selling, general and administrative............. 47,733 17,527 5,485
Depreciation and amortization................... 6,473 3,237 453
---------- ---------- ----------
Total operating expenses................ 86,027 38,169 10,892
---------- ---------- ----------
Operating loss............................... (46,466) (19,273) (4,464)
---------- ---------- ----------
OTHER INCOME (EXPENSES):
Foreign currency exchange gains (losses), net... 5,146 (53) --
Interest income................................. 11,857 21 4
Interest expense -- third parties............... (37,522) (41) (24)
Interest expense -- related parties............. (145) (514) (249)
---------- ---------- ----------
Total other income (expenses)........... (20,664) (587) (269)
---------- ---------- ----------
Loss before income taxes..................... (67,130) (19,860) (4,733)
PROVISION FOR INCOME TAXES........................ (7) -- --
---------- ---------- ----------
Net loss..................................... (67,137) (19,860) (4,733)
========== ========== ==========
NET LOSS PER SHARE (Basic and Diluted) in NLG..... (2.06) (1.10) (0.47)
Weighted average number of shares outstanding..... 32,622,194 18,084,188 10,008,494
</TABLE>
F-4
<PAGE> 154
VERSATEL TELECOM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS,
EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NUMBER OF ADDITIONAL
SHARES ORDINARY PAID-IN ACCUMULATED
OUTSTANDING SHARES CAPITAL WARRANTS DEFICIT TOTAL
----------- -------- ---------- -------- ----------- -------
NLG NLG NLG NLG NLG
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995...... 9,900,000 495 -- -- (616) (121)
Shareholder contributions......... 7,920,000 396 4,604 -- -- 5,000
Net loss........................ -- -- -- -- (4,733) (4,733)
---------- ----- ------ ----- ------- -------
Balance at December 31, 1996...... 17,820,000 891 4,604 -- (5,349) 146
Shareholder contributions......... 1,339,286 67 1,433 -- -- 1,500
Net loss........................ -- -- -- -- (19,860) (19,860)
---------- ----- ------ ----- ------- -------
Balance, December 31, 1997........ 19,159,286 958 6,037 -- (25,209) (18,214)
Shareholder contributions......... 19,695,524 985 44,750 5,212 -- 50,947
Shares issued for acquisition..... 130,000 6 325 -- -- 331
Net loss.......................... -- -- -- -- (67,137) (67,137)
---------- ----- ------ ----- ------- -------
Balance, December 31, 1998........ 38,984,810 1,949 51,112 5,212 (92,346) (34,073)
========== ===== ====== ===== ======= =======
</TABLE>
F-5
<PAGE> 155
VERSATEL TELECOM INTERNATIONAL N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS,
EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- ------
NLG NLG NLG
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss................................................ (67,137) (19,860) (4,733)
Adjustments to reconcile net loss to net cash used in
operating activities --
Depreciation and amortization........................... 6,473 3,237 453
Amortization finance cost............................... 1,250 -- --
Restricted cash......................................... 149 4 --
Deferred income......................................... (440) 440 --
Changes in other operating assets and liabilities
Accounts receivable..................................... (6,098) (595) (1,157)
Inventory............................................... (665) (282) (114)
Prepaid expenses and other.............................. (10,914) (1,963) 330
Accounts payable........................................ 19,189 18,716 1,754
Due to related parties.................................. 557 30 218
Accrued liabilities..................................... 20,314 6,038 1,531
-------- ------- ------
Net cash provided by (used in) operating
activities......................................... (37,322) 5,765 (1,718)
-------- ------- ------
Cash Flows from Investing Activities:
Capital expenditures.................................... (77,255) (14,516) (2,569)
Goodwill paid on acquisition............................ (4,781) -- --
-------- ------- ------
Net cash used in investing activities................ (82,036) (14,516) (2,569)
-------- ------- ------
Cash Flows from Financing Activities:
Proceeds from (redemptions of) capital lease
obligations.......................................... (279) (193) 421
Proceeds from (repayments of) subordinated convertible
shareholder loans.................................... (8,105) 4,500 3,150
Proceeds from long term liabilities..................... 670 -- --
Proceeds from long term debt (13 1/4% Senior Notes)..... 688,018 -- --
Restricted cash......................................... (211,556) -- --
Finance cost............................................ (30,000) -- --
Warrants................................................ 5,212 -- --
Shareholder contributions............................... 46,066 1,500 5,000
-------- ------- ------
Net cash provided by financing activities............ 490,026 5,807 8,571
-------- ------- ------
Net Increase (Decrease) in Cash........................... 370,668 (2,944) 4,284
Cash, beginning of the year............................... 1,346 4,290 6
-------- ------- ------
Cash, end of the year..................................... 372,014 1,346 4,290
======== ======= ======
Supplemental Disclosures of Cash Flow Information:
Cash paid for --
Interest (net of amounts capitalized)................ 26,260 510 96
Income taxes......................................... -- -- --
</TABLE>
F-6
<PAGE> 156
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. GENERAL
VersaTel Telecom International N.V., formerly known as VersaTel Telecom
B.V. ("VersaTel" or the "Company"), incorporated in Amsterdam on October 10,
1995, provides international and national telecommunications services in the
Benelux region.
2. FINANCIAL CONDITION AND OPERATIONS
For the year ended December 31, 1998, the Company had a loss from operating
activities of NLG 46,466. In addition, the Company had an accumulated deficit of
NLG 92,346 as of December 31, 1998.
Although the Company expects to incur operating losses and net losses for
the foreseeable future as it incurs additional costs associated with the
development and expansion of the Company's network, the expansion of its
marketing and sales organization and the introduction of new telecommunications
services, it has a positive working capital of NLG 414,915 at December 31, 1998,
which should enable it to continue its operations through December 31, 1999.
3. SIGNIFICANT ACCOUNTING PRINCIPLES
(A) BASIS OF PRESENTATION
The accompanying consolidated financial statements of the company have been
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP"). The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
The Company maintains its accounts under Dutch tax and corporate
regulations and has made certain out-of-book memorandum adjustments to these
records presenting the accompanying financial statements in accordance with U.S.
GAAP.
(B) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the operations
of the following wholly-owned (directly or indirectly) subsidiaries:
- VersaTel Telecom Europe B.V.
- Bizztel Telematica B.V.
- CS Net B.V.
- VersaTel Telecom Netherlands B.V.
- VersaTel Telecom Belgium N.V.
- CS Engineering B.V.
The results of the subsidiaries are included from the respective dates of
acquisition or incorporation by the Company during 1998. All significant
intercompany accounts and transactions have been eliminated.
F-7
<PAGE> 157
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On May 29, 1998 and August 10, 1998 the Company acquired the shares of
Bizztel Telematica B.V. ("Bizztel") in 2 phases. The key figures of Bizztel as
included in the December 31, 1998 financial statements of VersaTel are sales of
NLG 269, total assets NLG 189, total equity of NLG (722) and net loss for the
period of NLG (257).
The Company applied the purchase accounting method. The goodwill, being the
difference between the purchase price amounting to NLG 1,132 in total and the
net asset value as of acquisition date, is being capitalized and amortized in 5
years.
On November 6, 1998 the Company acquired the shares of CS Net B.V., which
owns 100% of the shares of CS Engineering B.V. (together, "CS Net"). The key
figures of CS Net as included in the December 31, 1998 financial statements of
VersaTel are sales of NLG 897, total assets NLG 1,332, total equity of NLG 921
and net income for the period of NLG 80.
The Company applied the purchase accounting method. The goodwill, being the
difference between the purchase price amounting to NLG 3,307 in cash and 130,000
shares of VersaTel (valued at NLG 2.55 per share for the purpose of determining
the goodwill) and the net asset value as of acquisition date, is being
capitalized and amortized in 10 years. Furthermore, an earn-out arrangement with
the former shareholders has been agreed-upon. Any payments resulting from this
earn-out arrangement will be recorded as an adjustment to the purchase price
upon the time they become certain. No such adjustments have yet been recorded.
For both entities, pro forma financial statements have been omitted for
materiality reasons.
(C) FOREIGN CURRENCY TRANSACTIONS
The Company's functional currency is the Dutch guilder. Transactions
involving other currencies are converted into Dutch guilders using the exchange
rates which are in effect at the time of the transactions.
At the balance sheet date, monetary assets and liabilities which are
denominated in other currencies are adjusted to reflect the current exchange
rates. Gains or losses resulting from foreign currency remeasurements are
reflected in the accompanying statements of operations.
(D) INVENTORY
Inventory, consisting primarily of dialers to be installed at customer
locations, is stated at the lower of cost (first-in, first-out) or market value.
(E) ADVERTISING EXPENSES
Advertising costs are expensed as incurred, and amounted to NLG 1,224, NLG
1,972 and NLG 5,259 in 1996, 1997 and 1998 respectively.
(F) INTANGIBLE ASSETS
Goodwill originating from the acquisition of investments represents the
difference of the net asset value and the acquisition cost of the investments at
the time of the acquisition. The goodwill is amortized on a straight-line basis
over a period varying from 5 to 10 years. Total accumulated amortization per
December 31, 1998 amounts to NLG 226.
F-8
<PAGE> 158
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred financing costs are costs incurred in connection with the issuance
of Senior Notes (the "Notes") during 1998 by the Company. Amortization is being
recorded over the term of the Notes as interest expense in the consolidated
statement of operations.
(G) RECOGNITION OF OPERATING REVENUES AND COST OF REVENUES
Operating revenues are recognized when the service is rendered. Cost of
revenues is recorded in the same period as the revenues are recorded.
The cost of telecommunication usage charged by the third party carriers to
the Company in connection with the telecommunication services rendered by the
Company to its customers, as well as other telecommunication costs, including
leased lines, are included in cost of revenues.
(H) SEGMENTAL REPORTING
Statement of Financial Accounting Standards ("SFAS") No. 131, "Disclosures
about Segments of an Enterprise and Related Information" has been issued and is
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires certain disclosures about business segments of an enterprise, if
applicable. The adoption of SFAS No. 131 did not have an effect on the Company's
financial statements, as the Company currently manages its operations as one
segment under the guidelines of the new standard.
(I) RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued the Statement of Position 98-1
("SOP 98-1"), "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," which provides guidance on accounting for the costs
of computer software developed or obtained for internal use. This SOP requires
computer software costs that are incurred in the preliminary project stage to be
expensed as incurred. Once the capitalization criteria of the SOP have been met,
directly attributable development costs should be capitalized. It also provides
guidance on the treatment of upgrade and maintenance expenditures. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. Costs incurred
prior to initial application of this SOP, whether capitalized or not, should not
be adjusted to the amounts that would have been capitalized had this SOP been in
effect when those costs were incurred. The Company has adopted this SOP in its
1998 consolidated financial statements.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or a liability
measured as its fair value. It also requires that changes in the derivative's
fair value be recognized currently into earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999
and can not be applied retroactively. The Company has not yet quantified the
impacts of adopting SFAS No. 133 on the financial statements and has not
determined the timing or method of adoption of SFAS No. 133.
F-9
<PAGE> 159
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(J) ORDINARY SHARES AND STOCK SPLIT
Ordinary shares, with a par value of NLG 0.05 and consisting of 140,000,000
class A shares and 10,000,000 class B shares, of which 17,820,000, 19,159,286
and 38,984,810 class A shares were outstanding at December 31, 1996, 1997 and
1998, respectively. No class B shares were issued.
On April 13, 1999, a two-for-one stock split was effected, which resulted
in the issuance of 19,492,405 additional shares of class A ordinary shares. All
per share and weighted average share amounts have been restated to reflect this
stock split.
4. RECAPITALIZATION
To increase the equity of the Company by means of the conversion of
subordinated debt and cash contribution by its shareholders, the Company has
completed a four part recapitalization in 1998.
The Subordinated Convertible Shareholder Loans were converted into ordinary
shares of the Company in February and April 1998. Furthermore, additional cash
contributions in equity capital were received in April and May 1998 amounting to
NLG 43,100 in total.
5. RESTRICTED CASH
Restricted cash balances of NLG 153, NLG 149 and NLG 211,556 at December
31, 1996, 1997 and 1998, respectively, include mainly amounts restricted in
connection with the payment of interest to the holders of the Senior Notes, and
bank guarantees to the lessors of the Company's buildings.
The amounts restricted in connection with interest payments to the holders
of the Notes include the interest to be paid until and including May 15, 2001
over the first tranche of Senior Notes and the interest to be paid until and
including May 15, 2001 over the second tranche of Senior Notes, which have
restricted balances of NLG 125,777 and NLG 85,779 respectively. The (total)
current portion is presented as Current portion of restricted cash. The
non-current portion is presented as Restricted Cash, net of current portion.
The bank guarantee to the lessors terminates upon cancellation of the lease
agreements for the respective buildings, and amounted to NLG 90.
6. ACCOUNTS RECEIVABLE
Accounts receivable are presented net of an allowance for doubtful accounts
of NLG 0, NLG 65 and NLG 347 at December 31, 1996, 1997 and 1998, respectively.
7. PREPAID EXPENSES AND OTHER
Prepaid Expenses and Other as of December 31, 1998, 1997 and 1996,
respectively, include an amount of NLG 5,897, NLG 1,564 and NLG 0, respectively,
which relates to value added taxes.
8. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed on a straight-line basis over the estimated useful life
of the related asset. Property and equipment operated by the Company under a
capital lease agreement are capitalized.
F-10
<PAGE> 160
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Listed below are the major classes of property and equipment and their
estimated useful lives in years as of December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
USEFUL LIFE 1998 1997 1996
----------- ------ ------ -----
<S> <C> <C> <C> <C>
Leasehold improvements.................... 5 3,555 911 40
Telecommunications equipment.............. 2-10 37,264 14,750 2,376
Other..................................... 3-5 7,929 1,546 388
------ ------ -----
Property and equipment.................. 48,748 17,207 2,804
Less Accumulated depreciation........... 10,140 3,588 464
------ ------ -----
Property and equipment, net............. 38,608 13,619 2,340
====== ====== =====
</TABLE>
Presented under deferred income is cash received in connection with the
sublease by the company of part of its building. As the sublease was terminated
in 1998, the amount is no longer recorded in the December 31, 1998 balance
sheet.
9. CONSTRUCTION IN PROGRESS
The Company continues to build out its network in the Benelux and securing
rights-of-way. The resulting assets as of December 31, 1998 have been recorded
at cost under the caption "Construction in progress."
During the time of the construction interest is capitalized at a rate of
13 1/4%, the total capitalized interest at December 31, 1998 being NLG 1,393.
10. CAPITAL LEASE OBLIGATIONS
The Company entered into a master lease agreement with a finance company to
lease certain telecommunications and EDP equipment.
Commitments for minimum rentals under non-cancellable leases at the end of
1998 are as follows:
<TABLE>
<S> <C>
1999........................................................ NLG 73
2000........................................................ 19
2001........................................................ 19
2002........................................................ 4
-------
Total minimum lease payments................................ 115
Less amount representing interest........................... 7
-------
Present value of net minimum lease payments, including
maturities of NLG 71...................................... NLG 108
=======
</TABLE>
F-11
<PAGE> 161
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Property, plant and equipment at year-end include the following amounts for
capitalized leases:
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Telecommunications equipment..................... NLG 820 NLG 820
Other............................................ 28 28
------- -------
848 848
Less allowances for depreciation................. 740 461
------- -------
NLG 108 NLG 387
======= =======
</TABLE>
11. SENIOR NOTES
On May 27, 1998 and December 3, 1998 the company issued two tranches of
Senior Notes for respectively $225,000 and $150,000 with an interest rate of
13 1/4% due 2008, and warrants to purchase respectively 3,000,000 and 2,000,100
shares at an exercise price of NLG 2.55 per share, respectively.
The discount on the second tranche of Senior Notes (amounting to 4%) is
netted against the Notes and will be amortized on a straight-line basis over a
period equal to the term of the Senior Notes. The amortization charge is treated
as interest expense in the income statement.
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments,"
requires disclosure of fair value information about financial instruments
whether or not recognized in the balance sheet. The carrying amounts reported in
the consolidated balance sheets for cash, trade receivables, accounts payable
and accrued expenses approximate fair value based on the short-term maturity of
these instruments. The carrying amount of the Company's borrowings under the
long-term debt agreements approximates fair value as the interest rates on these
long-term debts approximates the current market interest rates.
12. EMPLOYEE BENEFIT PLANS
The Company has established two stock option plans: the 1997 Stock Option
Plan (the "1997 Plan"), and the 1998 Stock Option Plan (the "1998 Plan").
The 1997 Plan provides for the grant of options to certain key employees of
the Company to purchase depositary receipts issued for ordinary shares of the
Company. Under the 1997 Plan, no options may be granted with an expiration date
of more than five years after the granting of the option. The options will be
granted for free with an exercise price to be determined in the particular grant
of the option.
The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it to the Company or to another party
designated by the Company, at the Purchase Price (as defined in the 1997 Plan).
Unless otherwise specified in the particular grant of the option, the Purchase
Price will be the fair market value of the ordinary shares minus a penalty
discount. The 1997 Plan contains provisions in the event of a dispute regarding
the fair market value of the ordinary shares. The penalty discount, if any, is
determined by the length of employment of the particular option holder.
F-12
<PAGE> 162
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pursuant to the Shareholders' Agreement, Telecom Founders, Cromwilld and
NeSBIC must make available the shares underlying the depositary receipts to be
issued under the 1997 Plan.
As of December 31, 1998, 398,000 options to purchase 398,000 depositary
receipts had been granted under the 1997 Plan and the Company does not intend to
grant any more options under the 1997 Plan.
The 1998 Plan provides for the grant of options to employees to purchase
depositary receipts issued for ordinary shares of the Company. The option period
will commence at the date of the grant and will last 5 years. The option
exercise price shall be the economic value of the depositary receipt at the date
of the grant of the option. The 1998 Plan contains specific provisions for the
determination of the economic value of the depositary receipts.
The option holder is not entitled to retain any depositary receipts
received by the option holder as a result of the exercise of its option. Upon
exercise of its option by the option holder, the option holder is required to
offer the depositary receipts received by it, within one year after the end of
the option period, to the Company or to another party designated by the Company,
at a purchase price equal to the economic value of the depositary receipts.
As of December 31, 1998, 5,000,000 options to purchase 5,000,000 depositary
receipts have been granted under the 1998 Plan.
The fair value of the depository receipts at the date of the grant equals
the exercise price of the options granted under the 1998 Stock Option Plan. This
value was based on transactions conducted on an at arm's length basis, with
third parties becoming shareholders.
The depositary receipts issued under both the 1997 Plan and the 1998 Plan
will be administered by the Stichting Administratiekantoor Versatel.
In October 1995, FASB Statement No. 123 "Accounting for Stock-Based
Compensation" was issued. The Company has adopted the disclosure provisions of
FASB Statement No. 123 in 1997, but opted to remain under the expense
recognition provisions of Accounting Principles Board (APB) Opinion No. 25,
"Accounting for Stock Issued to Employees" in accounting for options granted
under the Stock Option Plans. Accordingly, for the years ended December 31, 1997
and 1998 no compensation was recognized for options granted under these schemes.
Had compensation cost for stock options awarded under these plans been
determined consistent with FASB Statement No. 123, the Company's net income and
earnings per share would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1998 1997
------- -------
NLG NLG
<S> <C> <C> <C>
Net Loss:...................................... As reported (67,137) (19,860)
Pro forma (69,405) (19,887)
Net loss per share (basic and diluted):........ As reported (2.06) (1.10)
Pro forma (2.06) (1.10)
</TABLE>
F-13
<PAGE> 163
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The movement in options outstanding during the 2 years ended December 31,
1997 and 1998 is summarized in the following table:
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED
SHARES SUBJECT AVERAGE EXERCISE
TO OPTION PRICE
-------------- ----------------
<S> <C> <C>
Outstanding at January 1, 1997.................... -- --
Granted during 1997............................... 398,000 NLG 0.54
---------
Outstanding at December 31, 1997.................. 398,000 NLG 0.54
Granted during 1998............................... 5,000,000 NLG 2.27
---------
Outstanding at December 31, 1998.................. 5,398,000 NLG 2.14
=========
</TABLE>
The weighted average fair value of options granted in the year ended
December 31, 1998 was estimated at NLG 0.46 as at the date of grant using the
Black-Scholes stock option pricing model. The following weighted average
assumptions were used: dividend yield of 0.00% per annum, annual standard
deviation (volatility) of 0.00%, risk free interest rate of 4.46% and expected
term of 5 years.
For options granted in the year ended December 31, 1998 with an exercise
price equal to market price at grant date, the weighted average exercise price
and fair value at grant date were estimated at NLG 2.27 and NLG 0.46
respectively.
The exercise prices for options outstanding at the end of the year ranged
from NLG 0.30 to NLG 2.55, with a weighted average exercise price of NLG 2.14
and a remaining contractual life of 4.28 years.
The following table summarizes information about the stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS CURRENTLY EXERCISABLE
- ------------------------------------------------------------------- -----------------------------
WEIGHTED WEIGHTED
RANGE AVERAGE AVERAGE WEIGHTED
OF EXERCISE REMAINING EXERCISE AVERAGE EXERCISE
PRICES NUMBER CONTRACTUAL LIFE PRICE NUMBER PRICE
----------- --------- ---------------- -------- --------- ----------------
<S> <C> <C> <C> <C> <C>
NLG 0 - 0.49............ 99,000 3.0 0.30 99,000 0.30
NLG 0.50 - 0.99......... 299,000 3.5 0.63 299,000 0.63
NLG 1 - 1.49............ -- -- -- -- --
NLG 1.50 - 1.99......... -- -- -- -- --
NLG 2 - 2.49............ 4,350,000 4.32 2.23 4,350,000 2.23
NLG 2.50 - 3.00......... 650,000 4.46 2.55 650,000 2.55
</TABLE>
13. TAXES
The Company had income tax carry-forwards of approximately NLG 1,800 at
December 31, 1996, NLG 8,200 at December 31, 1997 and NLG 42,300 at December 31,
1998, which may be utilized to reduce future income taxes payable.
F-14
<PAGE> 164
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The income tax carry-forwards do not expire and can be utilized
indefinitely under Netherlands tax legislation. A valuation allowance has been
established for the entire amount of the Net Operating Loss carry-forwards due
to the uncertainty of its recoverability.
There were no significant temporary differences which gave rise to deferred
tax assets and liabilities at December 31, 1996 or 1997. At December 31, 1998 a
temporary difference has arisen due to the different treatment of finance costs
for fiscal purposes. No deferred taxes have been recorded in this respect.
14. NET SALES
The geographical composition of net sales is as follows:
<TABLE>
<CAPTION>
1998
----------
<S> <C>
The Netherlands............................................. NLG 39,324
Belgium..................................................... 237
----------
Total............................................. NLG 39,561
==========
</TABLE>
In 1996 and 1997, all sales were realized in The Netherlands.
15. RELATED PARTY TRANSACTIONS
At December 31, 1996, 1997 and 1998 the Company had various accounts
payable to and accruals outstanding relating to related parties. These related
mainly to interest payable on the subordinated convertible shareholder loans of
approximately NLG 174 and NLG 199 at December 31, 1996 and 1997.
In the normal course of business, the Company uses a consultancy firm in
which one of the Company's officers is a director. Accounts payable to this
consultancy firm at December 31, 1998 amounted to NLG 806 and the 1998 expense
to the Company in this respect was approximately NLG 3,300.
16. RENT AND OPERATING LEASE COMMITMENTS
Future minimum commitments in connection with rent and other operating
lease agreements are as follows at December 31, 1998:
<TABLE>
<S> <C>
1999........................................................ NLG 4,635
2000........................................................ 4,571
2001........................................................ 4,571
2002........................................................ 4,313
2003........................................................ 2,092
2004 and further............................................ 2,352
----------
NLG 22,534
==========
</TABLE>
Rent and operating lease expenses amounted to approximately NLG 585 in 1997
and NLG 1,937 in 1998. The main part of future commitments relates to the
renting of Points-of-Presence ("POP's") for a ten-year period.
F-15
<PAGE> 165
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
17. COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET
Commitments in connection with the roll-out of the Company's network, not
yet recorded on the balance sheet amount to approximately NLG 75,000 as of
December 31, 1998. Reference is made to Note 9.
18. LEGAL PROCEEDING
One of the shareholders of the Company objected to the Recapitalization as
described under Note 4, and to the issuance of the 2 tranches of Senior Notes as
described under Note 11, and threatened to challenge in court certain of
VersaTel's actions in connection with the Recapitalization and the issuance of
the Notes. In January 1999, this shareholder filed, pursuant to article 2:345 of
the Netherlands Civil Code, a petition with the Enterprise Chamber of the Court
of Appeals in Amsterdam requesting the appointment of one or more experts to
investigate the management and affairs of VersaTel. If this request will be
granted, the person or persons appointed by the court will file a report with
the court upon conclusion of the investigation. The Netherlands Civil Code
provides that if the findings in such report indicate the mismanagement of the
company involved, the Enterprise Chamber of the Court of Appeals may, in its
discretion, at the request of either the petitioner, the other shareholders of
the company representing at least 10% of the outstanding share capital, or the
Solicitor-General with the Court of Appeals, take one or more of the following
actions: (i) suspend or dismiss one or more of the managing or supervisory
directors; (ii) appoint on a temporary basis one or more managing or supervisory
directors; (iii) deviate on a temporary basis from such provisions of the
articles of association of the company as indicated by the court; (iv) transfer
shares in the company on a temporary basis; and (v) dissolve the company.
Based upon advice from the Company's legal counsel, it is unlikely that
this objection would have a material impact on the Company's consolidated
balance sheets or statements of operations.
F-16
<PAGE> 166
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, 1998 MARCH 31, 1999
-------------- --------------
NLG NLG
<S> <C> <C>
ASSETS
Current Assets:
Cash.................................................... 5,149 329,551
Restricted cash, current portion........................ 76 94,201
Accounts receivable, net................................ 3,321 11,001
Inventory, net.......................................... 777 2,992
Prepaid expenses and other.............................. 1,837 17,439
------- --------
Total current assets............................ 11,160 455,184
------- --------
Fixed Assets:
Property, plant and equipment, net...................... 14,956 41,766
Construction in progress................................ -- 92,205
------- --------
Total fixed assets.............................. 14,956 133,971
------- --------
Restricted cash, net of current portion................... 73 135,614
Capitalized finance costs, net............................ -- 28,000
Goodwill, net............................................. -- 4,354
------- --------
Total assets.................................... 26,189 757,123
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable........................................ 24,345 50,556
Due to related parties.................................. 530 --
Accrued liabilities..................................... 9,583 70,413
Current portion of capital lease obligations............ 269 71
------- --------
Total current liabilities....................... 34,727 121,040
------- --------
Capital lease obligations, net of current portion......... 50 23
------- --------
Long term liabilities..................................... 325 670
------- --------
Subordinated Convertible Shareholder Loans................ 8,105 --
------- --------
Prepaid Shareholder Contributions......................... 7,200 --
------- --------
Long term debt (13 1/4% Senior Notes)..................... -- 747,845
------- --------
Total liabilities............................... 50,407 869,578
Shareholders' Equity:
Ordinary shares, NLG 0.05 par value..................... 958 1,949
Additional paid-in capital.............................. 6,037 51,112
Warrants................................................ -- 5,212
Accumulated deficit..................................... (31,213) (170,728)
------- --------
Total shareholders' equity...................... (24,218) (112,455)
------- --------
Total liabilities and shareholders' equity...... 26,189 757,123
======= ========
</TABLE>
See notes to the unaudited consolidated financial statements.
F-17
<PAGE> 167
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 31, 1998 MARCH 31, 1999
-------------- --------------
NLG NLG
<S> <C> <C>
OPERATING REVENUES........................................ 6,402 15,501
OPERATING EXPENSES:
Cost of Revenues, excluding depreciation................ 5,460 12,485
Selling, general and administrative..................... 5,544 20,179
Depreciation and amortization........................... 1,087 3,084
---------- ----------
Total operating expenses........................ 12,091 35,748
---------- ----------
Operating loss..................................... (5,689) (20,247)
---------- ----------
OTHER INCOME (EXPENSES):
Foreign currency exchange gains (losses), net........... (115) (40,283)
Interest income......................................... 14 6,043
Interest expense -- third parties....................... (27) (23,895)
Interest expense -- related parties..................... (187) --
---------- ----------
Total other income (expenses)................... (315) (58,135)
---------- ----------
Loss before income taxes........................... (6,004) (78,382)
PROVISION FOR INCOME TAXES................................ -- --
---------- ----------
Net loss........................................... (6,004) (78,382)
========== ==========
NET LOSS PER SHARE (Basic and Diluted) in NLG............. (0.31) (2.01)
Weighted average number of shares outstanding............. 19,159,286 38,984,810
</TABLE>
See notes to the unaudited consolidated financial statements.
F-18
<PAGE> 168
VERSATEL TELECOM INTERNATIONAL N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
MARCH 31, 1998 MARCH 31, 1999
-------------- --------------
NLG NLG
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss................................................ (6,004) (78,382)
Adjustments to reconcile net loss to net cash used in
operating activities --
Depreciation and amortization........................... 1,087 3,084
Amortization finance cost............................... -- 750
Exchange loss on long-term debt and restricted cash..... -- 41,568
Changes in other operating assets and liabilities Accounts
receivable.............................................. (1,517) (3,099)
Inventory............................................... (359) (1,909)
Prepaid expenses and other.............................. 158 (4,530)
Accounts payable........................................ 3,671 10,693
Due to related parties.................................. 281 (806)
Accrued liabilities..................................... 1,778 42,408
------ -------
Net cash provided by (used in) operating
activities...................................... (905) 9,777
====== =======
Cash Flows from Investing Activities:
Capital expenditures.................................... (2,424) (52,226)
------ -------
Net cash used in investing activities.............. (2,424) (52,226)
====== =======
Cash Flows from Financing Activities:
Redemptions of capital lease obligations................ (68) (14)
Shareholder contributions............................... 7,200 --
------ -------
Net cash provided by (used in) financing
activities...................................... 7,132 (14)
====== =======
Net Increase (Decrease) in Cash........................... 3,803 (42,463)
Cash, beginning of the period............................. 1,346 372,014
------ -------
Cash, end of the period................................... 5,149 329,551
====== =======
Supplemental Disclosures of Cash Flow Information:
Cash paid for --
Interest (net of amounts capitalized)................ -- --
Income taxes......................................... -- --
</TABLE>
See notes to the unaudited consolidated financial statements.
F-19
<PAGE> 169
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1999 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND 1999
(AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
1. FINANCIAL PRESENTATION AND DISCLOSURES
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of VersaTel Telecom International N.V. and its
wholly-owned subsidiaries (the "Company") have been prepared in conformity with
US generally accepted accounting principles ("US GAAP") and contain all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the Company's consolidated financial position as of March 31, 1999, and
the results of operations and cash flows for the three months ended March 31,
1998 and 1999.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the Company's 1998 audited financial statements and
the notes related thereto, filed on Form 20-F. The results of operations for the
three months ended March 31, 1999 may not be indicative of the operating results
for the full year.
As of March 31, 1999, the Company (directly or indirectly) wholly-owned the
following subsidiaries:
- VersaTel Telecom Europe B.V.
- VersaTel Telecom Netherlands B.V.
- VersaTel Telecom Belgium N.V.
- Bizztel Telematica B.V.
- CS Net B.V.
- CS Engineering B.V.
All intercompany assets, liabilities and transactions have been eliminated
in consolidation.
2. SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. It also requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999
and can not be applied retroactively. The Company has not yet quantified the
impacts of adopting SFAS No. 133 on the financial statements and has not
determined the timing of or method of adoption of SFAS No. 133.
3. INVENTORIES
Inventory, consisting primarily of dialers to be installed at customer
locations, is stated at the lower of cost (first-in, first-out) or market value.
F-20
<PAGE> 170
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. FOREIGN CURRENCY TRANSACTIONS
The Company's functional currency is the Dutch guilder. Transactions
involving other currencies are converted into Dutch guilders using the exchange
rates which are in effect at the time of the transactions.
At the balance sheet date, monetary assets and liabilities which are
denominated in other currencies are adjusted to reflect the current exchange
rates. Gains or losses resulting from foreign currency remeasurements are
reflected in the accompanying statements of operations.
For the three months ended March 31, 1999 an unrealized exchange loss of
approximately NLG 59,800 was recorded on the long-term debt (13 1/4% senior
notes, denominated in U.S. dollars). In the same period, an unrealized exchange
gain was recorded on the restricted cash, denominated in U.S. dollars, to an
amount of approximately NLG 18,300.
5. FINANCIAL CONDITION AND OPERATIONS
For the period ended March 31, 1999, the Company had a loss from operating
activities of NLG 20,247. In addition, the Company had an accumulated deficit of
NLG 170,728 as of March 31, 1999.
Although the Company expects to incur operating losses and net losses for
the foreseeable future as it incurs additional costs associated with the
development and expansion of the Company's network, the expansion of its
marketing and sales organization and the introduction of new telecommunications
services, it has a positive working capital of NLG 334,144 at March 31, 1999,
which should enable it to continue its operations through December 31, 1999. The
Company expects to raise additional funds in 1999 through public or private
financings or from financial institutions.
6. COMMITMENTS
Commitments in connection to the roll-out of the Company's network, not yet
recorded on the balance sheet, amount to approximately NLG 65,000 as of March
31, 1999.
An earn-out arrangement with the former shareholders of CS Net B.V. has
been agreed-upon. Any payments resulting from this earn-out arrangement will be
recorded as an adjustment to the purchase price upon the time they become
certain. No such adjustments have yet been recorded.
7. LEGAL PROCEEDING
One of the shareholders of the Company objected to the 1998
recapitalization as described in Form 20-F, and to the issuance of the two
tranches of senior notes as described in Form 20-F, and threatened to challenge
in court certain of the Company's actions in connection with the
recapitalization and the issuance of the senior notes. In January 1999, this
shareholder filed, pursuant to article 2:345 of the Netherlands Civil Code, a
petition with the Enterprise Chamber of the Court of Appeals in Amsterdam
requesting the appointment of one or more experts to investigate the management
and affairs of the Company. In May 1999, the Enterprise Chamber denied the
shareholder's request. However, it is not certain whether or not this
shareholder will attempt to frustrate, block or challenge our future actions.
8. SUBSEQUENT EVENTS
In May 1999 the Company acquired Amstel Alpha B.V. and its direct and
indirect subsidiaries, SpeedPort N.V. and Glabana U.S.A., Inc. (collectively,
"SpeedPort"). The unaudited key figures of
F-21
<PAGE> 171
VERSATEL TELECOM INTERNATIONAL N.V.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SpeedPort as of April 30, 1999 are summarized as follows: no sales, total assets
NLG 1,000, and a net loss for the period since inception in 1998 until April 30,
1999 of NLG 2,200.
In May 1999 the Company acquired 7-Klapper Beheer B.V. and its subsidiaries
Vuurwerk Internet B.V. and Vuurwerk Acces B.V. (collectively "Vuurwerk"). The
unaudited figures of Vuurwerk as of December 31, 1998 are summarized as follows:
1998 sales of NLG 3,800, assets NLG 6,000 and a net income of NLG 1,400.
In June 1999 the Company acquired ITinera Services N.V. ("ITinera"). Key
(unaudited) figures for ITinera over 1998 are as follows: sales of NLG 870, a
net loss for the year of NLG 254 and total assets as of December 31, 1998 of NLG
1,481.
In June 1999 the Company acquired Svianed B.V. Key unaudited figures for
Svianed as of April 30, 1999 are sales of NLG 21,100, total assets NLG 40,100
and a net income for the period from January 1, 1999 until April 30, 1999 of NLG
3,300.
On April 13, 1999 a two-for-one stock split was effected, which resulted in
the issuance of 19,492,405 additional shares of class A ordinary shares. The
authorized capital of the Company now consists of 140,000,000 class A shares and
10,000,000 class B shares, each with a par value of NLG 0.05. All share, per
share and weighted average share amounts have been restated in this document to
reflect this stock split. As of March 31, 1999, 38,984,810 class A shares (as
adjusted) were outstanding and no class B shares were issued.
In 1999, the Company issued options to employees to purchase depositary
receipts representing an equal number of ordinary shares of VersaTel. As of the
date of this prospectus, 2,115,000 options to purchase depositary receipts have
been issued under the 1999 Plan. As the exercise price of the 1999 options is
significantly below the estimated fair market value of the shares, the Company
will have to record a compensation expense in its June 30, 1999 financial
statements. The Company is in the process of quantifying this compensation
expense.
F-22
<PAGE> 172
SVIANED B.V.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report................................ F-24
Balance Sheets as of December 31, 1998 and 1997............. F-25
Statements of Operations for the Years Ended December 31,
1998 and 1997............................................. F-26
Statements of Shareholder's Equity for the Years Ended
December 31, 1998 and 1997................................ F-27
Statements of Cash Flows for the Years Ended December 31,
1998 and 1997............................................. F-28
Notes to Financial Statements............................... F-30
Condensed Balance Sheets as of March 31, 1999 and 1998...... F-35
Condensed Statements of Operations for the Three Months
Ended March 31, 1999 and 1998............................. F-36
Condensed Statement of Shareholder's Equity as of March 31,
1999 and 1998............................................. F-37
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 1999 and 1998............................. F-38
Condensed Notes to Financial Statements..................... F-39
</TABLE>
F-23
<PAGE> 173
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS AND THE SHAREHOLDER OF SVIANED B.V.
We have audited the accompanying balance sheets of Svianed B.V. as of
December 31, 1998 and 1997, and the related statements of operations,
shareholder's equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards in The Netherlands which do not differ in any significant respect from
generally accepted auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Svianed B.V. as of December
31, 1998 and 1997, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles in
the United States of America.
KPMG Accountants N.V.
Amsterdam, The Netherlands
March 15, 1999
F-24
<PAGE> 174
SVIANED B.V.
BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS
EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
NLG NLG
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................. 1,468 2,578
Trade accounts receivable, less allowance for doubtful
accounts of NLG 250 in 1998 and NLG nil in 1997.... 4,618 5,536
Due from group companies.............................. 5,476 4,254
Inventory............................................. 129 215
Prepaid expenses...................................... 190 298
Discounts to be received from KPN..................... 1,454 590
Other current assets.................................. 1,062 681
------ ------
Total current assets............................... 14,397 14,152
Property and equipment, less accumulated depreciation... 19,153 14,648
Deferred tax assets..................................... 105 70
------ ------
Total assets.................................. 33,655 28,870
====== ======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable...................................... 2,306 4,107
Due to group companies................................ 8,713 2,706
Short term portion of long term debt.................. 2,500 2,500
Deferred income....................................... 3,132 1,943
Accrued liabilities................................... 679 876
Other liabilities..................................... 1,508 250
------ ------
Total current liabilities.......................... 18,838 12,382
Long term debt.......................................... 2,500 5,000
Pension obligation...................................... 300 200
------ ------
Total liabilities.................................. 21,638 17,582
------ ------
Shareholder's equity
Common shares, NLG 1,000 par value, authorized 25,000
shares; issued and outstanding 5,000 in 1998 and
1997............................................... 5,000 5,000
Retained earnings..................................... 7,017 6,288
------ ------
Total shareholder's equity......................... 12,017 11,288
------ ------
Total liabilities and shareholder's equity.... 33,655 28,870
====== ======
</TABLE>
The accompanying notes form an integral part of these Financial Statements.
F-25
<PAGE> 175
SVIANED B.V.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
NLG NLG
<S> <C> <C>
OPERATING REVENUES:
Related party revenues.................................... 34,460 32,037
Other revenues............................................ 22,223 13,074
------ ------
Total operating revenues............................... 56,683 45,111
OPERATING EXPENSES:
Cost of Revenues, excluding depreciation.................. 26,878 23,550
Selling, general and administrative expenses.............. 11,890 8,331
Depreciation expense...................................... 8,751 6,754
------ ------
Total operating expenses............................... 47,519 38,635
------ ------
Operating Income.......................................... 9,164 6,476
OTHER INCOME (EXPENSE):
Interest income........................................... 85 111
Interest expense.......................................... (435) (542)
------ ------
Net income before income taxes.............................. 8,814 6,045
PROVISION FOR INCOME TAXES................................ (3,085) (2,120)
------ ------
Net income.................................................. 5,729 3,925
------ ------
</TABLE>
The accompanying notes form an integral part of these Financial Statements.
F-26
<PAGE> 176
SVIANED B.V.
STATEMENTS OF SHAREHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED SHAREHOLDER'S
SHARES EARNINGS EQUITY
------ -------- -------------
<S> <C> <C> <C>
Balance as at 31 December, 1996........................ 5,000 2,363 7,363
Net income............................................. -- 3,925 3,925
----- ------ ------
Balance as at 31 December, 1997........................ 5,000 6,288 11,288
Net income............................................. -- 5,729 5,729
Dividends.............................................. -- (5,000) (5,000)
----- ------ ------
Balance as at 31 December, 1998........................ 5,000 7,017 12,017
===== ====== ======
</TABLE>
The accompanying notes form an integral part of these Financial Statements.
F-27
<PAGE> 177
SVIANED B.V.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
NLG NLG
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income.................................................. 5,729 3,925
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 8,751 6,754
Deferred tax.............................................. (35) --
Deferred income........................................... 1,189 1,943
Provision for doubtful accounts........................... 250 --
Change in other operating assets and liabilities:
Decrease (increase) in accounts receivable................ 668 (3,796)
Increase in due from group companies...................... (1,222) (152)
Increase in accrued receivables and other receivables..... (1,137) (33)
Decrease (increase) in inventory.......................... 86 (215)
Decrease (increase) in accounts payable................... (1,801) 473
Increase (decrease) in due to group companies............. 6,007 (817)
Increase (decrease) in accrued and other liabilities...... 1,061 (1,460)
Increase in pension obligation............................ 100 --
------- --------
Net cash provided by Operating Activities.............. 19,646 6,622
======= ========
Cash flows from Investing Activities:
Capital expenditures...................................... (13,256) (8,454)
------- --------
Net cash used in Investing Activities..................... (13,256) (8,454)
======= ========
</TABLE>
The accompanying notes form an integral part of these Financial Statements.
F-28
<PAGE> 178
SVIANED B.V.
STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
NLG NLG
<S> <C> <C>
Cash flows from Financing Activities:
Dividends paid............................................ (5,000) --
Repayment of borrowings................................... (2,500) (2,500)
------- -------
Net cash used by Financing Activities.................. (7,500) (2,500)
======= =======
Net decrease in cash and cash equivalents................... (1,110) (4,332)
Cash and cash equivalents at beginning of period............ 2,578 6,910
------- -------
Cash and cash equivalents at end of period.................. 1,468 2,578
======= =======
</TABLE>
Supplemental Disclosures of Cash Flow Information:
<TABLE>
<S> <C> <C>
Income tax paid............................................. 2,120 1,656
Interest paid............................................... 408 540
</TABLE>
The accompanying notes form an integral part of these Financial Statements.
F-29
<PAGE> 179
SVIANED B.V.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Svianed B.V. (the "Company") is a wholly owned entity of Gak Holding B.V.,
which is wholly owned by Gak Group. The Company is a provider of integrated data
and telecommunications network services in The Netherlands. The Company
considers its operations to be in one business segment and internally makes
operating decisions, allocates resources and assesses performance based on one
segment.
Although the Company is a stand alone entity, an allocation was determined
for the pension costs associated with the Gak Holding B.V. defined benefit
pension plan based upon the employees future service costs in compliance with
statements of Financial Accounting Standards (SFAS) No. 87 Employers' Accounting
for Pensions. The fair value of the plan assets were allocated at the group
transfer value, which is a prescribed amount stipulated in the defined benefit
pension plan. Therefore these costs are not necessarily representative of the
pension costs of the company under a separate plan.
Included in the company results are group charges relating to costs in
connection with legal, internal audit and other administrative services provided
by Gak Holding B.V. on behalf of the Company. The Company's management believes
such costs are reflective of actual benefits received by the Company.
The Company is part of a fiscal unity with Gak Group. For purposes of these
financial statements the income taxes are calculated as if the company was a
stand alone corporation and therefore tax expense is calculated at 35% of pre
tax income, which represents the statutory income tax rate in The Netherlands.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist mainly of cash at banks on demand. For
purposes of the statement of cash flows, the Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.
(b) INVENTORY
Finished goods are stated at the lower of cost or market value. Cost is
determined using the first-in, first-out method. Cost of work in progress
consists of the direct salary costs and a charge for indirect costs.
(c) DISCOUNTS TO BE RECEIVED FROM KPN
Discounts represent volume discounts on the KPN network rental agreements
and are accrued based on volume utilized by the company on a monthly basis.
(d) REVENUE RECOGNITION
Revenues are recorded in the period in which the service is rendered. Cash
received in advance of services rendered is recorded as deferred income.
F-30
<PAGE> 180
SVIANED B.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(e) PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. The Company depreciates its
property and equipment using the straight-line method over the estimated useful
lives less the residual value. The useful life of property and equipment is 5
years or less.
(f) INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carry forwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.
(g) PENSIONS
The Company employees are covered under the Gak Group defined benefit
pension plan. The benefits are based on years of service and the employee's
compensation. The cost of this program is being funded currently. The Company
has included an allocation of the Gak Group defined benefit pension plan
obligation for its employees in compliance with SFAS No. 87 in the Company's
financial statements.
(h) ADVERTISING EXPENSE
Advertising costs are expensed as incurred, and amounted to NLG 415,000 in
1998 (1997: NLG 506,000).
(i) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates and assumptions are used in the amounts
reflected as allowance for doubtful accounts and recovery of deferred tax
assets. Actual results could differ from those estimates.
(j) FAIR VALUE OF FINANCIAL INSTRUMENTS
For all financial instruments, the carrying value is considered to
approximate the fair value due to the relatively short maturity of the
respective instruments.
3. RELATED PARTY TRANSACTIONS
Of the 1998 revenues realized from group companies, NLG 5.7 million relate
to subscriptions recharges relating to telephone access (1997: NLG 6.5 million)
for all Gak Group companies. The rest of the group revenues relate mainly to
capacity leases.
1998 costs charged by group companies to the company includes lease on
premises of NLG 850,000 (1997: NLG 697,000) and charges for various
administrative services and support of NLG 538,000 (1997: 585,000).
F-31
<PAGE> 181
SVIANED B.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The accounts due to the group companies for 1998 as of December 31, 1998
includes income tax payable of NLG 3,120,000 (1997: NLG 2,120,000) and dividends
payable of NLG 5,000,000.
4. INVENTORY
Inventory is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
NLG NLG
(IN THOUSANDS)
<S> <C> <C>
Finished goods............................... 24 16
Work in progress............................. 105 199
--- ---
129 215
=== ===
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment is comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -----------------
NLG NLG
(IN THOUSANDS)
<S> <C> <C>
Telecommunications and computer equipment.... 44,907 32,101
Furniture.................................... 29 --
------- -------
44,936 32,101
Accumulated depreciation..................... (25,783) (17,453)
------- -------
Property and equipment, net.................. 19,153 14,648
======= =======
</TABLE>
6. LONG-TERM DEBT
Svianed has a loan, maturing 1 December 2000, with ING Bank of originally
NLG 10,000,000. The fixed interest rate is 5.42% per year. Principal payments of
NLG 2,500,000 will be made in 1999 and 2000. Gak Holding B.V. is a joint
guarantor of the loan.
7. INCOME TAXES
Income tax expenses attributable to income consist of:
<TABLE>
<CAPTION>
1998 1997
----- ------
NLG NLG
(IN THOUSANDS)
<S> <C> <C>
Current..................................................... 3,120 2,120
Deferred.................................................... (35) --
----- ------
Total....................................................... 3,085 2,120
===== ======
</TABLE>
Since there are no material permanent differences between the book basis
and the tax basis, income tax expense approximates 35% (the Dutch statutory
rate) of net income before taxes.
F-32
<PAGE> 182
SVIANED B.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred taxes at December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----- ------
NLG NLG
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Pension obligation.......................................... 105 70
</TABLE>
In assessing the ability to realize deferred tax assets, management
considers whether it is more likely than not that some portions or all of the
portions of all the deferred tax assets will not be realized. Based upon the
level of historical taxable income and projections for future taxable income and
the periods for which the deferred tax assets are deductible. Management
believes it is more likely than not that it will realize the benefits of these
deductible differences.
8. COMMITMENTS
As per 31 December 1998, Svianed has the following off balance sheet
commitments:
- Rental agreement for the building of NLG 951,000 per year. The agreement
has an expiration date of 1 January 2000. After this date, the agreement
is terminable every six months.
- Rental agreement KPN network of NLG 3,000,000 per year. After one year,
this agreement is converted into a month-to-month lease.
- Service agreement for the KPN network of NLG 744,000 per year. This is a
3-year agreement and can be terminated with sale of the network.
- Service agreements of NLG 200,000 per year.
- Subscription agreements with KPN for NLG 330,000 per year. After one year
this agreement is converted into a month-to-month lease.
- Subscription agreements with WorldCom and UUnet of NLG 2,900,000 per
year. The expiration date is 31 December 1999.
- Lease agreements for company cars for NLG 421,000 per year. The
agreements have a term of 3 years.
LEASES
Future minimum rental commitments under non-cancelable operating leases as
of 31 December 1998 are as follows:
<TABLE>
<CAPTION>
NLG
(IN THOUSANDS)
--------------
<S> <C>
1999........................................................ 7,602
2000........................................................ 421
2001........................................................ 421
-----
8,444
=====
</TABLE>
F-33
<PAGE> 183
SVIANED B.V.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company is part of Gak Holding Group and therefore all companies within
the Gak Holding Group are jointly and severally liable.
9. PENSIONS
Pension costs incurred for the year ended December 31, 1998 was NLG 600,000
(1997: NLG 400,000). Contributions to the Gak Group plan were NLG 400,000 for
the year ended December 31, 1998 (1997: NLG 440,000).
The assumptions used in calculating the SFAS 87 pension obligation of the
Gak Group and allocated to Svianed B.V. were as follows:
<TABLE>
<CAPTION>
1998 1997
----- -----
NLG NLG
(IN THOUSANDS)
<S> <C> <C>
Weighed -- average assumptions as of 31 December:
Discount rate............................................... 5% 6%
Expected rate of return on plan assets...................... 6% 6%
Rate of compensation increase............................... 5% 5%
</TABLE>
10. SUBSEQUENT EVENTS (UNAUDITED)
On June 11, 1999, VersaTel Telecom International N.V. acquired 100% of the
capital of the Company.
Due to the change of the Company's shareholder, the Company will not
receive certain value added tax (VAT) benefits since it will not be part of the
Gak Holding B.V. fiscal tax unity, effective from the date of change of the
shareholder. As such, an estimated liability relating to VAT of approximately
NLG 1,2 million will be realized in 1999. The company expects to recover a total
amount of approximately NLG 1,1 million in the period 1999 through 2002.
F-34
<PAGE> 184
SVIANED B.V.
CONDENSED BALANCE SHEETS
AS OF MARCH 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1999 1998
--------- ---------
NLG NLG
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents................................. 5,318 1,009
Trade accounts receivable, less allowance for doubtful
accounts of NLG 125 on March 31, 1999 and NLG nil on
March 31, 1998......................................... 7,008 5,572
Due from group companies.................................. 5,210 1,972
Inventory................................................. 397 187
Prepaid expenses.......................................... -- 793
Discounts to be received from KPN......................... 1,470 346
Other current assets...................................... 1,506 1,426
------ ------
Total current assets................................... 20,909 11,305
Property and equipment, less accumulated depreciation....... 20,427 17,442
Deferred tax assets......................................... 158 79
------ ------
Total assets...................................... 41,494 28,826
====== ======
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable.......................................... 4,390 1,917
Due to group companies.................................... 4,759 2,555
Short term portion of long term debt...................... 2,500 2,500
Deferred income........................................... 1,536 3,132
Accrued expenses.......................................... 6,529 1,259
Other liabilities......................................... 101 247
------ ------
Total current liabilities.............................. 19,815 11,610
Long term debt.............................................. 7,500 5,000
Pension obligation.......................................... 450 225
------ ------
Total liabilities...................................... 27,765 16,835
Shareholder's equity
Common shares, NLG 1,000 par value, authorized 25,000
shares; issued and outstanding 5,000 in 1999 and
1998................................................... 5,000 5,000
Retained earnings......................................... 8,729 6,991
------ ------
Total shareholder's equity............................. 13,729 11,991
------ ------
Total liabilities and shareholder's equity........ 41,494 28,826
====== ======
</TABLE>
The accompanying notes form an integral part of these Unaudited Condensed
Financial Statements.
F-35
<PAGE> 185
SVIANED B.V.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
------------ ------------
NLG NLG
<S> <C> <C>
OPERATING REVENUES:
Related party revenues.................................... 9,429 8,467
Other revenues............................................ 6,150 3,375
------- -------
Total operating revenues............................... 15,579 11,842
OPERATING EXPENSES:
Cost of revenues, excluding depreciation.................. 6,628 6,342
Selling, general and administrative expenses.............. 3,734 2,448
Depreciation expenses..................................... 2,472 1,882
------- -------
Total operating expenses............................... 12,834 10,672
------- -------
Operating Income.......................................... 2,745 1,170
OTHER INCOME (EXPENSE):
Interest income........................................... 26 16
Interest expense -- third parties......................... (70) (104)
Interest expense -- related parties....................... (68) --
------- -------
Net income before income taxes............................ 2,633 1,082
PROVISION FOR INCOME TAXES.................................. (921) (379)
------- -------
Net income................................................ 1,712 703
======= =======
</TABLE>
The accompanying notes form an integral part of these Unaudited Condensed
Financial Statements.
F-36
<PAGE> 186
SVIANED B.V.
CONDENSED STATEMENTS OF SHAREHOLDER'S EQUITY
AS OF MARCH 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED SHAREHOLDER'S
SHARES EARNINGS EQUITY
------ -------- -------------
<S> <C> <C> <C>
Balance as at 31 December, 1997........................ 5,000 6,288 11,288
Net income............................................. -- 703 703
----- ------ ------
Balance as at 31 March, 1998........................... 5,000 6,991 11,991
===== ====== ======
Balance as at 31 December, 1998........................ 5,000 7,017 12,017
Net income............................................. -- 1,712 1,712
----- ------ ------
Balance as at 31 March, 1999........................... 5,000 8,729 13,729
===== ====== ======
</TABLE>
The accompanying notes form an integral part of these Unaudited Condensed
Financial Statements.
F-37
<PAGE> 187
SVIANED B.V.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS OF DUTCH GUILDERS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
------------------ ------------------
NLG NLG
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income........................................ 1,712 703
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................... 2,472 1,882
Deferred tax.................................... (53) (9)
Deferred income................................. (1,596) 1,189
Provision for doubtful accounts................. 125 --
Change in other operating assets and liabilities:
Increase in accounts receivable................. (2,515) (36)
Decrease in due from group companies............ 266 2,282
Increase in accrued receivables and other
receivables.................................. (270) (996)
Increase (decrease) in inventory................ (268) 28
Increase (decrease) in accounts payable......... 2,084 (2,190)
Decrease in due to group companies.............. (3,954) (151)
Increase in accrued and other liabilities....... 4,443 380
Increase in pension obligation.................. 150 25
------ ------
Net cash provided by Operating Activities.... 2,596 3,107
====== ======
Cash flows from Investing Activities:
Capital expenditures............................ (3,746) (4,676)
------ ------
Net cash used in Investing Activities........ (3,746) (4,676)
====== ======
Cash flows from Financing Activities:
Proceeds from new loan.......................... 5,000 --
------ ------
Net cash provided by Financing Activities.... 5,000 --
====== ======
Net increase (decrease) in cash and cash
equivalents..................................... 3,850 (1,569)
Cash and cash equivalents at beginning of
period.......................................... 1,468 2,578
------ ------
Cash and cash equivalents at end of period........ 5,318 1,009
====== ======
Supplemental disclosure of Cash Flow Information:
Income tax paid................................... -- --
Interest paid..................................... 137 101
</TABLE>
The accompanying notes form an integral part of these Unaudited Condensed
Financial Statements.
F-38
<PAGE> 188
SVIANED B.V.
CONDENSED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. DESCRIPTION OF BUSINESS
Svianed B.V. (the "Company") is a wholly owned entity of Gak Holding B.V.,
which is wholly owned by Gak Group. The Company is a provider of integrated data
and telecommunications network services in The Netherlands. The Company
considers its operations to be in one business segment and internally makes
operating decisions, allocates resources and assesses performance based on one
segment.
Although the Company is a stand alone entity, an allocation was determined
for the pension costs associated with the Gak Holding B.V. defined benefit
pension plan based upon the employees future service costs in compliance with
Statements of Financial Accounting Standards (SFAS) No. 87 Employers' Accounting
for Pensions. The fair value of the plan assets were allocated at the group
transfer value, which is a prescribed amount stipulated in the defined benefit
pension plan. Therefore these costs are not necessarily representative of the
pension costs of the company under a separate plan.
Included in the Company results are group charges relating to costs in
connection with legal, internal audit and other administrative services provided
by Gak Holding B.V. on behalf of the Company. The Company's management believes
such costs are reflective of actual benefits received by the Company.
The Company is part of a fiscal unity with Gak Group. For purposes of these
financial statements the income taxes are calculated as if the company was a
stand alone corporation and therefore tax expense is calculated at 35% of pre
tax income, which represents the statutory income tax rate in The Netherlands.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements and related notes at March 31, 1999 and for the
three months ended March 31, 1998 are unaudited and prepared in conformity with
the accounting principles applied in the Company's 1998 financial statements for
the year ended December 31, 1998. In the opinion of management, such interim
financial statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the results for such periods.
The results of operations for the three months ended March 31, 1999 are not
necessarily indicative of the results to be expected for the full year or any
other interim period.
3. INTERCOMPANY LOAN
The Company acquired a loan of Gak Holding B.V. of NLG 5 million as of
January 1, 1999. The fixed interest rate is 5.42% per year. Principal payments
of NLG 2,500,000 will be made as of December 31, 2001 and December 31, 2002.
4. SUBSEQUENT EVENTS
On June 11, 1999, VersaTel Telecom International N.V. acquired 100% of the
capital of the Company.
Due to the change of the Company's shareholder, the Company will not
receive certain value added tax (VAT) benefits since it will not be part of the
Gak Holding B.V. fiscal tax unity, effective from the date of change of the
shareholder. As such, an estimated liability relating to VAT of approximately
NLG
F-39
<PAGE> 189
SVIANED B.V.
CONDENSED NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1.2 million will be realized in 1999. The company expects to recover a total
amount of approximately NLG 1.1 million in the period 1999 through 2002.
Due to the change of the Company's shareholder, the loan of Gak Holding
B.V. has been fully repaid as of June 2, 1999, prior to its maturity.
F-40
<PAGE> 190
ANNEX A
GLOSSARY
ACCESS COSTS -- The costs paid by long distance carriers to the local
telephone companies for accessing the local networks of the local telephone
companies to originate and terminate long distance calls.
ADM (ADD-DROP MULTIPLEXER) -- A multiplexer which controls cross connect
between individual circuits by software, permitting dynamic cross connect of
individual 64 kbps circuits within an El line.
ATM (ASYNCHRONOUS TRANSFER MODE) -- An international standard for
high-speed broadband packet-switched networks, operating at digital transmission
speeds above 1.544 Mbps.
BANDWIDTH -- The range of frequencies that can be passed through a medium,
such as glass fibers, without distortion. The greater the bandwidth, the greater
the information-carrying capacity of such medium. For fiber optic transmission,
electronic transmitting devices determine the bandwidth, not the fibers
themselves. Bandwidth is measured in Hertz (analog) or Bits Per Second
(digital).
BITS -- The smallest unit of digital information utilized by electronic
information processing, storage or transmission systems.
BPS (BITS PER SECOND) -- The basic measuring unit of speed in a digital
transmission system; the number of bits that a transmission facility can convey
between a sending location and a receiving location in one second.
CARRIER -- A company authorized by a regulatory agency to provide
communications services.
CARRIER PRE-SELECTION -- The ability of end users to select the long
distance or international operator of their choice prior to the time their calls
are first made.
CARRIER SELECTION -- The ability of end users to select on a call-by-call
basis the long distance or international operator of their choice.
CIRCUIT SWITCHING -- A switching technique that establishes a dedicated
transmission path between originating and terminating points and holds that path
open for the duration of a call.
CO-LOCATION -- When an end-user or competing local telecommunications
service provider locates telephone network equipment at the building that houses
switches belonging to another telephone carrier, the user or competing provider
is said to be "co-located" with the other telephone carrier. The advantage for
the co-locating party is that it can make a direct connection to local and long
distance facilities and substantially reduce access costs.
CLOSED USER GROUP -- A group of customers with some affiliation with one
another and which are treated for regulatory purposes as not being the public.
CONNECTIVITY -- The property of a network that allows dissimilar devices to
communicate with each other.
DARK FIBER -- Any installed fiber optic cable lacking a light transmission
or signal, as opposed to in-service or "lit" fiber.
DWDM (DENSE WAVELENGTH DIVISION MULTIPLEXING) -- A multiplexing technique
allowing multiple different signals to be carried simultaneously, with
transmission capacity as high as 160 Gbps, on a fiber by allocating resources
according to frequency on non-overlapping frequency bands.
DIAL AROUND -- Use of carrier access numbers and/or carrier identification
codes to place a call through a carrier other than the one presubscribed to the
originating phone.
A-1
<PAGE> 191
E1 -- The European counterpart to the North American T-1 transmission
speed. The T-1 is a type of digital carrier transmitting voice or data at 1.544
Mbps. A T-1 carrier can handle up to 24 multiplexed 64 Kbps digital voice/data
channels. A T-1 carrier system can use metallic cable, microwave radio or
optical fiber as a transmission media.
E3 -- The European counterpart to the North American T-3 transmission
speed. The T-3 is a type of digital carrier transmitting voice or data at 34
Mbps (see also "E1").
FACILITIES -- Transmission lines, switches and other physical components
used to provide telephone service.
FACILITIES-BASED -- When a carrier owns or leases a network and facilities
to run that network, services offered on it are said to be facilities-based.
FACILITIES-BASED CARRIER -- A company that owns or leases its international
network facilities including undersea fiber optic cables and switching
facilities rather than reselling time provided by another facilities-based
carrier.
FIBER -- A filament, usually of glass, through which light beams carrying
voice, data or video transmissions are guided.
FIBER OPTIC -- Technology based on thin filaments of glass or other
transparent materials used as the medium for transmitting coded light pulses
that represent data, image and sound. Fiber optic technology offers extremely
high transmission speeds. The medium of choice for the telecommunications
industry. Fiber is immune to electrical interferences and environmental factors
that affect copper wiring and satellite transmission. Fiber optic technology
involves sending laser light pulses across glass strands in order to transmit
digital information. A strand of fiber optic cable is as thick as a human hair
yet has more bandwidth capacity than a copper wire the width of a telephone
pole.
FIBER OPTIC RING NETWORK -- Where a network is configured in bi-directional
circular fashion. If a portion of the ring malfunctions, the signal can be
re-routed back the way it came, around the circle, to complete the connection.
FRAME RELAY -- A method of achieving high-speed, packet-switched data
transmissions within digital networks at transmission speeds between 56 Kbps and
1.544 Mbps.
Gbps (GIGA BITS PER SECOND) -- A measurement of speed for digital signal
transmission expressed in billions of bits per second.
INTERCONNECT -- Connection of a telecommunications device or service to the
PSTN.
INTRANET -- A corporate communications system that uses the global Internet
protocol for employee-to-employee communications and information transactions.
An intranet allows employees of a company to access company and customer
information not available to the public, receive company or customer information
and communicate with other employees.
IP (INTERNET PROTOCOL) -- The standard that defines the information unit
being passed among the host computers and packet-switched networks that make up
the Internet. The Internet protocol provides the basis for packet delivery on
the Internet.
IPX -- Novell NetWare connection protocol.
ISDN (INTEGRATED SERVICES DIGITAL NETWORK) -- Switched network providing
end-to-end digital connectivity for simultaneous transmission of voice and/or
data over multiple multiplexed communications channels and employing
transmission and out-of-band signaling protocols that conform to
internationally-defined standards.
A-2
<PAGE> 192
Kbps (THOUSANDS OF BITS PER SECOND) -- A measurement of speed for digital
signal transmission expressed in thousands of bits per second.
LAN (LOCAL AREA NETWORK) -- A private data communications network linking a
variety of data devices, such as computer terminals, personal computer
terminals, personal computers and microcomputers, all housed in a defined
building, plant or geographic area.
LOCAL LOOP -- That portion of the local telephone network that connects the
customer's premises to the local exchange provider's central office or switching
center. This includes all the facilities starting from the customer premises
interface which connects to the inside wiring and equipment at the customer
premises to a terminating point within the switching wire center.
Mbps (MILLIONS OF BITS PER SECOND) -- A measurement of speed for digital
signal transmission expressed in millions of bits per second.
MDF (MAIN DISTRIBUTION FRAME) -- patch panel for connecting customer
equipment.
MULTIPLEXING -- An electronic or optical process that combines a large
number of lower-speed transmission lines into one high-speed line by splitting
the total available bandwidth of the high-speed line into narrower bands, or by
allotting a common channel to several different transmitting devices, one at in
sequence. Multiplexing devices are widely used in networks to improve efficiency
by concentrating traffic.
NACD (NETWORK AUTOMATIC CALL DISTRIBUTION) -- provides call queuing and
distribution functions.
NUMBER PORTABILITY -- The ability of end users to keep their number when
changing operators.
OPERATING SUPPORT SYSTEMS -- A general term encompassing the electronic and
manual systems used to fill orders for retail and wholesale telephone services.
PLATFORM -- A group of unbundled network elements assembled and sold
together as a package.
PBX (PRIVATE BRANCH EXCHANGE) -- A switching system within an office
building that allows calls from outside to be routed directly to the individual
instead of through a central number. A PBX also allows for calling within an
office by way of four-digit extensions.
POP (POINTS OF PRESENCE) -- A location containing switches or other
networking equipment through which users connect to a network.
PROTOCOL -- A formal set of rules and conventions governing the formatting
and relative timing of message exchange between 2 communicating points in a
computer system or data communications network.
PSTN (PUBLIC SWITCHED TELEPHONE NETWORK) -- A telephone network which is
accessible by the public through private lines, wireless systems and pay phones.
PTT (POSTAL, TELEPHONE AND TELEGRAPH COMPANY) -- The dominant carrier or
carriers in each Member State of the EU, until recently, often, but not always,
government-owned or protected.
REDUNDANCY -- Incorporation of duplicate components into a system so that a
duplicate component immediately takes over if the primary components fails.
REMOTE ACCESS -- A PBX feature that allows a user at an outside location to
access certain PBX features, such as call answering and advance calling, by
telephone. The user dials a direct distance dialing number to connect to the PBX
and then dials authorization and instruction codes to get the PBX services.
A-3
<PAGE> 193
RESELLER -- A carrier that does not operate its own transmission facilities
(although it may own its own switches or other equipment), but obtains
communications services from another carrier for resale to the public for
profit.
ROUTER -- A device for interconnecting local area networks that have
dissimilar operating protocols but which share a common network interconnection
protocol.
ROUTING -- Process of selecting the correct circuit path for a message.
SDH (SYNCHRONOUS DIGITAL HIERARCHY) -- SDH is a set of standards for
optical communications transmission systems that define optical rates and
formats, signal characteristics, performance, management and maintenance
information to be embedded within the signals and the multiplexing techniques to
be employed in optical communications transmission systems. SDH facilitates the
interoperability of dissimilar vendors' equipment and benefits customers by
minimizing the equipment necessary for telecommunications applications. SDH also
improves the reliability of the local loop connecting customers' premises to the
local exchange provider, historically one of the weakest links in the service
delivery.
SONET (SYNCHRONOUS OPTICAL NETWORK STANDARD) -- An ultra-high-speed, fiber
optic transmission standard for large-scale, fiber-based digital transmission
networks that use equipment from many different manufacturers. It is the first
telecom industry agreement on standardized interfaces between fiber optic
transmission systems and is well on the way to becoming an international
standard.
STM-1 (SYNCHRONOUS TRANSPORT MODULE) -- SDH notation for data transport,
used for transport and connection providing capacity of 155 Mbps.
SWITCH -- A sophisticated computer that accepts instructions from a caller
in the form of a telephone number. Like an address on an envelope, the numbers
tell the switch where to route the call. The switch opens or closes circuits or
selects the paths or circuits to be used for transmission of information.
Switching is a process of interconnecting circuits to form a transmission path
between users. Switches allow telecommunications service providers to connect
calls directly to their destination, while providing advanced features and
recording connection information for future billing.
T1 OR T3 -- see "E1" or "E3".
TELEPHONY -- A generic term describing voice telecommunications.
TRAFFIC -- A generic term that includes any and all calls, messages and
data sent and received by means of telecommunications.
WAN (WIDE AREA NETWORK) -- a large-scale, high speed communications network
used primarily for interconnecting local area and metro area networks located in
different cities, states or countries.
xDSL -- a digital subscriber line providing high speed customer connection
over copper pairs.
A-4
<PAGE> 194
PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
VERSATEL TELECOM INTERNATIONAL N.V.
Paalbergweg 36
1105 BV Amsterdam-Znidoost
The Netherlands
INDEPENDENT AUDITORS
ARTHUR ANDERSEN
Prof. W.H. Keesomlaam 8
1183 DJ Amstelveen
The Netherlands
LEGAL ADVISERS
To the Issuer
<TABLE>
<S> <C>
As to U.S. Law As to Dutch Law
SHERMAN & STERLING STIBBE SIMONT MONAHAN DUHOT
599 Lexington Avenue Strawinskylaan 2001
New York, NY 10022-6069 1077 ZZ Amsterdam
U.S.A. The Netherlands
To the Underwriters
As to U.S. Law As to Dutch Law
SIMPSON THACHER & BARTLETT NAUTA DUTILH
99 Bishopsgate Prinses Irencstraat 59
London EC2M 3YH 1077 ZZ Amsterdam
England The Netherlands
</TABLE>
TRUSTEE, REGISTRAR, PRINCIPAL PAYING AND TRANSFER AGENT
UNITED STATES TRUST COMPANY OF NEW YORK
770 Broadway, 13th Floor
New York, New York 10003
U.S.A.
LISTING AGENT, PAYING AND TRANSFER AGENT
KREDIETBANK, S.A. LUXEMBOURGEOISE
43, Boulevard Royal
L-2955 Luxembourg
<PAGE> 195
VERSATEL TELECOM INTERNATIONAL N.V.
$150,000,000 % SENIOR DOLLAR NOTES DUE 2009
E100,000,000 % SENIOR EURO NOTES DUE 2009
----------------------------
PROSPECTUS
, 1999
----------------------------
LEHMAN BROTHERS
ING BARINGS
<PAGE> 196
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the distribution of the securities being registered, other than underwriting
discounts and commissions.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 70,056
NASD filing fee............................................. 25,000
Printing and engraving expenses............................. 450,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 250,000
Blue sky fees and expenses.................................. 5,000
Miscellaneous expenses...................................... 50,000
----------
Total.................................................. 1,350,056
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Netherlands law does not prohibit indemnification of directors, employees
and agents of corporations. The Company has obtained liability insurance for its
directors, employees and agents. Under Netherlands law, the legal reasonableness
and fairness test means that such indemnity cannot be relied on where the
individual has been grossly negligent, fraudulent or dishonest.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following securities of the Company, that were sold by the Company
within the past three years, were not registered under the Securities Act. The
information has been adjusted for a two-for-one stock split which was effected
on April 13, 1999.
On December 27, 1996, VersaTel issued and sold 396,000 ordinary shares to
Telecom Founders B.V. for an aggregate consideration of NLG 249,999; 4,232,000
ordinary shares to Cromwilld Limited for an aggregate consideration of NLG
2,671,704; and 3,292,000 ordinary shares to NeSBIC Venture Fund C.V. for an
aggregate consideration of NLG 2,078,273. These shares were issued in reliance
on Regulation S under the Securities Act.
On October 21, 1997, VersaTel issued and sold 1,339,286 ordinary shares to
NeSBIC Venture Fund C.V. for an aggregate consideration of NLG 1,500,000. These
shares were issued in reliance on Regulation S under the Securities Act.
On April 8, 1998, VersaTel issued and sold 5,752,808 ordinary shares to
Paribas Deelnemingen N.V. for an aggregate consideration of NLG 12,799,998.
These shares were issued in reliance on Regulation S under the Securities Act.
On April 17, 1998, VersaTel issued and sold 629,214 ordinary shares to
Telecom Founders B.V. for an aggregate consideration of NLG 1,400,000. On the
same day, the NLG 1,767,000 subordinated convertible shareholder loan extended
by NeSBIC Venture Fund C.V. was converted into 1,051,786 ordinary shares, the
NLG 4,500,000 bridge loan extended by NeSBIC Venture Fund C.V. was converted
into 2,678,572 ordinary shares, and NeSBIC Venture Fund C.V. contributed an
additional NLG 5,800,000 for 2,606,742 ordinary shares. These shares were issued
in reliance on Regulation S under the Securities Act.
II-1
<PAGE> 197
On April 27, 1998, the NLG 1,838,000 subordinated convertible shareholder
loan extended by Cromwilld Limited was converted into 1,838,000 ordinary shares.
These shares were issued in reliance on Regulation S under the Securities Act.
On May 27, 1998, VersaTel issued and sold 725,370 ordinary shares to
Telecom Founders B.V. for an aggregate consideration of NLG 1,849,694; 1,274,510
ordinary shares to NeSBIC Groep B.V. for an aggregate consideration of NLG
3,250,000; 1,529,532 ordinary shares to Paribas Deelnemingen N.V. for an
aggregate consideration of NLG 3,900,306 and 2,352,942 ordinary shares to NPM
Capital N.V. for an aggregate consideration of NLG 6,000,000. These shares were
issued in reliance on Regulation S under the Securities Act.
On May 27, 1998, VersaTel issued and sold 225,000,000 units consisting of
$225,000,000 in principal amount of 13 1/4% senior notes due 2008 and warrants
to purchase 3,000,000 ordinary shares. The units were sold to Lehman Brothers,
Inc., as initial purchaser, who subsequently sold them to certain institutional
investors in reliance on Rule 144A and Regulation S under the Securities Act.
The notes and the warrants were separated in August 1998. In December 1998,
VersaTel completed a public exchange offer pursuant to which all the notes
issued in this offering were exchanged for substantially identical notes
registered under the Securities Act. The warrants issued in this offering have
not been registered under the Securities Act.
On December 3, 1998, VersaTel issued and sold 150,000 issued units
consisting of $150,000,000 in principal amount of 13 1/4% senior notes due 2008
and warrants to purchase 2,000,100 ordinary shares. The units were sold to
Lehman Brothers, Inc., Lehman Brothers International (Europe) and Paribas
Corporation, as initial purchasers, who subsequently sold them to certain
institutional investors in reliance on Rule 144A and Regulation S under the
Securities Act. The notes and the warrants were separated in January 1999. In
February 1999, VersaTel completed a public exchange offer pursuant to which all
the notes issued in this offering were exchanged for substantially identical
notes registered under the Securities Act. The warrants issued in this offering
have not been registered under the Securities Act.
In connection with the acquisition of CS Net B.V., VersaTel sold 130,000
ordinary shares to the former shareholders of CS Net B.V. in November 1998.
These shares were sold in reliance on Regulation S under the Securities Act. As
of the date of this Registration Statement none of these 130,000 shares have
been issued. These shares are expected to be issued following the completion of
this offering.
In connection with the acquisition of Amstel Alpha B.V. (the parent of
SpeedPort N.V.), VersaTel sold 375,000 ordinary shares to the former
shareholders of Amstel Alpha B.V. in May 1999. These shares were sold in
reliance on Regulation S under the Securities Act. In addition, VersaTel has
earn-out obligations to these former shareholders covering an additional 100,000
ordinary shares. As of the date of this Registration Statement, none of these
475,000 shares have been issued. These shares are expected to be issued
following the completion of this offering.
In connection with the acquisition of ITinera Services N.V., VersaTel sold
50,000 ordinary shares to the former shareholders of ITinera Services N.V. in
May 1999. These shares were sold in reliance on Regulation S under the
Securities Act. In addition, VersaTel has earn-out obligations to these
shareholders covering an additional 30,000 ordinary shares. As of the date of
this Registration Statement, none of these 80,000 shares have been issued. These
shares are expected to be issued following the completion of this offering.
On July 20, 1999, VersaTel issued and sold 200,000 ordinary shares to
Cromwilld Limited at a price of NLG 7.50 per ordinary share. These shares were
sold in reliance on Regulation S under the Securities Act.
II-2
<PAGE> 198
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement
3.1(1) Deed of Incorporation of the Company
3.2 Articles of Association of the Company
4.1 Form of Dollar Indenture, between the Company and United
States Trust Company of New York, as Trustee
4.2 Form of Euro Indenture, between the Company and United
States Trust Company of New York, as Trustee
4.3 Form of Dollar Note (included in Exhibit 4.1)
4.4 Form of Euro Note (included in Exhibit 4.2)
5.1 Opinion of Shearman & Sterling regarding the legality of the
securities being registered
5.2 Opinion of Stibbe Simont Monahan Duhot regarding the
legality of the securities being registered
8.1 Opinion of Shearman & Sterling regarding tax matters
10.1(1) Indenture, dated May 27, 1998, between the Company and
United States Trust Company of New York, as Trustee
10.2(2) Indenture, dated December 3, 1998, between the Company and
United States Trust Company of New York, as Trustee
10.3* Warrant Agreement, dated May 27, 1998, between the Company
and United States Trust Company of New York, as Warrant
Agent
10.4* Warrant Agreement, dated December 3, 1998, between the
Company and United States Trust Company of New York, as
Warrant Agent
10.5(1) Escrow Agreement, dated May 27, 1998, among the Company and
United States Trust Company of New York, as Trustee and
Escrow Agent
10.6(2) Escrow Agreement, dated December 3, 1998, among the Company
and United States Trust Company of New York, as Trustee and
Escrow Agent
10.7* Participation and Shareholders Agreement, dated December 27,
1996, among Telecom Founders B.V., NeSBIC C.V., Cromwilld
Limited, VersaTel Telecom B.V., R. Gary Mesch and Open Skies
International, Inc.
10.8* Loan Agreement, dated May 26, 1999, among VersaTel Telecom
Europe B.V., as Borrower, the Company, as Guarantor, and
Nortel Networks International Finance & Holding B.V., as
Agent and Security Agent
10.9(3) Agreement for the Sale and Purchase of Shares of Svianed
B.V., dated June 11, 1999, among VersaTel Telecom Europe
B.V., Gak Holding B.V. and Svianed B.V.
12.1* Statement re computation of earnings to fixed charges
21.1* List of subsidiaries
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)
23.2 Consent of Stibbe Simont Monahan Duhot (included as part of
Exhibit 5.2)
</TABLE>
II-3
<PAGE> 199
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23.3 Consent of Arthur Andersen
23.4 Consent of KPMG Accountants N.V.
24.1 Powers of attorney (included in the signature page hereof)
25.1 Statement of Eligibility of United States Trust Company of
New York, Trustee
</TABLE>
- -------------------------
* Previously filed
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form F-4 (File number 333-59979) initially filed with the Securities and
Exchange Commission on July 27, 1998 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form F-4 (File Number 333-70449) initially filed with the Securities and
Exchange Commission on January 12, 1999 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's report on Form 6-K, filed
with the Securities and Exchange Commission on June 21, 1999 and
incorporated herein by reference.
(b) Financial Statement Schedules
(1) Financial Statements
The Financial Statements filed as part of this Registration Statement
are listed in the Index to Financial Statements on page F-1.
(2) Schedules
Schedules are omitted because they are either not required, are not
applicable or because equivalent information has been included in the financial
statements, the notes thereto or elsewhere herein.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item 14, Indemnification
of Directors and Officers" above, 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 of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment to 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 is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this registration statement as of the time it was declared
effective.
II-4
<PAGE> 200
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus 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) It will provide to the Underwriters at the closing specified in the
Underwriting Agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
II-5
<PAGE> 201
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on a Form F-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Amsterdam, State of The Netherlands, on the 22nd day
of July, 1999.
VersaTel Telecom International N.V.
By: /s/ R. GARY MESCH
---------------------------------------
R. Gary Mesch
Managing Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated, either in person or by power of attorney, on the 22nd day
of July, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ R. GARY MESCH Managing Director (principal executive
- --------------------------------------------------- officer)
R. Gary Mesch
/s/ RAJ RAITHATHA Chief Financial Officer (principal financial
- --------------------------------------------------- and accounting officer)
Raj Raithatha
* Supervisory Director
- ---------------------------------------------------
Leo W.A.M. van Doorne
Supervisory Director
- ---------------------------------------------------
Denis O'Brien
* Supervisory Director
- ---------------------------------------------------
Johan G. Wackwitz
* Supervisory Director
- ---------------------------------------------------
James Meadows
- ------------------------
* By Raj Raithatha by power of attorney
</TABLE>
II-6
<PAGE> 202
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the undersigned in the capacity
indicated on the 22nd day of July, 1999.
<TABLE>
<CAPTION>
NAME CAPACITY
---- --------
<C> <S>
/s/ DONALD J. PUGLISI Managing Director of Puglisi & Associates
- ---------------------------------------------------
Donald J. Puglisi
</TABLE>
II-7
<PAGE> 203
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
3.1(1) Deed of Incorporation of the Company
3.2 Articles of Association of the Company
4.1 Form of Dollar Indenture, between the Company and United
States Trust Company of New York, as Trustee
4.2 Form of Euro Indenture, between the Company and United
States Trust Company of New York, as Trustee
4.3 Form of Dollar Note (included in Exhibit 4.1)
4.4 Form of Euro Note (included in Exhibit 4.2)
5.1 Opinion of Shearman & Sterling regarding the legality of the
securities being registered
5.2 Opinion of Stibbe Simont Monahan Duhot regarding the
legality of the securities being registered
8.1 Opinion of Shearman & Sterling regarding tax matters
10.1(1) Indenture, dated May 27, 1998, between the Company and
United States Trust Company of New York, as Trustee
10.2(2) Indenture, dated December 3, 1998, between the Company and
United States Trust Company of New York, as Trustee
10.3* Warrant Agreement, dated May 27, 1998, between the Company
and United States Trust Company of New York, as Warrant
Agent
10.4* Warrant Agreement, dated December 3, 1998, between the
Company and United States Trust Company of New York, as
Warrant Agent
10.5(1) Escrow Agreement, dated May 27, 1998, among the Company and
United States Trust Company of New York, as Trustee and
Escrow Agent
10.6(2) Escrow Agreement, dated December 3, 1998, among the Company
and United States Trust Company of New York, as Trustee and
Escrow Agent
10.7* Participation and Shareholders Agreement, dated December 27,
1996, among Telecom Founders B.V., NeSBIC C.V., Cromwilld
Limited, VersaTel Telecom B.V., R. Gary Mesch and Open Skies
International, Inc.
10.8* Loan Agreement, dated May 26, 1999, among VersaTel Telecom
Europe B.V., as Borrower, the Company, as Guarantor, and
Nortel Networks International Finance & Holding B.V., as
Agent and Security Agent
10.9(3) Agreement for the Sale and Purchase of Shares of Svianed
B.V., dated June 11, 1999, among VersaTel Telecom Europe
B.V., Gak Holding B.V. and Svianed B.V.
12.1* Statement re computation of earnings to fixed charges
21.1* List of subsidiaries
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)
23.2 Consent of Stibbe Simont Monahan Duhot (included in Exhibit
5.2)
23.3 Consent of Arthur Andersen
23.4 Consent of KPMG Accountants N.V.
24.1 Powers of attorney (included in the signature page hereof)
25.1 Statement of Eligibility of United States Trust Company of
New York, Trustee
</TABLE>
- -------------------------
* Previously filed
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form F-4 (File number 333-59979) initially filed with the Securities and
Exchange Commission on July 27, 1998 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on
Form F-4 (File Number 333-70449) initially filed with the Securities and
Exchange Commission on January 12, 1999 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's report on Form 6-K, filed
with the Securities and Exchange Commission on June 21, 1999 and
incorporated herein by reference.
<PAGE> 1
ST&B DRAFT JULY 18, 1999
------------------------
Exhibit 1.1
VersaTel Telecom International N.V.
$ -% Senior Dollar Notes due 2009
-% Senior Euro Notes due 2009
UNDERWRITING AGREEMENT
July 22, 1999
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
As Representative of the several
Underwriters named in Schedule I
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
VersaTel Telecom International N.V., a public company organized under the
laws of The Netherlands, and having its corporate seat in Amsterdam, The
Netherlands (the "Company"), proposes to sell to the several underwriters listed
on Schedule I hereto (the "Underwriters") $- aggregate principal amount of its
- -% Senior Dollar Notes due 2009 (the "Dollar Notes") and aggregate principal
amount of its -% Senior Euro Notes due 2009 (the "Euro Notes"; and, together
with the Dollar Notes, the "Notes"). The Dollar Notes are to be issued under a
dollar indenture, to be entered into and dated as of July -, 1999 (the "Dollar
Indenture"), between the Company and United States Trust Company of New York, as
trustee (the "Dollar Trustee"). The Euro Notes are to be issued under a euro
indenture, to be entered into and dated as of July -, 1999 (the "Euro
Indenture"; and, together with the Dollar Indenture, the "Indentures"), between
the Company and United States Trust Company of New York, as trustee (the "Euro
Trustee"; and, together with the Euro Trustee, the "Trustees"). This Agreement
and the Indentures shall hereafter be referred to as the "Operative Agreements".
Two forms of prospectus are to be used in connection with the offering and sale
of the Notes contemplated by the foregoing, one relating to the Notes to be sold
in the United States and Canada (the "U.S. Prospectus") and the second relating
to the Notes to be sold outside of the United States and Canada (the
"International Prospectus"). The International Prospectus will be identical to
the U.S. Prospectus except for certain substitute pages.
This is to confirm the agreement concerning the purchase of the Notes from
the Company by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form F-1 (File No.
333-81333), and amendments thereto, with respect to the Notes have (i)
been prepared by the
<PAGE> 2
3
Company in conformity with the requirements of the United States
Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations (the "Rules and Regulations") of the United
States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities
Act and (iii) become effective under the Securities Act; a second
registration statement on Form F-1 with respect to the Shares (i) may
also be prepared by the Company in conformity with the Securities Act
and the Rules and Regulations and (ii) if to be so prepared, will be
filed with the Commission under the Securities Act pursuant to Rule
462(b) of the Rules and Regulations on the date hereof. Copies of the
first such registration statement and the amendments thereto, together
with the form of any such second registration statement, have been
delivered by the Company to the Representative. As used in this
Agreement, "Effective Time" means (i) with respect to the Primary
Registration Statement (as defined), the date and the time as of which
such registration statement, or the most recent post-effective
amendment thereto, is if any, was declared effective by the Commission
and (ii) with respect to the 462(b) Registration Statement (as
defined), the date of the Effective Time of such second registration
statement, and "Effective Times" is the collective reference to both
Effective Times; "Effective Date" means (i) with respect to the
Primary Registration Statement, the date of the Effective Time of such
registration statement and (ii) with respect to the 462(b)
Registration Statement, the date of the Effective Time of such
registration statement, and "Effective Dates" is the collective
reference to both Effective Dates; "Preliminary Prospectus" means each
prospectus included in any such registration statement, of amendments
thereof, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the consent
of the Representative pursuant to Rule 424(a) of the Rules and
Regulations; "Primary Registration Statement" means the first
registration statement referred to in this Section 1(a), as amended at
its Effective Time, "Rule 462(b) Registration Statement" means the
second registration statement, if any, referred to in this Section
1(a), as filed with the Commission, and "Registration Statements"
means both the Primary Registration Statement and any Rule 462(b)
Registration Statement, including in each case all information
contained in the final prospectus filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations in accordance with Section
7(a) hereof and deemed to be a part of the Registration Statements as
of the Effective Time of the Registration Statements as of the
Effective Time of the Primary Registration Statement pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations.
(b) The Primary Registration Statement conforms (and the Rule 462(b)
Registration Statement, if any, the Prospectus and any further
amendments or supplements to the Registration Statements or the
Prospectus,
<PAGE> 3
4
when they become effective or are filed with the Commission, as the
case may be, will conform) conform in all respects to the requirements
of the Securities Act and the Rules and Regulations and do not and
will not, as of the applicable effective date (as to the Registration
Statements and any amendments thereto) and as of the applicable filing
date (as to the Prospectus and any amendment or supplement thereto)
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 not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statements or the Prospectus in reliance upon and in
conformity with the written information described in Section 7(f)
furnished to the Company through the Representative by or on behalf of
any Underwriter specifically for inclusion therein.
(c) Each Indenture shall have been qualified under and will comply in
all material respects with the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act"); provided that no representation and
warranty is made as to the statement of eligibility and qualification
on Form T-1 of either Trustee under the Trust Indenture Act or as to
information contained in or omitted from the Registration Statements
or the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
on behalf of any Underwriter specifically for inclusion therein.
(d) The Company is a public company with limited liability ("naamloze
vennootschap"), duly incorporated and validly existing under the laws
of The Netherlands, is not in bankruptcy, liquidation or receivership,
is duly qualified to do business and is in good standing in each
jurisdiction, if applicable, in which its ownership or lease of
property or the conduct of its business requires such qualification.
(e) Each of the subsidiaries (as defined in Section 14 hereof) of the
Company has been duly organized and is validly existing under the laws
of its jurisdiction of organization or incorporation, is not in
bankruptcy, liquidation or receivership, is duly qualified to do
business and is in good standing in the jurisdiction in which its
ownership or lease of property or the conduct of its business requires
such qualification; and each has all power and authority necessary to
own or hold its respective property and to conduct the business in
which it is engaged; and, other than [VersaTel Netherlands B.V. and]
Svianed B.V., none of the subsidiaries of the Company is a
"significant subsidiary", as such term is defined in Rule 405 of the
Rules and Regulations; and all of the issued share capital of each
subsidiary of the Company has been duly and validly authorized and
issued and is fully paid and non-assessable and is wholly owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (other than, in the case of Svianed
B.V., a lien granted in favor of Lehman Commercial Paper, Inc.).
<PAGE> 4
5
(f) The Company has an authorized and issued share capital as set
forth in the Prospectus; all outstanding shares of capital stock of
the Company have been duly and validly authorized and issued; all
outstanding shares of capital stock of the Company are fully paid, and
holders of such shares will have no liability for any debt or other
obligation of the Company towards third parties in their capacity as
holders thereof; the outstanding shares of capital stock of the
Company conform in all material respects to the description thereof
contained in the Prospectus; except as described in the Prospectus,
there are no outstanding securities convertible into or exchangeable
for, or warrants, rights or options to purchase from the Company and
its subsidiaries, or obligations of the Company and its subsidiaries
to issue, any class of share capital of the Company or any of its
subsidiaries; except as described in the Prospectus, there are no
restrictions on transfer or voting of any of the capital stock of the
Company pursuant to the Company's articles of association (the
"Articles of Association") or equivalent constituent documents or any
agreement to which the Company is a party or by which it may be bound
or to which any of its property may be subject; and no depositary
receipts have been issued with respect to the capital stock of the
Company.
(g) The execution, delivery and performance of the Operative
Agreements, the U.S. Equity Underwriting Agreement (as defined) and
the International Equity Underwriting Agreement (as defined) by the
Company and the consummation of the transactions contemplated hereby
and thereby, and the amendments to the Articles of Association of the
Company will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, shareholders
agreement or other material agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the properties
or assets of the Company or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the
articles of association or other constitutive documents of the Company
or any of its subsidiaries or any statute, license, legislation,
authorization, or any order, rule or regulation of any court or
governmental agency or body (including, without limitation, any
statutes, rules, orders or regulations promulgated by the Minister van
Verkeer en Waterstaat (the "Transport Department"), the Onafhankelijke
Post en Telecommunicatie Autoriteit ("OPTA") or the Commission of the
European Union) having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets; and except for (i)
the registration of the Notes under the Securities Act, (ii) the
qualification of each Indenture under the Trust Indenture Act and
(iii) and such consents, approvals, authorizations, registrations or
qualifications as may be required under the United States
<PAGE> 5
6
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
applicable state securities laws in connection with the purchase and
distribution of the Notes by the Underwriters, no consents, approvals,
authorizations or orders of, or filing or registration with, any court
or governmental agency or body (including, without limitation, any
statutes, rules, orders or regulations promulgated by the Transport
Department, OPTA or the Commission of the European Union) is required
for the execution, delivery and performance of the Operative
Agreements by the Company and the consummation of the transactions
contemplated hereby and thereby.
(h) The Company has full power and authority to enter into this
Agreement and this Agreement has been duly authorized, executed and
delivered by the Company.
(i) The Company has full power and authority to enter into each
Indenture; on the Closing Date (as defined below), each Indenture will
have been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery of each Indenture by the
relevant Trustee, the Indenture will constitute a valid and legally
binding obligation of the Company, enforceable in accordance with its
terms, except that the enforcement thereof may be subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
(j) The Company has full power and authority to offer and sell the
Notes; the Notes have been duly authorized by the Company; and when
the Notes are delivered and paid for pursuant to this Agreement on the
Closing Date, such Notes will have been duly executed, authenticated,
issued and delivered (assuming due authentication of the Notes by the
relevant Trustee) and, assuming due authentication of the Notes by the
relevant Trustee, such Notes will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the relevant
Indenture and enforceable in accordance with their terms, except that
the enforcement thereof may be subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.
(k) The Company had full power and authority to enter into the
settlement agreement, dated July 20, 1999, among the parties thereto
(the "Settlement Agreement"), and the Settlement Agreement is a valid
and binding obligation of the Company, enforceable against the Company
and the other parties thereto in accordance with its terms.
<PAGE> 6
7
(l) The Operative Agreements conform in all material respects to the
descriptions thereof contained in the Prospectus.
(m) No stamp, capital or other issuance or transfer taxes or duties
and no capital gains, income, withholding or other taxes are payable
by or on behalf of the Underwriters in connection with (i) the issue
of the Notes, (ii) the sale of the Notes to the Underwriters or (iii)
the sale and delivery of the Notes by the Underwriters to the initial
purchasers therefrom.
(n) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in
the Prospectus, any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the
Prospectus; and, since such date, there has not been any change in the
share capital or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity
or results of operations of the Company and its subsidiaries,
otherwise than as set forth in the Prospectus.
(o) The financial statements (including the related notes) included in
the Prospectus were prepared in accordance with generally accepted
accounting principles in the United States ("U.S. GAAP") consistently
applied throughout the periods involved and present fairly the
financial condition and results of operations of the entities
purported to be shown thereby, at the dates and for the periods
indicated. The summary financial data and selected financial and other
data included in the Prospectus have been accurately extracted from
the financial statements of the Company. The pro forma financial
information contained in the Prospectus has been prepared on a basis
consistent with the historical financial statements contained in the
Prospectus (except for the pro forma adjustments specified therein),
includes all material adjustments to the historical financial
information required by Rule 11-02 of Regulation S-X under the
Securities Act and the Exchange Act to reflect the transactions
described in the Prospectus, gives effect to assumptions made on a
reasonable basis and fairly presents the historical and proposed
transactions contemplated by the Prospectus, the Operative Agreements
and the Company's concurrent offering of Ordinary Shares in the form
of Shares or American Depositary Shares (the "Equity Offering").
(p) Arthur Andersen, who have certified certain financial statements
of the Company, whose report appears in the Prospectus and who will
deliver the initial letter referred to in Section 4(s) hereof dated
the date of the Prospectus, are independent public accountants as
required by the Securities Act and the Rules and Regulations; and KPMG
Accountants N.V., who have certified
<PAGE> 7
8
certain financial statements of Svianed B.V., whose report appears in
the Prospectus and who will deliver the initial letter referred to in
Section 4(s) hereof dated the date of the Prospectus, are independent
public accountants as required by the Securities Act and the Rules and
Regulations.
(q) The Company and each of its subsidiaries have good title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries. Except as otherwise described in the Prospectus, neither
the Company nor its subsidiaries owns any title to real property or
buildings, and all real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries.
(r) The Company and each of its subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in
similar businesses in similar industries.
(s) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such rights
of others, other than such that the Company believes will not have a
material adverse effect on the financial position, shareholders'
equity, results of operations, business or prospects of the Company
and its subsidiaries.
(t) There are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any
property or asset of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the financial
position, shareholders' equity, results of operations, business or
prospects of the Company and its subsidiaries; and to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
<PAGE> 8
9
(u) The conditions for use of Form F-1, as set forth in the General
Instructions thereto, have been satisfied.
(v) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to either
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to either Registration Statement.
(w) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus and is not so described.
(x) No labor disturbance by the employees of the Company or any of its
subsidiaries exists or to the knowledge of the Company is imminent
which might be expected to have a material adverse effect on the
consolidated financial position, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
(y) The Company is in compliance in all material respects with all
applicable provisions of Netherlands and Belgian laws relating to
employees (including, without limitation, laws relating to pension
obligations).
(z) The Company and its subsidiaries have duly filed with the
appropriate taxing authorities all tax returns, reports and other
information required to be filed through the date hereof and have paid
all taxes due thereon (except as are being disputed in good faith and
for which reserves in accordance with U.S. GAAP have been set aside);
each such tax return, report or other information was, when filed,
accurate and complete in all material respects; nor does the Company
have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of its subsidiaries, might have a
material adverse effect on the consolidated financial position,
shareholders' equity, results of operations, business or prospects of
the Company and its subsidiaries.
(aa) Except as disclosed in the Prospectus, under current laws and
regulations of The Netherlands and any political subdivision thereof,
all interest, principal, premium, if any, and other payments due or
made on the Notes may be paid by the Company to the holders thereof in
Dutch Guilders, euros or another currency that, in each case, may be
converted into foreign currency and may be freely transferred out of
The Netherlands, and all such payments made to holders thereof who are
non-residents of The Netherlands will not be subject to income,
withholding or other taxes under laws and regulations of The
Netherlands or any political subdivision or taxing authority thereof
or therein and will otherwise be free and clear of any other tax,
duty,
<PAGE> 9
10
withholding or deduction in The Netherlands or any political
subdivision or taxing authority thereof or therein and without the
necessity of obtaining any governmental authorization in The
Netherlands or any political subdivision or taxing authority thereof
or therein.
(bb) As of the date hereof, and except as may otherwise be disclosed
in the Prospectus, the Company has not (i) issued or granted any
securities, including, without limitation, any options or warrants,
(ii) incurred any liability or obligation, direct or contingent, other
than liabilities and obligations which were incurred in the ordinary
course of business, (iii) entered into any transaction not in the
ordinary course of business or (iv) declared or paid any dividend on
its issued share capital.
(cc) The Company (i) makes and keeps books and records which are
accurate in all material respects and (ii) maintains internal
accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals.
(dd) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective articles of association or by-laws or
equivalent constitutive documents, (ii) in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound
or to which any of its properties or assets is subject or (iii) is in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its properties or
assets may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its properties or assets or to
the conduct of its business.
(ee) Except as otherwise described in the Prospectus, each of the
Company and its subsidiaries possesses all licenses, permits,
certificates, franchises, approvals and other authorizations necessary
to the conduct of their respective businesses and the ownership, lease
and operation of their respective properties; all such licenses,
permits, certificates, franchises, approvals and other authorizations
are in full force and effect and each of the
<PAGE> 10
11
Company and its subsidiaries is in compliance therewith in all
material respects, except where the failure to possess such licenses,
permits, certificates, franchises, approvals and other authorizations
would not, in the aggregate, have a material adverse effect on the
business, properties, financial condition, results of operations or
prospects of the Company and its subsidiaries, taken as a whole; and
none of the Company and any of its subsidiaries has received any
notice of any proceedings relating to the revocation or modification
of any such license, permit, certificate, franchise, approval or
authorization which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or result, might have a material
adverse effect on the business, properties, financial condition,
results of operations or prospects of the Company and its
subsidiaries, taken as a whole.
(ff) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has (i)
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity, (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate
funds, (iii) violated or is in violation of any provision of the
United States Foreign Corrupt Practices Act of 1977, as amended, or
(iv) made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(gg) To the best of the Company's knowledge after due inquiry, there
has been no violation of any applicable environmental law, ordinance,
rule, regulation, order, judgment, decree or permit in any
jurisdiction with respect to the properties of the Company or its
subsidiaries.
(hh) There are no material acquisitions of businesses or assets by the
Company or any of its subsidiaries pending or currently being
negotiated.
(ii) Each of the Company and its subsidiaries has undertaken a review
of all of its computer hardware and software ("Computer Equipment")
and determined that such Computer Equipment is not in need of
replacement or reprogramming to function correctly from January 1,
2000, except where such replacement or reprogramming would not have a
material adverse effect on the Company and its subsidiaries.
(jj) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States
Investment Company Act of 1940, as amended (the "Investment Company
Act"), nor is it a closed-end investment company required to be
registered, but not registered, thereunder; and the Company is not
and, after giving effect to the offering and sale of the Notes and the
Equity Offering, and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" as
defined
<PAGE> 11
12
in the Investment Company Act and the rules and regulations of the
Commission thereunder.
(kk) Neither the Company nor any subsidiary has incurred any liability
for a fee, commission, or other compensation on account of the
employment of a broker or finder in connection with the transactions
contemplated by this Agreement.
(ll) Neither the Company nor any subsidiary has taken, directly or
indirectly, any action which is designed to or which has constituted
or which might reasonably have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Notes.
(mm) The Company owns no capital stock of, or other equity interests
in, any person or entity (other than VersaTel Telecom Belgium N.V.,
VersaTel Telecom Europe B.V., Versatel Telecom Netherlands B.V.,
Bizztel Telematica B.V., CS Net B.V., CS Engineering B.V., Amstel
Alpha B.V., 7-Klapper Beheer B.V., ITinera Services N.V. and Svianed
B.V.).
(nn) Taking into account the receipt of proceeds from the offering and
sale of the Notes and the Equity Offering, the Company does not expect
to qualify as a passive foreign investment company ("PFIC") as defined
in Section 1296(a) of the United States Internal Revenue Code of 1986,
as amended (the "Code"), a "foreign personal holding company" as
defined in Section 552 of the Code or a "controlled foreign
corporation" as defined in Section 957 of the Code, for its current
taxable year or for future taxable years.
(oo) All of the representations, warranties and agreements contained
in (i) the U.S. underwriting agreement (the "U.S. Equity Underwriting
Agreement") and (ii) the international underwriting agreement (the
"International Equity Underwriting Agreement"), in each case relating
to the Equity Offering, are true and correct in all material respects.
2. Purchase, Sale and Delivery of Notes. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell to the Underwriters,
and the Underwriters agree, severally and not jointly, to purchase from the
Company, at a purchase price of -% of the principal amount thereof plus accrued
interest, if any, from July -, 1999, to the Closing Date, the respective
aggregate principal amounts of Dollar Notes set forth opposite the names of the
several Underwriters in Schedule I hereto.
On the basis of the representations and warranties contained in, and
subject to the terms and conditions of, this Agreement, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Company, at a purchase price of -% of the aggregate
principal amount thereof plus accrued interest, if any,
<PAGE> 12
13
from July -, 1999, to the Closing Date, the respective principal amounts of Euro
Notes set forth opposite the names of the several Underwriters in Schedule I
hereto.
The Company will deliver against payment of the purchase price the
Dollar Notes in the form of one or more permanent global Dollar Notes in
registered form, denominated in U.S. dollars (the "Dollar Global Notes"), and
one or more permanent global Euro Notes in registered form (the "Euro Global
Notes" and, together with the Dollar Global Notes, the "Global Notes").
Beneficial interests in the Global Notes will be shown on, and transfers thereof
will be effected only through, records maintained in book-entry form by The
Depository Trust Company ("DTC") and its participants, including, as applicable,
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System and Cedel Bank, societe anonyme. Payment for the Notes shall be
made by or on behalf of the Underwriters in same day funds by wire transfer to a
dollar account with respect to Dollar Global Notes and to a euro account with
respect to Euro Global Notes, each as previously designated to Lehman Brothers
International (Europe) by the Company at a bank reasonably acceptable to Lehman
Brothers International (Europe) at 10:00 a.m. (New York time), on July -, 1999,
or at such other time or place thereafter as Lehman Brothers Inc. and the
Company determine, such time being herein referred to as the "Closing Date",
against delivery at the office of Simpson Thacher & Bartlett (New York) at least
24 hours prior to the Closing Date of the Global Notes to the relevant Trustee.
3. Undertaking of Underwriters. Each Underwriter represents to and
agrees with the Company that (i) it has not solicited, and will not solicit,
offers to purchase any of the Notes from, (ii) it has not sold, and will not
sell, any of the Notes to, and (iii) it has not distributed, and will not
distribute, the Prospectus to, any person or entity in any jurisdiction outside
of the United States except, in each case to the best of each Underwriter's
knowledge and belief, in compliance in all material respects with all applicable
laws. For the purpose of this Agreement, "United States" means the United States
of America, its territories, its possessions and other areas subject to its
jurisdiction.
4. Further Agreements of the Company. The Company agrees:
(a) To prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representative and to file such
462(b) Registration Statement with the Commission on the date hereof;
to prepare the Prospectus in a form approved by the Representative and
to file such Prospectus pursuant to Rule 424(b) under the Securities
Act not later than 5:00 p.m., New York City time, on the day following
the execution and delivery of this Agreement; to make no further
amendment or any supplement to either Registration Statement or to the
Prospectus except as permitted herein; to advise the
<PAGE> 13
14
Representative, promptly after it receives notice thereof, of the time
when each Registration Statement or any amendment thereto has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish the Representative
with copies thereof; to advise the Representative, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Notes for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of either Registration Statement or the Prospectus or
for additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to the Representative and to U.S.
counsel to the Underwriters a signed copy of each of the Registration
Statements as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representative such number of
the following documents as the Representative shall reasonably
request: (i) conformed copies of the Registration Statements as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits other than this Agreement and the
computation of per share earnings) and (ii) each Preliminary
Prospectus, the Prospectus (not later than 5:00 p.m., New York City
time, on the day following the execution and delivery of this
Agreement) and any amended or supplemented Prospectus (not later than
10:00 a.m., New York City time, on the day following the date of such
amendment or supplement), as the Representative may reasonably
request; and, if the delivery of a prospectus is required at any time
after the Effective Time of the Primary Registration Statement in
connection with the offering or sale of the Notes and if at such time
any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary to amend
or supplement the Prospectus in order to comply with the Securities
Act, to notify the Representative and, upon their request, to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representative may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to
the Registration Statements or the Prospectus or any supplement to the
Prospectus, that may, in the reasonable judgment of the Company or the
Representative, be required by the Securities Act or requested by the
<PAGE> 14
15
Commission;
(e) Prior to filing with the Commission any amendment to
either Registration Statement or any amendment or supplement to the
Prospectus, or any Prospectus pursuant to Rule 424 of the Rules and
Regulations, to furnish a copy thereof to the Representative and
counsel to the Underwriters and not to file any such document to which
the Representative shall reasonably object after having been given
reasonable notice of the proposed filing thereof;
(f) As soon as practicable after the Effective Date of the
Primary Registration Statement, to make generally available to the
Company's security holders and to deliver to the Representative an
earning statement of the Company and its subsidiaries (which need not
be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158);
(g) For a period of five years following the Effective Date
of the Primary Registration Statement, to furnish to the
Representatives copies of all materials furnished by the Company to
its shareholders and all public reports and all reports and financial
statements furnished by the Company to the securities exchange or
automatic quotation system upon which the Notes may be listed or
quoted pursuant to requirements of or agreements with such exchange or
system or to the Commission pursuant to the Exchange Act or any rule
or regulation of the Commission thereunder;
(h) Promptly from time to time to exercise best efforts to
take such action as the Representative may reasonably request, in
cooperation with the Underwriters, to qualify the Notes for offering
and sale under the securities laws of such jurisdictions as the
Representative may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Notes; provided that, in connection therewith, the
Company shall not be required to qualify as a foreign corporation or
otherwise subject itself to taxation in any jurisdiction in which it
is not otherwise so qualified or subject, except as may be provided in
the Operative Agreements;
(i) In connection with the offering, until the
Representative shall have notified the Company of the completion of
the resale of the Notes, none of the Company nor any of its affiliates
has or will, either alone or with one or more other persons, bid for
or purchase for any account in which it or any of its affiliates has a
beneficial interest any Notes or attempt to induce any person to
purchase any Notes; and neither it nor any of its affiliates will make
bids or purchases for the purpose of creating actual, or apparent,
active trading in, or of raising the price of, the Notes;
(j) For a period of 180 days from the date of the
Prospectus, not to (i) offer, sell, contract to sell, pledge or
otherwise dispose of, directly or
<PAGE> 15
16
indirectly, any debt securities issued or guaranteed by the Company or
any subsidiary thereof and having a maturity of more than one year
from the date of issue or (ii) directly or indirectly, issue, offer,
pledge, sell, contract to sell or sell or grant any contract, option,
right or warrant to purchase, purchase any option to sell, or
otherwise transfer or dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition, transfer or purchase by any person at any time in the
future of) any shares of its capital stock (other than pursuant to the
Equity Offering or pursuant to employee stock option and incentive
plans existing on the date hereof) or any other share capital of the
Company or securities convertible or exercisable or exchangeable for
any such securities, or sell or grant options, rights or warrants with
respect to any such securities (other than the grant of options
pursuant to employee stock option and incentive plans existing on the
date hereof) or enter into any swap or similar agreement that
transfers, in whole or in part, the economic risk of ownership of any
such securities, whether any of the foregoing transactions is to be
settled by delivery of any such securities, in cash or otherwise, in
each case without the prior written consent of the Representative;
(k) The Company will indemnify and hold harmless the
Underwriters against any documentary, stamp or similar issuance tax,
including any interest and penalties, on the creation, issuance and
sale of the Notes and on the execution and delivery of this Agreement.
All payments to be made by the Company hereunder shall be made without
withholding or deduction for or on account of any present or future
taxes, duties or governmental charges whatsoever unless the Company is
compelled by law to deduct or withhold such taxes, duties or charges.
In that event, the Company shall pay such additional amounts as may be
necessary in order that the net amounts received after such
withholding or deduction shall equal the amounts that would have been
received if no withholding or deduction had been made;
(l) To comply in all material respects with all covenants
and agreements of the Company contained in each of the U.S. Equity
Underwriting Agreement and the International Equity Underwriting
Agreement;
(m) To apply the net proceeds from the sale of the Notes
being sold by the Company as set forth in the Prospectus, and to apply
the net proceeds from the Equity Offering as set forth in the
Prospectus and in each prospectus relating to the Equity Offering;
(n) Between the date hereof and the Closing Date (both dates
inclusive), to notify and consult with the Representative, and to
cause its subsidiaries and all other parties acting on its or their
behalf to notify and consult with the Representative, prior to issuing
any announcement which could be material in the context of the
distribution of the Notes;
<PAGE> 16
17
(o) Promptly to inform the Representative of any
communications received by the Company from any governmental or
regulatory agency or authority, including, without limitation, any
Netherlands or Belgian regulatory authority, the Luxembourg Stock
Exchange, or the Commission, relating to the offering of the Notes and
to furnish the Representative with copies thereof;
(p) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act, and the rules and regulations of the Commission thereunder;
(q) To not take, directly or indirectly, any action which is
designed to stabilize or manipulate, or which constitutes or which
might reasonably be expected to cause or result in stabilization or
manipulation, of the price of any security of the Company in
connection with the offering of the Notes;
(r) To take reasonable steps to minimize its accumulation of
passive income and passive assets and the risk of the Company
qualifying as a PFIC for 1999 and for future years; provided that such
steps are consistent with the Company's general business plan and
other business considerations (which are subject to change);
(s) To monitor its status as a PFIC and, in the event the
Company is a PFIC, to provide the requisite information to enable
shareholders to make qualified electing fund (as such term is used in
the Code) elections;
(t) To cause each of Arthur Andersen and KPMG Accountants
N.V. to deliver an initial comfort letter, with respect to the
financial statements of the Company and Svianed B.V., respectively,
dated the date of the Prospectus, to the Underwriters, in form and
substance reasonably satisfactory to the Representative at or prior to
the time copies of the Prospectus are furnished to the Representative;
(u) To make an application to list each series of Notes on
the Luxembourg Stock Exchange and to use its best efforts to have the
Notes admitted to trading on the Luxembourg Stock Exchange as promptly
as practicable; and
(v) If the Notes cease to be listed on the Luxembourg Stock
Exchange, the Company shall endeavour promptly to list the Notes on a
stock exchange to be agreed between the Company and the
Representative.
<PAGE> 17
18
5. Expenses. The Company agrees to pay: (a) the costs incident to the
authorization, issuance, sale and delivery of the Notes and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and
distributing of the Registration Statements, each Preliminary Prospectus, each
Prospectus and any amendments, supplements and exhibits thereto; (c) the costs
of distributing the Registration Statements as originally filed and each
amendment thereto and any post-effective amendments thereto (including, in each
case, exhibits), each Preliminary Prospectus, the Prospectus, the International
Prospectus and any amendment or supplement to the Prospectus or the
International Prospectus, all as provided in this Agreement; (d) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Notes; (e) the fees and
expenses of qualifying the Notes under the securities laws of the several
jurisdictions as provided in Section 4(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including reasonable related fees and
expenses of counsel to the Underwriters, including Canadian counsel);[(f) (i)
all costs and expenses incident to the preparation of the "road show"
presentation materials and (ii) all costs and expenses incident to the road show
travelling expenses of the Company]; (g) the costs of preparing certificates
evidencing the Notes; (h) all expenses and fees in connection with the
application for the listing of the Notes on the Luxembourg Stock Exchange and
the obtaining of any approvals in connection with the sale of the Notes from
relevant authorities in The Netherlands or Belgium; (i) the fees and expenses of
any Authorized Agent (as defined in Section 19 hereof); (j) the fees and
expenses (including fees and disbursements of counsel) of each Trustee; (k) the
cost and charges of any transfer agent or registrar; (l) all stamp or other
issuance or transfer taxes or governmental duties, if any, payable by the
Underwriters in connection with the offer and sale of the Notes to the
Underwriters and by the Underwriters to the initial purchasers therefrom; and
(m) all other costs and expenses incident to the performance of the obligations
of the Company under this Agreement not otherwise specifically provided for in
this Section 5, including, without limitation, the fees and expenses of Arthur
Andersen, the Company's independent accountants, KPMG Accountants N.V., the
accountants of Svianed B.V., Shearman & Sterling, U.S. counsel to the Company,
and Stibbe Simont Monahan Duhot, Netherlands counsel to the Company; provided
that, except as provided in this Section 5 and in Section 8, the Underwriters
shall pay their own costs and expenses, including the costs and expenses of
their counsel and any transfer taxes on the Notes which they may sell.
6. Conditions of the Underwriters' Obligations. The several
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Rule 462(b) Registration Statement, if any, and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 4(a); no stop order suspending the
effectiveness of any of either Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional
<PAGE> 18
19
information in either of the Registration Statements or the Prospectus
or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to the Closing Date that either Registration
Statement or the Prospectus or any amendment or supplement thereto
contain any untrue statement of a fact which, in the opinion of
counsel to the Underwriters, is material or omits to state any fact
which, in the opinion of such counsel, is material and is required to
be stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement,
each Indenture, each Registration Statement and the Prospectus or any
amendment or supplement thereto, and all other legal matters relating
to this Agreement, each Indenture and the transactions contemplated
hereby and thereby shall be reasonably satisfactory in all material
respects to counsel to the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Shearman & Sterling shall have furnished to the
Representative its written opinion, as U.S. counsel to the Company,
addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representative, to the effect that:
(i) The Primary Registration Statement was
declared effective under the Securities Act as of the date
and time specified in such opinion, the Rule 462(b)
Registration Statement, if any, was filed with the
Commission on the date specified therein, the Prospectus was
filed with the Commission pursuant to the subparagraph of
Rule 424(b) of the Rules and Regulations specified in such
opinion on the date specified therein and no stop order
suspending the effectiveness of either Registration
Statement has been issued and no proceeding for that purpose
is pending or threatened by the Commission;
(ii) The Registration Statements, as of their
respective Effective Dates, and the Prospectus, as of its
date, and any further amendments or supplements thereto, as
of their respective dates, made by the Company prior to the
Closing Date (other than the financial statements and other
financial data contained therein, as to which such counsel
need express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the
Rules and Regulations;
(iii) To the best of such counsel's knowledge,
there are no contracts or other documents which are required
to be described in the
<PAGE> 19
20
Prospectus or filed as exhibits to the Registration
Statements by the Securities Act or by the Rules and
Regulations which have not been described or filed as
exhibits to the Registration Statements or incorporated
therein by reference as permitted by the Rules and
Regulations;
(iv) Assuming due authorization, execution and
delivery by the Company under the laws of The Netherlands,
this Agreement has been duly executed and delivered by the
Company insofar as New York law is concerned;
(v) Assuming due authorization, execution and
delivery by the Company under the laws of The Netherlands,
each Indenture has been duly executed and delivered by the
Company insofar as New York law is concerned and, assuming
due authorization, execution and delivery of each Indenture
by the relevant Trustee and that each of the relevant
Trustee and (under the laws of The Netherlands) the Company
has full power, authority and legal right to enter into and
perform its obligations thereunder, constitutes a valid and
legally binding agreement of the Company, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally
and to general principles of equity (regardless of whether
in a proceeding in equity or at law); the Indenture has been
duly qualified under the Trust Indenture Act;
(vi) Assuming due authorization, execution and
delivery by the Company under the laws of The Netherlands,
the Notes have been duly executed and delivered by the
Company insofar as New York law is concerned and, assuming
due authentication thereof by the relevant Trustee and upon
payment and delivery in accordance with this Agreement and
the relevant Indenture, the Notes constitute valid and
legally binding obligations of the Company entitled to the
benefits of the relevant Indenture and enforceable against
the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally
and to general principles of equity (regardless of whether
in a proceeding in equity or at law);
(vii) Assuming the validity of such actions under
the laws of
<PAGE> 20
21
The Netherlands, under the laws of the State of New York
relating to submission to personal jurisdiction, the Company
has, pursuant to Section 16 of this Agreement, legally,
validly and irrevocably submitted to the personal
jurisdiction of any state or federal court located in the
Borough of Manhattan, The City of New York, New York in any
action arising out of or relating to this Agreement or the
transactions contemplated hereby, and has legally, validly
and effectively appointed the Authorized Agent as its
authorized agent for the purposes described in Section 16 of
this Agreement, and the Company has validly and irrevocably
waived (A) the defense of an inconvenient forum to the
maintenance of any such suit or proceeding and (B) any
immunity to jurisdiction to which it may otherwise be
entitled in any such suit or proceeding;
(viii) The execution, delivery and performance of
the Operative Agreements by the Company, and the
consummation by the Company of the transactions contemplated
thereby, do not and will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under (A) any existing applicable law,
rule or regulation of any court or governmental agency or
body of the United States or the State of New York (other
than state securities or Blue Sky laws as to which we have
not been requested to express any opinion) or (B) any order,
known to us, of any government, governmental instrumentality
or court of the United States or the State of New York
having jurisdiction over the Company or any of their
properties or assets; and, except for (x) the registration
of the Notes under the Securities Act, (y) the qualification
of each Indenture under the Trust Indenture Act and (z) such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase and distribution of the Notes by the Underwriters,
no consent, approval, authorization or order of, or filing
or registration with, any such court, governmental agency or
body is required for the execution, delivery and performance
of this Agreement and each Indenture by the Company and the
consummation of the transactions contemplated hereby and
thereby;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body of the United States or the
State of New York is required for the consummation of the
transactions contemplated by the Operative Agreements in
connection with the issuance or sale of the Notes by the
Company (assuming compliance with the terms of the Operative
Agreements by the parties thereto), except as may be
required under the Securities Act and the Trust Indenture
Act and the Rules and Regulations, and
<PAGE> 21
22
otherwise except as may be required by state or
foreign securities or "Blue Sky" laws;
(x) The statements set forth in the
Prospectus under the captions "Description of the
Notes", insofar as such statements purport to
summarize federal laws of the United States, fairly
summarize such terms, laws, agreements and other
documents in all material respects;
(xi) The statements set forth in the
Prospectus under the caption "Tax Considerations --
U.S. Federal Income Tax Considerations" accurately
summarize, subject to limitations and qualifications
stated therein, the material U.S. federal income tax
consequences to a U.S. Holder of the purchase,
ownership and disposition of Notes;
(xii) The Company is not and, after giving
effect to the offering and sale of the Notes and the
Equity Offering, will not be an "investment company"
or an entity "controlled" by an "investment company,"
as such terms are defined in the United States
Investment Company Act of 1940;
(xiii) No New York State or any New York City
stamp or documentary taxes payable by or on behalf of
the Underwriters or the Company are required to be
paid with respect to the execution of each Indenture
and the authorization, issuance, sale and delivery of
the Notes to the Underwriters in the manner
contemplated by this Agreement; and
(xiv) The opinions of such counsel delivered
pursuant to Section 9(d) of each of the U.S. Equity
Underwriting Agreement and the International Equity
Underwriting Agreement, respectively, are confirmed
and the Underwriters may rely upon such opinion as if
they were addressed to them.
In rendering such opinion, such counsel may (i) state that
their opinion is limited to matters governed by the federal
laws of the United States of America and the laws of the State
of New York and (ii) rely (to the extent such counsel deems
proper), as to matters involving the application of the laws
of The Netherlands upon the opinion of Stibbe Simont Monahan
Duhot referred to in Section 6(e) below if so specified in its
opinion. Such counsel shall also have furnished to the
Representative a written statement, addressed to the
Underwriters and dated the Closing Date, in form and substance
satisfactory to the Representative, to the effect that (x)
such counsel has acted as counsel to the Company in connection
with the preparation of the Registration Statements and (y)
based on the foregoing, no facts have come to the attention
<PAGE> 22
23
of such counsel which lead it to believe that (I) each
Registration Statement, as of its respective Effective Date,
and the Prospectus, as of its date, 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 not misleading or, (II) as of the
Closing Date, that the Prospectus or International Prospectus
contains any untrue statement of a material fact or omits 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.
The foregoing opinion and statement may be qualified by a
statement to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of
the statements contained in each Registration Statement or the
Prospectus except for the statements made in the Prospectus
under the captions "Description of the Notes" and "Tax
Considerations - Certain U.S. Federal Income Tax
Considerations" insofar as such statements relate to the
provisions of this Agreement or each Indenture, or concern
legal matters.
(e) Stibbe Simont Monahan Duhot shall have furnished
to the Representative its written opinion, as Netherlands
counsel to the Company, addressed to the Underwriters and the
Company and dated the Closing Date, in form and substance
satisfactory to the Representative and the Company, to the
effect that:
(i) The Company has been duly incorporated
and is validly existing under the laws of The
Netherlands as a legal entity in the form of a
naamloze vennootschap, is duly qualified to do
business in each jurisdiction in which its ownership
or lease of property or the conduct of its businesses
requires such qualification, and has all power and
authority necessary to own or hold its properties and
to conduct the businesses in which it is engaged;
(ii) Each of the Company's Netherlands
subsidiaries has been duly incorporated and is
validly existing under the laws of The Netherlands,
is duly qualified to do business in each jurisdiction
in which its ownership or lease of property or the
conduct of its businesses requires such
qualification, and has all power and authority
necessary to own or hold its properties and to
conduct the businesses in which it is engaged;
(iii) The Company has an authorized and issued
capitalization as set forth in the Prospectus, and
all of the issued and outstanding shares of capital
stock of the Company have been duly and validly
authorized and issued and are fully paid and
non-assessable; except as disclosed in the
Prospectus, there are no outstanding securities
convertible into or exchangeable for, or warrants,
rights or options to purchase from the Company or
obligations of the Company to issue,
<PAGE> 23
24
any class of capital stock of, or other form of
ownership interest in, the Company; and all of the
issued shares of capital stock of, or other form of
ownership interest in, each subsidiary of the Company
have been duly and validly authorized and issued and
are fully paid, non-assessable and are wholly owned
directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims;
(iv) There are no restrictions in the
Articles of Association that would prevent the Notes
from being offered and sold by the Company to the
Underwriters;
(v) The shareholders register of the Company
does not contain any registration of any pledges
("pandrecht") or rights of usufruct ("vruchtgebruik")
with respect to any shares of capital stock of the
Company;
(vi) The descriptions in the Prospectus of
statutes, legal and governmental proceedings and
contracts and other documents are accurate in all
material respects; the statements in the Prospectus
under the headings "Service of Process and
Enforceability of Civil Liabilities," "Summary -
Regulatory and Competitive Environment," "Risk
Factors Changes in the Regulatory Environment Could
Affect our Ability to Offer our Products and
Services," "Business - Regulation," "Business
Intellectual Property," "Management - Supervisory
Board," "Management - Management Board," "Management
- Executive Compensation," and "Management - Stock
Option Plans," to the extent that they constitute
summaries of matters of law or regulation or legal
conclusions, have been reviewed by such counsel and
fairly summarize the matters described therein in all
material respects;
(vii) The Company, with respect to each of the
Operative Agreements, has full right, power and
authority to execute and deliver each of the
Operative Agreements and to perform its obligations
thereunder; and all corporate action required to be
taken for the due and proper authorization, execution
and delivery of each of the Operative Agreements and
the consummation of the transactions contemplated
thereby have been duly and validly taken;
(viii) This Agreement has been duly authorized,
executed and delivered by the Company and, assuming
that this Agreement constitutes a valid and legally
binding agreement under the laws of the State of New
York, constitutes a valid and legally binding
agreement of the Company enforceable against the
Company in accordance with its terms;
<PAGE> 24
25
(ix) Each Indenture has been duly authorized,
executed and delivered by the Company and, assuming
due authorization, execution and delivery thereof by
the relevant Trustee and assuming that each Indenture
constitutes a valid and legally binding agreement
under the laws of the State of New York, constitutes
a valid and legally binding agreement of the Company
enforceable against the Company in accordance with
its terms;
(x) The execution, delivery and performance
of the Operative Agreements by the Company and the
consummation of the transactions contemplated
thereby, and the offer and sale of the Notes in the
manner contemplated by this Agreement and the
Prospectus, will not conflict with or result in a
breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to any
material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument
to which the Company or its subsidiaries is a party
or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of
the Company or its subsidiaries is subject, nor will
such actions result in any violation of the
provisions of the articles of association of the
Company or any of its subsidiaries or any statute or
any judgment, order, decree, rule or regulation of
any court or arbitrator or governmental agency or
body having jurisdiction over the Company or any of
its subsidiaries or any of their properties or
assets; and except for (i) the registration of the
Notes under the Securities Act, (ii) the
qualification of each Indenture under the Trust
Indenture Act and (iii) such consents, approvals,
authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable
state securities laws in connection with the purchase
and distribution of the Notes by the Underwriters, no
consent, approval, authorization or order of, or
filing or registration with, any such court or
arbitrator or governmental agency or body under any
such statute, judgment, order, decree, rule or
regulation is required for the execution, delivery
and performance by the Company of this Agreement and
the consummation of the transactions contemplated
hereby and thereby;
(xi) To the best knowledge of such counsel,
there are no pending actions or suits or judicial,
arbitral, rule-making, administrative or other
proceedings to which the Company or any of its
subsidiaries is a party or of which any property or
assets of the Company or any of its subsidiaries is
the subject which (A) singularly or in the aggregate,
if determined adversely to the Company or any of
<PAGE> 25
26
its subsidiaries, could reasonably be expected to
have a material adverse effect on the Company and its
subsidiaries or (B) questions the validity or
enforceability of the Operative Agreements or any
action taken or to be taken pursuant thereto; and to
the best knowledge of such counsel, no such
proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xii) Neither the Company nor any of its
subsidiaries is (A) in violation of its articles of
association (B) in default in any material respect,
and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in
the due performance or observance of any term,
covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which they
are a party or by which they are bound or to which
any of their property or assets is subject or (C) in
violation in any material respect of any law,
ordinance, governmental rule, regulation or court
decree to which the Company or any of its
subsidiaries or their property or assets may be
subject;
(xiii) Each of the Operative Agreements, and
any other document required to be furnished hereunder
or thereunder is in proper legal form under
Netherlands law for the enforcement thereof against
the Company without further action on the part of the
Underwriters or the holders of the Notes, as the case
may be; and to ensure the legality, validity,
enforceability, priority or admissibility in evidence
in The Netherlands of each of the Operative
Agreements or any other document required to be
furnished hereunder or thereunder, it is not
necessary that the Operative Agreements or any such
document be submitted to, filed or recorded with any
Netherlands court or other authority. All formalities
required in The Netherlands for the validity and
enforceability of the Operative Agreements (including
any necessary registration, recording or filing with
any Netherlands court or other authority) have been
accomplished, and no notarization is required, for
the validity and enforceability thereof;
(xiv) Any judgment obtained in a United States
federal or state court of competent jurisdiction
sitting in New York City arising out of or in
relation to the obligations of the Company under the
Operative Agreements would be enforced against the
Company in the courts of The Netherlands;
(xv) The Underwriters would be permitted to
commence proceedings against the Company in
Netherlands courts of competent jurisdiction based on
the Operative Agreements (to the extent that they
have direct contractual rights against the Company
under such Operative Agreements which arise as a
result of valid and binding
<PAGE> 26
27
obligations of the Company under such documents in
accordance with the laws of the State of New York),
and (if they accepted jurisdiction) such Netherlands
courts would recognize the choice of law provisions
of the Operative Agreements;
(xvi) The Company can sue and be sued in its
own name; under Netherlands law, the agreement of the
Company that Operative Agreements shall be governed
by the laws of the State of New York will, if it
constitutes a valid and legally binding agreement
under the laws of the State of New York, be
recognized by the courts of The Netherlands;
(xvii) Under the laws of The Netherlands, the
Company would in the Courts of The Netherlands not be
entitled to invoke immunity from jurisdiction or
immunity from execution on the grounds of sovereignty
in respect of any action arising out its obligations
under the Operative Agreements;
(xviii) The indemnification and contribution
provisions set forth in Section 7 herein do not
contravene the public policy or laws of The
Netherlands;
(xix) The submission by the Company to the
jurisdiction of the United States federal or New York
state courts sitting in New York City, set forth in
each of the Operative Agreements, constitute valid
and legally binding obligations of the Company, and
service of process effected in the manner set forth
in, the Operative Agreements, assuming validity under
the laws of the State of New York, will be effective,
insofar as Netherlands law is concerned;
(xx) The certificates used to evidence the
Notes are in due and proper form and comply with all
applicable statutory requirements of Netherlands law;
and
(xxi) The opinions of such counsel delivered
pursuant to Section 9(e) of each of the U.S. Equity
Underwriting Agreement and the International Equity
Underwriting Agreement, respectively, are confirmed
and the Underwriters may rely upon such opinions as
if they were addressed to them.
Such counsel shall also have furnished to the Representative a
written statement, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Representative, to the effect that no facts have come to the
attention of such counsel which lead it to believe that (I)
<PAGE> 27
28
each Registration Statement, as of its Effective Date, and the
Prospectus, as of its date, 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 not misleading or, (II) as of the Closing
Date, that the Prospectus contains any untrue statement of a
material fact or, omits 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. In rendering such opinion, such counsel
may state that their opinion is limited to matters governed by
Netherlands law and shall state that each of Shearman &
Sterling and Simpson Thacher & Bartlett may rely upon their
opinion with respect to matters of Netherlands law.
(f) Arthur Andersen shall have furnished to the
Representative written opinion, as special Netherlands tax
counsel to the Company, addressed to the Underwriters and
dated the Closing Date, in form and substance satisfactory to
the Representative, to the effect that:
(i) It is not necessary, prior to the
Underwriters seeking enforcement of the Operative
Agreements, in the Netherlands, that any stamp or
similar tax be paid;
(ii) The disclosure in the Prospectus under
the caption "Tax Considerations -- Netherlands Tax
Considerations" accurately summarizes, subject to the
limitations and qualifications stated therein, the
material Netherlands income tax consequences of the
purchase, ownership and disposition of Notes;
(iii) Except as disclosed in the Prospectus,
under current laws and regulations of The Netherlands
and any political subdivision thereof, all interest
payments payable on the Notes may be paid by the
Company in Dutch Guilders, euros or another currency
that may be converted into foreign currency that may
be freely transferred out of The Netherlands and, in
each case, all such payments made to holders thereof
who are non-residents of The Netherlands will not be
subject to income, withholding or other taxes under
laws and regulations of The Netherlands or any
political subdivision or taxing authority thereof or
therein and will otherwise be free and clear of any
other tax, duty, withholding or deduction in The
Netherlands or any political subdivision or taxing
authority thereof or therein and without the
necessity of obtaining any governmental authorization
in The Netherlands or any political subdivision or
taxing authority thereof or therein; and
(iv) No stamp, withholding or other issuance
or transfer taxes or duties are payable in accordance
with Netherlands tax law, by or on behalf of the
Underwriters, to Netherlands taxation authorities or
other
<PAGE> 28
29
Netherlands agencies in connection with the
following:
(a) the issuance of the Notes by the
Company;
(b) the delivery of the Notes to or for
the account of the Underwriters in
the manner contemplated herein; or
(c) the sale and delivery by the
Underwriters of the Notes to the
initial purchasers therefrom.
(g) Nauta Dutilh shall have furnished to the
Representative its written opinion, as Netherlands counsel to
the Underwriters, addressed to the Underwriters and dated the
Closing Date, in form and substance satisfactory to the
Representative.
(h) Each Trustee shall have furnished to the
Representative an officer's certificate, dated the Closing
Date, in form and substance satisfactory to the Representative
to the effect that (i) the relevant Indenture has been duly
authorized, executed and delivered by such Trustee, (ii) each
person who, on behalf of such Trustee, executed and delivered
the relevant Indenture was at the date thereof and is now duly
elected, appointed or authorized, qualified and acting as an
officer or authorized signatory of such Trustee and duly
authorized to perform such acts at the respective times of
such acts and the signatures of such persons appearing on such
document are their genuine signatures and (iii) such other
matters reasonably requested by the Underwriters to be
included in such officer's certificate. Attached to the
officer's certificate shall be an extract of the Bylaws of
such Trustee, duly adopted by its Board of Directors,
respecting the signing authority of the persons mentioned in
clause (ii) above and a letter from an officer of such Trustee
authorizing, pursuant to such Bylaws, such signing authority,
which Bylaws and letter at the Closing Date are in full force
and effect.
(i) Mark van der Heijden, Chief Regulatory Counsel of
the Company, shall have furnished his written opinion to
Underwriters and dated the Closing Date, in form and substance
satisfactory to the Representative.
(j) With respect to the letter of each of Arthur
Andersen and KPMG Accountants N.V. delivered to the
Representative and dated the date of the Prospectus referred
to in Section 4(t) (as used in this paragraph, the "initial
letter"), the Company shall have furnished to the
Representative a letter (as used in this paragraph, the
"bring-down letter") of each such accounting firm, addressed
to the Underwriters and dated the Closing Date (i) confirming
that they are independent public accountants within the
meaning of the Securities
<PAGE> 29
30
Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the
date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates
as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings
of such firm with respect to the financial information and
other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and
findings set forth in the initial letter.
(k) The Company shall have furnished to the
Representative a certificate, dated the Closing Date, of R.
Gary Mesch, Managing Director, and Raj Raithatha, Chief
Financial Officer, stating, on behalf of the Company, that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and
correct as of the Closing Date; the Company has
complied with all its agreements contained herein;
and
(ii) (A) Neither the Company nor any of its
subsidiaries has sustained since the date of the
latest audited financial statements included in the
Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any
labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the
Prospectus or (B) since such date there shall not
have been any change in the share capital or
long-term debt of the Company or any of its
subsidiaries or any change, or any development
involving a prospective change, in or affecting the
general affairs, management, financial position,
shareholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set
forth in the Prospectus; and
(iii) They have carefully examined the
Prospectus and, in their opinion (A) the Prospectus,
as of its date, did not include any untrue statement
of a material fact and did not omit to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and (B) since such date no event has
occurred which should have been set forth in a
supplement or amendment to the Prospectus so that the
Prospectus, as so amended or supplemented, would not
include any untrue statement of a material fact and
would not omit to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in the light of the circumstances
in which they were made, not misleading.
(l) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest
audited financial statements included in
<PAGE> 30
31
the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set
forth in the Prospectus or (ii) since such date there shall
not have been any change in the share capital or long-term
debt of the Company or any of its subsidiaries or any change,
or any development involving a prospective change, in or
affecting the general affairs, management, financial
position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth
in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the
Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering of
the Notes on the terms and in the manner contemplated in the
Prospectus.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange, Inc., the American Stock Exchange, the Nasdaq
National Market System, the Amsterdam Stock Exchange, the
Luxembourg Stock Exchange or in the U.S. over-the-counter
market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) any downgrading in the
rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Securities Act),
or any public announcement that any such organization has
under surveillance or review its rating of any debt securities
of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a
possible downgrading, of such rating), (iii) a banking
moratorium shall have been declared by U.S. federal or state
authorities in the United States or by authorities in The
Netherlands or by European Union authorities, (iv) the United
States or The Netherlands shall have become engaged in
hostilities, there shall have been an escalation in
hostilities involving the United States or The Netherlands or
there shall have been a declaration of a national emergency or
war by the United States or The Netherlands or (v) there shall
have occurred such a material adverse change in general or
United States or Netherlands economic, political or financial
conditions or in currency exchange rates, taxation, exchange
controls or foreign investment regulations (or the effect of
international conditions on the financial markets in the
United States or The Netherlands shall be such) as to make it,
in the judgment of a majority in interest of the several
Underwriters, impracticable or inadvisable to proceed with
completion of the offering or sale of and payment for the
Notes on the terms and in the manner contemplated in the
Prospectus.
<PAGE> 31
32
(n) Each Indenture shall have been duly executed and
delivered by the Company and the relevant Trustee on the
Closing Date and the Notes shall have been duly executed and
delivered by the Company and duly authenticated by the
relevant Trustee on the Closing Date.
(o) The Luxembourg Stock Exchange shall have approved
the Notes for inclusion, subject only to official notice of
issuance.
(p) The closing of the Equity Offering shall have
occurred concurrently with the closing hereunder on the
Closing Date.
(q) No action shall have been taken and no statute,
rule, regulation or order shall have been enacted, adopted or
issued by any governmental agency or body which would, as of
the Closing Date, prevent the issuance or sale of the Notes;
and no injunction, restraining order or order of any other
nature by any federal or state court of competent jurisdiction
shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Notes.
(r) The Company shall have furnished to the
Representative such further information, certificates and
documents as the Representative may reasonably request.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance satisfactory to
counsel to the Representative.
7. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter and the QIU (as defined) and each of their officers and employees
and each person, if any, who controls each Underwriter and the QIU within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Notes), to which that Underwriter, QIU, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, either Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or (B)
in any blue sky application or other document prepared or executed by the
Company (or based upon any written information furnished by the Company)
specifically for the purpose of qualifying any or all of the under the
securities laws of any state or other jurisdiction (such application, document
or information being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus, either
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading or (iii) any
act or failure to act, or any alleged act or failure
<PAGE> 32
33
to act, by any Underwriter or the QIU in connection with, or relating in any
manner to, the Notes or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable in the case of any matter covered
by this clause (iii) to the extent that it is determined in a final judgment by
a court of competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such act or failure to act undertaken or
omitted to be taken by such Underwriter or the QIU through its gross negligence
or wilful misconduct), and shall reimburse each Underwriter and the QIU and each
such officer, employee and controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, QIU, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, either Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application in reliance upon and in
conformity with the written information furnished to the Company through the
Representative by or on behalf of any Underwriter or the QIU specifically for
inclusion therein and described in Section 7(f); provided, further, that as to
any Preliminary Prospectus this indemnity agreement shall not inure to the
benefit of any Underwriter, its officers or employees or any person controlling
that Underwriter on account of any loss, claim, damage, liability or action
arising from the sale of Notes to any person by that Underwriter if that
Underwriter failed to send or give a copy of the Prospectus, as the same may be
amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact in such
Preliminary Prospectus was corrected in the Prospectus, unless such failure
resulted from non-compliance by the Company with Section 4(c). The foregoing
indemnity agreement is in addition to any liability which the Company may
otherwise have to any Underwriter, the QIU or to any officer, employee or
controlling person of that Underwriter or QIU.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of its
directors and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Prospectus,
either Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, either Registration
Statement or the Prospectus, or in any amendment or supplement thereto, or in
any Blue Sky Application any material fact required to be stated therein or
necessary to make the
<PAGE> 33
34
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with the written information furnished
to the Company through the Representative by or on behalf of that Underwriter
specifically for inclusion therein and described in Section 7(f), and shall
reimburse the Company and any such director, officer or controlling persons for
any legal or other expenses reasonably incurred by the Company or any such
director, officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer or controlling person.
(c) The Company hereby confirms that at its request
______________ has acted as "qualified independent underwriter" (in such
capacity, the "QIU") within the meaning of Rule 2710 of the Conduct Rules of the
National Association of Securities Dealers, Inc. in connection with the offering
of the Notes. The Company will indemnify and hold harmless the QIU against any
losses, claims, damages or liabilities, joint or several, to which the QIU may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon the QIU's acting (or alleged failing to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by such failure; and, provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional
<PAGE> 34
35
to those available to the indemnifying party and in the reasonable judgement of
such counsel it is advisable for such indemnified party to employ separate
counsel or (iii) the indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the indemnified party, in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party, it being understood, however,
that the indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated in writing
by the Representative, if the indemnified parties under this Section 7 consist
of any Underwriters, the QIU or any of their respective officers, employees or
controlling persons, or by the Company, if the indemnified parties under this
Section consist of the Company or any of the Company's directors, officers,
employees or controlling persons. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 7(a), 7(b) and 7(c), shall use its
best efforts to cooperate with the indemnifying party in the defense of any such
action or claim. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld) settle or compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent (a) includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding and (b) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on behalf
of the indemnified party, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss of liability by reason of such settlement or judgment.
(e) If the indemnification provided for in this Section 7
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 7(a), 7(b) or 7(c) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand, and the Underwriters and the
QIU on the other, from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters and the QIU on the other with respect to the
statements or omissions which resulted in such loss,
<PAGE> 35
36
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Underwriters and the QIU on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes purchased under this Agreement (before
deducting expenses but after deducting underwriting discounts and commissions)
received by the Company, on the one hand, and the total underwriting discounts
and commissions received by the Underwriters (or other fees, with respect to the
QIU) with respect to the Notes purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the Notes under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, on the one hand, and the Underwriters, on the other hand,
agree that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation (even if the
Underwriters and the QIU were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(e) shall be deemed to include, for
purposes of this Section 7(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Notes underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The Underwriters severally confirm that the statements
with respect to the offering of the Notes set forth in the third paragraph on
page (i) of, and under the caption "Underwriting" in, the Prospectus are correct
in all material respects and constitute the only information furnished in
writing to the Company by or on behalf of the Underwriters specifically for
inclusion in the Registration Statements and the Prospectus.
8. Defaulting Underwriters. If, on the Closing Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Notes which the defaulting Underwriter agreed but failed to purchase on the
Closing Date in the respective proportions which the aggregate principal amount
of Notes set opposite the name of each remaining non-defaulting Underwriter in
Schedule I hereto bears to the aggregate principal amount of Notes set opposite
the names of all the remaining non-defaulting Underwriters in Schedule I hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Notes on the Closing Date if the total
aggregate principal
<PAGE> 36
37
amount of Notes which the defaulting Underwriter or Underwriters agreed but
failed to purchase on such date exceeds 9.09% of the total aggregate principal
amount of Notes to be purchased on the Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the aggregate principal amount of Notes that it agreed to purchase on the
Closing Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representative who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, the total aggregate principal amount of Notes be purchased on the Closing
Date. If the remaining Underwriters or other underwriters satisfactory to the
Representative do not elect to purchase the aggregate principal amount of Notes
that the defaulting Underwriter or Underwriters agreed but failed to purchase on
the Closing Date, this Agreement shall terminate without liability on the part
of any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 5 and 10. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule I hereto who, pursuant to this Section 8, purchases
Notes which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the Notes
of a defaulting or withdrawing Underwriter, either the Representative or the
Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel to the Company or
counsel to the Underwriters may be necessary in either Registration Statement,
the Prospectus or in any other document or arrangement.
9. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representative by notice given to and received by the
Company prior to delivery of and payment for the Notes if, prior to that time,
any of the events described in Sections 6(l) or 6(m) shall have occurred or if
the Underwriters shall decline to purchase the Notes for any reason permitted
under this Agreement.
10. Reimbursement of Underwriters' Expenses. If (a) the
Company shall fail to issue the appropriate aggregate principal amount of Notes
to the Underwriters for any reason permitted under this Agreement or (b) the
Underwriters shall decline to purchase the Notes for any reason permitted under
this Agreement (including the termination of this Agreement pursuant to Section
9), the Company shall reimburse the Underwriters for fees and expenses of their
counsels and for such other out-of-pocket expenses as shall have been incurred
by them in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Company shall pay the full amount thereof to the
Representative. Notwithstanding the previous sentence, if this Agreement is
terminated pursuant to Section 8 by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of those expenses.
11. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
<PAGE> 37
38
(a) if to the Underwriters, shall be delivered or
sent by mail, telex or facsimile transmission to Lehman
Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: Syndicate Department (Fax: 212-528-
8822);
With a copy to Simpson Thacher & Bartlett, 99 Bishopsgate,
London, EC2M 3YH, Attention: William R. Dougherty (Fax:
011-44-171-422-4022);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the
Company set forth in the Prospectus, Attention: Raj Raithatha
(Fax: 31-20-501-1011).
With a copy to Shearman & Sterling, 599 Lexington Avenue, New
York, New York 10022, Attention: John D. Morrison, Jr. (Fax:
212-848-7179)
provided, however, that any notice to a Underwriter pursuant to Section 7(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the officers and
employees of the Underwriters and the person or persons, if any, who control the
Underwriters within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 7 of this Agreement
shall be deemed to be for the benefit of directors, officers and employees of
the Company and any person controlling the Company within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
12, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Notes and shall
remain in full force and effect regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) the term "business day" means any day on
which the Nasdaq
<PAGE> 38
39
National Market System is open for trading and (b) the term "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
15. Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK.
16. Submission to Jurisdiction; Appointment of Agent for
Service; Waiver; Currency Indemnity. (a) To the fullest extent permitted by
applicable law, the Company irrevocably submits to the non-exclusive
jurisdiction of any federal or state court in the Borough of Manhattan in the
City of New York, County and State of New York, United States of America, in any
suit or proceeding based on or arising under this Agreement, and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in any such court. The Company, to the fullest extent permitted by applicable
law, irrevocably and fully waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding and hereby irrevocably designates and
appoints CT Corporation System (the "Authorized Agent"), as its authorized agent
upon whom process may be served in any such suit or proceeding. The Company
represents that it has notified the Authorized Agent of such designation and
appointment and that the Authorized Agent has accepted the same in writing. The
Company hereby irrevocably authorizes and directs its Authorized Agent to accept
such service. The Company further agrees that service of process upon its
Authorized Agent and written notice of said service to the Company mailed by
first class mail or delivered to its Authorized Agent shall be deemed in every
respect effective service of process upon the Company in any such suit or
proceeding. Nothing herein shall affect the right of any person to serve process
in any other manner permitted by law. The Company agrees that a final action in
any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other lawful manner.
Notwithstanding the foregoing, any action against the Company arising out of or
based on this Agreement or the transactions contemplated hereby may also be
instituted by the Underwriters, their officers and employees or any person who
controls any Underwriter within the meaning of the Securities Act in any
competent court in The Netherlands, and the Company expressly accepts the
jurisdiction of any such court in any such action.
The Company hereby irrevocably waives, to the extent permitted
by law, any immunity to jurisdiction to which it may otherwise be entitled
(including, without limitation, immunity to pre-judgment attachment,
post-judgment attachment and execution) in any legal suit, action or proceeding
against it arising out of or based on this Agreement or the transactions
contemplated hereby.
The provisions of this Section 16(a) are intended to be
effective upon the execution of this Agreement without any further action by the
Company or the Underwriters and the introduction of a true copy of this
Agreement into evidence shall be conclusive and final evidence as to such
matters.
<PAGE> 39
40
(b) The Company shall indemnify the Underwriters against any
loss incurred by it as a result of any judgment or order being given or made and
expressed and paid in a currency (the "Judgment Currency") other than U.S.
dollars and as a result of any variation as between (i) the rate of exchange at
which the U.S. dollar amount is converted into the Judgment Currency for the
purpose of such judgment or order and (ii) the spot rate of exchange in New
York, New York at which the Underwriters on the date of payment of such judgment
or order are able to purchase U.S. dollars with the amount of the Judgment
Currency actually received by the Underwriters. If the U.S. dollars so purchased
are greater than the amount originally due to the Underwriters hereunder, the
Underwriters agree to pay to the Company an amount equal to the excess of the
U.S. dollars so purchased over the amount originally due to the Underwriters
hereunder. The Underwriters shall indemnify the Company against any loss
incurred by it as a result of any judgment or order being given or made and
expressed and paid in a Judgment Currency other than U.S. dollars and as a
result of any variation as between (i) the rate of exchange at which the U.S.
dollar amount is converted into the Judgment Currency for the purpose of such
judgment or order and (ii) the spot rate of exchange in New York, New York at
which the Company, on the date of payment of such judgment or order, is able to
purchase U.S. dollars with the amount of the Judgment Currency actually received
by the Company. If the U.S. dollars so purchased are greater than the amount
originally due to the Company hereunder, the Company agrees to pay to the U.S.
Underwriters an amount equal to the excess of the U.S. dollars so purchased over
the amount originally due to the Company hereunder. The foregoing shall
constitute a separate and independent obligation of the Company and the
Underwriters and shall continue in full force and effect notwithstanding any
such judgment or order as aforesaid. The term "spot rate of exchange" shall
include any premiums and costs of exchange payable in connection with the
purchase of, or conversion into, U.S. dollars.
17. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
<PAGE> 40
If the foregoing correctly sets forth the agreement among the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
VERSATEL TELECOM INTERNATIONAL N.V.
By: _______________________________
Name:
Title:
Accepted:
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
For itself and as Representative
of the several Underwriters named
on Schedule I hereto
By: ________________________
Authorized Representative
<PAGE> 41
SCHEDULE I
<TABLE>
AGGREGATE AGGREGATE
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITERS DOLLAR NOTES EURO NOTES
<S> <C> <C>
Lehman Brothers International (Europe)
ING Barings LLC.
ING Barings Limited
Total
</TABLE>
<PAGE> 1
Exhibit 3.2
DI/CA/685683.dlt
Begripsbepalingen
Artikel 1
In deze statuten moet worden verstaan onder
1. 1. vennootschap:
de vennootschap waarvoor deze statuten gelden;
1. 2. algemene vergadering:
het orgaan dat gevormd wordt door aandeelhouders met stemrecht en
andere personen met stemrecht;
1. 3. vergadering van aandeelhouders:
de vergadering van de algemene vergadering en andere
vergadergerechtigden;
1. 4. vergadergerechtigden:
- aandeelhouders met stemrecht;
- aandeelhouders zonder stemrecht;
- vruchtgebruikers en pandhouders met stemrecht;
- andere (houders van rechten die door de wet zijn toegekend
aan) houders van met medewerking van de vennootschap
uitgegeven certificaten van haar aandelen;
1. 5. Officiele Prijscourant:
de Officiele Prijscourant van de Amsterdam Exchanges N.V. of een
daarvoor in de plaats tredende officiele publicatie;
1. 6. accountant:
een accountant als bedoeld in artikel 393 Boek 2 van het Burgerlijk
Wetboek, dan wel een organisatie waarin zodanige accountants
samenwerken;
1. 7. jaarvergadering:
de vergadering van aandeelhouders, bestemd tot de behandeling van de
jaarrekening en het jaarverslag;
<PAGE> 2
-2-
1. 8. jaarrekening:
de balans en de winst- en verliesrekening met toelichting;
1. 9. jaarverslag:
verslag van de toestand van de vennootschap per de laatste dag van
het boekjaar en van de gang van zaken gedurende het boekjaar.
1. 10. dochtermaatschappij:
- een rechtspersoon waarin de vennootschap of een of meer van
haar dochtermaatschappijen, al dan niet krachtens overeenkomst
met andere stemgerechtigden, alleen of samen meer dan de helft
van de stemrechten in de algemene vergadering kunnen
uitoefenen;
- een rechtspersoon waarvan de vennootschap of een of meer van
haar dochtermaatschappijen lid of aandeelhouder zijn en, al
dan niet krachtens overeenkomst met andere stemgerechtigden,
alleen of samen meer dan de helft van de bestuurders of van de
commissarissen kunnen benoemen of ontslaan, ook indien alle
stemgerechtigden stemmen. Met een dochtermaatschappij wordt
gelijkgesteld een onder eigen naam optredende vennootschap
waarin de vennootschap of een of meer dochtermaatschappijen
als vennoot volledig jegens schuldeisers aansprakelijk is voor
de schulden. Het hiervoor bepaalde geldt onverminderd het
bepaalde in artikel 24a leden 3-4 Boek 2 van het Burgerlijk
Wetboek;
1. 11. groepsmaatschappij: een rechtspersoon of vennootschap, waarmee de
vennootschap in een groep is verbonden;
1. 12. prioriteit: de houder van het ene prioriteitsaandeel.
<PAGE> 3
-3-
1. 13. Wge:
Wet Giraal effectenverkeer.
1. 14. Necigef:
het centraal instituut in de zin van de Wge.
1. 15. aangesloten instelling:
aangesloten instelling in de zin van de Wge.
Naam, zetel en doel
Artikel 2
2. 1. De vennootschap draagt de naam: VersaTel Telecom International N.V..
2. 2. Zij heeft haar zetel te Amsterdam.
Doel
Artikel 3
De vennootschap heeft ten doel:
a. het verlenen van telecommunicatie-diensten;
b. het oprichten van, deelnemen in, het voeren van bestuur over en het zich
op enigerlei andere wijze financieel interesseren bij andere
vennootschappen en ondernemingen;
c. het verlenen van diensten op administratief, technisch, financieel,
economisch of bestuurlijk gebied aan andere vennootschappen, personen en
ondernemingen;
d. het verkrijgen, vervreemden, beheren en exploiteren van roerende en
onroerende zaken en andere goederen, daaronder begrepen patenten,
merkrechten, licenties, vergunningen en andere industriele
eigendomsrechten;
e. het ter leen opnemen of ter leen verstrekken van gelden, alsmede het
zekerheid stellen, zich op andere wijze sterk maken of zich hoofdelijk
naast of voor anderen verbinden,
het vorenstaande al of niet in samenwerking met derden en met inbegrip van het
verrichten en bevorderen van alle handelingen die daarmede direct of indirect
verband houden, alles in de ruimste zin van het woord.
<PAGE> 4
-4-
Kapitaal
Artikel 4
4. 1. Het maatschappelijk kapitaal van de vennootschap bedraagt negen
miljoen gulden vijf cent ((Function) 9.000.000,05) en is verdeeld in
- tachtig miljoen (80.000.000) gewone aandelen;
- twintig miljoen (20.000.000) preferente aandelen A,
- tachtig miljoen (80.000.000) preferente aandelen B en
- een (1) prioriteitsaandeel,
elk nominaal groot vijf cent (NLG 0,05).
4. 2. Waar in deze statuten wordt gesproken van "aandelen" of
"aandeelhouders", wordt daaronder verstaan aandelen van welke soort
dan ook respectievelijk houders van aandelen van welke soort dan
ook, tenzij het tegendeel uitdrukkelijk is vermeld of kennelijk uit
het zinsverband blijkt.
Uitgifte van aandelen
Artikel 5
5. 1. Uitgifte van aandelen kan slechts geschieden krachtens een besluit
van de algemene vergadering dat tevens de koers en de verdere
voorwaarden van de uitgifte bevat.
De algemene vergadering kan haar bevoegdheid als in de vorige zin
bedoeld voor een bepaalde duur van ten hoogste vijf jaar overdragen
aan een ander vennootschapsorgaan.
Bij die aanwijzing wordt bepaald hoeveel aandelen mogen worden
uitgegeven.
De aanwijzing kan telkens voor niet langer dan vijf jaar worden
verlengd.
Tenzij bij de aanwijzing anders is bepaald, kan zij niet worden
ingetrokken.
<PAGE> 5
-5-
Voor de geldigheid van het besluit van de algemene vergadering tot
uitgifte of tot aanwijzing is vereist een voorafgaand of
gelijktijdig goedkeurend besluit van elke groep van houders van
aandelen van eenzelfde soort aan wier rechten de uitgifte afbreuk
doet.
De vennootschap legt binnen acht dagen na een be-sluit van de
algemene vergadering tot uitgifte of tot aanwijzing een volledige
tekst daarvan neer ten kantore van het handelsregister met
vermelding van aantal en soort.
De vennootschap doet binnen acht dagen na elke uitgifte van aandelen
hiervan opgave ten kantore van het handelsregister met vermelding
van aantal en soort.
Dit lid is van overeenkomstige toepassing op het verlenen van
rechten tot het nemen van aandelen, maar is niet van toepassing op
het uitgeven van aandelen aan iemand die een voordien reeds
verkregen recht tot het nemen van aandelen uitoefent.
5. 2. Indien en voor zover de raad van bestuur is aangewezen als bevoegd
om tot uitgifte van aandelen te besluiten, is bij de uitgifte van
preferente aandelen B - daaronder begrepen het verlenen van een
recht tot het nemen van preferente aandelen B -:
a. de raad van bestuur verplicht, binnen vier weken na die
uitgifte een algemene vergadering bijeen te roepen, waarin de
motieven voor de uitgifte worden toegelicht, tenzij voordien
in een algemene vergadering een zodanige toelichting is
gegeven;
b. de voorafgaande goedkeuring van de algemene vergadering voor
het specifieke geval vereist indien (i) tengevolge van die
uitgifte (ii) en/of
<PAGE> 6
-6-
tengevolge van het eerder uitgeven van preferente aandelen B
door de raad van bestuur, zonder bedoelde goedkeuring, zoveel
preferente aandelen B kunnen worden genomen en/of zijn
geplaatst, dat het totale nominale bedrag van zonder bedoelde
goedkeuring van de algemene vergadering door de raad van
bestuur uitgegeven preferente aandelen meer bedraagt dan
eenhonderd procent (100%) van het totale nominale bedrag van
de geplaatste gewone aandelen en de preferente aandelen A voor
die uitgifte.
5. 3. Indien preferente aandelen B zijn geplaatst krachtens een besluit
tot uitgifte, dan wel een besluit tot het verlenen van een recht tot
het nemen van aandelen, genomen door de raad van bestuur zonder de
voorafgaande goedkeuring of andere medewerking van de algemene
vergadering, is de raad van bestuur verplicht een vergadering van
aandeelhouders bijeen te roepen binnen twee jaren na die plaatsing
en daarin een voorstel te doen omtrent inkoop casu quo intrekking
van bedoelde geplaatste preferente aandelen.
Indien in die vergadering niet het besluit wordt genomen dat strekt
tot inkoop casu quo intrekking van de preferente aandelen B is de
raad van bestuur verplicht telkens binnen twee jaar nadat
vorenbedoeld voorstel aan de orde is gesteld, wederom een algemene
vergadering bijeen te roepen, waarin een zodanig voorstel opnieuw
wordt gedaan, welke verplichting er niet meer is indien de bedoelde
aandelen niet langer door een ander dan de vennootschap worden
gehouden.
5. 4. Bij uitgifte van gewone aandelen heeft iedere houder van gewone
aandelen een recht van voorkeur naar
<PAGE> 7
-7-
evenredigheid van het gezamenlijk bedrag van zijn aandelen,
behoudens het bepaalde in de wet.
Bij uitgifte van aandelen bestaat geen voorkeursrecht op aandelen
die worden uitgegeven tegen inbreng anders dan in geld, noch op
aandelen die worden uitgegeven aan werknemers van de vennootschap of
van een groepsmaatschappij.
De houders van preferente aandelen hebben geen voorkeursrecht bij de
uitgifte van gewone aandelen.
Houders van gewone aandelen hebben geen voorkeursrecht bij uitgifte
van preferente aandelen en het prioriteitsaandeel.
De vennootschap kondigt de uitgifte met voorkeursrecht en het
tijdvak waarin dat kan worden uitgeoefend aan in de Staatscourant,
in een landelijk verspreid dagblad en in de Officiele Prijscourant.
Het voorkeursrecht kan worden beperkt of uitgesloten bij besluit van
de algemene vergadering.
In het voorstel hiertoe moeten de redenen voor het voorstel en de
keuze van de voorgenomen koers van uitgifte schriftelijk worden
toegelicht.
Het voorkeursrecht kan ook worden beperkt of uitgesloten door het
ingevolge lid 1 aangewezen vennootschapsorgaan, indien dit bij
besluit van de algemene vergadering voor een bepaalde duur van ten
hoogste vijf jaren is aangewezen als bevoegd tot het beperken of
uitsluiten van het voorkeursrecht.
De aanwijzing kan telkens voor niet langer dan vijf jaren worden
verlengd; zij houdt in ieder geval op te gelden indien de aanwijzing
van het als tot uitgifte bevoegde vennootschapsorgaan als bedoeld in
artikel 5, lid 1, niet meer van kracht is.
Tenzij bij de aanwijzing anders is bepaald, kan zij -onverminderd
het bepaalde in de vorige zin - niet
<PAGE> 8
-8-
worden ingetrokken.
Voor een besluit van de algemene vergadering tot beperking of
uitsluiting van het voorkeursrecht of tot aanwijzing is een
meerderheid van ten minste twee derden van de uitgebrachte stemmen
vereist, indien minder dan de helft van het geplaatste kapitaal in
de vergadering is vertegenwoordigd.
De vennootschap legt binnen acht dagen na het besluit een volledige
tekst daarvan neer ten kantore van het handelsregister.
Bij het verlenen van rechten tot het nemen van gewone aandelen
hebben de houders van gewone aandelen een voorkeursrecht; het
hiervoor in dit lid bepaalde is van overeenkomstige toepassing.
Aandeelhouders hebben geen voorkeursrecht op aandelen die worden
uitgegeven aan iemand die een voordien reeds verkregen recht tot het
nemen van aandelen uitoefent.
5. 5. De koers waartegen de aandelen worden uitgegeven mag niet beneden
pari zijn,
onverminderd het bepaalde in artikel 80 lid 2 Boek 2 van het
Burgerlijk Wetboek.
5. 6. Storting moet geschieden in geld voorzover niet inbreng anders dan
in geld is overeengekomen.
Storting in vreemd geld kan slechts geschieden met toestemming van
de vennootschap.
Alsdan wordt aan de stortingsplicht voldaan voor het bedrag
waartegen het gestorte bedrag vrijelijk in Nederlands geld dan wel
in euro's kan worden omgewisseld.
Bepalend is de wisselkoers op de dag van storting.
In afwijking van het in de vorige zin bepaalde kan de vennootschap
storting verlangen tegen de wisselkoers op een bepaalde dag binnen
twee maanden voor
<PAGE> 9
-9-
de laatste dag waarop moet worden gestort, mits de aandelen of
certificaten van die aandelen onverwijld na de uitgifte zullen
worden opgenomen in de prijscourant van een beurs buiten Nederland.
Eigen aandelen
Artikel 6
6. 1. De vennootschap kan bij uitgifte geen eigen aandelen nemen.
6. 2. Verkrijging door de vennootschap van niet volgestorte eigen aandelen
is nietig.
6. 3. De vennootschap mag, na daartoe verkregen goedkeuring van de raad
van commissarissen, volgestorte eigen aandelen onder bezwarende
titel verkrijgen indien
a. het eigen vermogen, verminderd met de verkrijgingsprijs, niet
kleiner is dan het gestorte en opgevraagde deel van het
kapitaal, vermeerderd met de reserves die krachtens de wet
moeten worden aangehouden;
b. het nominale bedrag van de aandelen in haar kapitaal die de
vennootschap verkrijgt, houdt of in pand houdt of die worden
gehouden door een dochtermaatschappij niet meer beloopt dan
een tiende van het geplaatste kapitaal, en
c. machtiging tot de verkrijging is verleend door de algemene
vergadering.
Verkrijging van aandelen in strijd met het in dit lid bepaalde is
nietig.
6. 4. Voor het vereiste onder a van het vorige lid is bepalend de grootte
van het eigen vermogen volgens de laatst vastgestelde balans,
verminderd met de verkrijgingsprijs voor aandelen in het kapitaal
van de vennootschap en uitkeringen uit winst of reserves aan
anderen, die zij en haar dochtermaatschappijen
<PAGE> 10
-10-
na de balansdatum verschuldigd werden.
Is een boekjaar meer dan zes maanden verstreken zonder dat de
jaarrekening is vastgesteld, dan is verkrijging overeenkomstig lid 3
niet toegestaan.
6. 5. De algemene vergadering moet in de machtiging bepalen hoeveel
aandelen mogen worden verkregen, hoe zij mogen worden verkregen en
tussen welke grenzen de prijs moet liggen.
De machtiging geldt voor ten hoogste achttien maanden.
6. 6. De vorige leden gelden niet voor aandelen die de vennootschap onder
algemene titel verkrijgt.
6. 7. Tot vervreemding van door de vennootschap gehouden eigen aandelen is
de raad van bestuur bevoegd.
6. 8. Het hiervoor in dit artikel bepaalde is van overeenkomstige
toepassing op certificaten van aandelen in het kapitaal van de
vennootschap.
Kapitaalvermindering
Artikel 7
7. 1. De algemene vergadering van aandeelhouders kan besluiten tot
vermindering van het geplaatste kapitaal door intrekking van
aandelen of door het bedrag van de aandelen bij statutenwijziging te
verminderen.
In dit besluit moeten de aandelen waarop het besluit betrekking
heeft, worden aangewezen en moet de uitvoering van het besluit zijn
geregeld.
Het gestorte en opgevraagde deel van het kapitaal mag niet kleiner
worden dan het ten tijde van het besluit ingevolge de wet
voorgeschreven minimumkapitaal.
7. 2. Een besluit tot intrekking van aandelen kan slechts betreffen
- aandelen die de vennootschap zelf houdt of waarvan zij de
certificaten houdt;
<PAGE> 11
-11-
- alle preferente aandelen van een bepaalde soort of beide
soorten met terugbetaling.
7. 3. Vermindering van het bedrag van aandelen zonder terugbetaling en
zonder ontheffing van de verplichting tot storting moet naar
evenredigheid op alle aandelen van een zelfde soort geschieden.
Van het vereiste van evenredigheid mag worden afgeweken met
instemming van alle betrokken aandeelhouders.
7. 4. Gedeeltelijke terugbetaling op aandelen of ontheffing van de
verplichting tot storting is slechts mogelijk ter uitvoering van een
besluit tot vermindering van het bedrag van de aandelen.
Zulk een terugbetaling of ontheffing moet geschieden
- hetzij naar evenredigheid op alle aandelen;
- hetzij naar evenredigheid van alleen de preferente aandelen
van een bepaalde soort of beide soorten.
Van het vereiste van evenredigheid mag worden afgeweken met
instemming van alle betrokken aandeelhouders.
7. 5. Voor een besluit tot kapitaalvermindering met betrekking tot
preferente aandelen van een bepaalde soort of beide soorten is een
voorafgaand of gelijktijdig goedkeurend besluit vereist van de
vergadering van houders van de aandelen van die soort(en).
7. 6. De oproeping tot een vergadering waarin een in dit artikel genoemd
besluit wordt genomen, vermeldt het doel van de kapitaalvermindering
en de wijze van uitvoering.
Voor een besluit tot kapitaalvermindering is een meerderheid van
tenminste twee derden van de uitgebrachte stemmen vereist, indien
minder dan de helft van het geplaatste kapitaal vertegenwoordigd is.
7. 7. De vennootschap is verplicht tot publikatie van de
<PAGE> 12
-12-
in dit artikel bedoelde besluiten overeenkomstig het in de wet
bepaalde.
Een besluit tot vermindering van het geplaatste kapitaal wordt niet
van kracht zolang door crediteuren van de vennootschap verzet kan
worden gedaan overeenkomstig het in de wet bepaalde.
Aandelen
Artikel 8
De gewone aandelen luiden ter keuze van de houder op naam of aan toonder; de
preferente aandelen en het prioriteitsaandeel kunnen slechts op naam luiden.
Aandelen aan toonder
Artikel 9
9. 1. Alle aandelen aan toonder worden belichaamd in een aandeelbewijs.
In bijzondere gevallen kan de raad van bestuur onder goedkeuring van
de raad van commissarissen en Negicef besluiten dat aandelen aan
toonder op andere wijze zullen worden belichaamd dan in het
verzamelbewijs vermeld in de vorige zin.
9. 2. Dit aandeelbewijs worden getekend op de wijze als in deze statuten
bepaald omtrent vertegenwoordiging van de vennootschap.
9. 3. De vennootschap doet het in lid 1 bedoelde aandeelbewijs voor de
rechthebbende(n) bewaren door Necigef.
9. 4. De vennootschap kent aan een rechthebbende een recht terzake van een
gewoon aandeel aan toonder toe doordat (a) Necigef de vennootschap
in staat stelt een aandeel op het aandeelbewijs bij te schrijven en
(b) de rechthebbende een aangesloten instelling aanwijst die hem
dienovereenkomstig als deelgenoot (hierna te noemen: een deelgenoot)
in haar verzameldepot crediteert.
<PAGE> 13
-13-
9. 5. Onverminderd het bepaalde in artikel 27, lid 3, van deze statuten is
het beheer over het aandeelbewijs onherroepelijk aan Necigef
opgedragen en is Necigef onherroepelijk gevolmachtigd namens de
rechthebbende(n) ter zake van desbetreffende gewone aandelen al het
nodige te doen, waaronder aanvaarden, leveren en medewerken aan
bijschrijving op en afschrijving van het aandeelbewijs.
9. 6. Als houder van aandelen zal voor de toepassing van deze statuten
eveneens gelden de als deelgenoot gerechtigde in een verzameldepot
van gewone aandelen aan toonder als bedoeld in de Wge.
De vennootschap is bevoegd ter zake van het aandeelbewijs nadere
regels vast te stellen.
Artikel 10
10. 1. Indien een deelgenoot in een depot ten name van een aangesloten
instelling uitlevering wenst van een of meer aandelen aan toonder,
zal, als een onlosmakelijk geheel, (a) Necigef bij akte het
aandeel/de aandelen aan de gerechtigde leveren, (b) de vennootschap
de levering erkennen, (c) Necigef de vennootschap in staat stellen
het aandeel/de aandelen van het aandeelbewijs af te schrijven, (d)
de desbetreffende aangesloten instelling de rechthebbende
dienovereenkomstig als deelgenoot in haar verzameldepot debiteren en
(e) de vennootschap de houder als houder van het aandeel/de aandelen
op naam in het register van aandeelhouders inschrijven.
10. 2. Een houder van een gewoon aandeel op naam kan dit te allen tijde aan
toonder doen stellen doordat (a) de rechthebbende dit aandeel bij
akte aan Necigef levert, (b) de vennootschap de levering erkent, (c)
Necigef de vennootschap in staat stelt een aandeel
<PAGE> 14
-14-
op het aandeelbewijs bij te schrijven, (d) een door de rechthebbende
aangewezen aangesloten instelling de rechthebbende
dienovereenkomstig als deelgenoot in haar verzameldepot crediteert
en (e) de vennootschap de rechthebbende als houder van het
desbetreffende aandeel uit het register schrijft.
Aandelen op naam
Artikel 11
11. 1. Voor de aandelen op naam worden geen aandeelbewijzen afgegeven.
11. 2. De raad van bestuur houdt een aandeelhoudersregister waarin ten
aanzien van houders van aandelen op naam en vruchtgebruikers en
pandhouders van zodanige aandelen, de namen en adressen alsmede de
overige door de wet voorgeschreven gegevens worden vermeld.
11. 3. Iedere houder van aandelen op naam en iedere vruchtgebruiker of
pandhouder van zodanige aandelen, is verplicht zijn adres
schriftelijk aan de vennootschap door te geven.
11. 4. Het register wordt regelmatig bijgehouden.
Alle aantekeningen in het register worden getekend op de wijze als
in deze statuten bepaald omtrent vertegenwoordiging van de
vennootschap.
11. 5. Het register ligt ten kantore van de vennootschap ter inzage van
vergadergerechtigden.
De vorige zin is niet van toepassing op het gedeelte van het
register dat buiten Nederland wordt gehouden, indien dat nodig is
ter voldoening aan aldaar geldende wetgeving of beursvoorschriften.
11. 6. De raad van bestuur verstrekt aan een houder van aandelen op naam en
aan een vruchtgebruiker en pandhouder van zodanige aandelen
kosteloos een uittreksel uit het register omtrent hun recht op een
<PAGE> 15
-15-
aandeel en de daaraan verbonden vergaderrechten.
Dit uittreksel wordt getekend op de wijze als in deze statuten
bepaald omtrent vertegenwoordiging van de vennootschap.
Vruchtgebruik en pandrecht
Artikel 12
12. 1. Op aandelen kan een recht van vruchtgebruik worden gevestigd.
12. 2. De aandeelhouder heeft het stemrecht op aandelen waarop een
vruchtgebruik is gevestigd.
In afwijking van het in de vorige zin bepaalde komt het stemrecht
verbonden aan gewone aandelen toe aan de vruchtgebruiker indien dat
bij de vestiging van het recht is bepaald.
Het stemrecht verbonden aan preferente aandelen komt slechts toe aan
de vruchtgebruiker indien dat bij de vestiging van dat recht is
bepaald en zowel deze bepaling als - bij overdracht van het
vruchtgebruik - de overgang van het stemrecht is goedgekeurd door de
raad van commissarissen.
Het stemrecht verbonden aan het prioriteitsaandeel kan niet aan de
vruchtgebruiker worden toegekend.
12. 3. De aandeelhouder die geen stemrecht heeft en de vruchtgebruiker die
stemrecht heeft, hebben de rechten die de wet toekent aan houders
van met medewerking van de vennootschap uitgegeven certificaten.
De vruchtgebruiker die geen stemrecht heeft, heeft de in de vorige
zin bedoelde rechten niet.
Artikel 13
13. 1. Aandelen, met uitzondering van het prioriteitsaandeel, kunnen worden
verpand.
13. 2. Het bepaalde in de leden 2 en 3 van artikel 12 is van
overeenkomstige toepassing op het stemrecht op
<PAGE> 16
-16-
de verpande aandelen en op vergaderrechten van de pandhouders.
Raad van bestuur
Artikel 14
14. 1. De vennootschap heeft een raad van bestuur.
14. 2. De raad van bestuur is, behoudens de beperkingen volgens deze
statuten, belast met het besturen van de vennootschap.
14. 3. De raad van bestuur is - na daartoe verkregen goedkeuring van de
raad van commissarissen - bevoegd tot het aangaan van
rechtshandelingen als bedoeld in artikel 94 lid 1 Boek 2 van het
Burgerlijk Wetboek.
Artikel 15
15. 1. De raad van bestuur bestaat uit een of meer leden.
Het aantal leden van de raad van bestuur wordt vastgesteld door de
raad van commissarissen.
15. 2. Leden van de raad van bestuur worden benoemd door de algemene
vergadering.
Indien het prioriteitsaandeel geplaatst is geschiedt die benoeming
uit een bindende voordracht van ten minste twee personen voor elke
vacature op te maken door de prioriteit.
Tot het opmaken van een bindende voordracht wordt de prioriteit door
de raad van bestuur uitgenodigd.
De bindende voordracht wordt opgemaakt binnen twee maanden, na het
verzenden van de in de vorige zin bedoelde uitnodiging.
Maakt de prioriteit geen of niet tijdig gebruik van zijn recht een
bindende voordracht op te maken, dan is de algemene vergadering van
aandeelhouders vrij in haar benoeming.
De algemene vergadering van aandeelhouders kan aan een bindende
voordracht steeds het bindende karak-
<PAGE> 17
-17-
ter ontnemen bij besluit genomen met ten minste twee derden van de
uitgebrachte stemmen, die meer dan de helft van het geplaatste
kapitaal vertegenwoordigen.
Het bepaalde in artikel 120 lid 3 van Boek 2 van het Burgerlijk
Wetboek is niet van toepassing.
15. 3. Leden van de raad van bestuur kunnen te allen tijde door de algemene
vergadering worden geschorst en ontslagen.
Een besluit tot schorsing of ontslag van leden van de raad van
bestuur kan door de algemene vergadering slechts worden genomen met
ten minste twee derden van de uitgebrachte stemmen, die meer dan de
helft van het geplaatste kapitaal vertegenwoordigen tenzij het
betreffende voorstel is gedaan door de raad van commissarissen.
Leden van de raad van bestuur kunnen bovendien door de raad van
commissarissen worden geschorst.
Een schorsing als bedoeld in de vorige zin kan door de algemene
vergadering worden opgeheven.
15. 4. Een schorsing kan een of meermalen worden verlengd, maar kan in
totaal niet langer duren dan drie maanden.
15. 5. De bezoldiging en de verdere arbeidsvoorwaarden worden voor ieder
lid van de raad van bestuur afzonderlijk bepaald door de raad van
commissarissen.
Interne organisatie raad van bestuur
Artikel 16
16. 1. De raad van bestuur kan nadere regels vaststellen omtrent haar
werkwijze en interne organisatie waaronder begrepen die omtrent het
houden van-, de oproeping tot- en de besluitvorming in zijn
vergaderingen danwel buiten vergadering alsmede omtrent
<PAGE> 18
-18-
verdeling van de taken.
De vaststelling van zodanige regels behoeft de voorafgaande
goedkeuring van de raad van commissarissen.
16. 2. De raad van bestuur is - onverminderd haar eigen
verantwoordelijkheid - bevoegd om functionarissen aan te stellen met
zodanige bevoegdheden en zodanige titulatuur als door de raad van
bestuur te bepalen.
16. 3. Onverminderd het elders in deze statuten bepaalde zijn aan de
goedkeuring van de raad van commissarissen onderworpen alle
besluiten van de raad van bestuur omtrent
zodanige rechtshandelingen als door de raad van commissarissen
duidelijk omschreven en schriftelijk ter kennis van de raad van
bestuur zijn gebracht.
Voor de toepassing van dit lid wordt met een besluit als bedoeld in
de vorige zin gelijkgesteld een besluit van de raad van bestuur tot
het nemen of goedkeuren van een besluit van enig orgaan van een
vennootschap waarin de vennootschap deelneemt, mits het besluit tot
het aangaan van zo een rechtshandeling aan de goedkeuring van de
raad van bestuur als hiervoor bedoeld in dit lid is onderworpen.
Ontstentenis of belet
Artikel 17
17. 1. Ingeval van ontstentenis of belet van een of meer leden van de raad
van bestuur berust het bestuur van de vennootschap tijdelijk bij de
overige leden van de raad van bestuur.
17. 2. Ingeval van ontstentenis of belet van alle leden van de raad van
bestuur, berust het bestuur van de vennootschap tijdelijk bij een
door de raad van
<PAGE> 19
-19-
commissarissen daartoe -al dan niet uit zijn midden - aan te wijzen
persoon.
Vertegenwoordiging
Artikel 18
18. 1. De raad van bestuur vertegenwoordigt de vennootschap voor zover uit
de wet niet anders voortvloeit.
De bevoegdheid tot vertegenwoordiging komt mede toe aan twee
gezamenlijk handelende personen en wel
- hetzij twee leden van de raad van bestuur;
- hetzij een lid van de raad van bestuur tezamen met een
procuratiehouder;
- hetzij twee gezamenlijk handelende procuratiehouders,
voor wat betreft die procuratiehouders, mits handelende binnen de
grenzen van de verleende bevoegdheid.
18. 2. Ingeval van tegenstrijdig belang tussen de vennootschap en een of
meer leden van de raad van bestuur wordt de vennootschap
vertegenwoordigd op de wijze als bepaald in lid 1.
In alle gevallen waarin de vennootschap een tegenstrijdig belang
heeft met een lid van de raad van bestuur in prive behoeft het
besluit tot het aangaan van de betreffende rechtshandeling de
voorafgaande goedkeuring van de raad van commissarissen.
Het ontbreken van de goedkeuring als bedoeld in de vorige zin tast
de vertegenwoordigingsbevoegdheid van de raad van bestuur of de
leden van de raad van bestuur niet aan.
Raad van commissarissen
Artikel 19
19. 1. De vennootschap heeft een raad van commissarissen.
19. 2. De raad van commissarissen is belast met het toe-
<PAGE> 20
-20-
zicht op het beleid van de raad van bestuur en op de algemene gang
van zaken van de vennootschap en de met haar verbonden onderneming.
De raad van commissarissen staat de raad van bestuur met raad
terzijde.
Hij is verder belast met hetgeen hem overigens bij de wet en deze
statuten is opgedragen.
Bij de vervulling van hun taak richten de commissarissen zich op de
belangen van de vennootschap en de met haar verbonden onderneming.
19. 3. De raad van bestuur verschaft de raad van commissarissen tijdig de
voor de juiste uitoefening van zijn taak noodzakelijke gegevens.
19. 4. De raad van commissarissen kan voor de juiste uitoefening van zijn
taak op kosten van de vennootschap adviezen inwinnen.
Artikel 20
20. 1. De raad van commissarissen bestaat uit drie of meer natuurlijke
personen.
Het aantal commissarissen wordt met in achtneming van het in de
vorige zin bepaalde vastgesteld door de algemene vergadering.
20. 2. Indien te eniger tijd minder dan drie leden van de raad van
commissarissen in functie zijn, vormen de overblijvende leden van
die raad casu quo vormt het overgebleven lid een bevoegd college,
onverminderd de verplichting van de raad om zo spoedig mogelijk in
de vacatures te doen voorzien.
20. 3. De commissarissen genieten een bezoldiging.
Deze bezoldiging wordt door de algemene vergadering vastgesteld.
Artikel 21.
21. 1. De commissarissen worden benoemd door de algemene vergadering.
<PAGE> 21
-21-
Indien het prioriteitsaandeel geplaatst is geschiedt die benoeming
uit een bindende voordracht van ten minste twee personen voor elke
vacature op te maken door de prioriteit.
Tot het opmaken van een bindende voordracht wordt de prioriteit door
de raad van bestuur uitgenodigd.
De bindende voordracht wordt opgemaakt binnen twee maanden, na het
verzenden van de in de vorige zin bedoelde uitnodiging.
Maakt de prioriteit geen of niet tijdig gebruik van zijn recht een
bindende voordracht op te maken, dan is de algemene vergadering van
aandeelhouders vrij in haar benoeming.
De algemene vergadering van aandeelhouders kan aan een bindende
voordracht steeds het bindende karakter ontnemen bij besluit genomen
met ten minste twee derden van de uitgebrachte stemmen, die meer dan
de helft van het geplaatste kapitaal vertegenwoordigen.
Het bepaalde in artikel 120 lid 3 van Boek 2 van het Burgerlijk
Wetboek is niet van toepassing.
21. 2. Degene die de leeftijd van tweeenzeventig jaren heeft bereikt kan
niet tot commissaris worden benoemd.
21. 3. Commissarissen kunnen te allen tijde door de algemene vergadering
worden geschorst en ontslagen.
Artikel 22.
22. 1. Een commissaris treedt uiterlijk af na afloop van de algemene
vergadering van aandeelhouders waarin de jaarrekening wordt
behandeld in het boekjaar waarin hij de leeftijd van tweeenzeventig
jaren bereikt.
22. 2. Elke commissaris treedt voorts af volgens een door de raad van
commissarissen vast te stellen rooster.
<PAGE> 22
-22-
Aftredende commissarissen zijn terstond herbenoembaar, onverminderd
het bepaalde in de wet omtrent de leeftijdsgrens.
Interne organisatie raad van commissarissen
Artikel 23
23. 1. De raad van commissarissen benoemt uit zijn midden een voorzitter en
een plaatsvervangend voorzitter.
23. 2. De raad van commissarissen kan nadere regels vaststellen omtrent
zijn interne organisatie waaronder begrepen die omtrent het houden
van-, de oproeping tot- en de besluitvorming in zijn vergaderingen
danwel buiten vergadering alsmede omtrent verdeling van de taken.
23. 3. De raad van commissarissen heeft te allen tijde recht van toegang
tot alle bedrijfsruimten van de vennootschap en is zijn bevoegd
inzage te nemen in alle correspondentie, boeken, bescheiden en
andere gegevensdragers en de kas en andere vermogenswaarden van de
vennootschap te controleren.
23. 4. Indien moet blijken van een besluit van de raad van commissarissen
is een daartoe strekkende schriftelijke mededeling van de
(fungerend) voorzitter van die raad voldoende.
Algemene vergadering en vergaderingen van aandeelhouders
Artikel 24
Aan de algemene vergadering behoren, binnen de door de wet en deze statuten
gestelde grenzen, alle bevoegdheden die niet aan anderen zijn toegekend.
Artikel 25
25. 1. De jaarvergadering wordt gehouden binnen zes maanden na afloop van
elk boekjaar.
25. 2. In die vergadering wordt - tenzij de termijn als bedoeld in artikel
31 lid 2 van deze statuten overeenkomstig het aldaar bepaalde is
verlengd -
<PAGE> 23
-23-
onder meer aan de orde gesteld
- het jaarverslag;
- de jaarrekening en de bestemming van de winst, en
- decharge van de raad van bestuur en de raad van
commissarissen.
Indien de termijn bedoeld in artikel 31 lid 2 is verlengd, worden de
in de vorige zin genoemde onderwerpen aan de orde gesteld in een
vergadering van aandeelhouders te houden uiterlijk een maand na het
verstrijken van die termijn.
25. 3. Onverminderd het bepaalde in artikel 108a Boek 2 van het Burgerlijk
Wetboek worden buitengewone vergaderingen van aandeelhouders
gehouden zo dikwijls de raad van bestuur of de raad van
commissarissen zulks nodig acht.
Voorts worden buitengewone vergaderingen van aandeelhouders gehouden
zo dikwijls de vergadergerechtigden, die ten minste een tiende
gedeelte van het geplaatste kapitaal vertegenwoordigen, zulks
schriftelijk met nauwkeurige opgave van de te behandelen onderwerpen
aan de raad van bestuur en/of de raad van commissarissen verzoeken.
Artikel 26
26. 1. De oproeping tot de vergaderingen van aandeelhouders geschiedt door
de raad van bestuur of de raad van commissarissen en wel niet later
dan op de vijftiende dag voor die van de vergadering.
26. 2. De oproeping geschiedt door aankondiging in een landelijk verspreid
dagblad in Nederland alsmede in zodanige bladen in het buitenland
als door de raad van bestuur te bepalen.
26. 3. Bij de oproeping worden de te behandelen punten vermeld of wordt
meegedeeld dat vergadergerechtigden er ten kantore van de
vennootschap, alsmede op
<PAGE> 24
-24-
zodanige plaatsen waaronder een bankinstelling te Amsterdam die is
geregistreerd ingevolge de Wet toezicht kredietwezen en eventueel
elders als in de oproeping bepaald, kennis van kunnen nemen en
kosteloos afschriften van kunnen verkrijgen.
26. 4. De oproeping vermeldt tevens de plaats(en) waar en de datum waarop
uiterlijk door diegenen die hun vergaderrecht ontlenen aan aandelen
aan toonder bewijsstukken van hun recht moeten worden gedeponeerd
tegen een ontvangstbewijs dat als toegangsbewijs voor de vergadering
kan dienen.
De datum bedoeld in de vorige zin kan niet vroeger worden gesteld
dan op de zevende dag voor die van de vergadering.
Als toegangsbewijs als bedoeld in de voorlaatste zin kan tevens
dienen een verklaring van een aangesloten instelling of een andere
door de raad van bestuur aan te wijzen buitenlandse bankinstelling
die is onderworpen aan bedrijfseconomisch toezicht van
overheidswege, dat de in die verklaring genoemde hoeveelheid
aandelen aldaar ten name van de in die verklaring genoemde persoon
in (haar verzamel-)depot berust en tot en met de dag van de
vergadering aldus in depot zal blijven.
De oproeping vermeldt tevens dat met betrekking tot aandelen op naam
in de vergadering slechts rechten kunnen worden uitgeoefend indien
de betreffende vergadergerechtigden uiterlijk op de dag voor die van
de vergadering schriftelijk aan de raad van bestuur hebben
meegedeeld dat zij voornemens zijn de vergadering bij te (doen)
wonen.
Artikel 27
27. 1. De vergaderingen van aandeelhouders worden gehouden
<PAGE> 25
-25-
te Amsterdam.
27. 2. Als voorzitter van de vergaderingen van aandeelhouders fungeert de
voorzitter van de raad van commissarissen en bij diens afwezigheid
de plaatsvervangend voorzitter van de raad van commissarissen en
indien ook deze afwezig is door een door de ter vergadering
aanwezige commissarissen aan te wijzen commissaris.
Indien als voormeld niet in de leiding van de vergadering wordt
voorzien, wijst de vergadering zelf een voorzitter aan.
27. 3. Toegang tot de vergaderingen van aandeelhouders hebben alle
vergadergerechtigden die voorzien zijn van een toegangsbewijs of die
hun voornemen om aanwezig te zijn hebben aangekondigd, een en ander
zoals hiervoor bepaald in artikel 26 lid 3, alsmede de leden van de
raad van bestuur en de commissarissen.
Omtrent toelating van anderen beslist de voorzitter van de
vergadering.
27. 4. Vergadergerechtigden kunnen zich ter vergadering doen
vertegenwoordigen door een schriftelijk gevolmachtigde.
27. 5. Van het verhandelde in vergaderingen van aandeelhouders worden door
een door de voorzitter van de vergadering aangewezen secretaris
notulen gehouden, die ter vaststelling door de voorzitter en
secretaris worden getekend.
In afwijking van het in de eerste zin van dit lid bepaalde kunnen de
voorzitter van de vergadering en/of de raad van bestuur besluiten
tot het doen opmaken van een notarieel proces-verbaal.
De hiervoor in dit lid genoemde stukken liggen ten kantore van de
vennootschap ter inzage van verga-
<PAGE> 26
-26-
dergerechtigden.
Aan ieder van dezen wordt desgevraagd afschriften of uittreksels van
die stukken verstrekt tegen ten hoogste de kostprijs.
Artikel 28
28. 1. Ieder aandeel geeft recht op het uitbrengen van een stem.
Voor een aandeel dat toebehoort aan de vennootschap of aan een
dochtermaatschappij daarvan kan in de algemene vergadering van
aandeelhouders geen stem worden uitgebracht; evenmin voor een
aandeel waarvan een hunner de certificaten houdt.
Vruchtgebruikers en pandhouders van aandelen die aan de vennootschap
en haar dochtermaatschappijen toebehoren zijn evenwel niet van hun
stemrecht uitgesloten, indien het vruchtgebruik of pandrecht was
gevestigd voordat het aandeel aan de vennootschap of een
dochtermaatschappij daarvan toebehoorde.
De vennootschap of een dochtermaatschappij daarvan kan geen stem
uitbrengen voor een aandeel waarop zij een recht van vruchtgebruik
of een pandrecht heeft.
Bij de vaststelling in hoeverre de aandeelhouders stemmen, aanwezig
of vertegenwoordigd zijn, of in hoeverre het aandelenkapitaal
verschaft wordt of vertegenwoordigd is, wordt geen rekening gehouden
met aandelen waarvan de wet bepaalt dat daarvoor geen stem kan
worden uitgebracht.
Leden van de raad van bestuur en commissarissen hebben als zodanig
een raadgevende stem.
28. 2. Alle stemmingen geschieden mondeling, tenzij de voorzitter van de
vergadering besluit dat schriftelijk wordt gestemd.
<PAGE> 27
-27-
28. 3. De voorzitter van de vergadering kan besluiten dat bij acclamatie
wordt gestemd, tenzij een van de stemgerechtigden daartegen bezwaar
maakt.
28. 4. Blanco stemmen en ongeldig uitgebrachte stemmen gelden als niet
uitgebracht.
28. 5. Alle besluiten worden genomen met volstrekte meerderheid van de
uitgebrachte stemmen voor zover de wet of deze statuten geen grotere
meerderheid voorschrijven.
28. 6. Het ter vergadering uitgesproken oordeel van de voorzitter omtrent
de uitslag van een stemming, is beslissend.
Hetzelfde geldt voor de inhoud van een genomen besluit, voorzover
gestemd werd over een niet schriftelijk vastgelegd voorstel.
28. 7. Wordt echter onmiddellijk na het uitspreken van het in het
voorgaande lid bedoelde oordeel de juistheid daarvan betwist, dan
vindt een nieuwe stemming plaats, wanneer de meerderheid van de
algemene vergadering of indien de oorspronkelijke stemming niet
hoofdelijk of schriftelijk geschiedde, een stemgerechtigde dit
verlangt.
Door deze nieuwe stemming vervallen de rechtsgevolgen van de
oorspronkelijke stemming.
Vergaderingen van houders van aandelen van een bepaalde soort
Artikel 29
29. 1. Op vergaderingen van houders van aandelen van een bepaalde soort is
het hiervoor omtrent vergadering van aandeelhouders zoveel mogelijk
van toepassing.
29. 2. In afwijking van het in het vorige lid bepaalde is de
oproepingstermijn voor de vergadering van de houders van preferente
aandelen van een bepaalde soort tenminste zeven werkdagen en
behoeven houders
<PAGE> 28
-28-
van die aandelen hun komst niet aan te kondigen.
Voorts kan besluitvorming van houders van preferente aandelen van
een bepaalde soort ook op andere wijze dan in een vergadering van
aandeelhouders plaatsvinden, mits de stemrechtigde aandeelhouders
zich schriftelijk (waaronder begrepen alle vormen van
tekstoverdracht) met algemene stemmen voor het voorstel hebben
verklaard.
Het in de vorige zin bepaalde is niet van toepassing indien naast
houders van aandelen van de betreffende soort nog andere personen
zijn die aan die aandelen vergaderrechten ontlenen.
Oproepingen en kennisgevingen
Artikel 30
30. 1. Alle oproepingen en kennisgevingen vanwege de vennootschap bestemd
voor vergadergerechtigden geschieden voor wat betreft aandelen op
naam per brief gericht aan de adressen zoals opgenomen in het
aandeelhoudersregister en overigens per advertentie in ten minste
een landelijk dagblad alsmede in de Officiele Prijscourant.
30. 2. Deponering van stukken ter inzage van vergadergerechtigden geschiedt
ten kantore van de vennootschap alsmede op zodanige plaatsen
waaronder een bankinstelling te Amsterdam als in een oproeping of
kennisgeving te vermelden.
30. 3. Mededelingen welke krachtens de wet of deze statuten aan de algemene
vergadering moeten worden gericht kunnen geschieden door opneming
hetzij in de oproeping, hetzij in het stuk dat ter kennisneming ten
kantore van de vennootschap is neergelegd, mits daarvan in de
oproeping melding wordt gemaakt.
Boekjaar; jaarrekening; jaarverslag
<PAGE> 29
-29-
Artikel 31
31. 1. Het boekjaar is gelijk aan het kalenderjaar.
31. 2. Binnen vijf maanden na afloop van het boekjaar, behoudens verlenging
van deze termijn door de algemene vergadering met ten hoogste zes
maanden op grond van bijzondere omstandigheden, maakt de raad van
bestuur een jaarrekening en een jaarverslag op.
De opgemaakte jaarrekening wordt overgelegd aan de raad van
commissarissen die daarover een pre-advies uitbrengt aan de algemene
vergadering.
De jaarrekening wordt ondertekend door alle leden van de raad van
bestuur en alle commissarissen.
Ontbreken een of meer handtekeningen dan dient de reden daarvan te
worden vermeld.
31. 3. De raad van commissarissen brengt omtrent de jaarrekening pre-advies
uit aan de algemene vergadering.
31. 4. De vennootschap geeft aan een door de algemene vergadering aan te
wijzen accountant opdracht om de door de raad van bestuur opgemaakte
jaarrekening en jaarverslag te onderzoeken en daarover verslag uit
te brengen aan de raad van bestuur en de raad van commissarissen en
om een verklaring af te leggen, een en ander als bedoeld in artikel
393 lid 1 van Boek 2 van het Burgerlijk Wetboek.
Gaat de algemene vergadering niet over tot benoeming als voormeld
dan is de raad van commissarissen bevoegd of, zo deze in gebreke
blijft, de raad van bestuur.
Artikel 32
32. 1. De vennootschap zorgt er voor dat de jaarrekening, het jaarverslag
en daaraan ingevolge de wet toe te voegen gegevens en het
prae-advies van de raad van commissarissen vanaf de oproeping tot de
jaarverga-
<PAGE> 30
-30-
dering tot na afloop van die vergadering ten kantore van de
vennootschap alsmede bij een in de oproeping te vermelden
bankinstelling te Amsterdam ter inzage liggen van
vergadergerechtigden.
De vennootschap stelt een afschrift van de in de vorige zin bedoelde
stukken kosteloos ter beschikking van vergadergerechtigden.
Indien deze stukken worden gewijzigd geldt het in de vorige zin
bepaalde mede ten aanzien van de gewijzigde stukken.
32. 2. De jaarrekening wordt vastgesteld door de algemene vergadering.
32. 3. Indien de raad van bestuur wordt gedechargeerd voor het door haar in
enig boekjaar gevoerd bestuur en de raad van commissarissen voor het
door hem gehouden toezicht, dan beperkt die decharge zich tot
hetgeen uit de jaarrekening blijkt of aan de algemene vergadering
bekend is gemaakt, onverminderd hetgeen in de wet is bepaald.
Openbaarmaking
Artikel 33
33. 1. De jaarrekening, het jaarverslag en de daaraan ingevolge de wet toe
te voegen gegevens worden binnen acht dagen na de vaststelling van
de jaarrekening openbaar gemaakt.
De openbaarmaking geschiedt door nederlegging van een volledig in de
Nederlandse taal gesteld exemplaar of, als dat niet is vervaardigd,
een exemplaar in het Frans, Duits of Engels, ten kantore van het
handelsregister te Amsterdam.
Op het exemplaar moet de dag van vaststelling zijn aangetekend.
Is de jaarrekening niet binnen zeven maanden na afloop van het
boekjaar overeenkomstig de wette-
<PAGE> 31
-31-
lijke voorschriften vastgesteld, dan maakt de directie onverwijld de
opgemaakte jaarrekening op de in lid 1 voorgeschreven wijze
openbaar; op de jaarrekening wordt vermeld dat zij nog niet is
vastgesteld.
Heeft de algemene vergadering overeenkomstig artikel 31, lid 2 de
termijn voor het opmaken van de jaarrekening verlengd, dan geldt de
vorige zin met ingang van twee maanden na afloop van die termijn.
Gelijktijdig met en op dezelfde wijze als de jaarrekening wordt een
in de zelfde taal gesteld exemplaar van het jaarverslag en van de
overige in artikel 392 van Boek 2 van het Burgerlijk Wetboek
bedoelde gegevens openbaar gemaakt.
Het voorafgaande geldt, behalve voor de in artikel 392, lid 1 onder
a, c, f en g van Boek 2 van het Burgerlijk Wetboek genoemde
gegevens, niet, indien de stukken ten kantore van de vennootschap
ter inzage van een ieder worden gehouden en op verzoek een volledig
of gedeeltelijk afschrift daarvan ten hoogste tegen de kostprijs
wordt verstrekt; hiervan doet de vennootschap opgaaf ter
inschrijving in het handelsregister.
Indien op grond van de omvang van het bedrijf van de vennootschap de
vrijstelling van artikel 396, leden 3 tot en met 8 van Boek 2 van
het Burgerlijk Wetboek of van artikel 397, leden 3 tot en met 6 van
Boek 2 van het Burgerlijk Wetboek voor de vennootschap geldt,
geschiedt openbaarmaking met inachtneming van de toepasselijke
vrijstellingen.
33. 2. Een besluit tot uitkering op aandelen en besluiten tot tussentijdse
uitkering alsmede de (wijze van) betaalbaarstelling van uitkeringen
en de samenstel-
<PAGE> 32
-32-
ling van de uitkeringen worden onverwijld openbaar gemaakt.
Reserves, reserveringen en uitkeringen
Artikel 34
34. 1. Ten behoeve van zowel de gewone aandelen als de preferente aandelen
A worden in de boeken van de vennootschap afzonderlijke agioreserves
gevormd.
34. 2. Ten laste van de in het vorige lid bedoelde reserves kunnen slechts
uitkeringen worden gedaan op respectievelijk afboekingen of
afschrijvingen gedaan ten laste van aandelen van de betreffende
soort.
Tot onttrekking aan de agioreserve behorende bij de preferente
aandelen kan worden besloten door de raad van bestuur onder
voorafgaande goedkeuring van de vergadering van houders van die
aandelen.
Artikel 35
35. 1. De vennootschap kan aan de aandeelhouders slechts uitkeringen doen
voor zover het eigen vermogen van de vennootschap groter is dan het
bedrag van het gestorte kapitaal van de vennootschap, vermeerderd
met de reserves die krachtens de wet moeten worden aangehouden.
35. 2. Uit de winst - het positieve saldo van de winst- en verliesrekening
- wordt allereerst, zo mogelijk, op de preferente aandelen B een
dividend uitgekeerd waarvan het percentage gelijk is aan het
gemiddelde van de depositorente van de Europese Centrale Bank,
verhoogd met een op- of afslag, gewogen naar het aantal dagen
waarover de uitkering geschiedt.
De op- en afslag zal maximaal drie procent (3%) bedragen en wordt
vastgesteld door de raad van bestuur onder goedkeuring van de raad
van commissarissen ten tijde van de eerste uitgifte van een
<PAGE> 33
-33-
preferent aandeel B.
Het dividend wordt berekend over het gestorte deel van het nominaal
bedrag.
Indien de winst behaald in enig boekjaar de in de vorige volzin
bedoelde uitkering niet (volledig) toelaat, wordt aan de houders van
preferente aandelen B het tekort uitgekeerd ten laste van de winst
van een of meer van de opvolgende boekjaren.
Uit de resterende winst wordt op de preferente aandelen A een
dividend uitgekeerd waarvan het bedrag dan wel de wijze van
berekening wordt vastgesteld door het tot uitgifte bevoegde orgaan
bij de eerste uitgifte van preferente aandelen A.
Uit de resterende winst wordt, zo mogelijk, op het
prioriteitsaandeel een dividend uitgekeerd ter grootte van twintig
procent (20%) van het nominaal bedrag van dit aandeel.
Vervolgens wordt door de raad van bestuur onder goedkeuring van de
raad van commissarissen vastgesteld welk deel van de na toepassing
van het hiervoor in dit lid bepaalde overblijvende winst wordt
gereserveerd.
35. 3. De na toepassing van het hiervoor in dit lid bepaalde resterende
winst staat ter beschikking van de algemene vergadering, met dien
verstande dat die alsdan resterende winst alleen aan houders van
gewone aandelen ten goede komt.
35. 4. Aan de uitkeerbare reserves kunnen onttrekkingen worden gedaan
krachtens besluit van de algemene vergadering.
Het in de vorige zin bepaalde is niet van toepassing op de
agioreserve behorende bij de preferente aandelen.
35. 5. De vennootschap mag tussentijds slechts uitkeringen
<PAGE> 34
-34-
doen, indien blijkens een tussentijdse vermogensopstelling als
bedoeld in artikel 105 lid 4 Boek 2 van het Burgerlijk Wetboek aan
het vereiste van lid 1 van dit artikel is voldaan en mits na
voorafgaande goedkeuring van de raad van commissarissen.
Uitkeringen op gewone aandelen bedoeld in dit lid kunnen betaalbaar
worden gesteld in aandelen of verhandelbare rechten daarop.
35. 6. Onverminderd het hiervoor bepaalde kan de algemene vergadering
besluiten om uitkeringen op gewone aandelen (al dan niet ter keuze
van aandeelhouders) in plaats van in geld, geheel of gedeeltelijk
(al dan niet ter keuze van aandeelhouders) betaalbaar te stellen in
gewone aandelen (desverlangd en indien mogelijk ten laste van de
agioreserve) of verhandelbare rechten daarop.
Een besluit als bedoeld in de vorige zin kan slechts worden genomen
op voorstel van de raad van bestuur dat is goedgekeurd door de raad
van commissarissen.
35. 7. Op door de vennootschap verkregen aandelen in haar kapitaal en op
aandelen waarvan de vennootschap certificaten houdt vindt geen
uitkering ten behoeve van de vennootschap plaats.
35. 8. Bij de berekening van de winstverdeling tellen de aandelen, waarop
ingevolge het in lid 6 bepaalde geen uitkering ten behoeve van de
vennootschap plaatsvindt, niet mee.
35. 9. Uitkeringen waartoe is besloten, zijn betaalbaar binnen twee weken
na vaststelling van de jaarrekening waaruit blijkt dat deze
geoorloofd is worden uiterlijk na veertien dagen betaalbaar gesteld.
De vordering tot uitkering vervalt door een tijdsverloop van vijf
jaren te rekenen vanaf de dag van
<PAGE> 35
-35-
betaalbaarstelling.
Statutenwijziging, Ontbinding, Juridische Fusie en Splitsing
Artikel 36
36. 1. De algemene vergadering kan besluiten tot statutenwijziging,
ontbinding, juridische fusie en splitsing.
Indien het prioriteitsaandeel geplaatst is kan een besluit bedoeld
in de vorige zin slechts worden genomen op voorstel van de
prioriteit.
Een besluit tot wijziging van een bepaling in de statuten waarbij
aan houders van de preferente aandelen of het prioriteitsaandeel
enig recht is toegekend of tot een wijziging waarbij aan zodanig
recht afbreuk wordt gedaan, is slechts geldig na voorafgaande
goedkeuring van de vergadering van houders van die aandelen.
36. 2. Wanneer aan de algemene vergadering een voorstel als in de vorige
zin bedoeld zal worden gedaan, moet dat steeds bij de oproeping tot
de betreffende vergadering worden vermeld.
36. 3. Gelijktijdig met de oproeping tot de vergadering waarin wijziging
van de statuten aan de orde wordt gesteld, wordt een afschrift van
het voorstel waarin de voorgestelde wijziging woordelijk is
opgenomen ter inzage gelegd van vergadergerechtigden, tot de afloop
van die vergadering.
Vergadergerechtigden kunnen kosteloos een afschrift van voormeld
voorstel verkrijgen.
Artikel 37
37. 1. Ingeval tot ontbinding is besloten geschiedt de vereffening door de
raad van bestuur, tenzij de algemene vergadering andere vereffenaars
benoemt, onder toezicht van de raad van commissarissen.
<PAGE> 36
-36-
De algemene vergadering stelt de beloning voor de vereffenaars vast.
37. 2. Tijdens de vereffening blijven deze statuten zoveel mogelijk van
kracht.
37. 3. Van hetgeen na voldoening van alle schulden, waaronder die met
betrekking tot de vereffening, van het vermogen van de vennootschap
resteert, wordt allereerst - in na te melden volgorde - aan de
houders van de preferente aandelen B en A en aan de houder van het
prioriteitsaandeel uitgekeerd het op die aandelen gestorte bedrag
(waaronder begrepen de eventueel gestorte agio) vermeerderd met -
naar tijdsgelang over het lopende boekjaar en voor wat betreft de
preferente aandelen B eventueel over vorige boekjaren, het dividend
als bepaald in artikel 35 lid 2 -.
Hetgeen daarna resteert wordt aan houders van gewone aandelen en
andere gerechtigden tot die aandelen uitgekeerd in verhouding tot
ieders recht.
37. 4. Nadat de vennootschap heeft opgehouden te bestaan blijven de boeken,
bescheiden en andere gegevensdragers gedurende de door de wet
voorgeschreven periode berusten onder degene die daartoe door de
vereffenaars wordt aangewezen.
Slotbepaling
Tot de dag dat sinds de totstandkoming van de onderhavige statutenwijziging vijf
jaren zijn verstreken is de raad van bestuur onder voorafgaande goedkeuring van
de raad van commissarissen bevoegd tot uitgifte van zowel gewone als preferente
aandelen A en B, tot maximaal het aantal als vermeld in artikel 4 lid 1 van de
statuten,
alsmede tot het bij uitgifte van gewone aandelen uitsluiten of beperken van het
aan houders van gewone aandelen toekomende voorkeursrecht.
<PAGE> 37
-37-
Slotverklaringen
Tenslotte verklaarde de comparant
1. Per de totstandkoming van de onderhavige statutenwijziging is elk
van de (voorheen) geplaatste aandelen A omgezet in een gewoon
aandeel zodat het geplaatste kapitaal thans bedraagt een miljoen
negenhonderd tweeenveertigduizend zevenhonderd veertig gulden
vijfentwintig cent ((Function) 1.942.740,25) verdeeld in
achtendertig miljoen achthonderd vierenvijftigduizend achthonderd
tien (38.854.810) gewone aandelen.
./. 2. De Minister van Justitie heeft blijkens de aan deze akte te hechten
verklaring op
onder nummer N.V. 538.638, medegedeeld dat hem ten aanzien van de
onderhavige statutenwijziging van bezwaren niet is gebleken.
<PAGE> 38
- 1 -
TRANSLATION
DEFINITIONS
ARTICLE 1
In the present articles of association the following shall be understood to
mean:
1. 1. company:
the company to which the present articles of association will apply;
1. 2. general meeting:
the body formed by shareholders holding voting rights and other persons
holding voting rights;
1. 3. meeting of shareholders:
the meeting of the general meeting and other parties entitled to attend
meetings;
1. 4. parties entitled to attend meetings:
- shareholders with voting rights;
- shareholders without voting rights;
- usufructuaries and pledgees with voting rights;
- other (holders of rights granted by law to) holders of depository
receipts of its shares issued with the co-operation of the company;
1. 5. Official Price List:
the Official Price List of Amsterdam Exchanges N.V. or an official
publication taking its place;
1. 6. accountant:
an accountant as referred to in article 393, Volume 2 of the Civil Code
or an organisation in which such accountants are associated;
1. 7. annual meeting:
the meeting of shareholders destined for the consideration of the
annual account and the annual report;
1. 8. annual account:
<PAGE> 39
- 2 -
the balance sheet and the profit and loss account with explanatory
memorandum;
1. 9. annual report:
report of the position of the company as at the last day of the
financial year and the course of affairs during the financial year.
1. 10. subsidiary:
- a legal entity in which the company or one or several of its
subsidiaries, whether or not by virtue of an agreement with other
parties entitled to vote, alone or jointly may exercise more than
fifty per cent of the voting rights in the general meeting;
- a legal entity of which the company or one or several of its
subsidiaries is/are a member/members or shareholder(s) and, whether
or not by virtue of an agreement with other parties entitled to
vote, alone or jointly may appoint or dismiss more than fifty per
cent of the managing directors or of the supervisory directors,
also in case all parties entitled to vote will be voting.
A subsidiary will be equated with a company acting under its own
name in which the company or one or several subsidiaries as a
partner will be fully liable for the debts towards creditors.
The provisions laid down hereinbefore will apply without prejudice
to the provisions in article 24a paragraphs 3-4, Volume 2 of the
Civil Code;
1. 11. group company:
a legal entity or company with which the company is associated in a
group;
1. 12. the priority:
the holder of the sole priority share;
1. 13. Wge:
the Act on securities transfer by giro;
1. 14. Necigef:
the central institute in the sense of the Wge;
1. 15. associated institution:
<PAGE> 40
- 3 -
an associated institution in the sense of the Wge.
NAME, REGISTERED OFFICE
ARTICLE 2
2. 1. The company bears the name: Versatel Telecom International N.V.
2. 2. It has its registered office in Amsterdam.
OBJECT
ARTICLE 3 The object of the company is:
a. to provide telecommunication services;
b. to incorporate, to participate in, to manage and to be financially involved
in any other way in other companies and enterprises;
c. to provide administrative, technical, financial, economic and management
services to other companies, persons and enterprises;
d. to acquire, to dispose of, to manage and to exploit movable and immovable
properties and other properties, including but not limited to patents,
trade marks, licenses, permits and other industrial ownership rights;
e. to borrow or to lend money, to grant security-rights, to warrant
performances by third parties or to undertake joint and several liability
for third parties, all such acts as mentioned above, whether or not
performed in co-operation with third parties and including the performance
and promotion of all such acts connected therewith, whether directly or
indirectly, and all in the widest sense of the word.
CAPITAL
ARTICLE 4
4. 1. The authorized capital of the company amounts to nine million Dutch
Guilders five Dutchcent (NLG 9,000,000.05) and is divided into
- eighty million (80,000,000) ordinary shares;
- twenty million (20,000,000) preference shares A,
- eighty million (80,000,000) preference shares B, and
- one (1) priority share,
each share to a nominal amount of five Dutchcent (NLG 0.05).
<PAGE> 41
- 4 -
4. 2. Whenever in the present articles of association reference is made to
"shares" or "shareholders", these terms will be understood to mean
shares of whatever category respectively holders of shares of whatever
category, unless the contrary will have been explicitly stated or will
clearly be evident from the context.
ISSUE OF SHARES
ARTICLE 5
5. 1. Shares may only be issued by virtue of a resolution of the general
meeting, which resolution will also include the price and the further
conditions of the issue.
The general meeting may transfer its competence as referred to in the
preceding sentence to an other company body for a specified period not
exceeding five years.
The number of shares that may be issued will be fixed in said
designation.
The designation may each time be extended for a maximum period of five
years.
Unless laid down otherwise in said designation, it cannot be withdrawn.
The validity of the resolution of the general meeting for the issue of
shares or for designation will require a prior or simultaneous
resolution of approval of each group of holders of shares of a similar
category whose rights will be prejudiced by the issue.
Within eight days after a resolution of the general meeting for the
issue of shares or for designation, the company will deposit a full
text of said resolution at the office of the Trade Register with
additional statement of the number and category.
Within eight days after each issue of shares, the company will deposit
a relative statement at the office of the Trade Register with
additional statement of the number and category.
The present paragraph will be correspondingly applicable to the
granting of rights to take shares but will not be applicable to the
issue of shares to a party
<PAGE> 42
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exercising an already previously acquired right to take shares.
5. 2. If and insofar as the board of management has been designated as
being competent to resolve to issue shares, in case of preference
shares B being issued, which will be understood to include the granting
of a right to subscribe for preference shares B:
a. the board of management shall, within four weeks after such issue,
convene a general meeting in which the motives for the issue will
be elucidated, unless such an elucidation has previously been given
in a general meeting;
b. the previous approval of the general meeting is required for the
specific case if (i) in consequence of such issue (ii) and/or in
consequence of the earlier issue of preference shares B by the
board of management, without the approval referred to, so many
preference shares B can be taken and/or have been issued that the
total nominal amount of the preference shares, issued by the board
of management without the said approval of the general meeting,
exceeds one hundred per cent (100%) of the total nominal amount of
the issued ordinary shares and the preference shares A prior to
said issue.
5. 3. In case preference shares A have been issued by virtue of a resolution
to issue shares or a resolution to grant a right to subscribe for
shares, passed by the board of management without the previous approval
or other collaboration of the general meeting, the board of management
shall convene a meeting of shareholders within two years after such
issue and make a proposal in said meeting as regards purchase by the
company or (as the case may be) withdrawal of such preference shares
issued.
In case in said meeting no resolution will be passed to the effect that
the preference shares B will be purchased by the company or (as the
case may be) will be withdrawn, the board of management shall, every
time within two years after the proposal referred to above has been
brought up for consideration, convene a general meeting again in which
such a proposal will again be
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made, which obligation will no longer exist if the shares referred to
will no longer be held by a party other than the company.
5. 4. In case of ordinary shares being issued, each holder of ordinary shares
will hold a pre-emptive right in proportion of the aggregate amount of
his shares, without prejudice to the provisions in the law.
In case of shares being issued, there will be a pre-emptive right
neither to the shares issued against contribution other than in money
nor to the shares issued to employees of the company or of a group
company.
Holders of preference shares will not hold a pre-emptive right in case
of ordinary shares being issued.
Holders of ordinary shares will not hold a pre-emptive right in case of
preference shares and the priority shares being issued.
The company will announce the issue with a pre-emptive right and the
period within which said right may be exercised in the Dutch Gazette,
in a national newspaper and in the Official Price List.
The pre-emptive right may be restricted or excluded in a resolution of
the general meeting.
In the relative proposal the reasons for the proposal and the choice of
the intended price of issue shall be elucidated in writing.
The pre-emptive right may also be restricted or excluded by the company
body designated by virtue of paragraph 1, in case said body will have
been designated in a resolution of the general meeting as being
competent to restrict or exclude the pre- emptive right for a specific
period not exceeding five years.
The designation may each time be extended for a period not exceeding
five years; it will in any case cease to apply in case the designation
of the corporate body competent to issue shares as referred to in
article 5, paragraph 1 will no longer be effective.
Unless laid down otherwise in the designation - without prejudice to
the provisions in the preceding sentence - it cannot be withdrawn.
A resolution of the general meeting for restriction or exclusion of the
pre-
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emptive right or for designation will require a majority of at least
two/thirds of the votes cast, in case less than fifty per cent of the
issued capital will be represented at the meeting.
Within eight days after said resolution, the company will deposit a
full text thereof at the office of the Trade Register.
In case of rights to take ordinary shares being granted, the holders of
ordinary shares will hold a pre-emptive right; the provisions laid down
hereinbefore in the present paragraph will be correspondingly
applicable.
Shareholders will not hold a pre-emptive right to shares issued to a
party exercising an already previously acquired right to take shares.
5. 5. The price at which the shares will be issued may not be below par,
without prejudice to the provisions laid down in article 80, paragraph
2, Volume 2 of the Civil Code.
5. 6. Payment shall be made in money insofar as contribution other than in
money will not have been agreed upon.
Payment in foreign currency may only be made with the consent of the
company.
The payment liability will in said case be fulfilled for the
amount at which the amount paid may freely be exchanged in Dutch
currency or in Euros.
Decisive will be the rate of exchange on the date of payment.
In deviation from the provisions laid down in the preceding sentence,
the company may demand payment at the rate of exchange on a particular
date within two months prior to the last day on which payment shall be
made, provided the shares or the depository receipts for these shares
will forthwith after having been issued be included in the Price List
of a Stock Exchange outside the Netherlands.
COMPANY SHARES
ARTICLE 6
6. 1. In case of shares being issued, the company may not take company
shares.
6. 2. Acquisition by the company of company shares not paid up will be null
and
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void.
6. 3. After the relative approval of the board of supervisory directors
having been obtained, the company may acquire paid-up company shares
for a consideration in case:
a. the common equity, reduced by the price of acquisition, will not be
smaller than the paid and claimed part of the capital, increased by
the reserves which shall be kept by virtue of the law;
b. the nominal amount of the shares in its capital acquired, held or
held in pledge by the company or those held by a subsidiary will
not exceed one/tenth part of the issued capital, and
c. authorization for the acquisition will have been granted by the
general meeting.
Acquisition of shares contrary to the provisions in the present
paragraph will be null and void.
6. 4. Decisive for the requirement under a. of the preceding paragraph will
be the amount of the common equity in accordance with the balance sheet
lately confirmed, reduced by the price of acquisition for the shares in
the capital of the company and distributions to the charge of profit or
reserves to other parties which the company and its subsidiary owed
after the date of the balance sheet.
In case a financial year will have lapsed for more than six months,
without the annual account having been confirmed, acquisition in
accordance with paragraph 3 will not be permitted.
6. 5. In the authorization the general meeting shall fix the number of shares
that may be acquired, the manner in which they may be acquired and
between what limits the price shall be.
The authorization will be valid for a maximum period of eighteen
months.
6. 6. The preceding paragraphs will not apply to shares acquired by the
company under a universal title.
6. 7. The board of management will be competent to alienate company shares
held
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by the company.
6. 8. The provisions laid down hereinbefore in the present article will be
correspondingly applicable to depository receipts of shares in the
capital of the company.
CAPITAL REDUCTION
ARTICLE 7
7. 1. The general meeting of shareholders may pass a resolution for the
reduction of the issued capital by withdrawing shares or by reducing
the amount of the shares in an amendment of the articles of
association.
The shares to which the resolution relates shall be designated in the
resolution and the implementation of the resolution shall have been
arranged. The paid and claimed part of the capital may not become
smaller than the minimum capital prescribed by law at the time of the
resolution.
7. 2. A resolution for withdrawal of shares may only relate to:
- shares held by the company itself or of which it holds the
depository receipts.
- all preference shares of a particular category or of both
categories with repayment.
7. 3. Reduction of the amount of shares without repayment and without
exemption from the payment liability shall be carried out
proportionately on all shares of a similar category.
The requirement of proportion may be deviated from with the consent of
all shareholders concerned.
7. 4. Partial repayment on shares or exemption from the payment liability
will only be possible by way of implementation of a resolution for
reduction of the amount of the shares.
Such repayment or exemption shall be made
- either proportionately on all shares;
- or proportionately with respect to the preference shares of a
particular category or of both categories.
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The requirement of proportion may be deviated from with the consent of
all shareholders concerned.
7. 5. A resolution for the reduction of the capital relating to preference
shares of a particular category or of both categories will require a
prior or simultaneous resolution of approval of the meeting of the
holders of said shares of that category or these categories.
7. 6. The convening notice for a meeting in which a resolution referred to
in the present article will be passed will state the object of the
capital reduction and the manner of implementation.
A resolution for the reduction of the capital will require a majority
of at least two/thirds of the votes cast, in case less than fifty per
cent of the capital will be represented.
7. 7. The company shall publish the resolutions referred to in the present
article in accordance with the provisions laid down in the law.
A resolution for the reduction of the issued capital will not take
effect for as long as creditors of the company may raise objections in
accordance with the provisions laid down in the law.
SHARES
ARTICLE 8
The ordinary shares shall be registered shares or bearer shares at the
discretion of the shareholder; the preference shares and the priority share may
only be registered shares.
BEARER SHARES
ARTICLE 9
9. 1. All bearer shares will be embodied in one share certificate.
In special cases the board of management may resolve, subject to the
approval of the board of supervisory directors and Necigef, that bearer
shares will be embodied in an other manner than in the collective
certificate referred to in the preceding sentence.
9. 2. This share certificate will be signed in the manner as determined in
these
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articles of association as regards representation of the company.
9. 3. The company will cause Necigef to keep the share certificate referred
to in paragraph 1 for the party (parties) entitled.
9. 4. The company will grant the party entitled a right in respect of an
ordinary bearer share by (a) Necigef enabling the company to write up a
share on the share certificate and (b) the party entitled designating
an associated institution which will credit him accordingly as joint
owner (hereinafter to be called: a joint owner) in its collective
deposit.
9. 5. Without prejudice to the provisions in article 27, paragraph 3 of
the present articles of association, the administration of the share
certificate will irrevocably be entrusted to Necigef and Necigef will
be irrevocably authorized on behalf of the party/parties entitled to
effect everything necessary in respect of the relative ordinary shares,
including acceptance, delivery and cooperation to writing-up and
writing-off of the share certificate.
9. 6. For the application of the present articles of association, the
party entitled as joint owner in a collective deposit of ordinary
bearer shares as referred to in the Act on securities transfer by
giro/bank will likewise be deemed to be holder of shares.
The company will be competent to lay down further rules with respect to
the share certificate.
ARTICLE 10
10.1. In the event that a participant in a deposit in the name of the
associated institution wishes the delivery of one or several bearer
shares, the following actions shall occur constituting one and the same
event: (a) Necigef will deliver the share/shares to the party entitled
by means of a deed, (b) the company will acknowledge the delivery, (c)
Necigef will enable the company to delete the share/shares from the
share certificate, (d) the relevant associated institution will debit
the party entitled accordingly as participant in its collective deposit
and (e) the company will register the holder as holder of a registered
share/shares in the register of shareholders.
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10.2. A holder of an ordinary registered share may at all times have said
share made out to bearer by and through the following actions (a) the
party entitled shall deliver said share to Necigef in a deed, (b) the
company shall acknowledge the delivery, (c) Necigef shall enable the
company to register a share on the share certificate, (d) an associated
institution designated by the party entitled accordingly shall credit
the party entitled as joint owner in its collective deposit and (e) the
company shall delete the name of the party entitled as holder of the
relative share from the register.
REGISTERED SHARES
ARTICLE 11
11.1. Share certificates will not be issued for registered shares.
11.2. The board of management will keep a register of shareholders which,
with respect to the holders of registered shares and usufructuaries and
pledgees of such shares, will include the names and addresses as well
as the other data prescribed by law.
11.3. Every holder of registered shares and every usufructuary or pledgee
of such shares shall notify the company of his address in writing.
11.4. The register will be kept up-to-date regularly.
All annotations in the register will be signed in the manner as laid
down in the present articles of association with respect to
representation of the company.
11.5. The register shall be deposited at the office of the company for
inspection by parties entitled to attend meetings.
The preceding sentence shall not apply to that part of the register
which is kept outside the Netherlands in compliance with legislation or
Stock Exchange rules and regulations applying outside the Netherlands.
11.6. The board of management will gratuitously provide a holder of
registered shares and a usufructuary and pledgee of such shares with an
extract from the register with respect to their rights to a share and
the rights to attend meetings attached thereto.
Said extract will be signed in the manner as laid down in the present
articles
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of association with respect to representation of the company.
RIGHT OF USUFRUCT AND RIGHT OF LIEN
ARTICLE 12
12.1. A right of usufruct may be created on shares.
12.2. The shareholder will hold the voting right on the shares on which a
right of usufruct will have been created.
In deviation from the provisions laid down in the preceding sentence,
the voting right attached to ordinary shares will accrue to the
usufructuary in case this will have been determined upon the creation
of the right.
The voting rights attached to the preference shares can only be granted
to the usufructuary if so provided on the establishment of the usufruct
and if both such provisions and - in case of a transfer of the
usufruct, the transmissions of the right to vote, are approved by the
board of supervisory directors.
The voting right attached to the priority share cannot be granted to
the usufructuary.
12.3. The shareholder not holding voting rights and the usufructuary holding
voting rights, will hold the rights granted by law to holders of
depository receipts of shares issued with the co-operation of the
company.
The usufructuary not holding voting rights, will not hold the rights
referred to in the preceding sentence either.
ARTICLE 13
13.1. Shares, with the exception of the priority share, may be pledged.
13.2. The provisions in paragraphs 2 and 3 of article 12 will be
correspondingly applicable to the voting right on pledged shares and to
rights of the pledgees to attend meetings.
BOARD OF MANAGEMENT
ARTICLE 14
14.1. The company will have a board of management.
14.2. Without prejudice to the restrictions in accordance with the present
articles of association, the board of management will be charged with
the management
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of the company.
14.3. The board of management will be competent to enter into legal acts
as referred to in article 94, paragraph 1, Volume 2 of the Civil Code
subject to the prior approval of the supervisory board.
ARTICLE 15
15.1. The board of management will consist of two or more members.
The number of members of the board of management will be fixed by the
board of supervisory directors.
15.2. Members of the board of management will be appointed by the general
meeting. If the priority share is issued, the appointment shall take
place from a binding nomination, drawn up by the priority, of at least
two nominees for each vacancy to be filled.
The priority shall be invited to draw up the binding nomination by the
board of management.
The binding nomination shall be drawn up within two months, after the
sending of the above mentioned invitation.
If the priority fails to make use of its right to draw up a binding
nomination or fails to do so in a timely manner, the shareholders
meeting shall be free to make the appointment.
The shareholders meeting may at all times override the binding nature
of the nomination by adopting a resolution to this effect with at least
two-thirds of the votes cast at a meeting at which more than half of
the issued share capital is represented.
The provisions of article 120, paragraph 3 of Book 2 of the Dutch Civil
Code shall not apply.
15.3. Members of the board of management may at any time be suspended or
dismissed by the shareholders meeting.
The shareholders meeting may adopt a resolution to suspend or dismiss a
member of the board of management only by at least two-thirds of the
votes cast at the meeting at which more than half of the issued capital
is
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represented, unless the proposal concerned has been made by the
Supervisory Board.
A suspension as referred to in the preceding sentence may be removed by
the general meeting.
15.4. A suspension may be extended once or several times but it cannot
continue for longer than an aggregate period of three months.
15.5. The remuneration and the further conditions of employment will be fixed
separately for each member of the board of management by the board of
supervisory directors.
INTERNAL ORGANISATION OF THE BOARD OF MANAGEMENT
ARTICLE 16
16.1. The board of management may lay down further rules and regulations
with respect to its procedure and internal organisation among which
those with respect to the holding of, the convening of and the passing
of resolutions in its meetings and outside a meeting as well as regards
the division of duties.
The laying-down of such rules and regulation will require the prior
approval of the board of supervisory directors.
16.2. Without prejudice to its own responsibility - the board of management
will be competent to appoint officers with such powers and such title
to be determined by the board of managing directors.
16.3. Without prejudice to the provisions laid down elsewhere in the present
articles of association, all resolutions of the board of management
with respect to the following subjects will require the approval of the
board of supervisory directors such legal acts as will be clearly
defined by the board of supervisory directors and of which the board of
management will have been notified in writing.
For the application of the present paragraph, a resolution of the board
of management for the passing or approval of a resolution of any body
of the company in which the company participates will be equated with a
resolution as referred in the preceding sentence, provided the
resolution for entering into such
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a legal act will be subject to the approval of the board of supervisory
directors as referred to hereinbefore in the present paragraph.
The lacking of the approval as referred to in the present paragraph
will not affect the power of representation of the board of management
or the members of the board of management.
ABSENCE OR INABILITY TO ATTEND
ARTICLE 17
17.1. In case of absence or inability to attend of one or several members of
the board of management, the management of the company will temporarily
be entrusted to the other members of the board of management, provided
there will be at least two of them.
17.2. In case of all members of the board of management being absent or
unable to attend, the management of the company will temporarily be
entrusted to one person to be designated for this purpose - whether or
not from its number - by the board of supervisory directors.
ARTICLE 18
REPRESENTATION
18.1. The board of management will represent the company insofar as not
ensuing otherwise from the law.
The power of representation will also accrue to two persons acting
jointly viz.
- either two members of the board of management;
- or a member of the board of management together with a holder of
proxy;
- or two holders of proxy acting jointly,
for as far as said holders of proxy are concerned, provided they will
be acting within the limits of the power granted.
18.2. In case of a conflicting interest between the company and one or
several members of the board of management, the company will be
represented in the manner as provided for in paragraph 1.
In all cases in which the company will hold an interest conflicting
with that of a member of the board of management in private, the
resolution for entering
<PAGE> 54
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into the relative legal act will require the prior approval of the
board of supervisory directors.
The lacking of the approval as referred to in the preceding sentence
will not affect the power of representation of the board of management
or the members of the board of management.
BOARD OF SUPERVISORY DIRECTORS
ARTICLE 19
19.1. The company will have a board of supervisory directors.
19.2. The board of supervisory directors will be charged with the supervision
of the policy of the board of management and of the general course of
affairs of the company and the enterprise associated with it.
The board of supervisory directors will assist the board of management
by the rendering of advice.
The Board will furthermore be charged with everything otherwise
entrusted to it by the law and the present articles of association.
In the performance of their duties the supervisory directors will be
guided by the interests of the company and he enterprise associated
with it.
19.3. The board of management will timely provide the board of supervisory
directors with the data necessary for the proper performance of its
duties.
19.4. The board of supervisory directors may seek advice at the expense of
the company for the proper performance of its duties.
ARTICLE 20
20.1. The board of supervisory directors will consist of three or more
natural persons.
The number of supervisory directors will be fixed by the general
meeting with due observance of the provisions laid down in the
preceding sentence.
20.2. If at any time there will be less than three members of the board of
supervisory directors in office, the remaining members of said Board
and/or the remaining member will constitute a competent Board, without
prejudice to the obligation of the Board to have the vacancies filled
as soon as possible.
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20.3. The supervisory directors will receive a remuneration. Said
remuneration will be fixed by the general meeting.
ARTICLE 21
21.1. The supervisory directors will be appointed by the general meeting.
21.2. If preference shares B are issued the nomination shall take place from
a binding nomination, drawn up by the priority, of at least two
nominees for each vacancy to be filled.
The priority shall be invited to draw up the binding nomination by the
board of management.
The binding nomination shall be drawn up within two months, after the
sending of the above mentioned invitation.
If the priority fails to make use of its right to draw up a binding
nomination or fails to do so in a timely manner, the shareholders
meeting shall be free to make the appointment.
The shareholders meeting may at all times override the binding nature
of the nomination by adopting a resolution to this effect with at least
two-thirds of the votes cast at a meeting at which more than half of
the issued capital is represented.
The provisions of article 120, paragraph 3 of Book 2 of the Dutch Civil
Code shall not apply.
21.3. Supervisory directors may at any time be suspended or dismissed by
the shareholders meeting.
The shareholders meeting may adopt a resolution to suspend or dismiss a
Supervisory Director only by at least two-thirds of the votes cast at a
meeting at which more than half of the issued capital is represented
unless the proposal concerned has been made by the Supervisory Board.
The person who has reached the age of seventy-two cannot be appointed
supervisory director.
ARTICLE 22
22.1. A supervisory director will resign from office at the latest after
the end of the
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general meeting of shareholders in which the annual account will be
considered in the financial year in which he will reach the age of
seventy-two.
22.2. Each supervisory director will furthermore resign from office by
rotation as established by the board of supervisory directors.
Resigning supervisory directors may be re-appointed forthwith, without
prejudice to the provisions with respect to the age-limit laid down in
the law.
INTERNAL ORGANISATION OF THE BOARD OF SUPERVISORY DIRECTORS
ARTICLE 23
23.1. The board of supervisory directors will appoint a chairman and a deputy
chairman from its number.
23.2. The board of supervisory directors may lay down further rules and
regulations with as regards its internal organisation among which those
with respect to the holding of, the convening of and the passing of
resolution at its meetings and outside a meeting as well as with
respect to the division of the duties.
23.3. The board of supervisory directors will at any time be allowed
admittance to all business premises of the company and it will be
competent to peruse all correspondence, accounting records, vouchers
and other data carriers and to check the cash resources and other
capital assets of the company.
23.4. In case a resolution of the board of supervisory directors shall be
made evident, a relative written notification of the (acting) chairman
of said Board will suffice.
GENERAL MEETING AND MEETINGS OF SHAREHOLDERS
ARTICLE 24
Within the limits set by the present articles of association and the law, all
powers not granted to others will accrue to the general meeting.
ARTICLE 25
25.1. The annual meeting will be held within six months after the end of each
financial year.
25.2. Unless the period as referred to in article 31, paragraph 2 of the
present articles of association will have been extended in accordance
with the
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provisions laid down there - the following subjects will i.a. be
considered at said meeting
- the annual report;
- the annual account and the appropriation of profit, and
- discharge from liability to the board of management and the board
of supervisory directors.
In case the period referred to in article 31, paragraph 2 will have
been extended, the subjects mentioned in the preceding sentence will be
considered in a meeting of shareholders to be held at the latest one
month after said period having lapsed.
25.3. Without prejudice to the provisions in article 108a, Volume 2 of the
Civil Code, extraordinary meetings of shareholders will be held
whenever deemed desirable by the board of management or the board of
supervisory directors.
Furthermore extraordinary meetings of shareholders will be held
whenever the persons entitled to attend meetings, representing at least
one/tent part of the issued capital, will lodge the relative written
request with precise statement of the subjects to be considered with
the board of management and/or the board of supervisory directors.
ARTICLE 26
26.1. The board of management or the board of supervisory directors will send
the convening notices for the meetings of shareholders and not later
than on the fifteenth day prior to the date of the meeting.
26.2. A notice convening a meeting shall be given by publication in a
nationally distributed daily newspaper as well as such foreign
newspapers as designated by the board of management.
26.3. The convening notice will state the subjects to be considered or it
will announce that the persons entitled to attend meetings may take
cognizance thereof and obtain gratuitous copies thereof at the office
of the company as well as at such locations including a bank in
Amsterdam, registered by virtue of the Act on the Supervision of the
Credit System, and possibly at an other
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location as laid down in the convening notice.
26.4. The convening notice will also state the location(s) where and the date
on which those persons deriving their rights to attend meetings from
bearer shares shall at the latest deposit documentary evidence of their
rights against a receipt which may serve as admission ticket to the
meeting.
The date referred to in the preceding sentence may not be set earlier
than on the seventh day prior to the date of the meeting.
A statement of an associated institution, or of a foreign bank subject
to commercial supervision by the government, to be designated by the
board of management may also serve as admission ticket as referred to
in the penultimate sentence, to the effect that the number of shares
stated in said statement are kept in (its collective) deposit in the
name of the person mentioned in said statement and will be kept in
deposit up and to including the date of the meeting.
The convening notice will also state that with respect to registered
shares, rights may only be exercised at the meeting in case the
relative persons entitled to attend the meeting will have notified the
board of management in writing of their intentions to attend (have
themselves represented at) the meeting at the latest on the day prior
to the day of the meeting.
ARTICLE 27
27.1. The meetings of shareholders will be held in Amsterdam.
27.2. The chairman of the board of supervisory directors will act as chairman
of the meetings of shareholders and in case of his absence, the deputy
chairman of the board of supervisory directors and in case he will also
be absent, a supervisory director to be designated by the supervisory
directors present at the meeting.
in case the chairmanship of the meeting will not be provided for as
stated hereinbefore, the meeting itself will designate its chairman.
27.3. All persons entitled to attend the meeting provided with an admission
ticket or those who will have announced their intention to be present
will be allowed admission to the meetings of shareholders, everything
as laid down
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hereinbefore in article 26, paragraph 3, as well as the members of the
board of management and the supervisory directors.
The chairman will decide with respect to the admission of others.
27.4. Persons entitled to attend the meeting may have themselves represented
at the meeting by an attorney authorised in writing.
27.5. Minutes will be kept of the proceedings at meetings of shareholders by
a secretary to be designated by the chairman of the meeting, which
minutes will be signed by way of confirmation by the chairman and the
secretary.
In deviation from the provisions laid down in the first sentence of the
present paragraph, the chairman of the meeting and/or the board of
management may decide to have a notarial record drawn up.
The documents mentioned hereinbefore in the present paragraph will be
available at the office of the company for perusal by persons entitled
to attend the meeting.
At request, each of them will be provided with copies of or extracts
from said documents at a price not exceeding cost.
ARTICLE 28
28.1. Every share will carry the right to cast one vote.
No vote may be cast in the general meeting of shareholders for a share
owned by the company or a subsidiary thereof;
nor may a vote be cast for a share of which one of them holds the
depository receipts.
However, usufructuaries and pledgees of shares owned by the company and
its subsidiaries will not be excluded from their voting rights, in case
the right of usufruct or the right of lien will have been created prior
to the share being owned by the company or a subsidiary thereof.
The company or a subsidiary thereof cannot cast a vote for a share on
which it holds a right of usufruct or a right of lien.
In the determination of the extent to which the shareholders vote, are
present or represented, or the extent to which the share capital is
provided or represented,
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shares of which it has been laid down in the law that no votes may be
cast for them will be disregarded.
Members of the board of management and supervisory directors as such
will hold an advisory vote.
28.2. All votes will be cast by word of mouth, unless the chairman of the
meeting will decide that votes will be cast in writing.
28.3. The chairman of the meeting may decide that votes will be cast by
acclamation, unless one of the persons entitled to vote will oppose
this.
28.4. Abstentions and invalid votes will be regarded as votes not cast.
28.5. All resolutions will be passed by an absolute majority of the votes
cast insofar as the law or the present articles of association will not
prescribe a larger majority.
28.6. The opinion of the chairman expressed at the meeting as regards the
outcome of a ballot will be decisive.
The same will apply to the text of a resolution passed, insofar as
votes will have been cast on a proposal not laid down in writing.
28.7. However, if immediately after the opinion referred to in the preceding
paragraph having been expressed, its correctness will be challenged, a
new ballot will be held, in case the majority of the general meeting,
or if the original ballot was not held by roll call or in writing, one
of the parties entitled to vote will desire this.
As a result of said new ballot the legal consequences of the original
ballot will be cancelled.
MEETINGS OF HOLDERS OF SHARES OF A PARTICULAR CATEGORY
ARTICLE 29
29.1. The provisions laid down hereinbefore with respect to meetings of
shareholders will as much as possible be applicable to meetings of
holders of a particular category.
29.2. In deviation from the provisions laid down in the preceding paragraph,
the period for convening the meeting of the holders of preference
shares of a
<PAGE> 61
- 24 -
particular category will be at least seven working days and holders of
said shares need not announce their intention to attend the meeting.
Furthermore resolutions of holders of preference shares may also be
passed in an other manner than at a meeting of shareholders, provided
the shareholders entitled to vote will unanimously have declared in
writing (including all forms of written communication) to favour the
proposal.
The provisions in the preceding paragraph will not be applicable in
case, in addition to holders of shares of the relative category, there
will be other persons deriving rights to attend meetings from said
shares.
CONVENING NOTICES AND NOTIFICATIONS
ARTICLE 30
30.1. All convening notices and notifications by the company, destined for
persons entitled to attend meetings, as far as registered shares are
concerned, will be sent by letter to the addresses as included in the
register of shareholders and apart from this by means of an
advertisement in at least one national newspaper as well as in the
Official Price List.
30.2. Documents for the perusal of persons entitled to attend the meeting
will be deposited at the office of the company as well as at such
locations, including a bank in Amsterdam, as will be stated in a
convening notice or notification.
30.3. Communications which shall be addressed to the general meeting by
virtue of the law or the present articles of association, may be sent
either by including them in the convening notice or in the document
deposited for perusal at the office of the company, provided this will
be stated in the convening notice.
FINANCIAL YEAR; ANNUAL ACCOUNT; ANNUAL REPORT
ARTICLE 31
31.1. The financial year will coincide with the calendar year.
31.2. Within five months after the end of the financial year, apart from
extension of said period not exceeding six months by the general
meeting on the ground of special circumstances, the board of management
will compile an annual account and an annual report
<PAGE> 62
- 25 -
The compiled annual account will be submitted to the board of
supervisory directors who will present a relative report to the general
meeting.
The annual account will be signed by all members of the board of
management and all supervisory directors.
If the signature(s) of one or several of them will be lacking, the
reason thereof will be stated.
31.3. The board of supervisory directors issues a recommendation regarding
the annual account to the shareholders meeting.
31.4. The company will grant an accountant to be designated by the general
meeting the assignment to audit the annual account and the annual
report compiled by the board of management and to report his findings
to the board of management and the board of supervisory directors and
to issue a certificate, everything as referred to in article 393,
paragraph 1 of Volume 2 of the Civil Code.
In case the general meeting will not proceed to the aforesaid
appointment, the board of supervisory directors will be competent or,
in case said Board will fail to do so, the board of management will be
competent.
ARTICLE 32
32.1. The company will ensure that the annual account, the annual report and
the data to be added thereto by virtue of the law and the report of the
board of supervisory directors will be available for perusal by the
persons entitled to attend the meetings at the office of the company as
well as at a bank in Amsterdam to be stated in the convening notice as
of the date of the convening notice for the annual meeting until after
the end of said meeting.
The company will gratuitously make a copy of the documents referred to
in the preceding sentence available to the persons entitled to attend
meetings.
In case said documents will be amended, the provisions in the preceding
sentence will also apply with respect to the amended documents.
32.2. The annual account will be confirmed by the general meeting.
32.3. In case discharge from liability will be granted to the board of
management
<PAGE> 63
- 26 -
for the management conducted by it in any financial year and to the
board of supervisory directors for the supervision exercised by it,
said discharge from liability will be limited to everything evident
from the annual account or announced to the general meeting, without
prejudice to the provisions laid down in the law.
PUBLICATION
ARTICLE 33
33.1. The annual account, the annual report and the data to be added thereto
by virtue of the law will be published within eight days after the
confirmation of the annual account.
Publication shall be made by depositing a copy prepared entirely in the
Dutch language or, if no Dutch language version was made, a copy in the
French, German or English language at the office of the commercial
register in Amsterdam. The date of adoption must be annotated on the
copy.
If the annual accounts have not been adopted in conformity with the
statutory provisions within seven months from the end of the financial
year, the management shall publish the annual accounts as prepared in
the manner provided in paragraph 1 without delay; it shall be stated in
the annual accounts that they have not yet been adopted.
If the shareholders meeting has extended the period to compile the
annual account in accordance with article 31, paragraph 2, the
provision of the previous sentence shall enter into effect as from two
months after the end of such period.
Simultaneously with and in the same manner as the annual accounts, a
copy of the annual report and of the other information referred to in
section 2: 392 of the Dutch Civil Code shall be published in the same
language. The preceding sentence shall not apply, except for the
information referred to in subparagraphs a, c, f and g of section
2:392, subsection 1 of the Dutch Civil Code, if the documents are kept
for public inspection at the office of the company and a complete or
partial copy thereof is obtainable on request at no more than cost. The
company shall file a notice of this fact for registration in the
commercial
<PAGE> 64
- 27 -
register.
If, due to the volume of the company's enterprise the exemption of
section 2:396 paragraphs 3 up to and including 8 of the Dutch Civil
Code or of section 2:397, paragraphs 3 up to and including 6 of the
Dutch Civil Code is applicable, the publication will take place with
due observance of the applicable exemptions.
33.2. A resolution for distribution on shares and resolutions for interim
distribution as well as (the manner of) making distributions payable
and the composition of the distributions will be published forthwith.
RESERVES, ALLOCATION TO RESERVES AND DISTRIBUTIONS
ARTICLE 34
34.1. Separate share premium reserves will be formed in the accounting
records of the company in behalf of both the ordinary shares and the
preference shares A.
34.2. Distributions may only be made to the charge of the reserves referred
to in the preceding paragraph on respectively deductions or
depreciation made to the charge of shares of the relative category.
A resolution for the withdrawal from the share premium reserve
belonging to the preference shares may be passed by the board of
management under prior approval of the meeting of shareholders of said
shares.
ARTICLE 35
35.1. The company can only make distributions to shareholders insofar as the
common equity of the company will exceed the amount of the paid capital
of the company, increased by the reserves which shall be kept by virtue
of the law.
35.2. To the extent the profits allow this, a dividend to be deducted from
the positive amount of the profits as evidenced by the profit and loss
account shall in the first place be distributed on the preference
shares B according to a percentage which shall be the equivalent of the
average rate of the European
<PAGE> 65
- 28 -
Central Bank, increased with a surcharge or discount calculated against
the number of days to which the payment has to be made.
The surcharge and discount shall amount to a maximum of 3% and shall be
determined by the board of management upon the prior approval of the
supervisory board at the time of the initial issue of a preference
share B.
The dividend shall be calculated against the paid in amount on a
share's nominal amount.
If the distribution was not made or was not made in full on account of
insufficient profits, the deficit shall be paid to the holders of the
preference B shares from the profit of one or more of the succeeding
financial years.
The profits which remain shall be distributed to the holders of
preference shares A, the amount of such distributable dividend or the
manner of calculation to be determined by the corporate body authorised
to initially issue the preference shares A.
From the profits which remain, shall, as far as this may be possible,
be distributed to the priority share a dividend equal to 20% of the
nominal amount of such share.
Successively, the board of management shall, with the approval thereto
of the supervisory board, determine which part of the remaining profits
after application of the previous provisions shall be reserved.
35.3. The profit left after application of the provisions laid down
hereinbefore in the present paragraph will be available to the general
meeting, subject to the proviso that the profit then left will only be
for the benefit of holders of ordinary shares.
35.4. Amounts may be withdrawn from the distributable reserves by virtue of a
resolution of the general meeting.
The provisions laid down in the preceding paragraph will not be
applicable to the share premium reserve belonging to the preference
shares.
35.5. The company may only make interim distributions in case the requirement
of paragraph 1 of the present article will have been fulfilled as will
be evident
<PAGE> 66
- 29 -
from an interim specification of equity as referred to in article 105,
paragraph 4, Volume 2 of the Civil Code and provided this will be done
after prior approval of the board of supervisory directors.
Distributions on ordinary shares as referred to in the present
paragraph may be made payable in shares or negotiable rights thereon.
35.6. Without prejudice to the provisions laid down hereinbefore, the general
meeting may pass a resolution for making distributions on ordinary
shares (whether or not at the discretion of shareholders) fully or
partially payable instead of in money (whether or not at the discretion
of the shareholders)
a. in ordinary shares (if so requested and if possible to the charge of
the share premium reserve) or negotiable rights thereon or
b. in capital assets of or negotiable claim rights on the company.
A resolution as referred to in the preceding sentence may only be
passed on proposal of the board of management which resolution will
have been approved by the board of supervisory directors.
35.7. No distribution in behalf of the company will be made on the shares in
its capital acquired by the company and on shares of which the company
holds the depository receipts.
35.8. In the calculation of the appropriation of profit, the shares on which
no distribution will be made in behalf of the company by virtue of the
provisions in paragraph 7, will be disregarded.
35.9. Distributions for which resolutions have been passed will be made
payable at the latest after a fortnight.
The claim for distribution will lapse as a result of expiry of a period
of five years to be counted as of the date of it becoming payable.
AMENDMENT OF THE ARTICLES OF ASSOCIATION, DISSOLUTION, JURIDICAL MERGER AND
SPLITTING-UP
ARTICLE 36
36.1. The general meeting may pass a resolution for amendment of the articles
of association, dissolution, juridical merger and splitting-up.
<PAGE> 67
- 30 -
If the priority share is outstanding, a resolution as set forth in the
previous sentence may only be adopted upon proposal of the priority.
A resolution for amendment of a provision in the articles of
association whereby holders of the preference shares have been granted
any right or for an amendment whereby such right will be prejudiced,
will only be valid after prior approval of the holders of said shares.
36.2. In case a proposal as referred to in the preceding sentence will be
made to the general meeting, this shall invariably be stated in the
convening notice for the relative meeting.
36.3. Simultaneously with the convening notice for the meeting in which an
amendment of the articles of association will be considered, a copy of
the proposal, containing the verbatim text of the proposed amendment,
will be deposited for perusal by the persons entitled to attend the
meeting until the end of said meeting.
Persons entitled to attend the meeting may gratuitously obtain a copy
of aforesaid proposal.
ARTICLE 37
37.1. In case a resolution for dissolution will have been passed, the company
will be liquidated by the board of management, unless the general
meeting will appoint other liquidators, under the supervision of the
board of supervisory directors.
The general meeting will fix the remuneration for the liquidators.
37.2. During the liquidation the present articles of association will
continue being effective as much as possible.
37.3. From the balance remaining of the equity of the company after payment
of all debts, including those relating to the liquidation, - in the
order to be stated hereinafter - first the holders of the preference
B-shares and A-shares and the holder of the priority share will be paid
the amounts paid on said shares (including any share premium paid),
increased by the dividend as laid down in article 35, paragraph 2, on
the basis of time on the current financial year and,
<PAGE> 68
- 31 -
as far as the preference B-shares are concerned, possibly on preceding
financial years.
The balance then remaining will be distributed to the holders of
ordinary shares and other parties entitled to said shares in proportion
to each of their rights.
37.4. After the company will have ceased to exist, the accounting records,
vouchers and other data carriers will be kept by the person to be
designated for this purpose by the liquidators for the period
prescribed by law.
FINAL PROVISION
For a period of five years the board of management under prior approval of the
supervisory board is entitled to issue both the ordinary shares as well as the
preference shares A and B to a maximum as defined in article 4 paragraph 1 of
the articles, as well as to restrict or exclude the pre-emptive right of
shareholders.
<PAGE> 1
EXHIBIT 4.1
STB Draft 7/19/99
VERSATEL TELECOM INTERNATIONAL N.V.
as Issuer,
AND
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee, Registrar and
Paying Agent
----------------------
INDENTURE
Dated as of July |X|, 1999
----------------------
$ * % Senior Dollar Notes due 2009
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE ............. 1
SECTION 1.1 Definitions ............................................ 1
SECTION 1.2 Incorporation by Reference of TIA ...................... 22
SECTION 1.3 Rules of Construction .................................. 22
ARTICLE II
THE NOTES .............................................. 23
SECTION 2.1 Form and Dating ........................................ 23
SECTION 2.2 Execution and Authentication ........................... 24
SECTION 2.3 Registrar and Paying Agent ............................. 24
SECTION 2.4 Paying Agent To Hold Assets in Trust ................... 25
SECTION 2.5 List of Holders ........................................ 26
SECTION 2.6 Transfer and Exchange .................................. 26
SECTION 2.7 Replacement Notes ...................................... 27
SECTION 2.8 Outstanding Notes ...................................... 28
SECTION 2.9 Treasury Notes ......................................... 28
SECTION 2.10 Temporary Notes ........................................ 29
SECTION 2.11 Cancellation ........................................... 29
SECTION 2.12 Defaulted Interest ..................................... 29
SECTION 2.13 CUSIP, ISIN and Common Code Numbers .................... 30
SECTION 2.14 Deposit of Moneys ...................................... 30
SECTION 2.15 Certain Matters Relating to Global Notes ............... 30
SECTION 2.16 Separation of Warrants and Notes ....................... 30
ARTICLE III
REDEMPTION ............................................. 31
SECTION 3.1 Optional Redemption .................................... 31
SECTION 3.2 Notices to Trustee ..................................... 31
SECTION 3.3 Selection of Notes To Be Redeemed ...................... 31
SECTION 3.4 Notice of Redemption ................................... 31
SECTION 3.5 Effect of Notice of Redemption ......................... 33
SECTION 3.6 Deposit of Redemption Price ............................ 33
SECTION 3.7 Notes Redeemed in Part ................................. 34
<PAGE> 3
ARTICLE IV
<TABLE>
<CAPTION>
<S> <C> <C>
COVENANTS .............................................................. 35
SECTION 4.1 Payment of Notes ....................................................... 35
SECTION 4.2 Maintenance of Office or Agency ........................................ 35
SECTION 4.3 Limitation on Restricted Payments ...................................... 35
SECTION 4.4 Limitation on Indebtedness ............................................. 38
SECTION 4.5 Corporate Existence .................................................... 42
SECTION 4.6 Payment of Taxes and Other Claims ...................................... 42
SECTION 4.7 Maintenance of Properties and Insurance ................................ 42
SECTION 4.8 Compliance Certificate; Notice of Default .............................. 43
SECTION 4.9 Compliance with Laws ................................................... 44
SECTION 4.10 Reports ................................................................ 44
SECTION 4.11 Waiver of Stay; Extension or Usury Laws ................................ 45
SECTION 4.12 Limitation on Transactions with Shareholders and Affiliates ............ 45
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries ................................................ 46
SECTION 4.14 Limitation on Liens .................................................... 48
SECTION 4.15 Change of Control ...................................................... 48
SECTION 4.16 Limitation on Asset Sales .............................................. 50
SECTION 4.17 Limitation on Issuance of Guarantees of Indebtedness by Restricted
Subsidiaries ........................................................... 54
SECTION 4.18 Business of the Company; Restriction on Transfers of Existing
Business ............................................................... 54
SECTION 4.19 Limitation on the Issuance and Sale of Capital Stock of Restricted
Subsidiaries ........................................................... 54
SECTION 4.20 Additional Amounts ..................................................... 55
SECTION 4.21 Payment of Non-Income Taxes and Similar Charges ........................ 56
ARTICLE V
SUCCESSOR CORPORATION .................................................. 56
SECTION 5.1 Consolidation, Merger, and Sale of Assets .............................. 56
SECTION 5.2 Successor Corporation Substituted ...................................... 57
ARTICLE VI
DEFAULT AND REMEDIES ................................................... 57
SECTION 6.1 Events of Default ...................................................... 57
SECTION 6.2 Acceleration ........................................................... 59
SECTION 6.3 Other Remedies ......................................................... 59
SECTION 6.4 The Trustee May Enforce Claims Without Possession of
Securities ............................................................. 59
SECTION 6.5 Rights and Remedies Cumulative ......................................... 59
SECTION 6.6 Delay or Omission Not Waiver ........................................... 60
SECTION 6.7 Waiver of Past Defaults ................................................ 60
SECTION 6.8 Control by Majority .................................................... 60
SECTION 6.9 Limitation on Suits .................................................... 61
SECTION 6.10 Rights of Holders To Receive Payment ................................... 61
SECTION 6.11 Collection Suit by Trustee ............................................. 61
SECTION 6.12 Trustee May File Proofs of Claim ....................................... 62
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6.13 Priorities ............................................................. 62
SECTION 6.14 Restoration of Rights and Remedies. .................................... 63
SECTION 6.15 Undertaking for Costs .................................................. 63
SECTION 6.16 Compliance Certificate; Notices of Default ............................. 63
ARTICLE VII
TRUSTEE ................................................................ 63
SECTION 7.1 Duties of Trustee ...................................................... 63
SECTION 7.2 Rights of Trustee ...................................................... 65
SECTION 7.3 Individual Rights of Trustee ........................................... 66
SECTION 7.4 Trustee's Disclaimer ................................................... 67
SECTION 7.5 Notice of Default ...................................................... 67
SECTION 7.6 Report by Trustee to Holders ........................................... 67
SECTION 7.7 Compensation and Indemnity ............................................. 67
SECTION 7.8 Replacement of Trustee ................................................. 69
SECTION 7.9 Successor Trustee by Merger, Etc ....................................... 70
SECTION 7.10 Corporate Trustee Required; Eligibility ................................ 70
SECTION 7.11 Disqualification; Conflicting Interests ................................ 70
SECTION 7.12 Preferential Collection of Claims Against Company ...................... 70
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE ................................ 71
SECTION 8.1 Option To Effect Legal Defeasance or Covenant Defeasance ............... 71
SECTION 8.2 Legal Defeasance and Discharge ......................................... 71
SECTION 8.3 Covenant Defeasance .................................................... 71
SECTION 8.4 Conditions to Legal or Covenant Defeasance ............................. 72
SECTION 8.5 Satisfaction and Discharge of Indenture ................................ 74
SECTION 8.6 Survival of Certain Obligations ........................................ 74
SECTION 8.7 Acknowledgement of Discharge by Trustee ................................ 74
SECTION 8.8 Application of Trust Moneys ............................................ 75
SECTION 8.9 Repayment to the Company; Unclaimed Money .............................. 75
SECTION 8.10 Reinstatement .......................................................... 76
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS .................................... 76
SECTION 9.1 Without Consent of Holders of Notes .................................... 76
SECTION 9.2 With Consent of Holders of Notes ....................................... 77
SECTION 9.3 Compliance with TIA .................................................... 78
SECTION 9.4 Revocation and Effect of Consents ...................................... 78
SECTION 9.5 Notation on or Exchange of Notes ....................................... 79
SECTION 9.6 Trustee To Sign Amendments, Etc ........................................ 79
ARTICLE X
MISCELLANEOUS .......................................................... 79
SECTION 10.1 TIA Controls ........................................................... 79
SECTION 10.2 Notices ................................................................ 79
SECTION 10.3 Communications by Holders with Other Holders ........................... 81
SECTION 10.4 Certificate and Opinion as to Conditions Precedent ..................... 81
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 10.5 Statements Required in Certificate or Opinion .......................... 81
SECTION 10.6 Rules by Trustee, Paying Agent, Registrar .............................. 82
SECTION 10.7 Legal Holidays ......................................................... 82
SECTION 10.8 Governing Law .......................................................... 82
SECTION 10.9 Submission to Jurisdiction; Appointment of Agent for Service;
Waiver ................................................................. 82
SECTION 10.10 No Adverse Interpretation of Other Agreements .......................... 83
SECTION 10.11 No Personal Liability of Directors, Officers, Employees,
Stockholders or Incorporators .......................................... 83
SECTION 10.12 Currency Indemnity. .................................................... 83
SECTION 10.13 Successors. ............................................................ 84
SECTION 10.14 Counterpart Originals .................................................. 84
SECTION 10.15 Severability ........................................................... 84
SECTION 10.16 Table of Contents, Headings, etc ....................................... 84
</TABLE>
EXHIBITS
Exhibit A - Form of Global Dollar Note
Exhibit B - Form of Definitive Dollar Note
NOTE: This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
<PAGE> 6
6
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Sections
<S> <C>
310(a)(1)....................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... NA
(a)(4)....................................................................... NA
(a)(5)....................................................................... 7.8; 7.11
(b).......................................................................... 7.8; 7.11
(c).......................................................................... NA
311(a).......................................................................... 7.12
(b).......................................................................... 7.12
(c).......................................................................... NA
312(a).......................................................................... 2.5
(b).......................................................................... 10.3
(c).......................................................................... 10.3
313(a).......................................................................... 7.6
(b)(1)....................................................................... 10.3
(b)(2)....................................................................... 7.6
(c).......................................................................... 7.6; 10.2
(d).......................................................................... 7.6
314(a).......................................................................... 4.8; 4.10; 10.2;
10.4
(b).......................................................................... 10.2
(c)(1)....................................................................... 7.2; 10.4
(c)(2)....................................................................... 7.2; 10.4
(c)(3)....................................................................... NA
(d).......................................................................... 10.3;10.4; 10.5
(e).......................................................................... 10.5
(f).......................................................................... NA
315(a).......................................................................... 7.1(c)
(b).......................................................................... 7.5; 10.2
(c).......................................................................... 7.1(a)
(d).......................................................................... 6.8; 7.1(c)
(e).......................................................................... 6.15
316(a)(last sentence)........................................................... 2.9
(a)(1)(A).................................................................... 6.8
(a)(1)(B).................................................................... 6.7
(a)(2)....................................................................... NA
(b).......................................................................... 6.10
317(a)(1)....................................................................... 6.11
(a)(2)....................................................................... 6.12
(b).......................................................................... 2.4
318(a).......................................................................... 10.1
(c).......................................................................... 10.1
</TABLE>
<PAGE> 7
7
- ----------------------
NA means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed
to be a part of this Indenture.
<PAGE> 8
8
INDENTURE, dated as of July |X|, 1999, between VERSATEL
TELECOM INTERNATIONAL N.V., a company organized under the
laws of The Netherlands, and having its corporate seat in
Amsterdam, The Netherlands (the "Company"), and United
States Trust Company of New York, a New York banking
corporation, as Trustee, Registrar and Paying Agent.
The Company has duly authorized the creation and issuance of (i) its
|X|% Senior Dollar Notes due 2009 (the "Dollar Notes") and (ii) Additional
Dollar Notes due 2009 (as defined herein) that may be issued on any Issue
Date (the Additional Notes, together with the Dollar Notes, the "Notes";
and, to provide therefor, the Company has duly authorized the execution and
delivery of this Indenture.
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. For purposes of this Indenture, unless
otherwise specifically indicated herein, the term "consolidated" with respect to
any Person refers to such Person consolidated with its Restricted Subsidiaries,
and excludes from such consolidation any Unrestricted Subsidiary as if such
Unrestricted Subsidiary were not an Affiliate of such Person. In addition, for
purposes of the following definitions and this Indenture generally, all
calculations and determinations shall be made in accordance with U.S. GAAP and
shall be based upon the consolidated financial statements of the Company and its
subsidiaries prepared in accordance with U.S. GAAP. As used in this Indenture,
the following terms shall have the following meanings:
"Acquired Indebtedness" means, Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Company or any Restricted Subsidiary or assumed in
connection with an Asset Acquisition by the Company or a Restricted Subsidiary
and not incurred in connection with, or in anticipation of, such Person becoming
a Restricted Subsidiary, such merger or consolidation or such Asset Acquisition;
provided that Indebtedness of such Person which is redeemed, defeased, retired
or otherwise repaid at the time of or immediately upon the consummation of the
<PAGE> 9
9
transactions by which such Person becomes a Restricted Subsidiary or is merged
or consolidated with or into the Company or any Restricted Subsidiary or such
Asset Acquisition shall not be Indebtedness.
"Additional Amounts" shall have the meaning set forth in Section
4.20.
"Additional Dollar Notes" means up to $|X| aggregate principal
amount of |X|% Senior Dollar Notes due 2009 issued under the terms of this
Indenture after the Closing Date.
"Additional Euro Notes" means up to |X| aggregate principal amount
of |X|% Senior Euro Notes due 2009 issued under the terms of the Euro Indenture
after the Closing Date.
"Additional Notes" means the Additional Dollar Notes and the
Additional Euro Notes.
"Affiliate" as applied to any Person means any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, Authenticating Agent or
co- Registrar.
"Agent Members" shall have the meaning set forth in Section 2.15.
"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated, merged with or into the Company
or any Restricted Subsidiary or (ii) an acquisition by the Company or any of its
Restricted Subsidiaries of the property and assets of any Person (other than the
Company or any of its Restricted Subsidiaries) that constitute substantially all
of an operating unit or line of business of such Person or which is otherwise
outside the ordinary course of business.
"Asset Disposition" means the sale or other disposition by the
Company or any of its Restricted Subsidiaries (other than to the Company or
<PAGE> 10
10
another Restricted Subsidiary of the Company) of (i) all or substantially all of
the Equity Interests in any Restricted Subsidiary of the Company or (ii) all or
substantially all of the assets that constitute an operating unit or line of
business of the Company or any of its Restricted Subsidiaries or which is
otherwise outside the ordinary course of business.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person (other than the Company or any of its
Restricted Subsidiaries) of (i) all or any of the Equity Interests in any
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business (including the
receipt of proceeds paid on account of the loss of or damage to any property or
asset and awards of compensation for any asset taken by condemnation, eminent
domain or similar proceedings). For the purposes of this definition, the term
"Asset Sale" shall not include (a) any transaction consummated in compliance
with Section 5.1 and the creation of any Lien not prohibited by Section 4.14;
provided, however, that any transaction consummated in compliance with such
Section 5.1, involving a sale, conveyance, assignment, transfer, lease or other
disposal of less than all of the properties or assets of the Company and the
Restricted Subsidiaries shall be deemed to be an Asset Sale with respect to the
properties or assets of the Company and Restricted Subsidiaries that are not so
sold, conveyed, assigned, transferred, leased or otherwise disposed of in such
transaction; (b) sales of property or equipment that has become worn out,
obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or any Restricted Subsidiary, as the case may be; and
(c) any transaction consummated in compliance with Section 4.3. In addition,
solely for purposes of Section 4.16, any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, involving assets with a Fair Market Value not in
excess of $1.0 million in any fiscal year shall be deemed not to be an "Asset
Sale."
"Asset Sale Offer" shall have the meaning set forth in Section 4.16.
"Authenticating Agent" shall have the meaning set forth in Section
2.2.
"Bankruptcy Law" means (i) for purposes of the Company, the
Faillissementswet and any similar statute, regulation or provision of any other
jurisdiction in which the Company is organized or conducting business and (ii)
for
<PAGE> 11
11
purposes of the Trustee, Title 11, U.S. Code or any similar United States
Federal, state or foreign law for the relief of creditors.
"Board of Directors" means the Supervisory Board of the Company.
"Board Resolution" means a duly authorized resolution of the Board
of Directors certified by an Officer and delivered to the Trustee.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banking institutions are authorized or required by law
to close in New York City or Amsterdam.
"Capital Stock" means with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, including, without
limitation, if such Person is a partnership, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
U.S. GAAP, is required to be capitalized and reflected as a liability on the
balance sheet of such Person; and "Capitalized Lease Obligation" is defined to
mean, at the time any determination thereof is to be made, the discounted
present value of the rental obligations under such lease.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the U.S. government or any agency or instrumentality
thereof having maturities of not more than 360 days from the date of
acquisition; (b) certificates of deposit and Eurodollar time deposits with
maturities of 360 days or less from the date of acquisition, bankers'
acceptances with maturities not exceeding 360 days and overnight bank deposits,
in each case with any commercial bank having capital and surplus in excess of
$500 million; (c) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a) and (b) entered
into with any financial institution meeting the qualifications specified in
clause (b) above; (d) commercial paper rated P-1, A-1 or the equivalent thereof
by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group,
respectively, and in each case maturing within six months after the date of
acquisition; (e) marketable direct obligations of the United Kingdom, The
Netherlands, Belgium, Germany or France or obligations fully and unconditionally
guaranteed by such sovereign nation (or any agency thereof), of the type and
maturity described in clauses (a) through (d) above of foreign obligors, which
have ratings described in such clauses or equivalent ratings from comparable
foreign rating agencies; and (f) investments in money market funds which invest
substantially all their assets in
<PAGE> 12
12
securities of the types described in clauses (a) through (e) above.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (other
than a Permitted Holder) becomes the ultimate "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of
the then outstanding Voting Stock of the Company on a fully diluted basis; (ii)
individuals who at the beginning of any period of two consecutive calendar years
constituted the Board of Directors (together with any directors who are members
of the Board of Directors on the date hereof and any new directors whose
election by the Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least two thirds of the
members of the Board of Directors then still in office who either were members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of such Board of Directors then in office;
(iii) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company to any such "person" or
"group" (other than to a Restricted Subsidiary); or (iv) the merger or
consolidation of the Company with or into another corporation or the merger of
another corporation with or into the Company with the effect that immediately
after such transaction any such "person" or "group" of persons or entities shall
have become the beneficial owner of securities of the surviving corporation of
such merger or consolidation representing a majority of the total voting power
of the then outstanding Voting Stock of the surviving corporation.
"Change of Control Offer" shall have the meaning set forth in
Section 4.15.
"Change of Control Payment" shall have the meaning set forth in
Section 4.15.
"Change of Control Payment Date" shall have the meaning set forth in
Section 4.15.
"Class A Shares" means the Class A Shares, par value NLG 0.10 per
share, of the Company.
"Class B Shares" means the Class B Shares, par value NLG 0.10 per
share, of the Company.
<PAGE> 13
13
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Company Order" means a written order or request signed in the name
of the Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company or any other officer so authorized
and delivered to the Trustee.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the (i) Consolidated Net Income of such Person for such period plus, to
the extent deducted in computing such Consolidated Net Income (and without
duplication) Consolidated Fixed Charges, (ii) any provision for taxes (other
than taxes (either positive or negative) attributable to extraordinary and non
recurring gains or losses or sales of assets), (iii) any amount attributable to
depreciation and amortization expense and (iv) all other non-cash items reducing
Consolidated Net Income (excluding any non-cash charge to the extent that it
requires or represents an accrual of, or reserve for, cash charges in any future
period), less all non-cash items increasing Consolidated Net Income (excluding
any items which represent the reversal of an accrual of, or reserve for,
anticipated cash charges at any prior period), all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in accordance
with U.S. GAAP; provided, however, that there shall be excluded therefrom the
Consolidated Cash Flow (if positive) of any Restricted Subsidiary (calculated
separately for such Restricted Subsidiary in the same manner as provided above)
that is subject to a restriction which prevents the payment of dividends or the
making of distributions to the Company or another Restricted Subsidiary to the
extent of such restriction.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, Consolidated Interest Expense plus dividends declared and payable on
Preferred Stock.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the aggregate amount of interest in respect of Indebtedness
(including capitalized interest, amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment obligation)
calculated in accordance with U.S. GAAP; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and interest
on Indebtedness that is Guaranteed or secured by such Person or any of its
Restricted Subsidiaries), less the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by such Person and its Restricted Subsidiaries during such period;
excluding, however, any amount of such interest of any Restricted Subsidiary to
<PAGE> 14
14
the extent the net income of such Restricted Subsidiary is excluded in the
calculation of Consolidated Net Income pursuant to the last proviso of such
definition.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period determined on a consolidated basis and in
conformity with U.S. GAAP; provided that the following items shall be excluded
in computing Consolidated Net Income (without duplication): (i) the net income
(or loss) of any Restricted Subsidiary accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with such Person or any
of its Restricted Subsidiaries or all or substantially all of the property and
assets of such Restricted Subsidiary are acquired by such Person or any of its
Restricted Subsidiaries; (ii) any gains or losses (on an after-tax basis) but
not losses attributable to Asset Sales; (iii) all extraordinary gains and gains
from Currency Agreements or Interest Rate Agreements and gains from the
extinguishment of debt; (iv) the net income (or loss) of any other Person (other
than net income (or loss) attributable to a Restricted Subsidiary) in which such
other Person (other than such Person or any of its Restricted Subsidiaries) has
a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Restricted Subsidiaries
by such other Person during such period; (v) net gains attributable to write-ups
of assets or write-downs of liabilities (determined after taking into account
losses attributable to write-downs of assets or write-ups of liabilities up to
but not in excess of such gains); and (vi) the cumulative effect of a change in
accounting principles after the Issue Date; and provided, further, that there
shall be further excluded therefrom the net income (but not the net loss) of any
Restricted Subsidiary (calculated separately for such Restricted Subsidiary in
the same manner as provided above) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the Company
or another Restricted Subsidiary to the extent of such restriction.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of such Person and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of
determination), less any amounts attributable to Redeemable Stock or any equity
security convertible into or exchangeable for Indebtedness, the cost of treasury
stock and the principal amount of any promissory notes receivable from the sale
of Equity Interests in the Company or any of its Restricted Subsidiaries, each
item to be determined in conformity with U.S. GAAP (excluding the effects of
foreign currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52).
<PAGE> 15
15
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the Issue Date or (ii) was nominated for election or elected to such Board of
Directors with, or whose election to such Board of Directors was approved by,
the affirmative vote of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination or election or (iii)
is any designee of any Permitted Holder or was nominated by any Permitted
Holder.
"Corporate Trust Office" means the address of the Trustee specified
in Section 11.2.
"Covenant Defeasance" shall have the meaning set forth in Section
8.3.
"Credit Facilities" means one or more senior credit agreements,
senior loan agreements or similar senior facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Cumulative Consolidated Cash Flow" means, for the period beginning
on the Issue Date through and including the end of the last fiscal quarter
(taken as one accounting period) preceding the date of any proposed Restricted
Payment, Consolidated Cash Flow of the Company and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with U.S. GAAP.
"Cumulative Consolidated Fixed Charges" means, for the period
beginning on the Issue Date through and including the end of the last fiscal
quarter (taken as one accounting period) preceding the date of any proposed
Restricted Payment, Consolidated Fixed Charges of the Company and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with U.S. GAAP.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement and any other arrangement or agreement designed to provide
protection against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
<PAGE> 16
16
"Default Interest Payment Date" shall have the meaning set forth in
Section 2.13.
"Definitive Notes" means Notes in definitive registered form
substantially in the form of Exhibits B and D.
"DTC" means The Depository Trust Company or its successors.
"DWAC" means the Depositary/Deposit Withdraw at Custodian system.
"Eligible Accounts Receivable" means the accounts receivables (net
of any reserves and allowances for doubtful accounts in accordance with U.S.
GAAP) of any Person that are not more than 60 days past their due date and that
were entered into in the ordinary course of business on normal payment terms as
shown on the most recent consolidated balance sheet of such Person filed with
the Commission, all in accordance with U.S. GAAP.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euro" shall have the meaning set forth in Section [ ].
"Euroclear Operator" means Morgan Guaranty Trust Company of New York
(Brussels office), as operator of the Euroclear System.
"Event of Default" shall have the meaning set forth in Section 6.1.
"Excess Proceeds" shall have the meaning set forth in Section 4.16.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Fair Market Value" means, with respect to any asset or property,
the price (after taking into account any liabilities relating to such assets)
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of which is under
any compulsion to complete the transaction; provided, however, that the Fair
Market Value of any such asset or assets shall be determined conclusively by the
Board of Directors acting in good faith, which determination shall be evidenced
by a resolution of such Board delivered to the Trustee.
<PAGE> 17
17
"Global Dollar Note" shall have the meaning set forth in Section
2.1.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged and are
not callable or redeemable at the option of the issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof) of any other Person; provided that
the term "Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an Incurrence of Indebtedness by reason of the
acquisition of more than 50% of the Equity Interests in any Person; provided
that the accrual of interest shall not be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person,
whether or not contingent (A) in respect of borrowed money, (B) evidenced by
bonds, debentures, notes or other similar instruments or letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto), (C) representing the balance deferred and unpaid of the purchase price
of property or services, which purchase price is due more than six months after
the date of placing such property in service or taking delivery and title
thereto or the completion of such services, except Trade Payables, (D)
representing Capitalized Lease Obligations, (ii) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the amount of such Indebtedness, (iii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such
Indebtedness is Guaranteed by such Person, (iv) the maximum fixed redemption or
repurchase price of Redeemable Stock of such Person at the time of determination
and (v) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described
<PAGE> 18
18
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation; provided (x)
that the amount outstanding at any time of any Indebtedness issued with original
issue discount is the face amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with U.S. GAAP, (y) money borrowed and set
aside at the time of the Incurrence of any Indebtedness (and which is pledged in
favor of the holders of such Indebtedness pending such application) shall not be
deemed to be "Indebtedness" so long as such money is held to secure the payment
of such interest and (z) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Indebtedness to Consolidated Cash Flow Ratio" shall have the
meaning set forth in Section 4.4.
"Indenture" means this Indenture, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate insurance, and any other arrangement
or agreement designed to provide protection against fluctuations in interest
rates.
"Investment" in any Person means, any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way of
Guarantee or similar arrangement; but excluding advances to customers in the
ordinary course of business that are, in conformity with U.S. GAAP, recorded as
accounts receivable on the balance sheet of such Person or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other tangible or intangible property to others or any payment for any property
or services for the account or use of others), or any purchase or acquisition of
Equity Interests, bonds, notes, debentures, or other similar instruments issued
by, any other Person. For purposes of the definition of "Unrestricted
Subsidiary" and Sections 4.3 and 4.19, (i) "Investment" shall include (a) the
Fair Market Value of the assets (net of liabilities) of any Restricted
Subsidiary of the Company at the time that such Restricted Subsidiary of the
Company is designated an Unrestricted Subsidiary and shall exclude the Fair
Market Value of the assets (net of liabilities) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary of the Company and (b) the Fair Market Value, in the case of a sale
of Equity Interests in accordance with Section 4.19 such that a Person no longer
constitutes a Restricted Subsidiary, of the remaining assets (net of
<PAGE> 19
19
liabilities) of such Person after such sale, and shall exclude the fair market
value of the assets (net of liabilities) of any Unrestricted Subsidiary at the
time that such Unrestricted Subsidiary is designated a Restricted Subsidiary of
the Company and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer.
"Issue Date" means the date on which the Notes are originally issued
under this Indenture.
"Legal Defeasance" shall have the meaning set forth in Section 8.2.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of Amsterdam, The Netherlands or The City of New York
or a place of payment are authorized or required by law, regulation or executive
order to remain closed. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
"Lien" means, any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind in respect of an asset, whether or not filed,
recorded or otherwise perfected under applicable law (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any sale with recourse against the seller or any Affiliate
of the seller, or any option or other agreement to sell or give any security
interest).
"Maturity Date" means May 15, 2009.
"Most Recent Balance Sheet" means, with respect to any Person, the
most recent consolidated balance sheet of such Person reported on by an
internationally recognized firm of independent accountants without qualification
as to scope.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or Cash Equivalents, including
payments in respect of deferred payment obligations (to the extend corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or Cash Equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary of the
Company) and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing agreements), (iii) payments made to repay Indebtedness or any
other obligation
<PAGE> 20
20
outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with U.S. GAAP;
provided that such amounts which cease to be held as reserves shall be deemed
Net Cash Proceeds; and (b) with respect to any capital contribution or any
issuance or sale of Equity Interests (other than Redeemable Stock), the proceeds
of such capital contribution, issuance or sale in the form of cash or Cash
Equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or Cash Equivalents (except to the extent (1)
such obligations are financed, directly or indirectly, with money borrowed from
the Company or any Restricted Subsidiary or otherwise financed or sold with
recourse to the Company or any Restricted Subsidiary or (2) the capital
contribution or purchase of the Equity Interests is otherwise financed, directly
or indirectly, by the Company or any Restricted Subsidiary, including through
funds contributed, extended, guaranteed or otherwise advanced by the Company or
any Affiliate) and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of attorney's fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a U.S. Person, as
defined in Regulation S.
"Notes" shall have the meaning set forth in the preamble of this
Indenture.
"Offer Amount" shall have the meaning set forth in Section 4.16.
"Offering" means the offering of the Notes described in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated as of
November 17, 1998, relating to the Units.
"Offer Period" shall have the meaning set forth in Section 4.16.
"Officer" means, with respect to any Person (other than any Agent),
<PAGE> 21
21
the Chairman of the Board, any Director, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Assistant Treasurer, the Controller or the Secretary of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements set
forth in Sections 11.4 and 11.5.
"Opinion of Counsel" means a written opinion from legal counsel
which and who are reasonably acceptable to, and addressed to, the Trustee
complying with the requirements of Sections 11.4 and 11.5. Unless otherwise
required by the TIA, the legal counsel may be an employee of or counsel to the
Company or the Trustee.
"Ordinary Shares" means the ordinary shares, consisting of the Class
A Shares and the Class B Shares, each par value NLG 0.10 per share, of the
Company.
"Paying Agent" shall have the meaning set forth in Section 2.3.
"Permitted Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) constructing, creating, developing
or marketing communications related network equipment, software and other
devices for use in a telecommunications business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in clause (i) or (ii) above.
"Permitted Holder" means, collectively, Telecom Founders B.V.,
NeSBIC Venture Fund C.V., Cromwilld Limited, Paribas Deelnemingen N.V.,
Nederlandse Participatie Maatschappij N.V. and any Affiliate of the foregoing
Persons.
"Permitted Investment" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, the Company or a Restricted
Subsidiary; (ii) commissions, payroll, travel and similar advances to cover
matters that are expected at the time of such advance ultimately to be treated
as expenses in accordance with U.S. GAAP; (iii) stock, obligations or securities
received (a) in satisfaction of judgments or (b) in settlement of debts or as a
result of foreclosure, perfection or enforcement of any Lien, in each case under
this clause (b) arising in the ordinary course of business and not in
contemplation of the acquisition of such stock, obligations or securities; (iv)
Investments in any Person (the primary business of which is related, ancillary
or complementary to the business of the
<PAGE> 22
22
Company on the date of such Investment) at any one time outstanding (measured on
the date each such Investment was made without giving effect to subsequent
changes in value) in an aggregate amount not to exceed the greater of (x) $10.0
million and (y) 5.0% of the Company's total consolidated assets as of the end of
the most recently completed fiscal quarter; (v) Investments in Cash Equivalents;
(vi) Investments made as a result of the receipt of noncash consideration from
any Asset Sale made in compliance with Section 4.16; (vii) Investments made in
the ordinary course of the telecommunications business in the Permitted Business
and on ordinary business terms in the Permitted Business in consortia formed to
construct transmission infrastructure for use primarily in the Permitted
Business, provided such Investment entitles the Company to rights of way or
rights of use on such transmission infrastructure; (viii) Investments made in
the ordinary course of the telecommunications business and on ordinary business
terms as partial payment for constructing a network relating principally to the
Permitted Business; and (ix) any Investment in Pledged Securities.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (ii) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Restricted Subsidiaries; (v) Liens (including extensions and renewals thereof)
upon real or personal property of a Restricted Subsidiary purchased or leased
after the Issue Date; provided that (a) such Lien is created solely for the
purpose of securing Indebtedness Incurred by such Restricted Subsidiary in
compliance with Section 4.4 (1) to finance the cost of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within six months after the later of the acquisition and the Incurrence of such
Indebtedness or (2) to refinance any Indebtedness of a Restricted Subsidiary
previously so secured, (b) the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such cost and (c) any such Lien shall not
extend to or cover any property or assets other than
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such item of property or assets; (vi) any interest or title of a lessor in the
property subject to any Capitalized Lease or operating lease of a Restricted
Subsidiary which, in each case, is permitted under the Indenture; (vii) Liens on
property of, or on Equity Interests in or Indebtedness of, any Person existing
at the time such Person becomes, or becomes a part of, any Restricted
Subsidiary; provided that such Liens were not created, incurred or assumed in
contemplation of such transaction and do not extend to or cover any property or
assets of the Company or any Restricted Subsidiary other than the property or
assets so acquired; (viii) Liens arising from the rendering of a final judgment
or order against the Company or any Restricted Subsidiary of the Company that
does not give rise to an Event of Default; (ix) Liens encumbering customary
initial deposits and margin deposits and other Liens that are either within the
general parameters customary in the industry or incurred in the ordinary course
of business, in each case, securing Indebtedness under Interest Rate Agreements
and Currency Agreements; (x) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale of goods entered
into by the Company or any of its Restricted Subsidiaries in the ordinary course
of business in accordance with the past practices of the Company and its
Restricted Subsidiaries prior to the Issue Date; (xi) Liens existing on the
Issue Date or securing the Notes or any Guarantee of the Notes; (xii) Liens
granted after the Issue Date on any assets or Equity Interests in the Company or
its Restricted Subsidiaries created in favor of the Holders; (xiii) Liens with
respect to the assets of a Restricted Subsidiary granted by such Restricted
Subsidiary to the Company or another Restricted Subsidiary to secure
Indebtedness owing to the Company or such Restricted Subsidiary and Incurred in
compliance with clause (ii) of paragraph (b) of Section 4.4; (xiv) Liens created
in connection with the incurrence of any Indebtedness permitted to be Incurred
under clause (iii) of paragraph (b) of Section 4.4; provided that the
Indebtedness which it refinances is secured by similar Liens; (xv) Liens
securing Indebtedness under Credit Facilities incurred in compliance with clause
(viii) of paragraph (b) of Section 4.4; (xvi) Liens incurred or deposits made to
secure the performance of tenders, bids, leases, subleases, licenses,
sublicenses, obligations for utilities, statutory or regulatory obligations,
bankers' acceptances, letters of credit, surety and appeal bonds, government or
other contracts, completion guarantees, performance and return-of-money bonds
and other obligations of a similar nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (xvii)
Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;
(xviii) Liens arising out of leases, subleases, licenses or sublicenses granted
to others in the ordinary course of business; (xix) any encumbrance or
restriction (including, but not limited to, put and call agreements) with
respect to Capital Stock of any joint venture pursuant to any joint venture
agreement; (xx) Liens encumbering property or assets under construction (and
related rights) in favor of a contractor or developer, or arising from progress
or partial payments by a customer of the Company or its Restricted Subsidiaries
relating to such property or assets; and (xxi) Liens arising from filing Uniform
Commercial Code or similar financing statements regarding
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leases.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) which is preferred as to the payment of dividends
or distributions, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over Equity Interests of
any other class in such Person.
"Pro Forma Consolidated Cash Flow" means, with respect to any Person
for any period, the Consolidated Cash Flow of such Person for such period
calculated on a pro forma basis to give effect to any Asset Disposition or Asset
Acquisition (including acquisitions of other Persons by merger, consolidation or
purchase of Equity Interests) during such period as if such Asset Disposition or
Asset Acquisition had taken place on the first day of such period and income (or
losses) ceased to accrue or accrued, as the case may be, therefrom from such
date.
"Public Equity Offering" means an underwritten primary public
offering of Ordinary Shares of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Date" shall have the meaning set forth in Section 4.16.
"Record Date" means the Record Dates specified in the Notes.
"Redeemable Stock" means , with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or Redeemable
Stock or (iii) is redeemable or must be purchased, upon the occurrence of
certain events or otherwise, by such Person at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes; provided, however, that any Capital Stock that
would not constitute Redeemable Stock but for provisions thereof giving holders
thereof the right to require such Person to purchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the first anniversary of the Stated Maturity of the Notes shall not
constitute Redeemable Stock if (x) the
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"asset sale" or "change of control" provisions applicable to such Capital Stock
are not more favorable to the holders of such Capital Stock than the terms
applicable to the Notes and described under Section 4.15 and Section 4.16 and
(y) any such requirement only becomes operative after compliance with such terms
applicable to the Notes including the purchase of any Notes tendered pursuant
thereto.
"Redemption Date" when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and
Paragraphs 8 and 9 of the Dollar Note.
"Redemption Price" when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and Paragraphs 8 and 9 of the Dollar Note.
"Registrar" shall have the meaning set forth in Section 2.3.
"Relevant Taxing Jurisdiction" shall have the meaning set forth in
Section 4.20.
"Replacement Assets" means any property, plant or equipment of a
nature or type that are used or usable in Permitted Businesses.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is then not an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill Companies, and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Share Capital" means, at any time of determination, the stated
capital of the Equity Interests (other than Redeemable Stock) and additional
paid-in capital of the Company as set forth on the most recent balance sheet of
the Company at such time.
"Significant Subsidiary" means, at any time of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (A) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (B) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year prepared in conformity with US GAAP and (ii) any
Restricted Subsidiary which, when aggregated with all other Restricted
Subsidiaries that are not otherwise
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Restricted Subsidiaries and as to which any event described in Section 6.1(h) or
Section 6.1(i) has occurred and is continuing, would constitute a Significant
Subsidiary under clause (i) of this definition.
"Stated Maturity" means, (i) with respect to any debt security, the
date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any scheduled installment of principal of or interest on any debt
security, the date specified in such debt security as the fixed date on which
such installment is due and payable.
"Strategic Minority Capital Stock Issues" means issuances or sales
of common stock of a Restricted Subsidiary, principally engaged in business
outside The Netherlands, to a Person which is principally engaged in the
Permitted Business and which has an equity market capitalization, a net asset
value or annual revenues of at least $500 million, which issuances or sales do
not represent more than 49% of the outstanding common stock of such Restricted
Subsidiary; provided that any such Strategic Minority Capital Stock Issue is
made to only one such Person with respect to any Restricted Subsidiary.
"Strategic Subordinated Indebtedness" means Indebtedness of the
Company or any Restricted Subsidiary Incurred to finance the acquisition of a
Person engaged in a business that is related, ancillary or complementary to the
Permitted Business, which Indebtedness by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is Incurred, (i) is
expressly made subordinate in right of payment to the Notes and (ii) provides
that no payment of principal, premium or interest on, or any other payment in
full of all of the Company's obligations under the Notes; provided that such
Indebtedness may provide for and be repaid at any time, in accordance with
Section 4.3, from the proceeds of a substantially concurrent capital
contribution or sale of Equity Interests (other than Redeemable Stock) of the
Company to any Person (other than a Subsidiary) after the Incurrence of such
Indebtedness.
"Subsidiary" means, with respect to any Person (i) any corporation,
association or other business entity of which more than 50% of the outstanding
Voting Stock is at the time of determination owned, directly or indirectly, by
such Person or one or more other Subsidiaries of such Person and (ii) any
partnership, joint venture, limited liability company or similar entity of which
(A) more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, are
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof whether in the
form of membership, general, special or limited partnership or otherwise and (B)
such Person or any Restricted Subsidiary of such Person is a controlling general
partner, co-venturer or manager or is in a similar position or otherwise
controls such entity.
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"Successor Company" shall have the meaning set forth in Section 5.1.
"Taxes" shall have the meaning set forth in Section 4.20.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb), as it may be amended from time to time.
"Telecommunications Assets" means, with respect to any Person,
assets used in the Permitted Business (or Equity Interests of a Person that
becomes a Restricted Subsidiary, the assets of which consist principally of such
Telecommunications Assets) that are purchased or acquired by the Company or a
Restricted Subsidiary after the Issue Date.
"Trade Payables" means any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by the Company or any of its Restricted Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods and
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee), including any vice
president, assistant vice president, corporate trust officer, assistant
corporate trust officer, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors in the manner provided below) and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the
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Company) to be an Unrestricted Subsidiary unless such Subsidiary, or any of its
Subsidiaries, owns any Equity Interests or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary; provided that
(a) the Company certifies in an Officers' Certificate that such designation
complies with the covenants described under Section 4.3, (b) such Subsidiary is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might reasonably be
obtained in a comparable arm's-length transaction at the time from Persons who
are not Affiliates of the Company, (c) neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe
for additional Equity Interests in such Subsidiary or any Subsidiary of such
Subsidiary or (2) to maintain or preserve such Subsidiary's financial condition
or to cause such Subsidiary to achieve any specified levels of operating results
and (d) such Subsidiary and its Subsidiaries has not at the time of designation,
and does not thereafter, Incur any Indebtedness other than Unrestricted
Subsidiary Indebtedness. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Company; provided that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.4(a) on a pro forma basis
taking into account such designation and (y) no Default or Event of Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Unrestricted Subsidiary Indebtedness" means Indebtedness of any
Unrestricted Subsidiary (i) as to which neither the Company nor any Restricted
Subsidiary is directly or indirectly liable (by virtue of the Company or any
such Restricted Subsidiary being the primary obligor on, guarantor of, or
otherwise liable in any respect to, such Indebtedness), and (ii) which, upon the
occurrence of a default with respect thereto, does not result in, or permit any
holder of any Indebtedness of the Company or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Company or any Restricted
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"U.S. GAAP" means, at any date of determination, generally accepted
accounting principles as in effect in the United States of America which are
applicable at the date of determination and which are consistently applied for
all applicable periods.
"U.S. Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and are not callable or redeemable at the option of the issuer thereof.
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"U.S. Person" means a "U.S. person" as defined in Rule 902 under the
Securities Act or any successor to such Rule.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily entitled to vote for the election of directors
thereof at a meeting of Stockholders called for such purpose, without the
occurrence of any additional event or contingency.
["Warrant Agreement" means the Warrant Agreement, dated as of the
Issue Date, between the Company and the United States Trust Company of New York,
as Warrant Agent.
"Warrants" means warrants issued by the Company on the pursuant to
the Warrant Agreement, each of which represents the right to purchase 6.667
Class B Shares of the Company.]
"Weighted Average Life to Maturity" means, at any date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i) (a) the sum of the products of the number of years from such date
of determination to the dates of each successive scheduled principal payment of,
or redemption or similar payment with respect to, such Indebtedness multiplied
by (b) the amount of such principal payment, by (ii) the sum of all such
principal payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
all of the outstanding voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
SECTION 1.2 Incorporation by Reference of TIA. This Indenture is
subject to the mandatory provisions of the TIA which as of the date hereof and
thereafter as in effect are incorporated by reference in, and made a part of,
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company or any other
obligor on the Notes.
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All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with U.S. GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in the plural
include the singular;
(e) provisions apply to successive events and transactions; and
(f) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating. The Dollar Notes and the notation
relating to the Trustee's certificate of authentication shall be substantially
in the form of Exhibits A or B, as applicable. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company and the Trustee shall approve the form of the Notes and any notation,
legend or endorsement on them. Each Note shall be dated the date of its issuance
and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
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The Dollar Notes shall be initially issued as a single security, in
global bearer form without interest coupons, substantially in the form of
Exhibit A hereto, with such applicable legends as are provided in Exhibit A
hereto (the "Global Dollar Note"). The Global Dollar Note will be issued in a
denomination equal to the outstanding Dollar Notes represented thereby and will
be held by The Bank of New York, as the Depositary. The Global Dollar Note will
be deposited with the Depositary pursuant to the Depositary Agreement, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided.
The Depositary will issue one certificateless depositary interest
(representing the Global Dollar Note) to DTC, which will then record beneficial
interests in the Global Dollar Note. Beneficial interests in the Global Dollar
Note will be shown on, and transfers thereof will be effected only through,
records maintained in book-entry form by DTC (with respect to participants'
interests) and its Agent Members, including, as applicable, the Euroclear
Operator and Cedel.
The aggregate principal amount of the Global Dollar Note may from
time to time be increased or decreased by adjustments made by annotation or
endorsement thereon by the Company or by the Trustee, the Depositary or a
custodian of either on behalf of the Company in consequence of the issue of the
Definitive Dollar Notes.
SECTION 2.2 Execution and Authentication. Two Officers, or an
Officer and a Secretary, shall sign, or one Officer shall sign and one Officer
or an Assistant Secretary (each of whom shall, in each case, have been duly
authorized by all requisite corporate actions) shall attest to, the Notes for
the Company by manual or facsimile signature.
If an Officer or Secretary whose signature is on a Note was an
Officer or Secretary at the time of such execution but no longer holds that
office or position at the time the Trustee authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Dollar Notes for original issue
in the aggregate principal amount not to exceed $|X| upon receipt of a Company
Order in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Notes to be authenticated, the series and type of Notes
and the date on which the Notes are to be authenticated, whether the Notes are
to be issued as Definitive Notes or Global Notes and such other information as
the Trustee may reasonably request. In authenticating the Notes and accepting
the responsibilities under this Indenture in relation to the Notes the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of
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Counsel stating that the form and terms thereof have been established in
conformity with the provisions of this Indenture. The aggregate principal amount
of Dollar Notes outstanding at any time may not exceed $|X| except as provided
in Section 2.7. Upon receipt of a Company Order, the Trustee shall authenticate
Notes in substitution of Notes originally issued to reflect any name change of
the Company.
The Trustee may appoint an authenticating agent ("Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company. The Trustee hereby appoints United States
Trust Company of New York to be the Authenticating Agent on the Issue Date.
The Dollar Notes shall be issuable only in denominations of $1,000
and any integral multiple thereof. The Global Notes shall be in bearer form
without coupons and the Definitive Notes shall be in registered form.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York and, if
and so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such stock exchange so require, in Luxembourg, where (i) Global Notes
may be presented or surrendered for registration of transfer or for exchange
("Registrar"), (ii) Global Notes may be presented or surrendered for payment
("Paying Agent") and (iii) notices and demands in respect of such Global Notes
and this Indenture may be served. In the event that Definitive Notes are issued,
(x) Definitive Notes may be presented or surrendered for registration of
transfer or for exchange, (y) Definitive Notes may be presented or surrendered
for payment and (z) notices and demands in respect of the Definitive Notes and
this Indenture may be served at an office of the Registrar or the Paying Agent,
as applicable, in the Borough of Manhattan, The City of New York. The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company, upon notice to the Trustee, may have one or more co-Registrars and one
or more additional Paying Agents reasonably acceptable to the Trustee. The term
"Registrar" includes any co-Registrar and the term "Paying Agent" includes any
additional Paying Agent. The Company initially appoints United States Trust
Company of New York as Registrar and Paying Agent until such time as United
States Trust Company of New York has resigned or a successor has been appointed.
The Company may change any Registrar or Paying Agent without notice to any
Holder. Payment of principal will be made upon the surrender of
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Definitive Notes at the office of the Paying Agent, including, if any, the
Paying Agent in Luxembourg. In the case of a transfer of a Definitive Note in
part, upon surrender of the Definitive Note to be transferred, a Definitive Note
shall be issued to the transferee in respect of the principal amount transferred
and a Definitive Note shall be issued to the transferor in respect of the
balance of the principal amount of the transferred Definitive Note at the office
of any transfer agent, including, if any, the transfer agent in Luxembourg.
If Definitive Notes are issued, the Company will appoint Kredietbank
S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably
acceptable to the Trustee, as an additional paying and transfer agent. Upon the
issuance of Definitive Notes, Holders will be able to receive principal and
interest on the Notes and will be able to transfer Definitive Notes at the
Luxembourg office of such paying and transfer agent, subject to the right of the
Company to mail payments in accordance with the terms of this Indenture.
SECTION 2.4 Paying Agent To Hold Assets in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all
assets held by the Paying Agent for the payment of principal of, Additional
Amounts, if any, premium, if any, or interest on, the Notes, and shall notify
the Trustee of any Default by the Company in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.5 List of Holders. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee before each Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.6 Transfer and Exchange. (a) Transfer of a Global Dollar
Note shall be by delivery. Each Global Dollar Note authenticated under this
Indenture shall be in bearer form and delivered to the Depositary or a nominee
or custodian therefor, and each such Global Dollar Note shall constitute a
single Note for all purposes of this Indenture.
(b) All Global Dollar Notes shall be exchanged by the Company (with
authentication by the Trustee) for one or more Definitive Notes of the same
series, if
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(a) DTC (i) has notified the Company that it is unwilling or unable to continue
as, or ceases to be, a clearing agency registered under the Exchange Act and
(ii) a successor to DTC registered as a clearing agency under the Exchange Act
is not able to be appointed by the Company within 90 days of such notification,
(b) the Depositary is at any time unwilling or unable to continue as Depositary
and a successor Depositary is not able to be appointed by the Company within 90
days or (c) at any time at the option of the Company. If an Event of Default
occurs and is continuing, the Company shall, at the request of the Holder
thereof, exchange all or part of any Global Dollar Note for one or more
Definitive Notes (with authentication by the Trustee); provided, however, that
the principal amount at maturity of such Definitive Notes and such Global Dollar
Note after such exchange shall be $1,000 or integral multiples thereof. Whenever
all of a Global Dollar Note is exchanged for one or more Definitive Notes, it
shall be surrendered by the Holder thereof to the Trustee for cancellation.
Whenever a part of a Global Dollar Note, is exchanged for one or more Definitive
Notes, the Global Dollar Note shall be surrendered by the Holder thereof to the
Trustee who shall cause an adjustment to be made to Schedule A of such Global
Dollar Note such that the principal amount of such Global Dollar Note will be
equal to the portion of such Global Dollar Note not exchanged and shall
thereafter return such Global Dollar Note to such Holder. All Definitive Notes
issued in exchange for a Global Dollar Note or any portion thereof shall be
registered in such names as the Depositary shall instruct the Trustee based on
the instructions of DTC. Every Note authenticated and delivered in exchange for
or in lieu of a Global Dollar Note, or any portion thereof, pursuant to Section
2.7, 2.10, 3.5 or 3.7 hereof or otherwise, shall be authenticated and delivered
in the form of, and shall be, a Global Dollar Note. A Global Dollar Note may not
be exchanged for a Definitive Note other than as provided in this Section
2.6(b).
(c) Definitive Notes shall be transferable only upon the surrender
of a Definitive Note for registration of transfer. When a Definitive Note is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements for such transfers are met. When Definitive Notes are presented to
the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Definitive Notes of other denominations, the Registrar shall
make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Notes at the Registrar's or co-registrar's
request.
(d) The Company shall not be required to make, and the Registrar
need not register transfers or exchanges of, Definitive Notes selected for
redemption (except, in the case of Definitive Notes to be redeemed in part, the
portion thereof not to be redeemed) or any Definitive Notes for a period of 15
days before a selection of Definitive Notes to be redeemed.
(e) Prior to the due presentation for registration of transfer of
any Definitive Note, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the Person in whose name a Definitive
Note is registered as the absolute owner of such Definitive Note for the purpose
of receiving payment of principal, premium,
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if any, interest or Additional Amounts, if any, on such Definitive Note and for
all other purposes whatsoever, whether or not such Definitive Note is overdue,
and none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(f) The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with any transfer
or exchange pursuant to this Section 2.6.
(g) All Notes issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Notes surrendered upon such transfer
or exchange.
SECTION 2.7 Replacement Notes. If a mutilated Definitive Note is
surrendered to the Registrar, if a mutilated Global Dollar Note is surrendered
to the Company or if the Holder of a Note claims that such Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note in such form as the Note being replaced if the
requirements of the Trustee, the Registrar and the Company are met. If required
by the Trustee, the Registrar or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of the Company,
the Registrar and the Trustee, to protect the Company, the Registrar, the
Trustee and any Agent from any loss which any of them may suffer if a Note is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Note, including reasonable fees and expenses of counsel.
Every replacement Note is an additional obligation of the Company.
SECTION 2.8 Outstanding Notes. Notes outstanding at any time are all
the Notes that have been authenticated by the Trustee except those cancelled by
it, those delivered to it for cancellation, those reductions in the Global Note
effected in accordance with the provisions hereof and those described in this
Section as not outstanding. Subject to Section 2.9, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest and Additional Amounts, if
any, on it cease to accrue.
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If on a Redemption Date or the Maturity Date the Paying Agent holds
cash in U.S. dollars or U.S. Government Securities sufficient to pay all of the
principal and interest due on the Notes payable on that date, then on and after
that date such Notes cease to be outstanding and interest and Additional
Amounts, if any, on such Notes cease to accrue.
SECTION 2.9 Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company or its Affiliates shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes that a
Trust Officer of the Trustee actually knows are so owned shall be disregarded.
The Company shall notify the Trustee, in writing, when it or any of
its Affiliates repurchases or otherwise acquires Notes of the aggregate
principal amount of such Notes so repurchased or otherwise acquired. The Trustee
may require an Officers' Certificate listing Notes owned by the Company, a
Subsidiary of the Company or an Affiliate of the Company.
SECTION 2.10 Temporary Notes. Until permanent Definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Definitive Notes upon receipt of a Company Order in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
temporary Definitive Notes to be authenticated and the date on which the
temporary Definitive Notes are to be authenticated. Temporary Definitive Notes
shall be substantially in the form of permanent Definitive Notes but may have
variations that the Company considers appropriate for temporary Definitive
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate upon receipt of a Company Order pursuant to Section 2.2
permanent Definitive Notes in exchange for temporary Definitive Notes.
SECTION 2.11 Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Notes surrendered to them for transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or the
Paying Agent, and no one else, shall cancel and, at the written direction of the
Company, shall dispose of (subject to the record retention requirements of the
Exchange Act) all Notes surrendered for transfer, exchange, payment or
cancellation; provided, however, that the Trustee may, but shall not be required
to, destroy such cancelled Notes. Subject to Section 2.7, the Company may not
issue new Notes to replace Notes that it has paid or delivered to the Trustee
for cancellation. If the Company shall acquire any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for
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cancellation pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest. If the Company defaults in a
payment of interest on the Notes, it shall pay the defaulted interest, plus (to
the extent lawful) any interest payable on the defaulted interest, to the Holder
thereof on a subsequent special record date, which date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest. The Company shall notify the Trustee and Paying Agent in writing of
the amount of defaulted interest proposed to be paid on each Dollar Note and the
date of the proposed payment (a "Default Interest Payment Date"), and at the
same time the Company shall deposit with the Trustee or Paying Agent an amount
of money equal to the aggregate amount proposed to be paid in respect of such
defaulted interest or shall make arrangements satisfactory to the Trustee or
Paying Agent for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted interest as in this Section 2.12; provided, however, that in
no event shall the Company deposit monies proposed to be paid in respect of
defaulted interest later than 11:00 a.m. New York City time on the proposed
Default Interest Payment Date with respect to defaulted interest to be paid on
the Dollar Note. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder, with a copy to the Trustee, a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
SECTION 2.13 CUSIP, ISIN and Common Code Numbers. The Company in
issuing the Notes may use a "CUSIP", "ISIN" or "Common Code" number, and if so,
the Trustee shall use the CUSIP, ISIN and Common Code number in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice may state that no representation is made as to the correctness or
accuracy of the , ISIN and Common Code number printed in the notice or on the
Notes, and that reliance may be placed only on the other identification numbers
printed on the Notes. The Company shall promptly notify the Trustee of any
change in any CUSIP, ISIN or Common Code number.
SECTION 2.14 Deposit of Moneys. Prior to 11:00 a.m. New York City
time on each Interest Payment Date and Maturity Date, the Company shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date or Maturity
Date, as the case may be, on all Dollar Notes then outstanding. Such payments
shall be made by the Company in a timely manner which permits the Paying Agent
to remit payment to the Holders on such Interest Payment Date or Maturity Date,
as the case may be.
SECTION 2.15 Certain Matters Relating to Global Notes. (a) Members
of, or participants in, DTC ("Agent Members") shall have no rights under this
Indenture with respect to any Global Note held on their behalf by DTC or the
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Trustee as its custodian, or under the Global Note, and DTC may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) The Holder of any Global Note may grant proxies and otherwise
authorize any person, including DTC and its Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 2.16 Separation of Warrants and Notes. The Notes and
Warrants will not be separately transferable until the Separation Date. The
"Separation Date" will be the earliest of (i) May 15, 1999, (ii) the
commencement of an exchange offer or the effectiveness of a Shelf Registration
Statement with respect to the Notes, (iii) the Exercisability Date (as defined
in the Warrant Agreement) and (iv) such other date as the Representatives will
determine in their sole discretion. The surrender of a Unit Certificate (as
defined in the Unit Agreement) for separate Warrant and Note certificates is
herein referred to as a "Separation" and the related Notes being referred to as
"Separated." Upon Separation of the Warrants and the Notes, the Global Notes
shall be transferred to and deposited with the Trustee, as custodian for, and
registered in the name of DTC or its nominee, duly executed by the Company and
countersigned by the Trustee as provided herein.
ARTICLE III
REDEMPTION
SECTION 3.1 Optional Redemption. The Company may redeem all or any
portion of the Notes, upon the terms and at the redemption prices set forth in
each of the Notes. Any redemption pursuant to this Section 3.1 shall be made
pursuant to the provisions of this Article III.
SECTION 3.2 Notices to Trustee. If the Company elects to redeem
Notes pursuant to Paragraphs 8 or 9 of such Notes it shall notify the Trustee in
writing of the Redemption Date and the principal amount of Notes to be redeemed
at least 15 days prior to the giving of the notice contemplated by
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Section 3.4 (or such shorter period as the Trustee in its sole discretion shall
determine). The Company shall give notice of redemption as required under the
relevant paragraph of the Notes pursuant to which such Notes are being redeemed.
SECTION 3.3 Selection of Notes To Be Redeemed. If less than all of
the Notes are to be redeemed at any time, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements of the principal
securities exchange, if any, on which such Notes are listed, or if such Notes
are not so listed or such exchange prescribes no method of selection, on a pro
rata basis, by lot or by such other method as the Trustee in its sole discretion
shall deem fair and appropriate (and in such manner as complies with applicable
legal and exchange requirements); provided, however, that no Dollar Note of
$1,000 in aggregate principal amount or less shall be redeemed in part. In the
event of partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the Redemption Date by the Trustee from the outstanding Notes not
previously called for redemption.
SECTION 3.4 Notice of Redemption. At least 30 days but not more than
60 days before a Redemption Date, the Company shall publish in a leading
newspaper having a general circulation in New York (which is expected to be The
Wall Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad) (and, if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or in the case of Definitive Notes, mail to Holders by
first-class mail, postage prepaid, at their respective addresses as they appear
on the registration books of the Registrar (and, if and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange
shall so require, publish in a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)). At the Company's
request made at least 45 days before the Redemption Date (or such shorter period
as the Trustee in its sole discretion shall determine), the Trustee shall give
the notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall deliver to the Trustee, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the following items. Each
notice for redemption shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Prices and the amount of interest, if any, and
Additional Amounts, if any, to be paid;
(c) the name and address of the Paying Agent;
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(d) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price plus accrued and unpaid interest, if
any, and Additional Amounts, if any;
(e) that, unless the Company defaults in making the redemption
payment, interest, and Additional Amounts, on Notes called for redemption
cease to accrue on and after the Redemption Date, and the only remaining
right of the Holders of such Notes is to receive payment of the Redemption
Price upon surrender to the Paying Agent of the Notes redeemed;
(f) (i) if any Global Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date, interest and Additional Amounts, if any, shall cease to
accrue on the portion called for redemption, and upon surrender of such
Global Note, the Global Note with a notation on Schedule A thereof
adjusting the principal amount thereof to be equal to the unredeemed
portion, will be returned and (ii) if any Definitive Note is being redeemed
in part, the portion of the principal amount of such Note to be redeemed,
and that, after the Redemption Date, upon surrender of such Definitive
Note, a new Definitive Note or Notes in aggregate principal amount equal to
the unredeemed portion thereof will be issued in the name of the Holder
thereof, upon cancellation of the original Note;
(g) if fewer than all the Notes are to be redeemed, the identification
of the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption;
(h) the paragraph of the Notes pursuant to which the Notes are to be
redeemed; and
(i) the , ISIN or Common Code number, and that no representation is
made as to the correctness or accuracy of the , ISIN or Common Code number,
if any, listed in such notice or printed on the Notes.
SECTION 3.5 Effect of Notice of Redemption. Once notice of
redemption is given in accordance with Section 3.4, Notes called for redemption
become due and payable on the Redemption Date and at the Redemption Price plus
accrued and unpaid interest, if any, and Additional Amounts, if any. Upon
surrender to the Trustee or Paying Agent, such Notes called for redemption shall
be paid at the Redemption Price (which shall include accrued and unpaid interest
thereon, if any, and Additional Amounts, if any, to the Redemption Date), but
installments of interest, the maturity of which is on or prior to the Redemption
Date, shall be payable to Holders of record at the close of business on the
relevant Record Dates.
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SECTION 3.6 Deposit of Redemption Price. Prior to 11:00 a.m. New
York City time on the Redemption Date, the Company shall deposit with the Paying
Agent cash in U.S. dollars sufficient to pay the Redemption Price plus accrued
and unpaid interest, if any, and Additional Amounts, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Company any
cash in U.S. dollars so deposited which is not required for that purpose upon
the written request of the Company.
If the Company complies with the preceding paragraph, then, unless
the Company defaults in the payment of such Redemption Price plus accrued and
unpaid interest, if any, and Additional Amounts, if any, interest, and
Additional Amounts on the Notes to be redeemed will cease to accrue on and after
the applicable Redemption Date, whether or not such Notes are presented for
payment. With respect to Definitive Notes, if a Definitive Note is redeemed on
or after an interest Record Date but on or prior to the related Interest Payment
Date, then any accrued and unpaid interest, and Additional Amounts, if any,
shall be paid to the Person in whose name such Note was registered at the close
of business on such Record Date. If any Note called for redemption shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest, and Additional Amounts, if any,
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Notes and in Section
4.1.
SECTION 3.7 Notes Redeemed in Part. Upon surrender and cancellation
of a Definitive Note that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Definitive Note equal in principal amount to the unredeemed portion of the
Definitive Note surrendered and cancelled; provided, however, that each such
Definitive Note shall be in a principal amount at maturity of $1,000 or an
integral multiple thereof. Upon surrender of a Global Note that is redeemed in
part, the Paying Agent shall forward such Global Note to the Trustee who shall
make a notation on Schedule A thereof to reduce the principal amount of such
Global Note to an amount equal to the unredeemed portion of the Global Note
surrendered; provided, however, that each such Global Note shall be in a
principal amount at maturity of $1,000 or an integral multiple thereof.
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ARTICLE IV
COVENANTS
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SECTION 4.1 Payment of Notes. (a) The Company shall pay the
principal, premium, if any, interest and Additional Amounts, if any, on the
Dollar Notes in the manner provided in such Dollar Notes and this Indenture. An
installment of principal of or interest on the Dollar Notes shall be considered
paid on the date it is due if the Trustee or Paying Agent holds at 11:00 a.m.
New York City time on that date money deposited by the Company in immediately
available funds and designated for, and sufficient to pay the installment in
full and is not prohibited from paying such money to the Holders pursuant to the
terms of this Indenture.
(b) The Company shall pay, to the extent such payments are lawful,
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and on overdue installments of interest
(without regard to any applicable grace periods) and on any Additional Amounts
from time to time on demand at the rate borne by the Notes plus 1.5% per annum.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
SECTION 4.2 Maintenance of Office or Agency. The Company shall
maintain the office or agency (which office may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-Registrar) required under Section
2.3 where Notes may be surrendered for registration of transfer or for exchange
and where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.2. The Company hereby initially
designates the office of CT Corporation System, located at 1633 Broadway, New
York, New York, 10019, as its office or agency outside The Netherlands as
required under Section 2.3 hereof. If Definitive Notes are issued, and if the
Notes are listed on the Luxembourg Stock Exchange, the Company will appoint
Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and
reasonably acceptable to the Trustee, as an additional paying and transfer
agent.
SECTION 4.3 Limitation on Restricted Payments. (a) The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on account of any
Equity Interest in the Company or any Restricted Subsidiary to the holders
thereof, including any dividend or distribution payable in connection with any
merger or consolidation (other than (A) dividends or distributions payable
solely in
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Equity Interests (other than Redeemable Stock) of the Company, (B) dividends or
distributions made only to the Company or a Restricted Subsidiary and (C) pro
rata dividends or distributions on Capital Stock of a Restricted Subsidiary held
by Persons other than the Company or a Restricted Subsidiary), (ii) purchase,
redeem, retire or otherwise acquire for value any Equity Interests of the
Company or any Equity Interests of any Restricted Subsidiary (other than any
such Equity Interests owned by the Company or any Restricted Subsidiary), (iii)
make any principal payment or redeem, repurchase, defease, or otherwise acquire
or retire for value, in each case, prior to any scheduled repayment, or
maturity, any Indebtedness of the Company that is subordinated in right of
payment to the Notes, or (iv) make any Investment, other than a Permitted
Investment, in any Person (all such payments or any other actions described in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments") unless, at the time of, and after giving effect to, the proposed
Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing;
(B) the Company could Incur at least $1.00 of additional
Indebtedness under Section 4.4(a); and
(C) the aggregate amount expended for all Restricted Payments (the
amount so expended, if other than in cash, to be determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) after the Issue Date is less than the sum of (1) Cumulative
Consolidated Cash Flow minus 150% of Cumulative Consolidated Fixed Charges plus
(2) 100% of the aggregate Net Cash Proceeds received by the Company after the
Issue Date as a capital contribution or from the issuance and sale of its Equity
Interests (other than Redeemable Stock, and excluding any Ordinary Shares issued
in connection with the Offering or the Recapitalization, as defined in the
Offering Memorandum) to a Person (other than a Restricted Subsidiary of the
Company), plus (3) the aggregate amount by which Indebtedness (other than any
Indebtedness subordinated in right of payment to the Notes) of the Company or
any Restricted Subsidiary is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Restricted Subsidiary of the Company)
subsequent to the Issue Date into Equity Interests (other than Redeemable Stock
and less the amount of any cash, or the fair value of property, distributed by
the Company or any Restricted Subsidiary upon such conversion or exchange) and
plus (4) without duplication of any amount included in the calculation of
Consolidated Net Income, in the case of repayment of, or return of capital in
respect of, any Investment constituting a Restricted Payment made after the
Issue Date, an amount equal to the lesser of the repayment of, the return of
capital with respect to, such Investment and the cost of such Investment, in
either case less the cost of the disposition of such Investment and net of
taxes.
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(b) The foregoing provisions in Section 4.3(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof if, at said date of declaration, such payment would
comply with the provisions of the Indenture; (ii) the redemption,
repurchase, defeasance or other acquisition or retirement for value of
Indebtedness that is subordinated in right of payment to the Notes
including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause (iii)
of paragraph Section 4.4(b); (iii) the repurchase, redemption or other
acquisition of Equity Interests in the Company in exchange for, or out of
the Net Cash Proceeds of, a substantially concurrent capital contribution
or offering of Equity Interests (other than Redeemable Stock) in the
Company to any Person (other than a Restricted Subsidiary); (iv) the
repurchase, redemption or other acquisition of Indebtedness of the Company
which is subordinated in right of payment to the Notes in exchange for, or
out of the Net Cash Proceeds of, a substantially concurrent capital
contribution or offering of Equity Interests (other than Redeemable Stock)
in the Company to any Person (other than a Restricted Subsidiary); (v) the
purchase of any subordinated Indebtedness at a purchase price not greater
than 101% of the principal amount thereof following a Change of Control
pursuant to an obligation in the instruments governing such subordinated
Indebtedness to purchase or redeem such subordinated Indebtedness as a
result of such Change of Control; provided, however, that no such purchase
or redemption shall be permitted until the Company has completely
discharged its obligations described under Section 4.15 (including the
purchase of all Notes tendered for purchase by holders) arising as a result
of such Change of Control; (vi) repurchases of Warrants in accordance with
Section 5.3 of the Warrant Agreement; (vii) repurchases of Existing
Warrants in accordance with Section 5.3 of the First Offering Warrant
Agreement; and (viii) repurchases of Equity Interests of the Company from
employees of the Company or any of its Restricted Subsidiaries deemed to
occur upon exercise of stock options if such Equity Interests represent a
portion of the exercise price of such options; provided that any payments
made pursuant to this clause (viii) may not exceed in aggregate $500,000 in
any fiscal year of the Company;
provided that in the case of clauses (ii) through (viii), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
Each Restricted Payment permitted pursuant to this Section 4.3(b) (other than
the Restricted Payment referred to in clause (ii) hereof) and the Net Cash
Proceeds from any capital contribution or issuance of Equity Interests referred
to in clauses (iii) and (iv), shall be included in calculating whether the
conditions of clause (C) of Section 4.3(a) have been met with respect to any
subsequent
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Restricted Payments. In the event the proceeds of an issuance of Equity
Interests (other than Redeemable Stock) of the Company are used for the
redemption, repurchase or other acquisition of the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the Section 4.3(a)
only to the extent such proceeds are not used for such redemption, repurchase or
other acquisition of the Notes.
(c) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.3 were computed, which calculations may
be based upon the Company's latest available financial statements. The Trustee
shall have no duty to recompute or recalculate or verify the accuracy of the
information set forth in such Officers' Certificate.
SECTION 4.4 Limitation on Indebtedness. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness; provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time, or would occur as a consequence, of
the Incurrence of any such Indebtedness, the Company may Incur Indebtedness if
immediately thereafter the ratio of (i) the aggregate principal amount of
Indebtedness of the Company and its Restricted Subsidiaries on a consolidated
basis outstanding as of the Transaction Date to (ii) the pro forma Consolidated
Cash Flow (the "Indebtedness to Consolidated Cash Flow Ratio") for the preceding
two full fiscal quarters multiplied by two, determined on a pro forma basis as
if any such Indebtedness had been Incurred and the proceeds thereof had been
applied at the beginning of such two fiscal quarters, would be greater than zero
and less than or equal to 5.0 to 1.
(b) Notwithstanding the foregoing, (except for Indebtedness under
subsection (vii) below) the Company and (except for Indebtedness under
subsections (v), (vi) and (x) (A) below) any Restricted Subsidiary may Incur
each and all of the following:
(i) Indebtedness (other than Acquired Indebtedness) Incurred to
finance the cost (provided that such Indebtedness is Incurred at any time on or
before, or within 90 days following, the incurrence of such cost) (including the
cost of design, development, construction, acquisition, installation or
integration) of assets used in the Permitted Business or Equity Interests of (A)
a Restricted Subsidiary, that owns principally such assets, from a Person other
than the Company or a Restricted Subsidiary of the Company or (B) any Person
that is principally engaged in the Permitted Business, that would become a
Restricted Subsidiary and owns principally such assets; provided that (x) any
such Indebtedness of a Restricted Subsidiary must be Incurred under one or more
Credit Facilities, under one or more Capitalized Leases or from the vendor of
the assets, property or services acquired with the proceeds of such
Indebtedness,
<PAGE> 46
46
(y) the amount of such Indebtedness of a Restricted Subsidiary may not exceed
the Fair Market Value of the assets so acquired and (z) the amount of such
Indebtedness of the Company, Incurred to acquire Equity Interests under clauses
(A) and (B) above, may not exceed the Fair Market Value of such assets of any
Restricted Subsidiary or any such Person so acquired;
(ii) Indebtedness of any Restricted Subsidiary to the Company or
Indebtedness of the Company or any Restricted Subsidiary to any other Restricted
Subsidiary; provided that any subsequent issuance or transfer of any Capital
Stock which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness not permitted by this
clause (ii) (other than to the Company or another Restricted Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such Indebtedness not
permitted by this clause (ii); and provided, further, that Indebtedness of the
Company owing to and held by a Restricted Subsidiary must be unsecured and
subordinated in right of payment to the Notes;
(iii) Indebtedness issued in exchange for, or the net proceeds of
which are used to refinance or refund, then outstanding Indebtedness of the
Company or a Restricted Subsidiary, other than Indebtedness Incurred under this
Section 4.4(b) (ii), (iv), (vii), (viii) and (xii), and any refinancings thereof
in an amount not to exceed the amount so refinanced or refunded (plus premiums,
accrued interest, and reasonable fees and expenses); provided that such new
Indebtedness shall only be permitted under this Section 4.4(b) (iii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced or
refunded is pari passu with the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new Indebtedness
is issued or remains outstanding, is expressly made pari passu with, or
subordinate in right of payment to, the remaining Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the Notes,
such new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced or refunded is
subordinated to the Notes, (C) the Stated Maturity of such new Indebtedness,
determined as of the date of Incurrence of such new Indebtedness, is no earlier
than the Stated Maturity of the Indebtedness being refinanced or refunded and
(D) such new Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, has a Weighted Average Life to Maturity which is not less than the
remaining Weighted Average Life to Maturity of the Indebtedness to be refinanced
or refunded; and provided, further, that in no event may Indebtedness of the
Company be refinanced or refunded by means of any Indebtedness of any Restricted
Subsidiary pursuant to this Section 4.4(b) (iii);
<PAGE> 47
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(iv) Indebtedness (A) in respect of performance, surety or appeal
bonds or letters of credit supporting Trade Payables, in each case provided in
the ordinary course of business, (B) under Currency Agreements and Interest Rate
Agreements; provided that such agreements do not increase the Indebtedness of
the obligor outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder, and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted Subsidiary
of the Company (other than Guarantees of Indebtedness Incurred for the purpose
of financing such acquisition by the Person acquiring all or any portion of such
business, assets or Restricted Subsidiary), in a principal amount not to exceed
the gross proceeds actually received by the Company or any Restricted Subsidiary
in connection with such disposition;
(v) Indebtedness, to the extent that the net proceeds thereof are
promptly (A) used to repurchase Notes tendered in a Change of Control Offer or
(B) deposited to defease all of the Notes as described in Sections 8.1 and 8.2;
(vi) Indebtedness of the Company represented by the Notes;
(vii) Indebtedness represented by a Guarantee of the Notes and
Guarantees of other Indebtedness of the Company by a Restricted Subsidiary, in
each case permitted by and made in accordance with Section 4.17;
(viii) Indebtedness under one or more Credit Facilities, in an
aggregate principal amount at any one time outstanding not to exceed the greater
of (x) NLG 70.0 million and (y) 80.0% of Eligible Accounts Receivable at any one
time outstanding, subject to any permanent reductions required by any other
terms of the Indenture;
(ix) Acquired Indebtedness; provided that the aggregate amount of
such Acquired Indebtedness (other than the Indebtedness Incurred under one or
more Credit Facilities, under one or more Capitalized Leases or from the vendor
of assets, property or services acquired with the proceeds of such Indebtedness)
of the Person that is to become a Restricted Subsidiary or be merged or
consolidated with or into the Company or any Restricted Subsidiary in the
contemplated transaction, outstanding at the time of such transaction does not
exceed the Fair Market Value of the plant, property and equipment (excluding
property, plant and equipment securing any of the Credit Facilities or vendor
financings or subject to any Capital Leases referred to in this clause (ix)) of
any Restricted Subsidiary so acquired;
<PAGE> 48
48
(x) Indebtedness of (A) the Company not to exceed, at any one
time outstanding, 2.00 times the Net Cash Proceeds from (1) the issuance and
sale, other than to a Subsidiary, of Equity Interests (other than Redeemable
Stock and excluding any Ordinary Shares issued in connection with the
Recapitalization) of the Company and (2) capital contributions made in the
Company (other than by a Subsidiary) less, in each case, the amount of such
proceeds used to make Restricted Payments as provided in Section 4.3(a) (C)(2)
or Section 4.3(b) (iii) or (iv) and (B) the Company or Acquired Indebtedness of
a Restricted Subsidiary (provided that any such Indebtedness of such Restricted
Subsidiary must be incurred under one or more Credit Facilities, under one or
more Capitalized Leases or from the vendor of the assets, property or services
acquired with the proceeds of such Indebtedness) not to exceed, at any one time
outstanding, the fair market value of any Telecommunications Assets acquired by
the Company or such Restricted Subsidiary in exchange for Equity Interests of
the Company issued after the Issue Date; provided, however, that in determining
the fair market value of any such Telecommunications Assets so acquired, if the
estimated fair market value of such Telecommunications Assets exceeds (x) $2.0
million (as estimated in good faith by the Board of Directors), then the fair
market value of such Telecommunications Assets will be determined by a majority
of the Board of Directors of the Company, which determination will be evidenced
by a resolution thereof, and (y) $10.0 million (as estimated in good faith by
the Board of Directors), then the Company will deliver the Trustee a written
appraisal as to the fair market value of such Telecommunications Assets prepared
by an internationally recognized investment banking or public accounting firm
(or, if no such investment banking or public accounting firm is qualified to
prepare such an appraisal, by an internationally recognized appraisal firm); and
provided, further, that such Indebtedness (other than the Indebtedness Incurred
under one or more Credit Facilities, under one or more Capitalized Leases or
from the vendor of assets, property or services acquired with the proceeds of
such Indebtedness) does not mature prior to the Stated Maturity of the Notes and
the Weighted Average Life to Maturity of such Indebtedness is longer than that
of the Notes;
(xi) Indebtedness outstanding as of the Issue Date; and
(xii) Indebtedness (in addition to Indebtedness permitted under
clauses (i) through (x) above) in an aggregate principal amount outstanding at
any one time not to exceed the greater of (A) NLG 100 million and (B) an amount
equal to 5% of the Company's consolidated net tangible assets as of such date.
(c) For purposes of determining any particular amount of
Indebtedness under Section 4.4(b), Guarantees, Liens or obligations with respect
to letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included; provided,
however, that the foregoing shall not in any way be deemed to limit the
provisions of Section 4.17. For purposes of determining compliance with Section
4.4, (A) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness
<PAGE> 49
49
described above, the Company, in its sole discretion, shall classify (or from
time to time reclassify) such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of such clauses and (B)
the principal amount of Indebtedness issued at a price that is less than the
principal amount thereof shall be equal to the amount of the liability in
respect thereof determined in conformity with U.S. GAAP.
SECTION 4.5 Corporate Existence. Except as otherwise permitted by
Article V, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, partnership, limited liability or other existence of each of its
Subsidiaries in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Subsidiary and the rights
(charter and statutory) of the Company and each of its Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right, or
the corporate, partnership, limited liability or other existence of any
Subsidiary, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and each of its Subsidiaries, taken as a whole, and that the loss
thereof is not, and will not be, adverse in any material respect to the Holders.
SECTION 4.6 Payment of Taxes and Other Claims. The Company shall pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon it or any of its Subsidiaries or upon the income, profits or
property of it or any of its Subsidiaries and (ii) all lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material liability or Lien upon the property of it or any of its Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which appropriate provision has been made.
SECTION 4.7 Maintenance of Properties and Insurance. (a) The Company
shall cause all material properties owned by or leased by it or any of its
Subsidiaries useful and necessary to the conduct of its business or the business
of any of its Subsidiaries to be improved or maintained and kept in normal
condition, repair and working order and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
its judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.7 shall prevent the Company or any of its Subsidiaries
from discontinuing the use, operation or maintenance of any of such
<PAGE> 50
50
properties, or disposing of any of them, if such discontinuance or disposal is,
in the judgment of the Board of Directors or of the board of directors of any
Subsidiary of the Company concerned, or of an officer (or other agent employed
by the Company or of any of its Subsidiaries) of the Company or any of its
Subsidiaries having managerial responsibility for any such property, desirable
in the conduct of the business of the Company or any Subsidiary of the Company,
and if such discontinuance or disposal is not adverse in any material respect to
the Holders.
(b) To the extent available at commercially reasonable rates, the
Company shall maintain, and shall cause its Subsidiaries to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses of similar size.
SECTION 4.8 Compliance Certificate; Notice of Default. (a) The
Company shall deliver to the Trustee, within 90 days after the close of each
fiscal year, an Officers' Certificate stating that a review of the activities of
the Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
it has kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
that, to the best of his knowledge, the Company during such preceding fiscal
year has kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill each and every such covenant
contained in this Indenture and no Default occurred during such year and at the
date of such certificate there is no Default which has occurred and is
continuing or, if such signers do know of such Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred and remains by reason of which payments on the
account of the principal of or interest, if any and Additional Amounts, if any,
on the Notes is prohibited or if such event has occurred, a description of the
event and what action each is taking or proposes to take with respect thereto.
The Officers' Certificate shall also notify the Trustee should the Company elect
to change the manner in which it fixes its fiscal year end. The Company shall
notify the Trustee of any default or defaults in the performance of any
covenants or agreements under this Indenture within five Business Days of
becoming aware of any such default.
(b) The annual financial statements delivered pursuant to Section
4.10 shall include, so long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, a written report of
the Company's independent accountants (who shall be a firm of established
international reputation) that in conducting their audit of such financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Articles IV, V or VI of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence
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51
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(b) The Company shall deliver to the Trustee, within 5
Business Days, upon any officer becoming aware of any Default or any default or
event of default under any document, instrument or agreement representing
indebtedness of the Company, an Officers' Certificate specifying the Default or
such default or event of default and describing its status with particularity.
SECTION 4.9 Compliance with Laws. The Company shall comply,
and shall cause each of its Subsidiaries to comply, with all applicable
statutes, rules, regulations, orders of the relevant jurisdiction in which they
are incorporated and/or in which they carry on business, all political
subdivisions thereof, and of any relevant governmental regulatory authority, in
respect of the conduct of their respective businesses and the ownership of their
respective properties, except for such noncompliances as would not in the
aggregate have a material adverse effect on the financial condition or results
of operations of the Company and its Subsidiaries taken as a whole.
SECTION 4.10 Reports. (a) The Company will file on a timely
basis with the SEC, to the extent such filings are accepted by the SEC and
whether or not the Company has a class of securities registered under the
Exchange Act, (i) all annual and quarterly financial statements and other
financial information that would be required to be contained in a filing with
the Commission on Forms 20-F and 10-Q if the Company were required to file such
Forms (which financial statements shall be prepared in accordance with U.S.
GAAP), including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual financial
information, a report thereon by the Company's certified independent accountants
and (ii) all current reports that would be required to be filed with the
Commission on Form 8-K if the Company were required to file such reports. Such
quarterly financial information shall be filed with the Commission within 45
days following the end of each fiscal quarter of the Company, and such annual
financial information shall be furnished within 90 days following the end of
each fiscal year of the Company. Such annual financial information shall include
the geographic segment financial information required to be disclosed by the
Company under Item 101(d) of Regulation S-K under the Securities Act. The
Company shall also (a) file with the Trustee, and provide to each holder,
without cost to such holder, copies of such reports and documents within 15 days
after the date on which the Company files such reports and documents with the
Commission or the date on which the Company would be required to file such
reports and documents if the Company were so required, and (b) if filing such
reports and documents with the Commission is not accepted by the Commission or
is prohibited under the Exchange Act, to supply at the Company's cost copies of
such reports and documents to any prospective holder promptly upon request. In
addition, for so long as the Notes remain outstanding and the Company is not
subject to the reporting requirements of Section 13
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52
or 15(d) of the Exchange Act nor exempt from reporting under Rule 12g3-2(b) of
the Exchange Act, the Company shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, any information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act and, to any
beneficial holder of Notes, information of the type that would be filed with the
Commission pursuant to the foregoing provisions, upon the request of any such
holder, and if, and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such exchange shall so require, copies of all such
reports and documents described above will be deposited with the Company's
listing agent in Luxembourg.
(b) Such reports shall be delivered to the Registrar and the
Registrar will mail them at the Company's expense to the Holders at their
addresses appearing in the register of Notes maintained by the Registrar.
(c) The Company shall also comply with the provisions of TIA
Section 314(a).
SECTION 4.11 Waiver of Stay; Extension or Usury Laws. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive the Company from paying all or any portion of the
principal of and/or interest on the Notes as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture, and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.12 Limitation on Transactions with Shareholders and
Affiliates. (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction or series of transactions (including, without limitation, the
purchase, sale, lease or exchange of property or assets, or the rendering of any
service) with any direct or indirect holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of the Company or with any Affiliate of
the Company or any Restricted Subsidiary, unless:
(i) such transaction or series of transactions is on terms
that are no less favorable to the Company or such Restricted Subsidiary
than could reasonably be obtained in a comparable arm's-length
transaction with a
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53
Person that is not such a holder or Affiliate;
(ii) if such transaction or series of transactions involves
aggregate consideration in excess of $2.0 million, then the Company
shall deliver to the Trustee a resolution set forth in an Officers'
Certificate adopted by a majority of the Board of Directors, including
a majority of the independent, disinterested directors, approving such
transaction or series of transactions and certifying that such
transaction or series of transactions comply with Section 4.12(a)(i);
and
(iii) if such transaction or series of transactions involves
aggregate consideration in excess of $5.0 million, then the Company
will deliver to the Trustee a written opinion as to the fairness to the
Company or such Restricted Subsidiary of such transaction or series of
transactions from a financial point of view from an internationally
recognized investment banking firm (or, if an investment banking firm
is generally not qualified to give such an opinion, by an
internationally recognized appraisal firm or accounting firm).
(b) The foregoing limitation does not limit and will not apply
to (i) any transaction between the Company and any of its Restricted
Subsidiaries or between Restricted Subsidiaries; (ii) the payment of reasonable
and customary regular fees to directors of the Company who are not employees of
the Company; and (iii) payment of dividends or other distributions in respect of
Equity Interests of the Company or any Restricted Subsidiary permitted by
Section 4.3.
SECTION 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries. (a) The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Restricted
Subsidiary to:
(i) pay dividends or make any other distributions permitted
by applicable law on any Equity Interests of such Restricted Subsidiary
owned by the Company or any other Restricted Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary,
(iii) make loans or advances to the Company or any other
Restricted Subsidiary, or
(iv) transfer any of its property or assets to the Company or
any other Restricted Subsidiary.
(b) The foregoing provisions shall not prohibit any
encumbrances or
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54
restrictions:
(i) existing under or by reason of any agreement in effect on
the Issue Date, and any amendments, supplements, extensions,
refinancings, renewals or replacements of such agreements; provided
that the encumbrances and restrictions in any such amendments,
supplements, extensions, refinancings, renewals or replacements are no
more restrictive than those encumbrances or restrictions that are then
in effect and that are being amended, supplemented, extended,
refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Restricted Subsidiary
acquired by the Company or any Restricted Subsidiary after the Issue
Date, or the property or assets of such Restricted Subsidiary, and
existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other
than such Person or the property or assets of such Person so acquired,
and any amendments, supplements, extensions, refinancings, renewals or
replacements of agreements containing such encumbrances or
restrictions; provided that the encumbrances and restrictions in any
such amendments, supplements, extensions, refinancings, renewals or
replacements are no more restrictive than those encumbrances or
restrictions that are then in effect and that are being amended,
supplemented, extended, refinanced, renewed or replaced;
(iv) in the case of Section 4.13(a)(iv), (A) that restrict in
a customary manner the subletting, assignment or transfer of any
property or asset that is, or is subject to, a lease, purchase mortgage
obligation, license, conveyance or contract or similar property or
asset, (B) existing by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or
assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that
do not, individually or in the aggregate, materially detract from the
value of property or assets of the Company or any Restricted Subsidiary
to the Company or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock in, or
property and assets of, such Restricted Subsidiary; provided that such
restriction shall terminate if such transaction is abandoned or if such
transaction is not consummated within six months of the date such
agreement was entered into; or
(vi) contained in the terms of any Indebtedness or any
agreement
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55
pursuant to which such Indebtedness was issued if (A) the encumbrance
or restriction applies only in the event of a payment default or a
default with respect to a financial covenant contained in such
Indebtedness or agreement, (B) the encumbrance or restriction is not
materially more disadvantageous to the holders of the Notes than is
customary in comparable financings (as determined by the Board of
Directors) and (C) the Board of Directors determines that any such
encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes.
Nothing contained in this Section 4.13 shall prevent the Company or any
Restricted Subsidiary from creating, incurring, assuming or suffering to exist
any Liens otherwise permitted in Section 4.14 that limit the right of the debtor
to dispose of the assets securing such Indebtedness.
SECTION 4.14 Limitation on Liens. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
asset or property of the Company or any Restricted Subsidiary without making
effective provisions for all of the Notes and all other amounts due under the
Indenture to be directly secured equally and ratably with (or, if the obligation
or liability to be secured by such Lien is subordinated in right of payment to
the Notes, prior to) the obligation or liability secured by such Lien.
SECTION 4.15 Change of Control. (a) Upon the occurrence of a
Change of Control, the Company will make an offer to purchase all or any part
(equal to $1,000 aggregate principal amount and integral multiple thereof) of
the Notes pursuant to the offer described below (the "Change of Control Offer")
at a price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, thereon to
the date of repurchase, plus Additional Amounts, if any, to the date of
repurchase (and in the case of Definitive Notes, subject to the right of Holders
of record on the relevant record date to receive interest due on the relevant
interest payment date and Additional Amounts, if any, in respect thereof).
Within 30 days following any Change of Control, the Company will publish notice
of such in a leading newspaper having a general circulation in New York (which
is expected to be The Wall Street Journal) and in Amsterdam (which is expected
to be Het Financieele Dagblad) (and, if and so long as the Notes are listed on
the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, a newspaper having a general circulation in Luxembourg (which is
expected to be the Luxemburger Wort)) or, in the case of Definitive Notes, mail
a notice to each Holder postage prepaid (and if and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange
shall so
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56
require, will publish notice in a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)), with a copy to the
Trustee, with the following information: (i) a Change of Control Offer is being
made pursuant to this Section 4.15 and all Notes properly tendered pursuant to
such Change of Control Offer will be accepted for payment; (ii) the purchase
price and the purchase date, which will be no earlier than 30 days nor later
than 60 days from the date such notice is published, or where relevant, mailed,
except as may be otherwise required by applicable law (the "Change of Control
Payment Date"); (iii) any Note not properly tendered will remain outstanding and
continue to accrue interest; (iv) unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest on the Change of Control
Payment Date; (v) Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes
completed, to the Paying Agent and at the address specified in the notice prior
to the close of business on the third Business Day preceding the Change of
Control Payment Date; (vi) Holders will be entitled to withdraw their tendered
Notes and their election to require the Company to purchase such Notes;
provided, however, that the Paying Agent receives, not later than the close of
business on the last day of the offer period, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes tendered for
purchase, and a statement that such Holder is withdrawing his tendered Notes and
his election to have such Notes purchased; and (vii) that Holders whose Notes
are being purchased only in part will be issued new Notes equal in principal
amount to the unpurchased portion of the principal amount of the Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
and will comply with the applicable laws of any non-U.S. jurisdiction in which a
Change of Control Offer is made, in each case, to the extent such laws or
regulations are applicable in connection with the repurchase of the Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Indenture,
the Company will comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations contained in this Indenture
by virtue thereof. The provisions relating to the Company's obligation to make
an offer to repurchase the Notes as a result of a Change of Control may be
waived or modified with the written consent of the Holders of a majority in
principal amount of the Notes.
(b) On the Change of Control Payment Date, the Company will,
to the extent permitted by law, (i) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount equal to the aggregate Change of Control Payment
in respect of all Notes or portions thereof so tendered and (iii) deliver, or
cause to be
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delivered, to the Trustee for cancellation the Notes so accepted together with
an Officers' Certificate stating that such Notes or portions thereof have been
tendered to and purchased by the Company. The Paying Agent will promptly either
(x) pay to the Holder against presentation and surrender (or, in the case of
partial payment, endorsement) of the Global Notes or (y) in the case of
Definitive Notes, mail to each Holder of Notes postage prepaid, the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
deliver to the Holder of the Global Notes a new Global Note or Notes or, in the
case of Definitive Notes, mail to each Holder a new Definitive Note, as
applicable, equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, however, that each new Definitive Note will be in
a principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.16 Limitation on Asset Sales. (a) The Company will
not, and will not permit any Restricted Subsidiary to, make any Asset Sale
unless (i) the Company or the Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the assets sold or disposed of and (ii) at least 80% of the
consideration received for such Asset Sale consists of cash or Cash Equivalents
or Replacement Assets or the assumption of Indebtedness which ranks pari passu
in right of payment with the Notes.
(b) The Company shall, or shall cause the relevant Restricted
Subsidiary to, apply the Net Cash Proceeds from an Asset Sale within 270 days of
the receipt thereof to (A) permanently repay unsubordinated Indebtedness of the
Company or Indebtedness of any Restricted Subsidiary, in each case owing to a
Person other than the Company or any of its Restricted Subsidiaries, (B) invest
in Replacement Assets, or (C) in any combination of repayment, prepayment, and
reinvestment permitted by the foregoing clauses (A) and (B). Any Net Proceeds
from the Asset Sale that are not invested as provided and within the time period
set forth in the first sentence of this Section 4.16(b) will be deemed to
constitute "Excess Proceeds."
If at any time the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Company shall, within 30 Business Days thereafter, make an
offer to all Holders of Notes (an "Asset Sale Offer") to purchase on a pro rata
basis the maximum principal amount of Notes, that is an integral multiple of
$1,000 that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the outstanding principal amount thereof,
plus accrued and unpaid interest thereon, plus Additional Amounts, if any, to
the date fixed for the closing of such offer (and, in the case of Definitive
Notes, subject to the right of a Holder of record on the relevant record date to
receive interest due on the relevant interest payment date and Additional
Amounts, if any, in respect thereof), in accordance with the procedures set
forth in this Indenture. The Company will
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commence an Asset Sale Offer with respect to Excess Proceeds within thirty
Business Days after the date that Excess Proceeds exceeds $5.0 million by
publishing or, where relevant, mailing the notice required pursuant to the terms
of the Indenture, with a copy to the Trustee. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, subject to applicable law, the Company may use any remaining Excess
Proceeds for general corporate purposes. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the maximum principal amount of
Notes that may be purchased with such Excess Proceeds (or such pro rata portion)
(which maximum principal amount of Notes shall be the "Offer Amount") or, if
less than the Offer Amount has been tendered, all Notes tendered in response to
the Asset Sale Offer.
If the Purchase Date is on or after an interest Record Date
and on or before the related Interest Payment Date, any accrued and unpaid
interest will be paid in the case of a Global Note, to the Holder thereof or, in
the case of a Definitive Note, to the Person in whose name such Definitive Note
is registered at the close of business on such Record Date, and no additional
interest will be payable to Holders with respect to Notes tendered pursuant to
the Asset Sale Offer.
At least 30 days but not more than 60 days before a Purchase
Date, the Company shall publish in a leading newspaper having a general
circulation in New York (which is expected to be The Wall Street Journal) and in
Amsterdam (which is expected to be Het Financieele Dagblad ) (and, if and so
long as the Notes are listed on the Luxembourg Stock Exchange and the rules of
such Stock Exchange shall so require, a newspaper having a general circulation
in Luxembourg (which is expected to be the Luxemburger Wort)) or, in the case of
Definitive Notes, mail to Holders by first-class mail, postage prepaid, at their
respective addresses as they appear on the registration books of the Registrar
with a copy of such notice to the Trustee (and, if and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange
shall so require, publish in a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)). The notice shall
contain all instructions and materials (or instructions on how to obtain
instructions and materials) necessary to enable such Holders to tender Notes
pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all
Holders. The notice,
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which shall govern the terms of the Asset Sale Offer, shall state:
(A) that the Asset Sale Offer is being made pursuant to this
Section 4.16 and the length of time the Asset Sale Offer shall remain
open;
(B) the Offer Amount (including the amount of accrued and
unpaid interest, if any), the purchase price and the Purchase Date;
(C) that any Note or portion thereof not tendered or accepted
for payment shall continue to accrue interest and Additional Amounts,
if any, in accordance with the terms thereof;
(D) that, unless the Company defaults in making payment
therefor any Note or portion thereof accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest and Additional
Amounts, if any, after the Purchase Date;
(E) (1) if any Global Note is being purchased in part, the
portion of the principal amount of such Note to be purchased and that,
after the Purchase Date, interest and Additional Amounts, if any, shall
cease to accrue on the portion to be purchased, and upon surrender of
such Global Note, the Global Note with a notation on Schedule A thereof
adjusting the principal amount thereof to be equal to the unpurchased
portion, will be returned and (2) if a Definitive Note may be purchased
in part, that, after the Purchase Date, upon surrender of such
Definitive Note, a new Definitive Note or Notes in aggregate principal
amount equal to the unpurchased portion thereof will be issued in the
name of the Holder thereof, upon cancellation of the original Note;
(F) that Holders electing to have a Note or portion thereof
purchased pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three Business Days before the
Purchase Date and must complete any form letter of transmittal proposed
by the Company and acceptable to the Trustee and the Paying Agent;
(G) that, subject to applicable law, Holders shall be entitled
to withdraw their election if the Company, depositary or Paying Agent,
as the case may be, receives, not later than the second Business Day
before the Purchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note or
portion thereof the Holder delivered for purchase, the Note certificate
number and a statement that such Holder is withdrawing his election to
have the Note or portion thereof purchased;
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(H) that, if the aggregate principal amount of Notes tendered
by Holders exceeds the Offer Amount, the selection of such Notes for
purchase will be made by the Trustee in compliance with the
requirements of the principal securities exchange, if any, on which
such Notes are listed, or if such Notes are not so listed or such
exchange prescribes no method of selection, subject to applicable law,
on a pro rata basis by lot or by such other method as the Trustee in
its sole discretion shall deem fair and appropriate (and in such manner
as complies with applicable legal and exchange requirements); provided,
however, that no Notes of $1,000 or less shall be purchased in part;
provided further, that, subject to applicable law, in the event of
partial purchase by lot, the particular Notes to be purchased shall be
selected, unless otherwise provided herein, by the Registrar or Trustee
from the outstanding Notes not previously called for purchase; and
(I) the instructions that Holders must follow to tender their
Notes.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes or
portions thereof tendered, and deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 4.16. On the Purchase Date,
the Paying Agent shall promptly cause the principal amount of any Global Note so
tendered to be adjusted on Schedule A thereof to be equal to any unpurchased
portion of such Global Note which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof, and shall promptly
authenticate and mail or deliver to each tendering Holder of a Definitive Note,
a new Definitive Note or Notes equal in principal amount to any unpurchased
portion of the Definitive Note surrendered which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof. DTC, the
Paying Agent or the Company, as the case may be, shall promptly (but in any case
not later than five Business Days after the Purchase Date) mail or deliver to
each tendering Holder an amount equal to the Offer Amount of the Notes tendered
by such Holder and accepted by the Company for purchase. Any Notes not so
accepted shall be promptly mailed or delivered by or on behalf of the Company to
the Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer not later than the second Business Day following the Purchase Date.
The Company will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
and will comply with the applicable laws of any non-U.S. jurisdiction in which
an Asset Sale Offer is made, in each case, to the extent such laws or
regulations are applicable in connection with the repurchase of the Notes
pursuant to an Asset
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Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions hereunder, the Company will comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations described in this Indenture by virtue thereof.
SECTION 4.17 Limitation on Issuance of Guarantees of
Indebtedness by Restricted Subsidiaries. (a) The Company shall not permit any
Restricted Subsidiary, directly or indirectly, to guarantee, assume or in any
other manner become liable with respect to any Indebtedness of the Company
unless (i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Guarantee of all of the
Company's obligations under the Notes and this Indenture on terms substantially
similar to the guarantee of such Indebtedness, except that if such Indebtedness
is by its express terms subordinated in right of payment to the Notes, any such
assumption, Guarantee or other liability of such Restricted Subsidiary with
respect to such Indebtedness shall be subordinated in right of payment to such
Restricted Subsidiary's assumption, Guarantee or other liability with respect to
the Notes substantially to the same extent as such Indebtedness is subordinated
to the Notes and (ii) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Guarantee; provided that any Restricted Subsidiary may
guarantee Indebtedness of the Company under a Credit Facility if such
Indebtedness is Incurred in accordance with Section 4.4.
(b) Notwithstanding the foregoing Section 4.17(a), any
Guarantee of all of the Company's obligations under the Notes and this Indenture
by a Restricted Subsidiary may provide by its terms that it will be
automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person not an Affiliate of the Company, of all of
the Company's and each Restricted Subsidiary's Equity Interests in, or all or
substantially all of the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture) or (ii) the release or
discharge of the guarantee which resulted in the creation of such Guarantee,
except a discharge or release by or as a result of payment under such guarantee.
SECTION 4.18 Business of the Company; Restriction on Transfers
of Existing Business. The Company will not, and will not permit any Restricted
Subsidiary to, be principally engaged in any business or activity other than a
Permitted Business. In addition, the Company and any Restricted Subsidiary will
not be permitted to, directly or indirectly, transfer to any Unrestricted
Subsidiary (i) any of the licenses, permits or authorizations used in
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the Permitted Business of the Company and any Restricted Subsidiary or (ii) any
material portion of the "property and equipment" (as such term is used in the
Company's consolidated financial statements) of the Company or any Restricted
Subsidiary used in the licensed service areas of the Company and any Restricted
Subsidiary.
SECTION 4.19 Limitation on the Issuance and Sale of Capital
Stock of Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue, transfer, convey, sell,
lease or otherwise dispose of any shares of Capital Stock (including options,
warrants or other rights to purchase shares of such Capital Stock) of such
Restricted Subsidiary or any other Restricted Subsidiary to any Person (other
than (i) to the Company or a Wholly Owned Restricted Subsidiary, (ii) issuances
of director's qualifying shares or sales to foreign nationals of shares of
Capital Stock of foreign Restricted Subsidiaries, in each case, to the extent
required by applicable law and (iii) Strategic Minority Capital Stock Issues),
unless (A) immediately after giving effect to such issuance, transfer,
conveyance, sale, lease or other disposition, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and (B) any Investment in such
Person remaining after giving effect to such issuance, transfer, conveyance,
sale, lease or other disposition would have been permitted to be made under
Section 4.3 if made on the date of such issuance, transfer, conveyance, sale,
lease or other disposition (valued as provided in the definition of "Investment"
in Section 1.1).
SECTION 4.20 Additional Amounts. At least 10 days prior to the
first date on which payment of principal, premium, if any, or interest on the
Notes is to be made, and at least 10 days prior to any subsequent such date if
there has been any change with respect to the matters set forth in the Officers'
Certificate described in this Section 4.20, the Company will furnish the Trustee
and the Paying Agent, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and the Paying Agent whether such payment of principal,
premium, if any, or interest on the Notes (whether or not in the form of
Definitive Notes) shall be made to the Holders without withholding for or on
account of any present or future tax, duty, assessment or other governmental
charges of whatever nature (collectively "Taxes") imposed or levied by or on
behalf of The Netherlands or any jurisdiction in which the Company or any
Surviving Entity is organized or is otherwise resident for tax purposes or any
political subdivision thereof or any authority having power to tax therein or
any jurisdiction from or through which payment is made (each a "Relevant Taxing
Jurisdiction"), unless the withholding or deduction of such Taxes is then
required by law. If any deduction or withholding for, or on account of, any
Taxes of any Relevant Taxing Jurisdiction, shall at any time be required on any
payments made by the Company with respect to the Notes, including payments of
principal, redemption price, interest or premium, then such Officers'
Certificate shall specify the amount, if any, required to be withheld on such
payments to such Holders and the Company will pay to the Trustee or the Paying
Agent the additional amounts pursuant to paragraph 2 of the Notes (the
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"Additional Amounts") and upon request shall provide the Trustee with
documentation satisfactory to the Trustee evidencing the payment of such
Additional Amounts. Copies of such documentation shall be made available to the
Holders upon request. The Company shall indemnify the Trustee and the Paying
Agent for, and hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished to them pursuant to this Section 4.20.
SECTION 4.21 Payment of Non-Income Taxes and Similar Charges.
The Company will pay any present or future stamp, court or documentary taxes, or
any other excise or property taxes, charges or similar levies which arise in any
jurisdiction from the execution, delivery or registration of the Notes or any
other document or instrument referred to therein, or the receipt of any payments
with respect to the Notes, excluding any such taxes, charges or similar levies
imposed by any jurisdiction outside of The Netherlands, the United States of
America, or any jurisdiction in which a Paying Agent is located, other than
those resulting from, or required to be paid in connection with, the enforcement
of the Notes or any other such document or instrument following the occurrence
of any Event of Default with respect to the Notes.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 Consolidation, Merger, and Sale of Assets. The
Company will not consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all of its property
and assets (as an entirety or substantially an entirety in one transaction or in
a series of related transactions) to, any Person or permit any Person to merge
with or into the Company and the Company will not permit any of its Restricted
Subsidiaries to enter into any such transaction or series of transactions if
such transaction or series of transactions, in the aggregate, would result in
the sale, assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Restricted Subsidiaries, taken as a whole, to any other Person or Persons,
unless: (i) the Company will be the continuing Person, or the Person (if other
than the Company) (the "Surviving Entity") formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company will be a corporation organized and validly existing under the
laws of The Netherlands, Germany, France, Belgium, the United Kingdom or the
United States of America, any state thereof or the District of Columbia and
shall expressly assume, by a
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supplemental indenture, executed and delivered to the Trustee, all of the
obligations of the Company with respect to the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Company, or any Person
becoming the successor obligor of the Notes, shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction; (iv) immediately after giving effect to such
transaction on a pro forma basis the Company, or any Person becoming the
successor obligor of the Notes, as the case may be, (A) prior to the third
anniversary of the Issue Date, would have an Indebtedness to Consolidated Cash
Flow Ratio no greater than such ratio immediately prior to such transaction or
(B) on or after the third anniversary of the Issue Date, could Incur at least
$1.00 of Indebtedness under Section 4.4(a); (v) the Company delivers to the
Trustee an Officers' Certificate (attaching the arithmetic computations to
demonstrate compliance with clauses (iii) and (iv)) and an Opinion of Counsel,
in each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with the Indenture and (vi) the Company shall
have delivered to the Trustee an opinion of tax counsel reasonably acceptable to
the Trustee stating that (A) Holders will not recognize income, gain or loss for
U.S. federal or Netherlands income tax purposes as a result of such transaction
and (B) no taxes on income (including taxable capital gains) will be payable
under the tax laws of the Relevant Taxing Jurisdiction by a Holder who is or who
is deemed to be a non-resident of the Relevant Taxing Jurisdiction in respect of
the acquisition, ownership or disposition of the Notes, including the receipt of
principal of, premium and interest paid pursuant to such Notes.
SECTION 5.2 Successor Corporation Substituted. Upon any such
consolidation, merger, assignment, conveyance, lease, transfer or other
disposition in accordance with Section 5.1, the Successor Company will succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such Successor Company
had been named as the Company herein, and thereafter (except in the case of a
sale, assignment, transfer, lease, conveyance or other disposition) the
predecessor corporation will be relieved of all further obligations and
covenants under this Indenture and the Notes.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default. Wherever used herein with
respect to any series of the Notes, "Event of Default" means any one of the
following events which shall have occurred and be continuing:
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(a) default for 30 days or more in the payment when due of
interest on the Notes or Additional Amounts, if any, with respect to the Notes;
(b) default in the payment of principal of (or premium, if
any, on) any Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(c) default in the payment of principal or interest on Notes
required to be purchased pursuant to an Asset Sale Offer as described under
Section 4.16 or pursuant to a Change of Control Offer as described under Section
4.15;
(d) failure to perform or comply with the provisions described
in Article V;
(e) default in the performance of or breach of any other
covenant or agreement of the Company in this Indenture or under the Notes and
such default or breach continues for a period of 30 consecutive days after
written notice by the Trustee or the holders of 25% or more in aggregate
principal amount of the Notes;
(f) a default occurs on any other Indebtedness of the Company
or any Restricted Subsidiary if either (x) such default is a failure to pay
principal of such Indebtedness when due after any applicable grace period and
the principal amount of such Indebtedness is in excess of $5.0 million or (y) as
a result of such default, the maturity of such Indebtedness has been accelerated
prior to its scheduled maturity and such default has not been cured within the
shorter of (i) 60 days and (ii) the applicable grace period, and such
acceleration has not been rescinded, and the principal amount of such
Indebtedness together with the principal amount of any other Indebtedness of the
Company and its Restricted Subsidiaries that is in default as to principal, or
the maturity of which has been accelerated, aggregates $5.0 million or more;
(g) failure to pay final judgments and orders against the
Company or any Restricted Subsidiary (not covered by insurance) aggregating in
excess of $5.0 million (treating any deductibles, self-insurance or retention as
not so covered), which final judgments remain unpaid, undischarged and unstayed
for a period in excess of 30 consecutive days following entry of the final
judgment or order that causes the aggregate amount for all such final judgments
or orders outstanding and not paid, discharged or stayed to exceed $5.0 million;
(h) a court having jurisdiction in the premises enters a
decree or order for (A) relief in respect of the Company or any of its
Significant Subsidiaries in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, (B) appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Company or any of its Significant Subsidiaries or for all or
substantially all of the property and assets of the Company or any of its
Significant Subsidiaries or (C) the winding up or
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liquidation of the affairs of the Company or any of its Significant Subsidiaries
and, in each case, such decree or order shall remain unstayed and in effect for
a period of 30 consecutive days; or
(i) the Company or any of its Significant Subsidiaries (A)
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case under any such law, (B) consents to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Company or any of
its Significant Subsidiaries or for all or substantially all of the property and
assets of the Company or any of its Significant Subsidiaries or (C) effects any
general assignment for the benefit of creditors.
SECTION 6.2 Acceleration. If an Event of Default (other than
an Event of Default specified in Sections 6.1 (h) or (i)) occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes, then outstanding, by written notice to the Company, may
declare the principal of, premium, if any, interest and other monetary
obligations (including Additional Amounts, if any on all the then outstanding
Notes to be immediately due and payable. Upon such a declaration, such principal
of, premium, if any, interest and other monetary obligations on the Notes shall
be immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in Section 6.1 (f) above has occurred and
is continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to Section 6.1 (f) shall be remedied or cured by the Company and/or the relevant
Restricted Subsidiaries or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If an
Event of Default specified in Sections 6.1 (h) or (i) above occurs, the
principal of, premium, if any, accrued interest and other monetary obligations
on the Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Trustee shall have no obligation to accelerate the Notes
if in the best judgment of the Trustee acceleration is not in the best interest
of the Holders of such Notes.
SECTION 6.3 Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy by proceeding at law
or in equity to collect the payment of principal of or, premium, if any,
interest, or Additional Amounts, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
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SECTION 6.4 The Trustee May Enforce Claims Without Possession
of Securities. All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto.
SECTION 6.5 Rights and Remedies Cumulative. Except as
otherwise provided with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes in Section 2.7, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders of Notes is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent or subsequent
assertion or employment of any other appropriate right or remedy.
SECTION 6.6 Delay or Omission Not Waiver. No delay or omission
of the Trustee or of any Holder of any Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to the
Holders of Notes may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders of Notes.
SECTION 6.7 Waiver of Past Defaults. Subject to Sections 6.10
and 9.2, at any time after a declaration of acceleration with respect to the
Notes as described in Section 6.1, the Holders of at least a majority in
principal amount of the outstanding Notes by written notice to the Company and
to the Trustee, may waive all past defaults and rescind and annul a declaration
of acceleration and its consequences if (i) all existing Events of Default,
other than the nonpayment of the principal of, premium, if any, interest and
other monetary obligations on the Notes that have become due solely by such
declaration of acceleration, have been cured or waived and (ii) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction. Such waiver shall not excuse a continuing Event of Default in the
payment of interest, premium, if any, principal or Additional Amounts, if any,
on such Note held by a non-consenting Holder, or in respect of a covenant or a
provision which cannot be amended or modified without the consent of all
Holders. In the event of any Event of Default specified in Section 6.1(f) above,
such Event of Default and all consequences thereof (including, without
limitation, any acceleration or resulting payment default) shall be annulled,
waived and rescinded, automatically and without any action by the Trustee or the
Holders of the Notes, if within 60 days after such Event of Default arose (x)
the Indebtedness or guarantee that is the basis for such Event of Default has
been discharged, or (y) the holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be)
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giving rise to such Event of Default, or (z) if the default that is the basis
for such Event of Default has been cured. The Company shall deliver to the
Trustee an Officers' Certificate stating that the requisite percentage of
Holders have consented to such waiver and attaching copies of such consents.
When a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.8 Control by Majority. Subject to Section 2.9, the
Holders of not less than a majority in principal amount of the outstanding Notes
may, by written notice to the Trustee, direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it. Subject to Section 7.1, however, the Trustee
may refuse to follow any direction that conflicts with any law or this Indenture
that the Trustee determines may be unduly prejudicial to the rights of another
Holder of Notes, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 6.9 Limitation on Suits. A Holder of Notes may not
pursue any remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holder or Holders of at least 25% in principal amount
of the outstanding Notes make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 30
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(v) during such 30-day period the Holder or Holders of a
majority in principal amount of the outstanding Notes do not give the
Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.10 Rights of Holders To Receive Payment.
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Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of, premium, if any, interest and Additional
Amounts, if any on a Note, on or after the respective due dates expressed in
such Note, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder.
SECTION 6.11 Collection Suit by Trustee. If an Event of
Default in payment of principal, premium, if any, interest or Additional
Amounts, if any, specified in Section 6.1(a) or (b) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or any other obligor on the Notes for the whole amount
of principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per annum
borne by the Notes and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7.
SECTION 6.12 Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, accountants and experts) and the Holders
allowed in any judicial proceedings relating to the Company, its creditors or
its property or other obligor on the Notes, its creditors and its property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 7.7. To the extent that the payment of any
such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.7
hereof out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, dividends, money, securities and other properties which
the Holders of the Notes may be entitled to receive in such proceeding whether
in liquidation or under any plan of reorganization or arrangement or otherwise.
SECTION 6.13 Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
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First: to the Trustee, the Agents and their agents and
attorneys for amounts due under Section 7.7, including payment of all
compensation, expense and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, interest and Additional Amounts, if any,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if any,
interest, and Additional Amounts, if any, respectively; and
Third: to the Company or any other obligor on the Notes, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.13; provided that the failure to give any such notice shall not affect the
establishment of such record date or payment date for Holders pursuant to this
Section 6.13.
SECTION 6.14 Restoration of Rights and Remedies. If the
Trustee or any Holder of any Note has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has ben discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case, subject to any determination in such
proceeding, the Company, the Trustee and the Holders of Notes shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders of Notes shall continue
as though no such proceeding had been instituted.
SECTION 6.15 Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.15
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.10, or a suit by a Holder or Holders of more than 10% in principal amount of
the outstanding Notes.
SECTION 6.16 Compliance Certificate; Notices of Default. The
Company is required to deliver to the Trustee annually a statement, in the form
of an Officers' Certificate, regarding compliance with this Indenture, and the
Company is required, within five Business Days, upon becoming aware of any
Default or Event of Default or any default under any document, instrument or
agreement representing Indebtedness of the Company, to deliver to the Trustee a
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statement, in the form of an Officers' Certificate, specifying such Default or
Event of Default.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. (a) If an Event of Default
actually known to a Trust Officer of the Trustee has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under this Indenture at the
request of any of the Holders of Notes, unless they shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
(b) Except during the continuance of an Event of Default
actually known to the Trustee:
(i) The Trustee and the Agents will perform only those duties
as are specifically set forth herein and no others and no implied
covenants or obligations shall be read into this Indenture against the
Trustee or the Agents.
(ii) In the absence of bad faith on their part, the Trustee
and the Agents may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions and such other documents delivered to them
pursuant to Section 11.4 hereof furnished to the Trustee and conforming
to the requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are required to
be furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of subsection (b)
of this Section 7.1.
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(ii) Neither the Trustee nor Agent shall be liable for any
error of judgment made in good faith by a Trust Officer of such Trustee
or Agent, unless it is proved that the Trustee or such Agent was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.8.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of such
funds is not assured to it or it does not receive an indemnity satisfactory to
it in its sole discretion against such risk, liability, loss, fee or expense
which might be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
subsections (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) Any provision hereof relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 7.1 and the TIA.
SECTION 7.2 Rights of Trustee. Subject to Section 7.1:
(a) The Trustee and each Agent may rely conclusively on and
shall be protected from acting or refraining from acting based upon any
document believed by them to be genuine and to have been signed or
presented by the proper person. Neither the Trustee nor any Agent shall
be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent order, approval, appraisal, bond, debenture,
note, coupon, security or other paper or document, but the Trustee or
its Agent, as the case may be, in its discretion, may make reasonable
further inquiry or investigation into such facts or matters stated in
such document and if the Trustee or its Agent as the case may be, shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, at
reasonable times during normal
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business hours, personally or by agent or attorney. The Trustee shall
not be deemed to have notice or any knowledge of any matter (including
without limitation Defaults or Events of Default) unless a Trust
Officer assigned to and working in the Trustee's Corporate Trust
Administration has actual knowledge thereof or unless written notice
thereof is received by the Trustee, attention: Corporate Trust
Administration and such notice references the Notes generally, the
Company or this Indenture;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate or Company Order and any resolution of the Board of
Directors of the Company, as the case may be, may be sufficiently
evidenced by a Board Resolution;
(c) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both,
which shall conform to the provisions of Sections 11.4 and 11.5.
Neither the Trustee nor any Agent shall be liable for any action it
takes or omits to take in good faith in reliance on such certificate or
opinion.
(d) The Trustee and any Agent may act through their attorneys
and agents and shall not be responsible for the misconduct or
negligence of any agent (other than an agent who is an employee of the
Trustee or such Agent) appointed with due care.
(e) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this
Indenture; provided, however, that the Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(f) The Trustee or any Agent may consult with counsel of its
selection and the advice or opinion of such counsel as to matters of
law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(g) Subject to Section 9.2 hereof, the Trustee may (but shall
not be obligated to), without the consent of the Holders, give any
consent, waiver or approval required by the terms hereof, but shall not
without the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding (i)
give any consent, waiver or approval or (ii) agree to any amendment or
modification of this Indenture, in each case,
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that shall have a material adverse effect on the interests of any
Holder. The Trustee shall be entitled to request and conclusively rely
on an Opinion of Counsel with respect to whether any consent, waiver,
approval, amendment or modification shall have a material adverse
effect on the interests of any Holder.
SECTION 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company, its Subsidiaries, or their respective
Affiliates with the same rights it would have if it were not Trustee. However,
in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights. The
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee and the Agents
shall not be responsible for and make no representation as to the validity,
effectiveness or adequacy of this Indenture or the Notes; it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company or upon the Company's direction under
any provision hereof; it shall not be responsible for the use or application of
any money received by any Paying Agent other than the Trustee and it shall not
be responsible for any statement or recital herein of the Company, or any
document issued in connection with the sale of Notes or any statement in the
Notes other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Default. If an Event of Default occurs
and is continuing and a Trust Officer of the Trustee receives actual notice of
such event, the Trustee shall mail to each Holder, as their names and addresses
appear on the list of Holders described in Section 2.5, notice of the uncured
Default or Event of Default within 30 days after the Trustee receives such
notice. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, interest or Additional Amounts, if any, on any
Note, including the failure to make payment on (i) the Change of Control Payment
Date pursuant to a Change of Control Offer or (ii) the Asset Sale Purchase Date
pursuant to an Asset Sale Offer, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of the Holders.
SECTION 7.6 Report by Trustee to Holders. Within 60 days after
each May 15 beginning with May 15, 1999, the Trustee shall, to the extent that
any of the events described in TIA Section 313(a) occurred within the previous
twelve months, but not otherwise, mail to each Holder a brief report dated as of
such date that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Sections 313(b), 313(c) and 313(d).
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A copy of each report at the time of its mailing to Holders
shall be mailed to the Company and filed with the SEC and each securities
exchange, if any, on which the Notes are listed.
The Company shall promptly notify the Trustee if subsequent to
the date hereof the Notes become listed on any securities exchange or of any
delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company shall pay
to the Trustee from time to time such compensation as the Company and the
Trustee shall from time to time agree in writing for its acceptance of this
Indenture and services hereunder. The Trustee's and the Agents' compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for their
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's or any Agent's negligence or bad faith. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's and Agents' accountants, experts and counsel and any taxes or
other expenses incurred by a trust created pursuant to Section 8.4 hereof.
The Company shall indemnify each of the Trustee, any
predecessor Trustee and the Agents for, and hold them harmless against, any and
all loss, damage, claim, expense or liability including taxes (other than taxes
based on the income of the Trustee) incurred by the Trustee or an Agent without
negligence, willful misconduct or bad faith on its part in connection with
acceptance of administration of this trust and its duties under this Indenture,
including the reasonable expenses and attorneys' fees and expenses of defending
itself against any claim of liability arising hereunder. The Trustee and the
Agents shall notify the Company promptly of any claim asserted against the
Trustee or such Agent for which it may seek indemnity. However, the failure by
the Trustee or the Agent to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the Trustee
or such Agent shall cooperate in the defense (and may employ its own counsel
reasonably satisfactory to the Trustee) at the Company's expense. The Trustee or
such Agent may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its written consent, which consent shall not be unreasonably
withheld. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee or such Agent as a result of the
violation of this Indenture by the Trustee or such Agent if such violation arose
from the Trustee's or such Agent's negligence or bad faith.
To secure the Company's payment obligations in this Section
7.7, the Trustee and the Agents shall have a senior Lien prior to the Notes
against all
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money or property held or collected by the Trustee and the Agents, in its
capacity as Trustee or Agent, except money or property held in trust to pay
principal or premium, if any, or interest on particular Notes.
When the Trustee or an Agent incurs expenses or renders
services after an Event of Default specified in Section 6.1(h) or Section 6.1(i)
occurs, the expenses (including the reasonable fees and expenses of its agents
and counsel) and the compensation for the services shall be preferred over the
status of the Holders in a proceeding under any Bankruptcy Law and are intended
to constitute expenses of administration under any Bankruptcy Law. The Company's
obligations under this Section 7.7 and any claim arising hereunder shall survive
the termination of this Indenture, the resignation or removal of any Trustee or
Agent, the discharge of the Company's obligations pursuant to Article VIII and
any rejection or termination under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company in writing. The Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee by so notifying
the Company and the Trustee in writing and may appoint a successor trustee with
the Company's consent. A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this section. The Company may remove
the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a receiver or other public officer takes charge of the
Trustee or its property; or
(iv) the Trustee becomes incapable of acting with respect to
its duties hereunder.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall notify each Holder of
such event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in principal
amount of the then outstanding Notes may, with the Company's consent, appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
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appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.7, all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.7, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee and the Company shall pay to any replaced or
removed Trustee all amounts owed under Section 7.7 upon such replacement or
removal.
SECTION 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee. In case any Notes shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by consolidation, merger or conversion to such authenticating Trustee
may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
SECTION 7.10 Corporate Trustee Required; Eligibility. There
shall be at all times a Trustee hereunder which shall be eligible to act as
Trustee under the TIA and shall have a combined capital and surplus of at least
$50,000,000 and have its Corporate Trust Office in the Borough of Manhattan, The
City of New York. If such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of a Federal, State or District
of Columbia supervising or examining authority within the United States of
America, then for the purposes of this Section, the combined capital and surplus
of such Person shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign
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immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.11 Disqualification; Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
TIA, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the TIA and
this Indenture.
SECTION 7.12 Preferential Collection of Claims Against
Company. The Trustee, in its capacity as Trustee hereunder, shall comply with
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1 Option To Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, with respect
to the Notes, elect to have either Section 8.2 or 8.3 be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article VIII.
SECTION 8.2 Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.2, the
Company shall be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
all the Obligations relating to the outstanding Notes and the Notes shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.6,
Section 8.8 and the other Sections of this Indenture referred to below in this
Section 8.2, and to have satisfied all of their other obligations under such
Notes and this Indenture and cured all then existing Events of Default (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal of,
premium, if any, interest, and Additional Amounts, if any, on such Notes when
such payments are due or on the Redemption Date solely out of the trust created
pursuant to this Indenture; (b) the Company's obligations with respect to Notes
concerning issuing temporary Notes, or, where relevant, registration of such
Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for
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payment and money for security payments held in trust; (c) the rights, powers,
trusts, duties and immunities of the Trustee, and the Company's obligations in
connection therewith; and (d) this Article VIII and the obligations set forth in
Section 8.6 hereof.
Subject to compliance with this Article VIII, the Company may
exercise its option under Section 8.2 notwithstanding the prior exercise of its
option under Section 8.3 with respect to the Notes.
SECTION 8.3 Covenant Defeasance. Upon the Company's exercise
under Section 8.1 of the option applicable to this Section 8.3, the Company
shall be released from any obligations under the covenants contained in Sections
4.3, 4.4, 4.10, 4.12, 4.13, 4.14, 4.15, and 4.16 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or Event of Default under Section 6.1(e), nor shall any event referred to in
Sections 6.1(f) or (g) thereafter constitute a Default or Event of Default, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.
SECTION 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
Section 8.3 to the outstanding Notes:
(i) the Company must irrevocably deposit, or cause to be
irrevocably deposited, with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, Government Securities
or a combination thereof in such amounts as will be sufficient, in the
opinion of an internationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, interest, and
Additional Amounts, if any, due on the outstanding Notes on the stated
maturity date or on the applicable Redemption Date, as the case may be,
of such principal, premium, if any, interest and Additional Amounts, if
any, due on the outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee (A) an Opinion of Counsel in the United States
reasonably
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acceptable to the Trustee confirming that, subject to customary
assumptions and exclusions, (1) the Company has received from, or there
has been published by, the U.S. Internal Revenue Service a ruling or
(2) since the Issue Date, there has been a change in the applicable
U.S. federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel in the United States shall
confirm that, subject to customary assumptions and exclusions, the
Holders of the outstanding Notes will not recognize income, gain or
loss for U.S. federal income tax purposes as a result of such Legal
Defeasance and will be subject to U.S. federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred and (B) an Opinion
of Counsel in The Netherlands reasonably acceptable to the Trustee to
the effect that (1) Holders will not recognize income, gain or loss for
Netherlands income tax purposes as a result of such Legal Defeasance
and will be subject to Netherlands income tax on the same amounts, in
the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred and (2) payments from the
defeasance trust will be free and exempt from any and all withholding
and other income taxes of whatever nature imposed or levied by or on
behalf of The Netherlands or any political subdivision thereof or
therein having the power to tax;
(iii) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee (A) an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the outstanding
Notes will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such Covenant Defeasance and will be
subject to such tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had
not occurred and (B) an Opinion of Counsel in The Netherlands
reasonably acceptable to the Trustee to the effect that (1) Holders
will not recognize income, gain or loss for Netherlands income tax
purposes as a result of such Covenant Defeasance and will be subject to
Netherlands income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance
had not occurred and (2) payments from the defeasance trust will be
free and exempt from any and all withholding and other income taxes of
whatever nature imposed or levied by or on behalf of The Netherlands or
any political subdivision thereof or therein having the power to tax;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of
such deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any
material
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agreement or instrument to which the Company is a party or by which the
Company is bound;
(vi) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such opinion
and subject to customary assumptions and exclusions following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally under any applicable Netherlands
and U.S. federal or state law, and that the Trustee has a perfected
security interest in such trust funds for the ratable benefit of the
Holders;
(vii) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of defeating, hindering, delaying or defrauding
any creditors of the Company or others; and
(viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel (which opinion of
counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have
been complied with.
SECTION 8.5 Satisfaction and Discharge of Indenture. This
Indenture will be discharged and will cease to be of further effect as to all
Notes issued thereunder when either (i) all such Notes theretofore authenticated
and delivered (except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been deposited in
trust and thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or (ii) (A) all such Notes not theretofore delivered to such
Trustee for cancellation have become due and payable by reason of the making of
a notice of redemption or otherwise or will become due and payable within one
year and the Company has irrevocably deposited or caused to be deposited with
such Trustee as trust funds in trust an amount of money sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation for principal, premium, if any, and accrued and unpaid
interest, and Additional Amounts, if any, to the date of maturity or redemption;
(B) no Default with respect to this Indenture or the Notes shall have occurred
and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company is a party
or by which it is bound; (C) the Company has paid, or caused to be paid, all
sums payable by it under this Indenture; and (D) the Company has delivered
irrevocable instructions to the Trustee under this Indenture to give the notice
of redemption and apply the
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deposited money toward the payment of such Notes at maturity or the Redemption
Date, as the case may be. In addition, the Company must deliver an Officers'
Certificate and an Opinion of Counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge have been satisfied.
SECTION 8.6 Survival of Certain Obligations. Notwithstanding
the satisfaction and discharge of this Indenture and of the Notes referred to in
Section 8.1, 8.2, 8.3, 8.4 or 8.5, the respective obligations of the Company and
the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.10, 2.11, 2.12, 2.13,
2.14, 4.1, 4.2, 4.5, 4.21, 6.10, Article VII, 8.7, 8.8, 8.9 and 8.10 shall
survive until the Notes are no longer outstanding, and thereafter the
obligations of the Company and the Trustee under Sections 7.7, 8.7, 8.8, 8.9 and
8.10 shall survive. Nothing contained in this Article VIII shall abrogate any of
the obligations or duties of the Trustee under this Indenture.
SECTION 8.7 Acknowledgement of Discharge by Trustee. Subject
to Section 8.10, after (i) the conditions of Section 8.4 or 8.5 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of all
of the Company's obligations under this Indenture except for those surviving
obligations specified in this Article VIII.
SECTION 8.8 Application of Trust Moneys. All cash in U.S.
dollars and Government Securities deposited with the Trustee pursuant to Section
8.4 or 8.5 in respect of Notes shall be held in trust and applied by it, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Holders of the Notes of all sums due and to become due thereon for principal,
premium, if any, interest, and Additional Amounts, if any, but such money need
not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the Government
Securities deposited pursuant to Section 8.4 or 8.5 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.9 Repayment to the Company; Unclaimed Money. The
Trustee and any Paying Agent shall promptly pay or return to the Company upon
Company Order any cash or Government Securities held by them at any time that
are not required for the payment of the principal of, premium, if any, interest,
and Additional Amounts, if any, on the Notes for which cash or Government
Securities have been deposited pursuant to Section 8.4 or 8.5.
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Any money held by the Trustee or any Paying Agent under this
Article, in trust for the payment of the principal of, premium, if any, interest
and Additional Amounts, if any, on any Note and remaining unclaimed for two
years after such principal, premium, if any, interest and Additional Amounts, if
any, has become due and payable shall be paid to the Company upon Company Order
or if then held by the Company shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company give notice to the
Holders or cause to be published notice once, in a leading newspaper having a
general circulation in New York (which is expected to be The Wall Street
Journal) and in Amsterdam (which is expected to be Het Financieele Dagblad )
(and, if and so long as the Notes are listed on the Luxembourg Stock Exchange
and the rules of such Stock Exchange shall so require, a newspaper having a
general circulation in Luxembourg (which is expected to be the Luxemburger
Wort)) or in the case of Definitive Notes, mail to Holders by first-class mail,
postage prepaid, at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, publish in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)), that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such notification, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.10 Reinstatement. If the Trustee or Paying Agent is
unable to apply any cash or Government Securities, as applicable, in accordance
with Section 8.2, 8.3, 8.4 or 8.5 by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2, 8.3, 8.4 or 8.5 until such time as
the Trustee or Paying Agent is permitted to apply all such cash or Government
Securities in accordance with Section 8.2, 8.3, 8.4 or 8.5; provided, however,
that if the Company has made any payment of interest on, premium, if any,
principal, and Additional Amounts, if any, of any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities, as applicable, held by the Trustee or Paying Agent.
ARTICLE IX
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84
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders of Notes.
Notwithstanding Section 9.2 hereof, the Company and the Trustee together may
amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note (i) to cure any ambiguity, omission, defect or inconsistency,
(ii) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (iii) to provide for the assumption of the Company
obligations to Holders of such Notes in the case of a merger or consolidation
pursuant to Article V, (iv) to provide for the assumption of the Company's
obligations to Holders of such Notes, (v) to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under this Indenture of any such Holder, (vi)
to add covenants for the benefit of the Holders or to surrender any right or
power conferred upon the Company or (vii) to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
9.6, the Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental indenture which adversely affects its own rights, duties
or immunities hereunder or otherwise.
SECTION 9.2 With Consent of Holders of Notes. The Company and
the Trustee may amend or supplement this Indenture or the Notes or any amended
or supplemental indenture with the written consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes), and
any existing Default or Event of Default and its consequences or compliance with
any provision of this Indenture or the Notes may be waived with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes). However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder of Notes): (i) reduce the principal amount of the Notes
whose Holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any such Note or alter or waive
the provisions with respect to the redemption of the Notes with respect to the
timing or amount of payment thereof, (iii) reduce the rate of or change the time
for payment of interest, including defaulted interest, on any Note, (iv) waive a
Default in the
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payment of principal of, premium, if any, interest and Additional Amounts, if
any, on the Notes (except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of the Notes and a
waiver of the payment default that resulted from the acceleration) or in respect
of a covenant or provision contained in this Indenture which cannot be amended
or modified without the consent of all Holders, (v) make any Note payable in
money other than that stated in the Notes, (vi) make any change in the
provisions of this Indenture relating to waivers of past Defaults or the rights
of Holders of the Notes to receive payments of principal, premium, if any,
interest and Additional Amounts, if any, on the Notes, (vii) make any change in
the amendment and waiver provisions contained in this Indenture, (viii) make any
change in paragraph 3 of the Notes that adversely affects the rights of any
Holder of the Notes, (ix) amend the terms of the Notes or this Indenture in a
way that would result in the loss of an exemption from any Taxes or an exemption
from any obligation to withhold or deduct Taxes unless the Company agrees to pay
Additional Amounts, if any, in respect thereof or (x) impair the right of any
Holder of the Notes to receive payment of principal of, or interest on such
Holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Notes.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.6, the Trustee shall join
with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture adversely affects the Trustee's
own rights, duties or immunities hereunder or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
SECTION 9.3 Compliance with TIA. Every amendment, waiver or
supplement of this Indenture or the Notes shall comply with the TIA as then in
effect.
SECTION 9.4 Revocation and Effect of Consents. Until an
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amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Note.
The Company may fix a record date for determining which
Holders of the Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the later
of 30 days prior to the first solicitation of such consent or the date of the
most recent list of Holders of Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.5 or (ii) such other date as the Company
shall designate.
SECTION 9.5 Notation on or Exchange of Notes. The Trustee may
place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
IX; provided, however, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which adversely affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive indemnity reasonably satisfactory to it, and shall
be fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture and constitutes the legal, valid and binding obligations of the
Company enforceable in accordance with its terms. Such Opinion of Counsel shall
not be an expense of the Trustee.
ARTICLE X
MISCELLANEOUS
<PAGE> 87
87
SECTION 10.1 TIA Controls. If any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by operation of Section
3.18(c) of the TIA, the imposed duties shall control.
SECTION 10.2 Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telecopier or first-class mail, postage
prepaid, addressed as follows:
if to the Company:
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam-Z.O.
The Netherlands
Facsimile No: 31-20-501-10-11
Attention: Raj Raithatha
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No: 212-848-7179
Attention: John D. Morrison, Jr. Esq.
if to the Trustee:
United States Trust Company of New York, as Trustee,
Registrar or Paying Agent
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Facsimile: (212) 852-1626
Each of the Company and the Trustee by written notice to each
other such Person may designate additional or different addresses for notices to
such Person. Any notice or communication to the Company and the Trustee, shall
be deemed to have been given or made as of the date so delivered if personally
delivered; when receipt is acknowledged, if telecopied; and five (5) calendar
days after mailing if sent by first class mail, postage prepaid (except that a
notice of change of address and a Notice to the Trustee shall not be deemed to
have been given until actually received by the addressee).
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88
Any notice or communication mailed to a Holder shall be mailed
to such Person by first-class mail or other equivalent means at such Person's
address as it appears on the registration books of the Registrar and shall be
sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Notices regarding the Notes will be (i) published in a leading
newspaper having a general circulation in New York (which is expected to be The
Wall Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad ) (and, if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or (ii) in the case of Definitive Notes, mailed to Holders by
first-class mail at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, published in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)). Notices given by publication
will be deemed given on the first date on which publication is made and notices
given by first-class mail, postage prepaid, will be deemed given five calendar
days after mailing.
SECTION 10.3 Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other person shall have the protection of TIA
Section 312(c).
SECTION 10.4 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee or an
Agent to take any action under this Indenture, the Company shall furnish to the
Trustee at the request of the Trustee:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.5), stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied or
complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee or such Agent (which shall include the
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89
statements set forth in Section 11.5) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been
satisfied or complied with.
SECTION 10.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, such
Person has made such examination or investigation as is necessary to
enable such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.
SECTION 10.6 Rules by Trustee, Paying Agent, Registrar. The
Trustee, Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.7 Legal Holidays. If a payment date is not a
Business Day, payment may be made on the next succeeding day that is a Business
Day, and no interest shall accrue for the intervening period.
SECTION 10.8 Governing Law. THIS INDENTURE AND THE NOTES, AND
THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.9 Submission to Jurisdiction; Appointment of Agent
for Service; Waiver. To the fullest extent permitted by applicable law, the
Company irrevocably submits to the non-exclusive jurisdiction of any federal or
state court in the Borough of Manhattan in The City of New York, County and
State of New York, United States of America, in any suit or proceeding based on
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or arising under this Indenture and the Notes, and irrevocably agrees that all
claims in respect of such suit or proceeding may be determined in any such
court. The Company, to the fullest extent permitted by applicable law,
irrevocably and fully waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding and hereby irrevocably designates and
appoints CT Corporation System (the "Authorized Agent"), [for a period of ten
years from the date hereof or until such time as no Notes are outstanding,] as
its authorized agent upon whom process may be served in any such suit or
proceeding. The Company represents that it has notified the Authorized Agent of
such designation and appointment and that the Authorized Agent has accepted the
same in writing. The Company hereby irrevocably authorizes and directs its
Authorized Agent to accept such service. The Company further agrees that service
of process upon its Authorized Agent and written notice of said service to the
Company mailed by first class mail or delivered to its Authorized Agent shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. Nothing herein shall affect the right of any person to
serve process in any other manner permitted by law. The Company agrees that a
final action in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other lawful
manner. Notwithstanding the foregoing, any action against the Company arising
out of or based on this Indenture, the Notes or the transactions contemplated
hereby may also be instituted in any competent court in The Netherlands, and the
Company expressly accepts the jurisdiction of any such court in any such action.
The Company hereby irrevocably waives, to the extent permitted
by law, any immunity to jurisdiction to which it may otherwise be entitled
(including, without limitation, immunity to pre-judgment attachment,
post-judgment attachment and execution) in any legal suit, action or proceeding
against it arising out of or based on this Indenture, the Notes or the
transactions contemplated hereby.
The provisions of this Section 11.9 are intended to be
effective upon the execution of this Indenture and the Notes without any further
action by the Company or the Trustee and the introduction of a true copy of this
Indenture into evidence shall be conclusive and final evidence as to such
matters.
SECTION 10.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of any of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.11 No Personal Liability of Directors, Officers,
Employees, Stockholders or Incorporators. No director, officer, employee,
incorporator or stockholder of the Company shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The
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waiver and release are part of the consideration for issuance of the Notes.
SECTION 10.12 Currency Indemnity. U.S. dollars are the sole
currency of account and payment for all sums payable by the Company under or in
connection with the Notes, including damages. Any amount received or recovered
in a currency other than U.S. dollars (whether as a result of, or the
enforcement of, a judgment or order of a court of any jurisdiction, in the
winding-up or dissolution of the Company or otherwise) by any Holder of a Note
in respect of any sum expressed to be due to it from the Company shall only
constitute a discharge to the Company to the extent of the U.S. dollar amount
which the recipient is able to purchase with the amount so received or recovered
in that other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on which it is
practicable to do so). If that U.S. dollar amount is less than the U.S. dollar
amount expressed to be due to the recipient under any Note, the Company shall
indemnify it against any loss sustained by it as a result. If the dollar amount
is greater than the dollar amount expressed to be due to the recipient under
this Agreement, the Company shall be entitled to the amount of such excess. In
any event, the Company shall indemnify the recipient against the cost of making
any such purchase. For the purposes of this subsection, it will be sufficient
for the Trustee or any Holder of a Note to certify in a satisfactory manner
(indicating the sources of information used) that it would have suffered a loss
had an actual purchase of U.S. dollars been made with the amount so received in
that other currency on the date of receipt or recovery (or, if a purchase of
dollars on such date had not been practicable, on the first date on which it
would have been practicable, it being required that the need for a change of
date be certified in the manner mentioned above). These indemnities constitute a
separate and independent obligation from the Company's other obligations, shall
give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by the Trustee or any Holder of a Note
and shall continue in full force and effect despite any other judgment, order,
claim or proof for a liquidated amount in respect of any sum due under any Note.
SECTION 10.13 Successors. All agreements of the Company in
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 10.14 Counterpart Originals. All parties hereto may
sign any number of copies of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent one and the same
agreement.
SECTION 10.15 Severability. In case any one or more of the
provisions in this Indenture or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended
<PAGE> 92
that all of the provisions hereof shall be enforceable to the full extent
permitted by law.
SECTION 10.16 Table of Contents, Headings, etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, as of the date first written above.
VERSATEL TELECOM INTERNATIONAL
N.V.,
By ---------------------------
Name: R. Gary Mesch
Title: Managing Director
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee, Registrar and
Paying Agent,
by
-------------------------------
Name:
Title:
<PAGE> 93
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Dollar Note
due 2009
1. Interest. VERSATEL TELECOM INTERNATIONAL N.V., a company
organized under the laws of The Netherlands (the "Company"), promises to pay
interest on the principal amount of this Note at the rate and in the manner
specified below. Interest on the Dollar Notes will accrue at -% per annum on the
principal amount then outstanding, and be payable semi-annually in arrears on
each May 15 and November 15, or if any such day is not a Business Day on the
next succeeding Business Day, commencing May 15, 2000 (the "Interest Payment"),
to the Holder hereof. Notwithstanding any exchange of this Dollar Note for a
Definitive Dollar Note during the period starting on a Record Date relating to
such Definitive Dollar Note and ending on the immediately succeeding Interest
Payment Date, the interest due on such Interest Payment Date shall be payable to
the Person in whose name this Global Dollar Note is registered at the close of
business on the Record Date for such interest. Interest on the Dollar Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from December 3, 1999. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) and on
any Additional Amounts from time to time on demand at the rate borne by the
Dollar Notes plus 1.5% per annum to the extent lawful. Any interest paid on this
Dollar Note shall be increased to the extent necessary to pay Additional Amounts
as set forth herein.
2. Additional Amounts. All payments made by the Company on the
Dollar Notes will be made without withholding or deduction for, or on account
of, any present or future Taxes imposed or levied by or on behalf of The
Netherlands or any jurisdiction in which the Company or any Surviving Entity is
organized or is otherwise resident for tax purposes or any political subdivision
thereof or any authority having power to tax therein or any jurisdiction from or
through which payment is made (each a "Relevant Taxing Jurisdiction"), unless
the withholding or deduction of such Taxes is then required by law. If any
deduction or withholding for, or on account of, any Taxes of any Relevant Taxing
Jurisdiction, shall at any time be required on any payments made by the Company
with respect to the Dollar Notes, including payments of principal, redemption
price, interest or premium, the Company will pay such additional amounts (the
"Additional Amounts") as may be necessary in order that the net amounts received
in respect of such payments by the Holders of the Dollar Notes or the Trustee,
as the case may be, after such withholding or deduction, equal the respective
amounts which would have been received in respect of such payments in the
absence of such withholding or deduction; except that no such Additional Amounts
will be payable with respect to:
(a) any payments on a Dollar Note held by or on behalf of a Holder
or
<PAGE> 94
beneficial owner who is liable for such Taxes in respect of such Dollar
Note by reason of the Holder or beneficial owner having some connection
with the Relevant Taxing Jurisdiction (including being a citizen or
resident or national of, or carrying on a business or maintaining a
permanent establishment in, or being physically present in, the Relevant
Taxing Jurisdiction) other than by the mere holding of such Dollar Note or
enforcement of rights thereunder or the receipt of payments in respect
thereof;
(b) any Taxes that are imposed or withheld as a result of a change
in law after the Issue Date where such withholding or imposition is by
reason of the failure of the Holder or beneficial owner of the Dollar Note
to comply with any request by the Company to provide information
concerning the nationality, residence or identity of such Holder or
beneficial owner or to make any declaration or similar claim or satisfy
any information or reporting requirement, which is required or imposed by
a statute, treaty, regulation or administrative practice of the Relevant
Taxing Jurisdiction as a precondition to exemption from all or part of
such Taxes;
(c) except in the case of the winding up of the Company, any Dollar
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction;
(d) any Note presented for payment (where presentation is required)
more than 30 days after the relevant payment is first made available for
payment to the Holder, except to the extent that the Holder would have
been entitled to such Additional Amounts on presenting note for payment on
the thirtieth day after the relevant payment is first made available.
(e) any estate, inheritance, gift, sale, transfer, personal,
property or similar tax, assessment or other governmental charge;
(f) any tax, assessment or other governmental charge which is
payable otherwise than by withholding any interest on, the Dollar Notes;
or
(g) any combination of clauses (a) through (f) above.
Such Additional Amounts will also not be payable where, had the
beneficial owner of the Dollar Note been the Holder of the Dollar Note, he would
not have been entitled to payment of Additional Amounts by reason of clauses (a)
to (g) inclusive above.
3. Method of Payment. The Company shall pay interest on the Dollar
Notes (except defaulted interest) to the Person in whose name this Dollar Note
is registered at the close of business on the Record Date for such interest.
Holders must surrender Dollar Notes to a Paying Agent to collect principal
payments. The Company
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<PAGE> 95
shall pay principal and interest in dollars or in such other coin or currency of
the United States of America that at the time of payment is legal tender for
payment of public and private debts. Immediately available funds for the payment
of the principal of (and premium, if any), interest and Additional Amounts, if
any, on this Dollar Note due on any Interest Payment Date, Maturity Date,
Redemption Date or other repurchase date will be made available to the Paying
Agent to permit the Paying Agent to pay such funds to the Holders on such
respective dates.
4. Paying Agent and Registrar. Initially, United States Trust
Company of New York will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act in any such capacity.
5. Indenture. The Company issued the Dollar Notes under an
Indenture, dated as of July -, 1999 (the "Indenture"), between the Company and
United States Trust Company of New York (the "Trustee"). This Note is one of a
duly authorized issue of Dollar Notes of the Company designated as its -% Senior
Dollar Notes due 2009 (the "Dollar Notes") denominated in U.S. dollars. The
terms of the Dollar Notes include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code Sections 77aaa-77bbbb) (the "TIA"), as in effect on the date of the
Indenture. Notwithstanding anything to the contrary herein, the Dollar Notes are
subject to all such terms, and Holders of Dollar Notes are referred to the
Indenture and the TIA for a statement of them. The Dollar Notes are not secured
by any of the assets of the Company, and will become general unsecured
obligations of the Company. The Dollar Notes are limited in aggregate principal
amount to $ - subject to the terms of the Indenture. Each Holder, by accepting a
Dollar Note, agrees to be bound by all of the terms and provisions of the
Indenture, as the same may be amended from time to time.
6. Ranking. The Dollar Notes will be general unsecured obligations
of the Company and will rank senior in right of payment to all future
indebtedness of the Company that is, by its terms or by the terms of the
agreement or instrument governing such indebtedness, expressly subordinated in
right of payment to the Dollar Notes and pari passu in right of payment with all
existing and future senior indebtedness of the Company.
7. Optional Redemption. The Dollar Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2004 upon not less
than 30 nor more than 60 days' prior notice published in a leading newspaper
having a general circulation in New York (which is expected to be The Wall
Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad ) (and if, and so long as the Dollar Notes are listed on the Luxembourg
Stock Exchange and the rules of such Stock Exchange shall so require, a
newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) or, in the case of Definitive Dollar Notes, mailed by
first-class mail to each Holder's registered address
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<PAGE> 96
(and, if, and so long as the Dollar Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, published in a
newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)), at the redemption prices (expressed as a percentage of
principal amount) set forth below, plus accrued and unpaid interest and
Additional Amounts, if any, to the applicable Redemption Date (and in the case
of Definitive Dollar Notes, subject to the right of Holders of record on the
record date to receive interest and Additional Amounts, if any, due on the
relevant interest payment date in respect thereof), if redeemed during the
twelve-month period beginning on May 15 of each of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- -----
<S> <C>
2004................................................... -%
2005................................................... -
2006................................................... -
2007 and thereafter.................................... -
</TABLE>
In addition, at any time on or prior to November 15, 2002, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the Dollar Notes at a redemption price equal to |X| % of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Amounts, if any, to the date of redemption, with the Net Cash Proceeds (as
defined in the Indenture) of one or more Public Equity Offerings (as defined in
the Indenture) received by, or invested in, the Company; provided that, in each
case, at least [65%] of the aggregate original principal amount of the Dollar
Notes remains outstanding immediately after the occurrence of such redemption;
and provided, further, that notice of any such redemption must be given within
30 days of the date of the closing of any such Public Equity Offering.
8. Special Tax Redemption. The Dollar Notes may be redeemed, at the
option of the Company in whole but not in part, at any time upon giving not less
than 30 nor more than 60 days' notice to the Holders (which notice shall be
irrevocable), at a redemption price equal to the aggregate principal amount
thereof, plus accrued and unpaid interest to the date fixed by the Company for
redemption (a "Tax Redemption Date"), and, all Additional Amounts, if any, then
due and which will become due on the Tax Redemption Date as a result of the
redemption or otherwise, if the Company determines that, as a result of (i) any
change in, or amendment to, the laws or treaties (or any regulations or rulings
promulgated thereunder) of The Netherlands (or any political subdivision or
taxing authority thereof) or any Relevant Taxing Jurisdiction affecting taxation
which becomes effective on or after the Issue Date,(ii) any change in position
regarding the application, administration or any new or different interpretation
of such laws, treaties, regulations or rulings (including a holding, judgment or
order by a court of competent jurisdiction), which change, amendment,
application or interpretation becomes effective on or after the Issue Date, or
(iii) the issuance of Definitive Dollar Notes due to (A) DTC being at any time
unwilling or unable to continue as or ceasing to
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<PAGE> 97
be a clearing agency registered as a clearing agency under the Exchange Act, and
a successor to DTC registered as a clearing agency under the Exchange Act is not
able to be appointed by the Company within 90 days or (B) the Depositary being
at any time unwilling or unable to continue as Depositary and a successor
Depositary is not able to be appointed by the Company within 90 Days, the
Company is, or on the next Interest Payment Date would be, required to pay
Additional Amounts, and the Company determines that such payment obligation
cannot be avoided by the Company taking reasonable measures. Notwithstanding the
foregoing, no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to make such
payment or withholding if a payment in respect of the Dollar Notes were then
due. Prior to the publication or, where relevant, mailing of any notice of
redemption of the Dollar Notes pursuant to the foregoing, the Company will
deliver to the Trustee an opinion of an independent tax counsel of recognized
standing to the effect that the circumstances referred to above exist. The
Trustee shall accept such opinion as sufficient evidence of the satisfaction of
the conditions precedent described above, in which event it shall be conclusive
and binding on the Holders.
9. Notice of Redemption. Notice of redemption will be given at least
30 days but not more than 60 days before the Redemption Date by publishing in a
leading newspaper having a general circulation in New York (which is expected to
be The Wall Street Journal) and in Amsterdam (which is expected to be Het
Financieele Dagblad ) (and, if and so long as the Dollar Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
a newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) or in the case of Definitive Dollar Notes, mailed to
Holders by first-class mail at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Dollar Notes are
listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange
shall so require, published in a newspaper having a general circulation in
Luxembourg (which is expected to be the Luxemburger Wort)). Dollar Notes in
denominations of $1,000 may be redeemed only in whole. The Trustee may select
for redemption portions (equal to $1,000 or any integral multiple thereof) of
the principal of Dollar Notes that have denominations larger than $1,000.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Notes called for redemption shall have
been deposited with the Paying Agent for redemption on such Redemption Date,
then, unless the Company defaults in the payment of such Redemption Price, the
Dollar Notes called for redemption will cease to bear interest and Additional
Amounts, if any, and the only right of the Holders of such Dollar Notes will be
to receive payment of the Redemption Price.
10. Change of Control Offer. Upon the occurrence of a Change of
Control, the Company will be required to make an offer to purchase all or any
part (equal to $1,000 aggregate principal amount and integral multiples thereof)
of the Dollar Notes on the Change of Control Payment Date at a purchase price in
cash equal to
A-97
<PAGE> 98
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
thereon to the date of repurchase and Additional Amounts, if any, to the date of
repurchase (and in the case of Definitive Dollar Notes, subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date and Additional Amounts, if any, in respect
thereof). Holders of Dollar Notes that are subject to an offer to purchase will
receive a Change of Control Offer from the Company prior to any related Change
of Control Payment Date and may elect to have such Dollar Notes purchased by
completing the form entitled "Option of Holder to Elect Purchase" appearing
below.
11. Limitation on Disposition of Assets. When the aggregate amount
of Excess Proceeds from Asset Sales exceeds $5.0 million, the Company will be
obligated, within 30 Business Days thereafter, to make an offer to purchase the
maximum principal amount of Dollar Notes, that is an integral multiple of
$1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon, plus Additional Amounts, if any, to the
date fixed for the closing of such offer (and, in the case of Definitive Dollar
Notes, subject to the right of a Holder of record on the relevant record date to
receive interest due on the relevant interest payment date and Additional
Amounts, if any, in respect thereof). If the aggregate principal amount of
Dollar Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, subject to applicable law, the Trustee shall select the Dollar Notes
to be redeemed in accordance with the Indenture; provided, however, that no
Dollar Notes of $1,000 or less shall be purchased in part. Holders of Dollar
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Dollar Notes purchased by completing the form entitled "Option of Holders
to Elect Purchase" appearing below.
12. Denominations; Form. The Global Dollar Notes are in bearer form,
without coupons, in denominations of $1,000 and integral multiples of $1,000.
13. Persons Deemed Owners. The registered Holder of this Dollar Note
shall be treated as the owner of it for all purposes, subject to the terms of
the Indenture.
14. Unclaimed Funds. If funds for the payment of principal, interest
or Additional Amounts remain unclaimed for two years, the Trustee and the Paying
Agents will repay the funds to the Company at its written request. After that,
all liability of the Trustee and such Paying Agents with respect to such funds
shall cease.
15. Legal Defeasance and Covenant Defeasance. The Company may be
discharged from its obligations under the Indenture and the Dollar Notes except
for certain provisions thereof ("Legal Defeasance"), and may be discharged from
their obligations to comply with certain covenants contained in the Indenture
("Covenant Defeasance"), in each case upon satisfaction of certain conditions
specified in the Indenture.
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<PAGE> 99
16. Amendment; Supplement; Waiver. Subject to certain exceptions
specified in the Indenture, the Indenture or the Dollar Notes may be amended or
supplemented with the written consent of the Holders of at least a majority in
principal amount of the Dollar Notes then outstanding, and any existing Default
or Event of Default or compliance with any provision of the Indenture or the
Dollar Notes may be waived with the consent of the Holders of a majority in
principal amount of the Dollar Notes then outstanding.
17. Restrictive Covenants. The Indenture imposes certain covenants
that, among other things, limit the ability of the Company and its Restricted
Subsidiaries to, incur additional Indebtedness, pay dividends or make other
distributions or investments, repurchase Equity Interests or make certain other
Restricted Payments, enter into certain consolidations or mergers or enter into
certain transactions with Affiliates and consummate certain mergers and
consolidations or sales of all or substantially all assets. The limitations are
subject to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
18. Successors. When a successor assumes all the obligations of its
predecessor under the Dollar Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
19. Defaults and Remedies. If an Event of Default (other than an
Event of Default specified in Sections 6.1(h) or (i) of the Indenture) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Dollar Notes may declare all the Dollar Notes to
be due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Dollar Notes may not enforce the Indenture or the Dollar
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Dollar Notes unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Dollar Notes then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Dollar Notes notice of any
continuing Default or Event of Default (except a Default in payment of
principal, premium, interest and Additional Amounts, if any, including an
accelerated payment) if it determines that withholding notice is in their
interest.
20. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Dollar Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
21. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any
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<PAGE> 100
obligation of the Company under the Dollar Notes or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of the Dollar Notes by accepting a Dollar Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Dollar Notes.
22. Authentication. This Dollar Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Dollar Note.
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Dollar Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Unless otherwise
defined herein, terms defined in the Indenture are used herein as defined
therein.
24. CUSIP, ISIN and Common Code Numbers. Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company will cause CUSIP, ISIN and Common Code numbers to be
printed on the Dollar Notes as a convenience to the Holders of the Dollar Notes.
No representation is made as to the accuracy of such numbers as printed on the
Dollar Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law THE INDENTURE AND THE DOLLAR NOTES, AND THE RIGHTS
AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
The initial principal amount at maturity of this Dollar Note shall
be $ . The following decreases/increases in the principal amount at
maturity of this Dollar Note have been made:
<TABLE>
<CAPTION>
Total Principal
Amount at Notation
Decrease in Increase in Maturity Made by
Date of Principal Principal Following such or on
Decrease/ Amount at Amount at Decrease/ Behalf of
Increase Maturity Maturity Increase Trustee
- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
</TABLE>
A-100
<PAGE> 101
<TABLE>
<S> <C> <C> <C> <C>
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
</TABLE>
A-101
<PAGE> 102
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Dollar Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Dollar Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount: $
Date:_____________ Your Signature:________________
(Sign exactly as your name appears on the other
side of this Dollar Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
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<PAGE> 103
EXHIBIT A
[FORM OF FACE OF GLOBAL DOLLAR NOTE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Dollar Note
due 2009
CUSIP NO.: [ ]
ISIN NO.: [ ]
COMMON CODE NO.. [ ]
No.____ $____________
VERSATEL TELECOM INTERNATIONAL N.V., a limited liability company
organized under the laws of The Netherlands (the "Company", which term includes
any successor corporation), for value received promises to pay to the bearer
upon surrender hereof the principal sum indicated on Schedule A hereof, on
Schedule A hereof, on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing
May 15, 2009
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Dollar Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
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<PAGE> 104
IN WITNESS WHEREOF, the Company has caused this Dollar Note to be
signed manually or by facsimile by its duly authorized officers.
VERSATEL TELECOM INTERNATIONAL N.V.,
by /s/ R. Gary Mesch
---------------------------------------
Name: R. Gary Mesch
Title: Managing Director
by /s/ John Guiliano
---------------------------------------
Name: John Guiliano
Title: Vice President
This is one of the Dollar Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by
-------------------------
Name:
Title:
Dated:
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<PAGE> 105
EXHIBIT B
[FORM OF FACE OF DEFINITIVE DOLLAR NOTE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Dollar Note
due 2009
CUSIP NO.: [ ]
ISIN NO.: [ ]
COMMON CODE NO.. [ ]
No.____ $____________
VERSATEL TELECOM INTERNATIONAL N.V., a limited liability company
organized under the laws of The Netherlands (the "Company", which term includes
any successor corporation), for value received promises to pay __________
__________, or registered assigns, upon surrender hereof the principal sum of
__________________ dollars, on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing
May 15, 2000
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Dollar Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
<PAGE> 106
IN WITNESS WHEREOF, the Company has cause this Dollar Note to be
signed manually or by facsimile by its duly authorized officers.
VERSATEL TELECOM INTERNATIONAL, N.V.,
by /s/ R. Gary Mesch
---------------------------------------
Name: R. Gary Mesch
Title: Managing Director
by /s/ John Guiliano
---------------------------------------
Name: John Guiliano
Title: Vice President
This is one of the Dollar Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by:
-------------------------------
Name:
Title:
Dated:
<PAGE> 107
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Note
due 2009
1. Interest. VERSATEL TELECOM INTERNATIONAL N.V., a company
organized under the laws of The Netherlands (the "Company"), promises to pay
interest on the principal amount of this Dollar Note at the rate and in the
manner specified below. Interest on the Dollar Notes will accrue at -% per annum
on the principal amount then outstanding, and be payable semi-annually in
arrears on each May 15 and November 15, or if any such day is not a Business Day
on the next succeeding Business Day, commencing May 15, 2000 to the Holder
hereof. Interest on the Dollar Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from December 3,
1999. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on overdue
installments of interest (without regard to any applicable grace periods) and on
any Additional Amounts from time to time on demand at the rate borne by the
Dollar Notes plus 1.5% per annum to the extent lawful. Any interest paid on this
Dollar Note shall be increased to the extent necessary to pay Additional Amounts
as set forth herein.
2. Additional Amounts. All payments made by the Company on the
Dollar Notes will be made without withholding or deduction for, or on account
of, any present or future Taxes imposed or levied by or on behalf of The
Netherlands or any jurisdiction in which the Company or any Surviving Entity is
organized or is otherwise resident for tax purposes or any political subdivision
thereof or any authority having power to tax therein or any jurisdiction from or
through which payment is made (each a "Relevant Taxing Jurisdiction"), unless
the withholding or deduction of such Taxes is then required by law. If any
deduction or withholding for, or on account of, any Taxes of any Relevant Taxing
Jurisdiction, shall at any time be required on any payments made by the Company
with respect to the Dollar Notes, including payments of principal, redemption
price, interest or premium, the Company will pay such additional amounts (the
"Additional Amounts") as may be necessary in order that the net amounts received
in respect of such payments by the Holders of the Dollar Notes or the Trustee,
as the case may be, after such withholding or deduction, equal the respective
amounts which would have been received in respect of such payments in the
absence of such withholding or deduction; except that no such Additional Amounts
will be payable with respect to:
(a) any payments on a Dollar Note held by or on behalf of a Holder
or beneficial owner who is liable for such Taxes in respect of such Dollar
Note by reason of the Holder or beneficial owner having some connection
with the
<PAGE> 108
Relevant Taxing Jurisdiction (including being a citizen or resident or
national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the Relevant Taxing
Jurisdiction) other than by the mere holding of such Dollar Note or
enforcement of rights thereunder or the receipt of payments in respect
thereof;
(b) any Taxes that are imposed or withheld as a result of a change
in law after the Issue Date where such withholding or imposition is by
reason of the failure of the Holder or beneficial owner of the Dollar Note
to comply with any request by the Company to provide information
concerning the nationality, residence or identity of such Holder or
beneficial owner or to make any declaration or similar claim or satisfy
any information or reporting requirement, which is required or imposed by
a statute, treaty, regulation or administrative practice of the Relevant
Taxing Jurisdiction as a precondition to exemption from all or part of
such Taxes;
(c) except in the case of the winding up of the Company, any Dollar
Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction;
(d) any Dollar Note presented for payment (where presentation is
required) more than 30 days after the relevant payment is first made
available for payment to the Holder, except to the extent that the Holder
would have been entitled to such Additional Amounts on presenting such
note for payment on the thirtieth day after the relevant payment is first
made available.
(e) any estate, inheritance, gift, sale, transfer, personal,
property or similar tax, assessment or other governmental charge;
(f) any tax, assessment or other governmental charge which is
payable otherwise than by withholding any interest on, the Dollar Notes;
or
(g) any combination of clauses (a) and (f) above.
Such Additional Amounts will also not be payable where, had the
beneficial owner of the Dollar Note been the Holder of the Dollar Note, he would
not have been entitled to payment of Additional Amounts by reason of clauses (a)
to (g) inclusive above.
3. Method of Payment. The Company shall pay interest on the Dollar
Notes (except defaulted interest) to the Persons who are the registered Holders
Dollar Notes at the close of business on the Record Date immediately preceding
the Interest Payment Date for such interest. Holders must surrender Dollar Notes
to a Paying Agent to collect principal payments. The Company shall pay principal
and interest in dollars or in such other coin or currency of the United States
of America that at the time
<PAGE> 109
of payment is legal tender for payment of public and private debts; provided,
however, that with respect to any payment of principal, interest, Additional
Amounts, if any, in excess of $100,000 to any payee or group of related payees,
such payment will be made, at the option of the Holder hereof, by wire transfer
of same day funds to the Paying Agent, who in turn will wire such funds to the
Holder hereof or to such individuals as the Holder hereof may in writing to the
Paying Agent direct; provided that the Paying Agent has received written wire
transfer instructions at least fifteen days prior to the date of any such
payment.
4. Paying Agent and Registrar. Initially, United States Trust
Company of New York will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act in any such capacity.
5. Indenture. The Company issued the Dollar Notes under an
Indenture, dated as of July -, 1999 (the "Indenture"), between the Company and
United States Trust Company of New York (the "Trustee"). This Dollar Note is one
of a duly authorized issue of Notes of the Company designated as its -% Senior
Notes due 2009 (the "Dollar Notes"). The terms of the Dollar Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Dollar Notes are subject to all such terms, and Holders of Dollar
Notes are referred to the Indenture and the TIA for a statement of them. The
Dollar Notes are not secured by any of the assets of the Company. The Dollar
Notes are limited in aggregate principal amount to $- subject to the terms of
the Indenture. Each Holder, by accepting a Dollar Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time.
6. Ranking. The Dollar Notes will be general unsecured obligations
of the Company and will rank senior in right of payment to all future
indebtedness of the Company that is, by its terms or by the terms of the
agreement or instrument governing such indebtedness, expressly subordinated in
right of payment to the Notes and pari passu in right of payment with all
existing and future senior indebtedness of the Company.
7. Optional Redemption. The Dollar Notes will be redeemable, at the
Company's option, in whole or in part, on and after May 15, 2004 upon not less
than 30 nor more than 60 days' prior notice published in a leading newspaper
having a general circulation in New York (which is expected to be The Wall
Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad ) (and if, and so long as the Dollar Notes are listed on the Luxembourg
Stock Exchange and the rules of such Stock Exchange shall so require, a
newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) and mailed by first-class mail to each Holder's
registered address), at the redemption prices (expressed as a percentage of
principal amount) set forth below, plus accrued and unpaid interest and
Additional Amounts, if any, to the applicable Redemption Date (and, subject to
the right of Holders of record on the relevant record date to receive interest
and Additional
A-108
<PAGE> 110
Amounts, if any, due on the relevant interest payment date in respect thereof),
if redeemed during the twelve-month period beginning on May 15 of each of the
years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- -----
<S> <C>
2004................................................... -%
2005................................................... -
2006................................................... -
2007 and thereafter.................................... -
</TABLE>
In addition, at any time on or prior to November 15, 2002, the
Company may, at its option, redeem up to [35%] of the aggregate principal amount
of the Dollar Notes at a redemption price equal to -1/4% of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Amounts, if any, to the date of redemption, subject to the right of Holders of
record on the relevant record date to receive interest due to the relevant
interest payment date and Additional Amounts, if any, in respect thereof, with
the Net Cash Proceeds (as defined in the Indenture) of one or more Public Equity
Offerings (as defined in the Indenture) received by, or invested in, the
Company; provided that, in each case, at least 65% of the aggregate original
principal amount of the Dollar Notes remains outstanding immediately after the
occurrence of such redemption; and provided, further, that notice of any such
redemption must be given within 30 days of the date of the closing of any such
Public Equity Offering.
8. Special Tax Redemption. The Dollar Notes may be redeemed, at the
option of the Company in whole but not in part, at any time upon giving not less
than 30 nor more than 60 days' notice to the Holders (which notice shall be
irrevocable), at a redemption price equal to the aggregate principal amount
thereof, plus accrued and unpaid interest to the date fixed by the Company for
redemption (a "Tax Redemption Date"), and all Additional Amounts, if any, then
due and which will become due on the Tax Redemption Date as a result of the
redemption or otherwise, if the Company determines that, as a result of (i) any
change in, or amendment to, the laws or treaties (or any regulations or rulings
promulgated thereunder) of The Netherlands (or any political subdivision or
taxing authority thereof) or any Relevant Taxing Authority affecting taxation
which becomes effective on or after the Issue Date or (iii) the issuance of
Definitive Dollar Notes due to (A) DTC being at any time unwilling or unable to
continue as or ceasing to be a clearing agency registered as a clearing agency
under the Exchange Act, and a successor to DTC registered as a clearing agency
under the Exchange Act is not able to be appointed by the Company within 90 days
or (B) the Depositary being at any time unwilling or unable to continue as
Depositary and a successor Depositary is not able to be appointed by the Company
within 90 days, or (ii) any change in position regarding the application,
administration or any new or different interpretation of such laws, treaties,
regulations or rulings (including a holding, judgment or order by a court of
competent jurisdiction), which change, amendment, application or interpretation
becomes effective on or after the Issue Date, the Company is, or on the next
Interest Payment Date would be, required to pay Additional Amounts, and the
Company determines that such payment obligation cannot be avoided by the
<PAGE> 111
Company taking reasonable measures. Notwithstanding the foregoing, no such
notice of redemption shall be given earlier than 90 days prior to the earliest
date on which the Company would be obligated to make such payment or withholding
if a payment in respect of the Dollar Notes were then due. Prior to the
publication or, where relevant, mailing of any notice of redemption of the
Dollar Notes pursuant to the foregoing, the Company will deliver to the Trustee
an opinion of an independent tax counsel of recognized standing to the effect
that the circumstances referred to above exist. The Trustee shall accept such
opinion as sufficient evidence of the satisfaction of the conditions precedent
described above, in which event it shall be conclusive and binding on the
Holders.
9. Notice of Redemption. Notice of redemption will be given at least
30 days but not more than 60 days before the Redemption Date by publishing in a
leading newspaper having a general circulation in New York (which is expected to
be The Wall Street Journal) and in Amsterdam (which is expected to be Het
Financieele Dagblad ) (and, if and so long as the Dollar Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
a newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) and mailed to Holders by first-class mail at their
respective addresses as they appear on the registration books of the Registrar).
Dollar Notes in denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Dollar Notes that have denominations
larger than $1,000.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Dollar Notes called for redemption
shall have been deposited with the Paying Agent for redemption on such
Redemption Date, then, unless the Company defaults in the payment of such
Redemption Price, the Dollar Notes called for redemption will cease to bear
interest and Additional Amounts, if any, and the only right of the Holders of
such Dollar Notes will be to receive payment of the Redemption Price.
10. Change of Control Offer. Upon the occurrence of a Change of
Control, the Company will be required to make an offer to purchase all or any
part (equal to $1,000 aggregate principal amount and integral multiples thereof)
of the Dollar Notes on the Change of Control Payment Date at a purchase price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, thereon to the date of repurchase and Additional Amounts, if
any, to the date of repurchase (and, subject to the right of Holders of record
on the relevant record date to receive interest due on the relevant interest
payment date and Additional Amounts, if any, in respect thereof). Holders of
Dollar Notes that are subject to an offer to purchase will receive a Change of
Control Offer from the Company prior to any related Change of Control Payment
Date and may elect to have such Dollar Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" appearing below.
<PAGE> 112
11. Limitation on Disposition of Assets. When the aggregate amount
of Excess Proceeds from Asset Sales exceeds $5.0 million, the Company will be
obligated, within 30 Business Days thereafter, to make an offer to purchase the
maximum principal amount of Dollar Notes, that is an integral multiple of
$1,000, that may be purchased out of the Excess Proceeds at an offer price in
cash in an amount equal to 100% of the aggregate principal amount thereof, plus
accrued and unpaid interest thereon, plus, Additional Amounts, if any, to the
date fixed for the closing of such offer (and, subject to the right of a Holder
of record on the relevant record date to receive interest due on the relevant
interest payment date and Additional Amounts, if any, in respect thereof). If
the aggregate principal amount of Dollar Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, subject to applicable law, the Trustee
shall select the Dollar Notes to be redeemed in accordance with the Indenture;
provided, however, that no Dollar Notes of $1,000 or less shall be purchased in
part. Holders of Dollar Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Dollar Notes purchased by completing the form
entitled "Option of Holders to Elect Purchase" appearing below.
12. Denominations; Form. The Definitive Dollar Notes are in bearer
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000.
13. Persons Deemed Owners. The Holder of this Dollar Note shall be
treated as the owner of it for all purposes, subject to the terms of the
Indenture.
14. Unclaimed Funds. If funds for the payment of principal, interest
Additional Amounts remain unclaimed for two years, the Trustee and the Paying
Agents will repay the funds to the Company at its written request. After that,
all liability of the Trustee and such Paying Agents with respect to such funds
shall cease.
15. Legal Defeasance and Covenant Defeasance. The Company may be
discharged from its obligations under the Indenture and the Dollar Notes except
for certain provisions thereof ("Legal Defeasance"), and may be discharged from
their obligations to comply with certain covenants contained in the Indenture
("Covenant Defeasance"), in each case upon satisfaction of certain conditions
specified in the Indenture.
16. Amendment; Supplement; Waiver. Subject to certain exceptions
specified in the Indenture, the Indenture or the Dollar Notes may be amended or
supplemented with the written consent of the Holders of at least a majority in
principal amount of the Dollar Notes then outstanding, and any existing Default
or Event of Default or compliance with any provision of the Indenture or the
Dollar Notes may be waived with the consent of the Holders of a majority in
principal amount of the Dollar Notes then outstanding.
17. Restrictive Covenants. The Indenture imposes certain covenants
that, among other things, limit the ability of the Company and its Restricted
Subsidiaries to, incur additional Indebtedness, pay dividends or make other
distributions or investments, repurchase Equity Interests or make certain other
Restricted Payments,
A-111
<PAGE> 113
enter into certain consolidations or mergers or enter into certain transactions
with Affiliates and consummate certain mergers and consolidations or sales of
all or substantially all assets. The limitations are subject to a number of
important qualifications and exceptions. The Company must annually report to the
Trustee on compliance with such limitations.
18. Successors. When a successor assumes all the obligations of its
predecessor under the Dollar Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
19. Defaults and Remedies. If an Event of Default (other than an
Event of Default specified in Sections 6.1(h) or (i) of the Indenture) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Dollar Notes may declare all the Dollar Notes to
be due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Dollar Notes may not enforce the Indenture or the Dollar
Notes except as provided in the Indenture. The Trustee is not obligated to
enforce the Indenture or the Dollar Notes unless it has received indemnity
satisfactory to it. The Indenture permits, subject to certain limitations
therein provided, Holders of a majority in aggregate principal amount of the
Dollar Notes then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Dollar Notes notice of any
continuing Default or Event of Default (except a Default in payment of
principal, premium, interest, Additional Amounts, if any, including an
accelerated payment) if it determines that withholding notice is in their
interest.
20. Trustee Dealings with Company. The Trustee under the Indenture,
in its individual or any other capacity, may become the owner or pledgee of
Dollar Notes and may otherwise deal with the Company, its Subsidiaries or their
respective Affiliates as if it were not the Trustee.
21. No Recourse Against Others. No stockholder, director, officer,
employee or incorporator, as such, of the Company shall have any liability for
any obligation of the Company under the Dollar Notes or the Indenture or for any
claim based on, in respect of or by reason of, such obligations or their
creation. Each Holder of the Dollar Notes by accepting a Dollar Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Dollar Notes.
22. Authentication. This Dollar Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Dollar Note.
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Dollar Note or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Unless otherwise
defined herein, terms defined in the Indenture are used herein as defined
therein.
24. CUSIP, ISIN and Common Code Numbers. Pursuant to a
<PAGE> 114
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company will cause CUSIP, ISIN and Common Code numbers to be
printed on the Dollar Notes as a convenience to the Holders of the Dollar Notes.
No representation is made as to the accuracy of such numbers as printed on the
Dollar Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law THE INDENTURE AND THE DOLLAR NOTES, AND THE RIGHTS
AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 115
________________________________________________________________________
ASSIGNMENT FORM
To assign this Dollar Note fill in the form below:
I or we assign and transfer this Dollar Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Dollar
Note on the books of the Company. The agent may substitute another to act for
him.
________________________________________________________________________
Date: _____________ Your Signature: ______________________
________________________________________________________________________
Sign exactly as your name appears on the other side of this Dollar Note.
<PAGE> 116
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Dollar Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Dollar Note purchased
by the Company pursuant to Section 4.15 or Section 4.16 of the Indenture, state
the amount: $
Date:_____________ Your Signature:________________
(Sign exactly as your name appears on the other
side of this Dollar Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
<PAGE> 1
Exhibit 4.2
VERSATEL TELECOM INTERNATIONAL N.V.
as Issuer,
AND
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee, Registrar and
Paying Agent
---------------
INDENTURE
Dated as of July -, 1999
---------------
- -% Senior Euro Notes due 2009
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE............ 1
SECTION 1.1 Definitions........................................... 1
SECTION 1.2 Incorporation by Reference of TIA..................... 22
SECTION 1.3 Rules of Construction................................. 22
ARTICLE II
THE NOTES................................ 23
SECTION 2.1 Form and Dating....................................... 23
SECTION 2.2 Execution and Authentication.......................... 23
SECTION 2.3 Registrar and Paying Agent............................ 24
SECTION 2.4 Paying Agent To Hold Assets in Trust.................. 25
SECTION 2.5 List of Holders....................................... 25
SECTION 2.6 Transfer and Exchange. ............................... 26
SECTION 2.7 Replacement Notes..................................... 27
SECTION 2.8 Outstanding Notes..................................... 28
SECTION 2.9 Treasury Notes........................................ 28
SECTION 2.10 Temporary Notes....................................... 28
SECTION 2.11 Cancellation.......................................... 29
SECTION 2.12 Defaulted Interest.................................... 29
SECTION 2.13 CUSIP, ISIN and Common Code Numbers................... 29
SECTION 2.14 Deposit of Moneys..................................... 30
SECTION 2.15 Certain Matters Relating to Global Notes.............. 30
SECTION 2.16 Separation of Warrants and Notes...................... 30
ARTICLE III
REDEMPTION................................ 31
SECTION 3.1 Optional Redemption................................... 31
SECTION 3.2 Notices to Trustee.................................... 31
SECTION 3.3 Selection of Notes To Be Redeemed..................... 31
SECTION 3.4 Notice of Redemption.................................. 31
SECTION 3.5 Effect of Notice of Redemption........................ 33
SECTION 3.6 Deposit of Redemption Price........................... 33
SECTION 3.7 Notes Redeemed in Part................................ 33
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
COVENANTS................................ 35
SECTION 4.1 Payment of Notes...................................... 35
SECTION 4.2 Maintenance of Office or Agency....................... 35
SECTION 4.3 Limitation on Restricted Payments..................... 35
SECTION 4.4 Limitation on Indebtedness............................ 38
SECTION 4.5 Corporate Existence................................... 42
SECTION 4.6 Payment of Taxes and Other Claims..................... 42
SECTION 4.7 Maintenance of Properties and Insurance............... 42
SECTION 4.8 Compliance Certificate; Notice of Default............. 43
SECTION 4.9 Compliance with Laws.................................. 44
SECTION 4.10 Reports............................................... 44
SECTION 4.11 Waiver of Stay; Extension or Usury Laws............... 45
SECTION 4.12 Limitation on Transactions with Shareholders and
Affiliates............................................ 45
SECTION 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries........ 46
SECTION 4.14 Limitation on Liens................................... 48
SECTION 4.15 Change of Control..................................... 48
SECTION 4.16 Limitation on Asset Sales............................. 50
SECTION 4.17 Limitation on Issuance of Guarantees of Indebtedness
by Restricted Subsidiaries............................ 54
SECTION 4.18 Business of the Company; Restriction on Transfers
of Existing Business.................................. 54
SECTION 4.19 Limitation on the Issuance and Sale of Capital Stock
of Restricted Subsidiaries............................ 54
SECTION 4.20 Additional Amounts.................................... 55
SECTION 4.21 Payment of Non-Income Taxes and Similar Charges....... 56
ARTICLE V
SUCCESSOR CORPORATION.......................... 56
SECTION 5.1 Consolidation, Merger, and Sale of Assets............. 56
SECTION 5.2 Successor Corporation Substituted..................... 57
ARTICLE VI
DEFAULT AND REMEDIES........................... 57
SECTION 6.1 Events of Default..................................... 57
SECTION 6.2 Acceleration.......................................... 59
SECTION 6.3 Other Remedies........................................ 59
SECTION 6.4 The Trustee May Enforce Claims Without Possession of
Securities............................................ 59
SECTION 6.5 Rights and Remedies Cumulative........................ 59
SECTION 6.6 Delay or Omission Not Waiver.......................... 60
SECTION 6.7 Waiver of Past Defaults............................... 60
SECTION 6.8 Control by Majority................................... 60
SECTION 6.9 Limitation on Suits................................... 61
SECTION 6.10 Rights of Holders To Receive Payment.................. 61
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6.11 Collection Suit by Trustee............................ 61
SECTION 6.12 Trustee May File Proofs of Claim...................... 62
SECTION 6.13 Priorities............................................ 62
SECTION 6.14 Restoration of Rights and Remedies. .................. 63
SECTION 6.15 Undertaking for Costs................................. 63
SECTION 6.16 Compliance Certificate; Notices of Default............ 63
ARTICLE VII
TRUSTEE................................. 63
SECTION 7.1 Duties of Trustee..................................... 63
SECTION 7.2 Rights of Trustee..................................... 65
SECTION 7.3 Individual Rights of Trustee.......................... 66
SECTION 7.4 Trustee's Disclaimer.................................. 67
SECTION 7.5 Notice of Default..................................... 67
SECTION 7.6 Report by Trustee to Holders.......................... 67
SECTION 7.7 Compensation and Indemnity............................ 67
SECTION 7.8 Replacement of Trustee................................ 69
SECTION 7.9 Successor Trustee by Merger, Etc...................... 70
SECTION 7.10 Corporate Trustee Required; Eligibility............... 70
SECTION 7.11 Disqualification; Conflicting Interests............... 70
SECTION 7.12 Preferential Collection of Claims Against Company..... 70
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE................. 71
SECTION 8.1 Option To Effect Legal Defeasance or Covenant
Defeasance............................................ 71
SECTION 8.2 Legal Defeasance and Discharge........................ 71
SECTION 8.3 Covenant Defeasance................................... 71
SECTION 8.4 Conditions to Legal or Covenant Defeasance............ 72
SECTION 8.5 Satisfaction and Discharge of Indenture............... 74
SECTION 8.6 Survival of Certain Obligations....................... 74
SECTION 8.7 Acknowledgement of Discharge by Trustee............... 74
SECTION 8.8 Application of Trust Moneys........................... 75
SECTION 8.9 Repayment to the Company; Unclaimed Money............. 75
SECTION 8.10 Reinstatement......................................... 76
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS................... 76
SECTION 9.1 Without Consent of Holders of Notes................... 76
SECTION 9.2 With Consent of Holders of Notes...................... 77
SECTION 9.3 Compliance with TIA................................... 78
SECTION 9.4 Revocation and Effect of Consents..................... 78
SECTION 9.5 Notation on or Exchange of Notes...................... 79
SECTION 9.6 Trustee To Sign Amendments, Etc....................... 79
ARTICLE X
MISCELLANEOUS.............................. 79
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 10.1 TIA Controls.......................................... 79
SECTION 10.2 Notices............................................... 79
SECTION 10.3 Communications by Holders with Other Holders.......... 81
SECTION 10.4 Certificate and Opinion as to Conditions Precedent.... 81
SECTION 10.5 Statements Required in Certificate or Opinion......... 81
SECTION 10.6 Rules by Trustee, Paying Agent, Registrar............. 82
SECTION 10.7 Legal Holidays........................................ 82
SECTION 10.8 Governing Law......................................... 82
SECTION 10.9 Submission to Jurisdiction; Appointment of Agent
for Service; Waiver................................... 82
SECTION 10.10 No Adverse Interpretation of Other Agreements......... 83
SECTION 10.11 No Personal Liability of Directors, Officers,
Employees, Stockholders or Incorporators.............. 83
SECTION 10.12 Currency Indemnity. .................................. 83
SECTION 10.13 Successors. ......................................... 84
SECTION 10.14 Counterpart Originals................................. 84
SECTION 10.15 Severability.......................................... 84
SECTION 10.16 Table of Contents, Headings, etc...................... 84
</TABLE>
EXHIBITS
Exhibit A - Form of Global Euro Note
Exhibit B - Form of Definitive Euro Note
NOTE: This Table of Contents shall not, for any purpose, be deemed to be part of
this Indenture.
<PAGE> 6
7
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1)................................................ 7.10
(a)(2)............................................... 7.10
(a)(3)............................................... NA
(a)(4)............................................... NA
(a)(5)............................................... 7.8; 7.11
(b).................................................. 7.8; 7.11
(c).................................................. NA
311(a)................................................... 7.12
(b).................................................. 7.12
(c).................................................. NA
312(a)................................................... 2.5
(b).................................................. 10.3
(c).................................................. 10.3
313(a)................................................... 7.6
(b)(1)............................................... 10.3
(b)(2)............................................... 7.6
(c).................................................. 7.6; 10.2
(d).................................................. 7.6
314(a)................................................... 4.8; 4.10; 10.2;
10.4
(b).................................................. 10.2
(c)(1)............................................... 7.2; 10.4
(c)(2)............................................... 7.2; 10.4
(c)(3)............................................... NA
(d).................................................. 10.3;10.4; 10.5
(e).................................................. 10.5
(f).................................................. NA
315(a)................................................... 7.1(c)
(b).................................................. 7.5; 10.2
(c).................................................. 7.1(a)
(d).................................................. 6.8; 7.1(c)
(e).................................................. 6.15
316(a)(last sentence).................................... 2.9
(a)(1)(A)............................................ 6.8
(a)(1)(B)............................................ 6.7
(a)(2)............................................... NA
(b).................................................. 6.10
317(a)(1)................................................ 6.11
(a)(2)............................................... 6.12
(b).................................................. 2.4
</TABLE>
<PAGE> 7
8
<TABLE>
<S> <C>
318(a)................................................... 10.1
(c).................................................. 10.1
</TABLE>
- ----------------------
NA means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
<PAGE> 8
9
INDENTURE, dated as of July -, 1999, between VERSATEL
TELECOM INTERNATIONAL N.V., a company organized under the laws
of The Netherlands, and having its corporate seat in
Amsterdam, The Netherlands (the "Company"), and United States
Trust Company of New York, a New York banking corporation, as
Trustee, Registrar and Paying Agent.
The Company has duly authorized the creation and issuance of (i) its
- -% Senior Euro Notes due 2009 (the "Euro Notes") and (ii) Additional Euro
Notes due 2009 (as defined herein) that may be issued on any Issue Date (the
Additional Notes, together with the Euro Notes, the "Notes"; and, to provide
therefor, the Company has duly authorized the execution and delivery of this
Indenture.
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions. For purposes of this Indenture, unless
otherwise specifically indicated herein, the term "consolidated" with respect to
any Person refers to such Person consolidated with its Restricted Subsidiaries,
and excludes from such consolidation any Unrestricted Subsidiary as if such
Unrestricted Subsidiary were not an Affiliate of such Person. In addition, for
purposes of the following definitions and this Indenture generally, all
calculations and determinations shall be made in accordance with U.S. GAAP and
shall be based upon the consolidated financial statements of the Company and its
subsidiaries prepared in accordance with U.S. GAAP. As used in this Indenture,
the following terms shall have the following meanings:
"Acquired Indebtedness" means, Indebtedness of a Person existing at
the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Company or any Restricted Subsidiary or assumed in
connection with an Asset Acquisition by the Company or a Restricted Subsidiary
and not incurred in connection with, or in anticipation of, such Person becoming
a Restricted Subsidiary, such merger or consolidation or such Asset Acquisition;
provided that Indebtedness of such Person which is redeemed, defeased, retired
or otherwise repaid at the time of or immediately upon the consummation of the
<PAGE> 9
10
transactions by which such Person becomes a Restricted Subsidiary or is merged
or consolidated with or into the Company or any Restricted Subsidiary or such
Asset Acquisition shall not be Indebtedness.
"Additional Amounts" shall have the meaning set forth in Section
4.20.
"Additional Dollar Notes" means up to $- aggregate principal amount
of -% Senior Euro Notes due 2009 issued under the terms of this Indenture after
the Closing Date.
"Additional Euro Notes" means up to - aggregate principal amount of
- -% Senior Euro Notes due 2009 issued under the terms of the Euro Indenture after
the Closing Date.
"Additional Notes" means the Additional Euro Notes and the
Additional Euro Notes.
"Affiliate" as applied to any Person means any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, is defined to mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means any Registrar, Paying Agent, Authenticating Agent or
co- Registrar.
"Agent Members" shall have the meaning set forth in Section 2.15.
"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Company or any
Restricted Subsidiary to any other Person, or any acquisition or purchase of
Equity Interests of any other Person by the Company or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated, merged with or into the Company
or any Restricted Subsidiary or (ii) an acquisition by the Company or any of its
Restricted Subsidiaries of the property and assets of any Person (other than the
Company or any of its Restricted Subsidiaries) that constitute substantially all
of an operating unit or line of business of such Person or which is otherwise
outside the ordinary course of business.
<PAGE> 10
11
"Asset Disposition" means the sale or other disposition by the
Company or any of its Restricted Subsidiaries (other than to the Company or
another Restricted Subsidiary of the Company) of (i) all or substantially all of
the Equity Interests in any Restricted Subsidiary of the Company or (ii) all or
substantially all of the assets that constitute an operating unit or line of
business of the Company or any of its Restricted Subsidiaries or which is
otherwise outside the ordinary course of business.
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person (other than the Company or any of its
Restricted Subsidiaries) of (i) all or any of the Equity Interests in any
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or line of business of the Company or any of its Restricted
Subsidiaries or (iii) any other property and assets of the Company or any of its
Restricted Subsidiaries outside the ordinary course of business (including the
receipt of proceeds paid on account of the loss of or damage to any property or
asset and awards of compensation for any asset taken by condemnation, eminent
domain or similar proceedings). For the purposes of this definition, the term
"Asset Sale" shall not include (a) any transaction consummated in compliance
with Section 5.1 and the creation of any Lien not prohibited by Section 4.14;
provided, however, that any transaction consummated in compliance with such
Section 5.1, involving a sale, conveyance, assignment, transfer, lease or other
disposal of less than all of the properties or assets of the Company and the
Restricted Subsidiaries shall be deemed to be an Asset Sale with respect to the
properties or assets of the Company and Restricted Subsidiaries that are not so
sold, conveyed, assigned, transferred, leased or otherwise disposed of in such
transaction; (b) sales of property or equipment that has become worn out,
obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or any Restricted Subsidiary, as the case may be; and
(c) any transaction consummated in compliance with Section 4.3. In addition,
solely for purposes of Section 4.16, any sale, conveyance, transfer, lease or
other disposition of any property or asset, whether in one transaction or a
series of related transactions, involving assets with a Fair Market Value not in
excess of $1.0 million in any fiscal year shall be deemed not to be an "Asset
Sale."
"Asset Sale Offer" shall have the meaning set forth in Section 4.16.
"Authenticating Agent" shall have the meaning set forth in Section
2.2.
<PAGE> 11
12
"Bankruptcy Law" means (i) for purposes of the Company, the
Faillissementswet and any similar statute, regulation or provision of any other
jurisdiction in which the Company is organized or conducting business and (ii)
for purposes of the Trustee, Title 11, U.S. Code or any similar United States
Federal, state or foreign law for the relief of creditors.
"Board of Directors" means the Supervisory Board of the Company.
"Board Resolution" means a duly authorized resolution of the Board
of Directors certified by an Officer and delivered to the Trustee.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banking institutions are authorized or required by law
to close in New York City or Amsterdam.
"Capital Stock" means with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) in equity of such Person, including, without
limitation, if such Person is a partnership, partnership interests (whether
general or limited) and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership.
"Capitalized Lease" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) of which the discounted present
value of the rental obligations of such Person as lessee, in conformity with
U.S. GAAP, is required to be capitalized and reflected as a liability on the
balance sheet of such Person; and "Capitalized Lease Obligation" is defined to
mean, at the time any determination thereof is to be made, the discounted
present value of the rental obligations under such lease.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the U.S. government or any agency or instrumentality
thereof having maturities of not more than 360 days from the date of
acquisition; (b) certificates of deposit and Eurodollar time deposits with
maturities of 360 days or less from the date of acquisition, bankers'
acceptances with maturities not exceeding 360 days and overnight bank deposits,
in each case with any commercial bank having capital and surplus in excess of
$500 million; (c) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a) and (b) entered
into with any financial institution meeting the qualifications specified in
clause (b) above; (d) commercial paper rated P-1, A-1 or the equivalent thereof
by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group,
respectively, and in each case maturing within six months after the date of
acquisition; (e) marketable
<PAGE> 12
13
direct obligations of the United Kingdom, The Netherlands, Belgium, Germany or
France or obligations fully and unconditionally guaranteed by such sovereign
nation (or any agency thereof), of the type and maturity described in clauses
(a) through (d) above of foreign obligors, which have ratings described in such
clauses or equivalent ratings from comparable foreign rating agencies; and (f)
investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (a) through (e) above.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (other
than a Permitted Holder) becomes the ultimate "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of
the then outstanding Voting Stock of the Company on a fully diluted basis; (ii)
individuals who at the beginning of any period of two consecutive calendar years
constituted the Board of Directors (together with any directors who are members
of the Board of Directors on the date hereof and any new directors whose
election by the Board of Directors or whose nomination for election by the
Company's stockholders was approved by a vote of at least two thirds of the
members of the Board of Directors then still in office who either were members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of such Board of Directors then in office;
(iii) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company to any such "person" or
"group" (other than to a Restricted Subsidiary); or (iv) the merger or
consolidation of the Company with or into another corporation or the merger of
another corporation with or into the Company with the effect that immediately
after such transaction any such "person" or "group" of persons or entities shall
have become the beneficial owner of securities of the surviving corporation of
such merger or consolidation representing a majority of the total voting power
of the then outstanding Voting Stock of the surviving corporation.
"Change of Control Offer" shall have the meaning set forth in
Section 4.15.
"Change of Control Payment" shall have the meaning set forth in
Section 4.15.
<PAGE> 13
14
"Change of Control Payment Date" shall have the meaning set forth in
Section 4.15.
"Class A Shares" means the Class A Shares, par value NLG 0.10 per
share, of the Company.
"Class B Shares" means the Class B Shares, par value NLG 0.10 per
share, of the Company.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Company Order" means a written order or request signed in the name
of the Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company or any other officer so authorized
and delivered to the Trustee.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the (i) Consolidated Net Income of such Person for such period plus, to
the extent deducted in computing such Consolidated Net Income (and without
duplication) Consolidated Fixed Charges, (ii) any provision for taxes (other
than taxes (either positive or negative) attributable to extraordinary and non
recurring gains or losses or sales of assets), (iii) any amount attributable to
depreciation and amortization expense and (iv) all other non-cash items reducing
Consolidated Net Income (excluding any non-cash charge to the extent that it
requires or represents an accrual of, or reserve for, cash charges in any future
period), less all non-cash items increasing Consolidated Net Income (excluding
any items which represent the reversal of an accrual of, or reserve for,
anticipated cash charges at any prior period), all as determined on a
consolidated basis for such Person and its Restricted Subsidiaries in accordance
with U.S. GAAP; provided, however, that there shall be excluded therefrom the
Consolidated Cash Flow (if positive) of any Restricted Subsidiary (calculated
separately for such Restricted Subsidiary in the same manner as provided above)
that is subject to a restriction which prevents the payment of dividends or the
making of distributions to the Company or another Restricted Subsidiary to the
extent of such restriction.
"Consolidated Fixed Charges" means, with respect to any Person for
any period, Consolidated Interest Expense plus dividends declared and payable on
Preferred Stock.
"Consolidated Interest Expense" means, with respect to any Person
for any period, the aggregate amount of interest in respect of Indebtedness
<PAGE> 14
15
(including capitalized interest, amortization of original issue discount on any
Indebtedness and the interest portion of any deferred payment obligation)
calculated in accordance with U.S. GAAP; all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and interest
on Indebtedness that is Guaranteed or secured by such Person or any of its
Restricted Subsidiaries), less the principal component of rentals in respect of
Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be
accrued by such Person and its Restricted Subsidiaries during such period;
excluding, however, any amount of such interest of any Restricted Subsidiary to
the extent the net income of such Restricted Subsidiary is excluded in the
calculation of Consolidated Net Income pursuant to the last proviso of such
definition.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period determined on a consolidated basis and in
conformity with U.S. GAAP; provided that the following items shall be excluded
in computing Consolidated Net Income (without duplication): (i) the net income
(or loss) of any Restricted Subsidiary accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with such Person or any
of its Restricted Subsidiaries or all or substantially all of the property and
assets of such Restricted Subsidiary are acquired by such Person or any of its
Restricted Subsidiaries; (ii) any gains or losses (on an after-tax basis) but
not losses attributable to Asset Sales; (iii) all extraordinary gains and gains
from Currency Agreements or Interest Rate Agreements and gains from the
extinguishment of debt; (iv) the net income (or loss) of any other Person (other
than net income (or loss) attributable to a Restricted Subsidiary) in which such
other Person (other than such Person or any of its Restricted Subsidiaries) has
a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to such Person or any of its Restricted Subsidiaries
by such other Person during such period; (v) net gains attributable to write-ups
of assets or write-downs of liabilities (determined after taking into account
losses attributable to write-downs of assets or write-ups of liabilities up to
but not in excess of such gains); and (vi) the cumulative effect of a change in
accounting principles after the Issue Date; and provided, further, that there
shall be further excluded therefrom the net income (but not the net loss) of any
Restricted Subsidiary (calculated separately for such Restricted Subsidiary in
the same manner as provided above) that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the Company
or another Restricted Subsidiary to the extent of such restriction.
<PAGE> 15
16
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of such Person and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of
determination), less any amounts attributable to Redeemable Stock or any equity
security convertible into or exchangeable for Indebtedness, the cost of treasury
stock and the principal amount of any promissory notes receivable from the sale
of Equity Interests in the Company or any of its Restricted Subsidiaries, each
item to be determined in conformity with U.S. GAAP (excluding the effects of
foreign currency exchange adjustments under Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 52).
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the Issue Date or (ii) was nominated for election or elected to such Board of
Directors with, or whose election to such Board of Directors was approved by,
the affirmative vote of a majority of the Continuing Directors who were members
of such Board of Directors at the time of such nomination or election or (iii)
is any designee of any Permitted Holder or was nominated by any Permitted
Holder.
"Corporate Trust Office" means the address of the Trustee specified
in Section 11.2.
"Covenant Defeasance" shall have the meaning set forth in Section
8.3.
"Credit Facilities" means one or more senior credit agreements,
senior loan agreements or similar senior facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Cumulative Consolidated Cash Flow" means, for the period beginning
on the Issue Date through and including the end of the last fiscal quarter
(taken as one accounting period) preceding the date of any proposed Restricted
Payment, Consolidated Cash Flow of the Company and its Restricted Subsidiaries
for such period determined on a consolidated basis in accordance with U.S. GAAP.
"Cumulative Consolidated Fixed Charges" means, for the period
beginning on the Issue Date through and including the end of the last fiscal
quarter
<PAGE> 16
17
(taken as one accounting period) preceding the date of any proposed
Restricted Payment, Consolidated Fixed Charges of the Company and its Restricted
Subsidiaries for such period determined on a consolidated basis in accordance
with U.S. GAAP.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement and any other arrangement or agreement designed to provide
protection against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Default Interest Payment Date" shall have the meaning set forth in
Section 2.13.
"Definitive Notes" means Notes in definitive registered form
substantially in the form of Exhibits B and D.
"DTC" means The Depository Trust Company or its successors.
"DWAC" means the Depositary/Deposit Withdraw at Custodian system.
"Eligible Accounts Receivable" means the accounts receivables (net
of any reserves and allowances for doubtful accounts in accordance with U.S.
GAAP) of any Person that are not more than 60 days past their due date and that
were entered into in the ordinary course of business on normal payment terms as
shown on the most recent consolidated balance sheet of such Person filed with
the Commission, all in accordance with U.S. GAAP.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Euro" shall have the meaning set forth in Section [ ].
"Euroclear Operator" means Morgan Guaranty Trust Company of
New York (Brussels office), as operator of the Euroclear System.
<PAGE> 17
18
"Event of Default" shall have the meaning set forth in Section 6.1.
"Excess Proceeds" shall have the meaning set forth in Section 4.16.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Fair Market Value" means, with respect to any asset or property,
the price (after taking into account any liabilities relating to such assets)
which could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of which is under
any compulsion to complete the transaction; provided, however, that the Fair
Market Value of any such asset or assets shall be determined conclusively by the
Board of Directors acting in good faith, which determination shall be evidenced
by a resolution of such Board delivered to the Trustee.
"Global Euro Note" shall have the meaning set forth in Section 2.1.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which obligations
or guarantee the full faith and credit of the United States is pledged and are
not callable or redeemable at the option of the issuer thereof.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof) of any other Person; provided that
the term "Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"Incur" means, with respect to any Indebtedness, to incur, create,
issue, assume, Guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such
Indebtedness, including an Incurrence of Indebtedness by reason of the
acquisition of more than 50% of the Equity Interests in any Person; provided
that the accrual of interest shall not be considered an Incurrence of
Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person,
whether or
<PAGE> 18
19
not contingent (A) in respect of borrowed money, (B) evidenced by bonds,
debentures, notes or other similar instruments or letters of credit or other
similar instruments (including reimbursement obligations with respect thereto),
(C) representing the balance deferred and unpaid of the purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables, (D) representing
Capitalized Lease Obligations, (ii) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person; provided that the amount of such Indebtedness shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the amount of such Indebtedness, (iii) all Indebtedness of other Persons
Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such
Person, (iv) the maximum fixed redemption or repurchase price of Redeemable
Stock of such Person at the time of determination and (v) to the extent not
otherwise included in this definition, obligations under Currency Agreements and
Interest Rate Agreements. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and, with respect to contingent obligations, the maximum
liability upon the occurrence of the contingency giving rise to the obligation;
provided (x) that the amount outstanding at any time of any Indebtedness issued
with original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with U.S. GAAP, (y) money
borrowed and set aside at the time of the Incurrence of any Indebtedness (and
which is pledged in favor of the holders of such Indebtedness pending such
application) shall not be deemed to be "Indebtedness" so long as such money is
held to secure the payment of such interest and (z) that Indebtedness shall not
include any liability for federal, state, local or other taxes.
"Indebtedness to Consolidated Cash Flow Ratio" shall have the
meaning set forth in Section 4.4.
"Indenture" means this Indenture, as amended, modified or
supplemented from time to time in accordance with the terms hereof.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate insurance, and any other arrangement
or
<PAGE> 19
20
agreement designed to provide protection against fluctuations in interest rates.
"Investment" in any Person means, any direct or indirect advance,
loan or other extension of credit (including, without limitation, by way of
Guarantee or similar arrangement; but excluding advances to customers in the
ordinary course of business that are, in conformity with U.S. GAAP, recorded as
accounts receivable on the balance sheet of such Person or its Restricted
Subsidiaries) or capital contribution to (by means of any transfer of cash or
other tangible or intangible property to others or any payment for any property
or services for the account or use of others), or any purchase or acquisition of
Equity Interests, bonds, notes, debentures, or other similar instruments issued
by, any other Person. For purposes of the definition of "Unrestricted
Subsidiary" and Sections 4.3 and 4.19, (i) "Investment" shall include (a) the
Fair Market Value of the assets (net of liabilities) of any Restricted
Subsidiary of the Company at the time that such Restricted Subsidiary of the
Company is designated an Unrestricted Subsidiary and shall exclude the Fair
Market Value of the assets (net of liabilities) of any Unrestricted Subsidiary
at the time that such Unrestricted Subsidiary is designated a Restricted
Subsidiary of the Company and (b) the Fair Market Value, in the case of a sale
of Equity Interests in accordance with Section 4.19 such that a Person no longer
constitutes a Restricted Subsidiary, of the remaining assets (net of
liabilities) of such Person after such sale, and shall exclude the fair market
value of the assets (net of liabilities) of any Unrestricted Subsidiary at the
time that such Unrestricted Subsidiary is designated a Restricted Subsidiary of
the Company and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its Fair Market Value at the time of such
transfer.
"Issue Date" means the date on which the Notes are originally issued
under this Indenture.
"Legal Defeasance" shall have the meaning set forth in Section 8.2.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of Amsterdam, The Netherlands or The City of New York
or a place of payment are authorized or required by law, regulation or executive
order to remain closed. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
"Lien" means, any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind in respect of an asset, whether or not filed,
recorded or otherwise perfected under applicable law (including, without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any sale with recourse against the seller or any Affiliate
of the seller, or any option or other agreement to sell or give any security
interest).
<PAGE> 20
21
"Maturity Date" means May 15, 2009.
"Most Recent Balance Sheet" means, with respect to any Person, the
most recent consolidated balance sheet of such Person reported on by an
internationally recognized firm of independent accountants without qualification
as to scope.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of cash or Cash Equivalents, including
payments in respect of deferred payment obligations (to the extend corresponding
to the principal, but not interest, component thereof) when received in the form
of cash or Cash Equivalents (except to the extent such obligations are financed
or sold with recourse to the Company or any Restricted Subsidiary of the
Company) and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of (i) brokerage commissions and
other fees and expenses (including fees and expenses of counsel and investment
bankers) related to such Asset Sale, (ii) taxes paid or payable as a result
thereof (after taking into account any available tax credits or deductions and
any tax sharing agreements), (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that either (A) is
secured by a Lien on the property or assets sold or (B) is required to be paid
as a result of such sale and (iv) appropriate amounts to be provided by the
Company or any Restricted Subsidiary of the Company as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with U.S. GAAP;
provided that such amounts which cease to be held as reserves shall be deemed
Net Cash Proceeds; and (b) with respect to any capital contribution or any
issuance or sale of Equity Interests (other than Redeemable Stock), the proceeds
of such capital contribution, issuance or sale in the form of cash or Cash
Equivalents, including payments in respect of deferred payment obligations (to
the extent corresponding to the principal, but not interest, component thereof)
when received in the form of cash or Cash Equivalents (except to the extent (1)
such obligations are financed, directly or indirectly, with money borrowed from
the Company or any Restricted Subsidiary or otherwise financed or sold with
recourse to the Company or any Restricted Subsidiary or (2) the capital
contribution or purchase of the Equity Interests is otherwise financed, directly
or indirectly, by the Company or any Restricted Subsidiary,
<PAGE> 21
22
including through funds contributed, extended, guaranteed or otherwise advanced
by the Company or any Affiliate) and proceeds from the conversion of other
property received when converted to cash or Cash Equivalents, net of attorney's
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees incurred in connection with
such issuance or sale and net of taxes paid or payable as a result thereof.
"Non-U.S. Person" means a person who is not a U.S. Person, as
defined in Regulation S.
"Notes" shall have the meaning set forth in the preamble of this
Indenture.
"Offer Amount" shall have the meaning set forth in Section 4.16.
"Offering" means the offering of the Notes described in the Offering
Memorandum.
"Offering Memorandum" means the Offering Memorandum, dated as of
November 17, 1998, relating to the Units.
"Offer Period" shall have the meaning set forth in Section 4.16.
"Officer" means, with respect to any Person (other than any Agent),
the Chairman of the Board, any Director, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Assistant Treasurer, the Controller or the Secretary of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company that meets the requirements set
forth in Sections 11.4 and 11.5.
"Opinion of Counsel" means a written opinion from legal counsel
which and who are reasonably acceptable to, and addressed to, the Trustee
complying with the requirements of Sections 11.4 and 11.5. Unless otherwise
required by the TIA, the legal counsel may be an employee of or counsel to the
Company or the Trustee.
"Ordinary Shares" means the ordinary shares, consisting of the
<PAGE> 22
23
Class A Shares and the Class B Shares, each par value NLG 0.10 per share, of the
Company.
"Paying Agent" shall have the meaning set forth in Section 2.3.
"Permitted Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) constructing, creating, developing
or marketing communications related network equipment, software and other
devices for use in a telecommunications business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in clause (i) or (ii) above.
"Permitted Holder" means, collectively, Telecom Founders B.V.,
NeSBIC Venture Fund C.V., Cromwilld Limited, Paribas Deelnemingen N.V.,
Nederlandse Participatie Maatschappij N.V. and any Affiliate of the foregoing
Persons.
"Permitted Investment" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, the Company or a Restricted
Subsidiary; (ii) commissions, payroll, travel and similar advances to cover
matters that are expected at the time of such advance ultimately to be treated
as expenses in accordance with U.S. GAAP; (iii) stock, obligations or securities
received (a) in satisfaction of judgments or (b) in settlement of debts or as a
result of foreclosure, perfection or enforcement of any Lien, in each case under
this clause (b) arising in the ordinary course of business and not in
contemplation of the acquisition of such stock, obligations or securities; (iv)
Investments in any Person (the primary business of which is related, ancillary
or complementary to the business of the Company on the date of such Investment)
at any one time outstanding (measured on the date each such Investment was made
without giving effect to subsequent changes in value) in an aggregate amount not
to exceed the greater of (x) $10.0 million and (y) 5.0% of the Company's total
consolidated assets as of the end of the most recently completed fiscal quarter;
(v) Investments in Cash Equivalents; (vi) Investments made as a result of the
receipt of noncash consideration from any Asset Sale made in compliance with
Section 4.16; (vii) Investments made in the ordinary course of the
telecommunications business in the Permitted Business and on ordinary business
terms in the Permitted Business in consortia formed to construct transmission
infrastructure for use primarily in the Permitted Business, provided such
Investment entitles the Company to rights of way or rights of use on such
transmission infrastructure; (viii) Investments made in the ordinary course of
the telecommunications business and on ordinary business terms as partial
payment for constructing a network relating principally to the Permitted
Business; and (ix) any Investment in Pledged
<PAGE> 23
24
Securities.
"Permitted Liens" means (i) Liens for taxes, assessments,
governmental charges or claims that are being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (ii) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other similar Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
appropriate legal proceedings promptly instituted and diligently conducted and
for which a reserve or other appropriate provision, if any, as shall be required
in conformity with U.S. GAAP shall have been made; (iii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (iv)
easements, rights-of-way, municipal and zoning ordinances and similar charges,
encumbrances, title defects or other irregularities that do not materially
interfere with the ordinary course of business of the Company or any of its
Restricted Subsidiaries; (v) Liens (including extensions and renewals thereof)
upon real or personal property of a Restricted Subsidiary purchased or leased
after the Issue Date; provided that (a) such Lien is created solely for the
purpose of securing Indebtedness Incurred by such Restricted Subsidiary in
compliance with Section 4.4 (1) to finance the cost of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within six months after the later of the acquisition and the Incurrence of such
Indebtedness or (2) to refinance any Indebtedness of a Restricted Subsidiary
previously so secured, (b) the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such cost and (c) any such Lien shall not
extend to or cover any property or assets other than such item of property or
assets; (vi) any interest or title of a lessor in the property subject to any
Capitalized Lease or operating lease of a Restricted Subsidiary which, in each
case, is permitted under the Indenture; (vii) Liens on property of, or on Equity
Interests in or Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, any Restricted Subsidiary; provided that such
Liens were not created, incurred or assumed in contemplation of such transaction
and do not extend to or cover any property or assets of the Company or any
Restricted Subsidiary other than the property or assets so acquired; (viii)
Liens arising from the rendering of a final judgment or order against the
Company or any Restricted Subsidiary of the Company that does not give rise to
an Event of Default; (ix) Liens encumbering customary initial deposits and
margin deposits and other Liens that are either within the general parameters
customary in the industry or incurred in the ordinary course of business, in
each case,
<PAGE> 24
25
securing Indebtedness under Interest Rate Agreements and Currency Agreements;
(x) Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business in accordance
with the past practices of the Company and its Restricted Subsidiaries prior to
the Issue Date; (xi) Liens existing on the Issue Date or securing the Notes or
any Guarantee of the Notes; (xii) Liens granted after the Issue Date on any
assets or Equity Interests in the Company or its Restricted Subsidiaries created
in favor of the Holders; (xiii) Liens with respect to the assets of a Restricted
Subsidiary granted by such Restricted Subsidiary to the Company or another
Restricted Subsidiary to secure Indebtedness owing to the Company or such
Restricted Subsidiary and Incurred in compliance with clause (ii) of paragraph
(b) of Section 4.4; (xiv) Liens created in connection with the incurrence of any
Indebtedness permitted to be Incurred under clause (iii) of paragraph (b) of
Section 4.4; provided that the Indebtedness which it refinances is secured by
similar Liens; (xv) Liens securing Indebtedness under Credit Facilities incurred
in compliance with clause (viii) of paragraph (b) of Section 4.4; (xvi) Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
subleases, licenses, sublicenses, obligations for utilities, statutory or
regulatory obligations, bankers' acceptances, letters of credit, surety and
appeal bonds, government or other contracts, completion guarantees, performance
and return-of-money bonds and other obligations of a similar nature incurred in
the ordinary course of business (exclusive of obligations for the payment of
borrowed money); (xvii) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods; (xviii) Liens arising out of leases, subleases,
licenses or sublicenses granted to others in the ordinary course of business;
(xix) any encumbrance or restriction (including, but not limited to, put and
call agreements) with respect to Capital Stock of any joint venture pursuant to
any joint venture agreement; (xx) Liens encumbering property or assets under
construction (and related rights) in favor of a contractor or developer, or
arising from progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such property or assets; and (xxi) Liens
arising from filing Uniform Commercial Code or similar financing statements
regarding leases.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) which is preferred as to the payment of dividends
or distributions, or as to the distribution of assets upon any voluntary or
involuntary
<PAGE> 25
26
liquidation or dissolution of such Person, over Equity Interests of any other
class in such Person.
"Pro Forma Consolidated Cash Flow" means, with respect to any Person
for any period, the Consolidated Cash Flow of such Person for such period
calculated on a pro forma basis to give effect to any Asset Disposition or Asset
Acquisition (including acquisitions of other Persons by merger, consolidation or
purchase of Equity Interests) during such period as if such Asset Disposition or
Asset Acquisition had taken place on the first day of such period and income (or
losses) ceased to accrue or accrued, as the case may be, therefrom from such
date.
"Public Equity Offering" means an underwritten primary public
offering of Ordinary Shares of the Company pursuant to an effective registration
statement under the Securities Act.
"Purchase Date" shall have the meaning set forth in Section 4.16.
"Record Date" means the Record Dates specified in the Notes.
"Redeemable Stock" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or Redeemable
Stock or (iii) is redeemable or must be purchased, upon the occurrence of
certain events or otherwise, by such Person at the option of the holder thereof,
in whole or in part, in each case on or prior to the first anniversary of the
Stated Maturity of the Notes; provided, however, that any Capital Stock that
would not constitute Redeemable Stock but for provisions thereof giving holders
thereof the right to require such Person to purchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" occurring
prior to the first anniversary of the Stated Maturity of the Notes shall not
constitute Redeemable Stock if (x) the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more favorable to the
holders of such Capital Stock than the terms applicable to the Notes and
described under Section 4.15 and Section 4.16 and (y) any such requirement only
becomes operative after compliance with such terms applicable to the Notes
including the purchase of any Notes tendered pursuant thereto.
"Redemption Date" when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and
Paragraphs 8 and 9 of the Euro Note.
"Redemption Price" when used with respect to any Note to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
<PAGE> 26
27
and Paragraphs 8 and 9 of the Euro Note.
"Registrar" shall have the meaning set forth in Section 2.3.
"Relevant Taxing Jurisdiction" shall have the meaning set forth in
Section 4.20.
"Replacement Assets" means any property, plant or equipment of a
nature or type that are used or usable in Permitted Businesses.
"Restricted Subsidiary" means, at any time, any direct or indirect
Subsidiary of the Company that is then not an Unrestricted Subsidiary.
"S&P" means Standard and Poor's Ratings Group, a division of
McGraw-Hill Companies, and its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Share Capital" means, at any time of determination, the stated
capital of the Equity Interests (other than Redeemable Stock) and additional
paid-in capital of the Company as set forth on the most recent balance sheet of
the Company at such time.
"Significant Subsidiary" means, at any time of determination, any
Restricted Subsidiary that, together with its Subsidiaries, (A) for the most
recent fiscal year of the Company, accounted for more than 10% of the
consolidated revenues of the Company and its Restricted Subsidiaries or (B) as
of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year prepared in conformity with US GAAP and (ii) any
Restricted Subsidiary which, when aggregated with all other Restricted
Subsidiaries that are not otherwise Restricted Subsidiaries and as to which any
event described in Section 6.1(h) or Section 6.1(i) has occurred and is
continuing, would constitute a Significant Subsidiary under clause (i) of this
definition.
"Stated Maturity" means, (i) with respect to any debt security, the
date specified in such debt security as the fixed date on which the final
installment of principal of such debt security is due and payable and (ii) with
respect to any
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scheduled installment of principal of or interest on any debt security, the date
specified in such debt security as the fixed date on which such installment is
due and payable.
"Strategic Minority Capital Stock Issues" means issuances or sales
of common stock of a Restricted Subsidiary, principally engaged in business
outside The Netherlands, to a Person which is principally engaged in the
Permitted Business and which has an equity market capitalization, a net asset
value or annual revenues of at least $500 million, which issuances or sales do
not represent more than 49% of the outstanding common stock of such Restricted
Subsidiary; provided that any such Strategic Minority Capital Stock Issue is
made to only one such Person with respect to any Restricted Subsidiary.
"Strategic Subordinated Indebtedness" means Indebtedness of the
Company or any Restricted Subsidiary Incurred to finance the acquisition of a
Person engaged in a business that is related, ancillary or complementary to the
Permitted Business, which Indebtedness by its terms, or by the terms of any
agreement or instrument pursuant to which such Indebtedness is Incurred, (i) is
expressly made subordinate in right of payment to the Notes and (ii) provides
that no payment of principal, premium or interest on, or any other payment in
full of all of the Company's obligations under the Notes; provided that such
Indebtedness may provide for and be repaid at any time, in accordance with
Section 4.3, from the proceeds of a substantially concurrent capital
contribution or sale of Equity Interests (other than Redeemable Stock) of the
Company to any Person (other than a Subsidiary) after the Incurrence of such
Indebtedness.
"Subsidiary" means, with respect to any Person (i) any corporation,
association or other business entity of which more than 50% of the outstanding
Voting Stock is at the time of determination owned, directly or indirectly, by
such Person or one or more other Subsidiaries of such Person and (ii) any
partnership, joint venture, limited liability company or similar entity of which
(A) more than 50% of the capital accounts, distribution rights, total equity and
voting interests or general or limited partnership interests, as applicable, are
owned or controlled, directly or indirectly, by such Person or one or more of
the other Subsidiaries of that Person or a combination thereof whether in the
form of membership, general, special or limited partnership or otherwise and (B)
such Person or any Restricted Subsidiary of such Person is a controlling general
partner, co-venturer or manager or is in a similar position or otherwise
controls such entity.
"Successor Company" shall have the meaning set forth in Section 5.1.
"Taxes" shall have the meaning set forth in Section 4.20.
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29
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as it may be amended from time to time.
"Telecommunications Assets" means, with respect to any Person,
assets used in the Permitted Business (or Equity Interests of a Person that
becomes a Restricted Subsidiary, the assets of which consist principally of such
Telecommunications Assets) that are purchased or acquired by the Company or a
Restricted Subsidiary after the Issue Date.
"Trade Payables" means any accounts payable or any other
indebtedness or monetary obligation to trade creditors created, assumed or
Guaranteed by the Company or any of its Restricted Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods and
services.
"Transaction Date" means, with respect to the Incurrence of any
Indebtedness by the Company or any of its Restricted Subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee), including any vice
president, assistant vice president, corporate trust officer, assistant
corporate trust officer, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer to
whom such trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company
which at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors in the manner provided below) and (ii) any Subsidiary
of an Unrestricted Subsidiary. The Board of Directors may designate any
Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary, or any of its Subsidiaries, owns any Equity Interests or
Indebtedness of, or owns or holds any Lien on any property of, the Company or
any Restricted Subsidiary; provided that
<PAGE> 29
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(a) the Company certifies in an Officers' Certificate that such designation
complies with the covenants described under Section 4.3, (b) such Subsidiary is
not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might reasonably be
obtained in a comparable arm's-length transaction at the time from Persons who
are not Affiliates of the Company, (c) neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (1) to subscribe
for additional Equity Interests in such Subsidiary or any Subsidiary of such
Subsidiary or (2) to maintain or preserve such Subsidiary's financial condition
or to cause such Subsidiary to achieve any specified levels of operating results
and (d) such Subsidiary and its Subsidiaries has not at the time of designation,
and does not thereafter, Incur any Indebtedness other than Unrestricted
Subsidiary Indebtedness. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Company; provided that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.4(a) on a pro forma basis
taking into account such designation and (y) no Default or Event of Default
shall have occurred and be continuing. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the resolution of the Board of Directors giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.
"Unrestricted Subsidiary Indebtedness" means Indebtedness of any
Unrestricted Subsidiary (i) as to which neither the Company nor any Restricted
Subsidiary is directly or indirectly liable (by virtue of the Company or any
such Restricted Subsidiary being the primary obligor on, guarantor of, or
otherwise liable in any respect to, such Indebtedness), and (ii) which, upon the
occurrence of a default with respect thereto, does not result in, or permit any
holder of any Indebtedness of the Company or any Restricted Subsidiary to
declare, a default on such Indebtedness of the Company or any Restricted
Subsidiary or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"U.S. GAAP" means, at any date of determination, generally accepted
accounting principles as in effect in the United States of America which are
applicable at the date of determination and which are consistently applied for
all applicable periods.
"U.S. Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and are not callable or redeemable at the option of the issuer thereof.
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"U.S. Person" means a "U.S. person" as defined in Rule 902 under the
Securities Act or any successor to such Rule.
"Voting Stock" means, with respect to any Person, Capital Stock of
any class or kind ordinarily entitled to vote for the election of directors
thereof at a meeting of Stockholders called for such purpose, without the
occurrence of any additional event or contingency.
["Warrant Agreement" means the Warrant Agreement, dated as of the
Issue Date, between the Company and the United States Trust Company of New York,
as Warrant Agent.
"Warrants" means warrants issued by the Company on the pursuant to
the Warrant Agreement, each of which represents the right to purchase 6.667
Class B Shares of the Company.]
"Weighted Average Life to Maturity" means, at any date of
determination with respect to any Indebtedness, the quotient obtained by
dividing (i)(a) the sum of the products of the number of years from such date
of determination to the dates of each successive scheduled principal payment of,
or redemption or similar payment with respect to, such Indebtedness multiplied
by (b) the amount of such principal payment, by (ii) the sum of all such
principal payments.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary
all of the outstanding voting Equity Interests (other than directors' qualifying
shares) of which are owned, directly or indirectly, by the Company.
SECTION 1.2 Incorporation by Reference of TIA. This Indenture is
subject to the mandatory provisions of the TIA which as of the date hereof and
thereafter as in effect are incorporated by reference in, and made a part of,
this Indenture. The following TIA terms used in this Indenture have the
following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the indenture securities means the Company or any
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other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with U.S. GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in the
plural include the singular;
(e) provisions apply to successive events and transactions; and
(f) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
ARTICLE II
THE NOTES
SECTION 2.1 Form and Dating. The Euro Notes and the notation
relating to the Trustee's certificate of authentication shall be substantially
in the form of Exhibits A or B, as applicable. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Company and the Trustee shall approve the form of the Notes and any notation,
legend or endorsement on them. Each Note shall be dated the date of its issuance
and shall show the date of its authentication.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
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execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
The Euro Notes shall be initially issued as a single security, in
global bearer form without interest coupons, substantially in the form of
Exhibit A hereto, with such applicable legends as are provided in Exhibit A
hereto (the "Global Euro Note"). The Global Euro Note will be issued in a
denomination equal to the outstanding Euro Notes represented thereby and will be
held by The Bank of New York, as the Depositary. The Global Euro Note will be
deposited with the Depositary pursuant to the Depositary Agreement, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided.
The Depositary will issue one certificateless depositary interest
(representing the Global Euro Note) to DTC, which will then record beneficial
interests in the Global Euro Note. Beneficial interests in the Global Euro Note
will be shown on, and transfers thereof will be effected only through, records
maintained in book-entry form by DTC (with respect to participants' interests)
and its Agent Members, including, as applicable, the Euroclear Operator and
Cedel.
The aggregate principal amount of the Global Euro Note may from time
to time be increased or decreased by adjustments made by annotation or
endorsement thereon by the Company or by the Trustee, the Depositary or a
custodian of either on behalf of the Company in consequence of the issue of the
Definitive Euro Notes.
SECTION 2.2 Execution and Authentication. Two Officers, or an
Officer and a Secretary, shall sign, or one Officer shall sign and one Officer
or an Assistant Secretary (each of whom shall, in each case, have been duly
authorized by all requisite corporate actions) shall attest to, the Notes for
the Company by manual or facsimile signature.
If an Officer or Secretary whose signature is on a Note was an
Officer or Secretary at the time of such execution but no longer holds that
office or position at the time the Trustee authenticates the Note, the Note
shall be valid nevertheless.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note. The
signature shall be conclusive evidence that the Note has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Euro Notes for original issue in
the aggregate principal amount not to exceed - upon receipt of a Company Order
in the form of an Officers' Certificate. The Officers' Certificate shall specify
the
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34
amount of Notes to be authenticated, the series and type of Notes and the
date on which the Notes are to be authenticated, whether the Notes are to be
issued as Definitive Notes or Global Notes and such other information as the
Trustee may reasonably request. In authenticating the Notes and accepting the
responsibilities under this Indenture in relation to the Notes the Trustee shall
be entitled to receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the form and terms thereof have been established in
conformity with the provisions of this Indenture. The aggregate principal amount
of Euro Notes outstanding at any time may not exceed - except as provided in
Section 2.7. Upon receipt of a Company Order, the Trustee shall authenticate
Notes in substitution of Notes originally issued to reflect any name change of
the Company.
The Trustee may appoint an authenticating agent ("Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Company and Affiliates of the Company. The Trustee hereby appoints United States
Trust Company of New York to be the Authenticating Agent on the Issue Date.
The Euro Notes shall be issuable only in denominations of 1,000 and
any integral multiple thereof. The Global Notes shall be in bearer form without
coupons and the Definitive Notes shall be in registered form.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York and, if
and so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such stock exchange so require, in Luxembourg, where (i) Global Notes
may be presented or surrendered for registration of transfer or for exchange
("Registrar"), (ii) Global Notes may be presented or surrendered for payment
("Paying Agent") and (iii) notices and demands in respect of such Global Notes
and this Indenture may be served. In the event that Definitive Notes are issued,
(x) Definitive Notes may be presented or surrendered for registration of
transfer or for exchange, (y) Definitive Notes may be presented or surrendered
for payment and (z) notices and demands in respect of the Definitive Notes and
this Indenture may be served at an office of the Registrar or the Paying Agent,
as applicable, in the Borough of Manhattan, The City of New York. The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company, upon notice to the Trustee, may have one or more co-Registrars and one
or more additional Paying Agents reasonably acceptable to the Trustee. The term
"Registrar" includes any co-Registrar and the term "Paying Agent" includes any
additional Paying Agent. The Company initially appoints United States Trust
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Company of New York as Registrar and Paying Agent until such time as United
States Trust Company of New York has resigned or a successor has been appointed.
The Company may change any Registrar or Paying Agent without notice to any
Holder. Payment of principal will be made upon the surrender of Definitive Notes
at the office of the Paying Agent, including, if any, the Paying Agent in
Luxembourg. In the case of a transfer of a Definitive Note in part, upon
surrender of the Definitive Note to be transferred, a Definitive Note shall be
issued to the transferee in respect of the principal amount transferred and a
Definitive Note shall be issued to the transferor in respect of the balance of
the principal amount of the transferred Definitive Note at the office of any
transfer agent, including, if any, the transfer agent in Luxembourg.
If Definitive Notes are issued, the Company will appoint Kredietbank
S.A. Luxembourgeoise, or such other Person located in Luxembourg and reasonably
acceptable to the Trustee, as an additional paying and transfer agent. Upon the
issuance of Definitive Notes, Holders will be able to receive principal and
interest on the Notes and will be able to transfer Definitive Notes at the
Luxembourg office of such paying and transfer agent, subject to the right of the
Company to mail payments in accordance with the terms of this Indenture.
SECTION 2.4 Paying Agent To Hold Assets in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all
assets held by the Paying Agent for the payment of principal of, Additional
Amounts, if any, premium, if any, or interest on, the Notes, and shall notify
the Trustee of any Default by the Company in making any such payment. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.5 List of Holders. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee before each Record Date and at such other
times as the Trustee may request in writing a list as of such date and in such
form as the Trustee may reasonably require of the names and addresses of
Holders, which list may be conclusively relied upon by the Trustee.
SECTION 2.6 Transfer and Exchange. (a) Transfer of a Global Euro
Note shall be by delivery. Each Global Euro Note authenticated under this
Indenture
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shall be in bearer form and delivered to the Depositary or a nominee or
custodian therefor, and each such Global Euro Note shall constitute a single
Note for all purposes of this Indenture.
(b) All Global Euro Notes shall be exchanged by the Company (with
authentication by the Trustee) for one or more Definitive Notes of the same
series, if (a) DTC (i) has notified the Company that it is unwilling or unable
to continue as, or ceases to be, a clearing agency registered under the Exchange
Act and (ii) a successor to DTC registered as a clearing agency under the
Exchange Act is not able to be appointed by the Company within 90 days of such
notification, (b) the Depositary is at any time unwilling or unable to continue
as Depositary and a successor Depositary is not able to be appointed by the
Company within 90 days or (c) at any time at the option of the Company. If an
Event of Default occurs and is continuing, the Company shall, at the request of
the Holder thereof, exchange all or part of any Global Euro Note for one or more
Definitive Notes (with authentication by the Trustee); provided, however, that
the principal amount at maturity of such Definitive Notes and such Global Euro
Note after such exchange shall be 1,000 or integral multiples thereof. Whenever
all of a Global Euro Note is exchanged for one or more Definitive Notes, it
shall be surrendered by the Holder thereof to the Trustee for cancellation.
Whenever a part of a Global Euro Note, is exchanged for one or more Definitive
Notes, the Global Euro Note shall be surrendered by the Holder thereof to the
Trustee who shall cause an adjustment to be made to Schedule A of such Global
Euro Note such that the principal amount of such Global Euro Note will be equal
to the portion of such Global Euro Note not exchanged and shall thereafter
return such Global Euro Note to such Holder. All Definitive Notes issued in
exchange for a Global Euro Note or any portion thereof shall be registered in
such names as the Depositary shall instruct the Trustee based on the
instructions of DTC. Every Note authenticated and delivered in exchange for or
in lieu of a Global Euro Note, or any portion thereof, pursuant to Section 2.7,
2.10, 3.5 or 3.7 hereof or otherwise, shall be authenticated and delivered in
the form of, and shall be, a Global Euro Note. A Global Euro Note may not be
exchanged for a Definitive Note other than as provided in this Section 2.6(b).
(c) Definitive Notes shall be transferable only upon the surrender
of a Definitive Note for registration of transfer. When a Definitive Note is
presented to the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as requested if its
requirements for such transfers are met. When Definitive Notes are presented to
the Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Definitive Notes of other denominations, the Registrar shall
make the exchange as requested if the same requirements are met. To permit
registration of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Notes at the Registrar's or co-registrar's
request.
(d) The Company shall not be required to make, and the Registrar
need not register transfers or exchanges of, Definitive Notes selected for
redemption (except, in the case of Definitive Notes to be redeemed in part, the
portion thereof not to be redeemed) or
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any Definitive Notes for a period of 15 days before a selection of Definitive
Notes to be redeemed.
(e) Prior to the due presentation for registration of transfer of
any Definitive Note, the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar may deem and treat the Person in whose name a Definitive
Note is registered as the absolute owner of such Definitive Note for the purpose
of receiving payment of principal, premium, if any, interest or Additional
Amounts, if any, on such Definitive Note and for all other purposes whatsoever,
whether or not such Definitive Note is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be affected
by notice to the contrary.
(f) The Company may require payment of a sum sufficient to pay all
taxes, assessments or other governmental charges in connection with any transfer
or exchange pursuant to this Section 2.6.
(g) All Notes issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Notes surrendered upon such transfer
or exchange.
SECTION 2.7 Replacement Notes. If a mutilated Definitive Note is
surrendered to the Registrar, if a mutilated Global Euro Note is surrendered to
the Company or if the Holder of a Note claims that such Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note in such form as the Note being replaced if the
requirements of the Trustee, the Registrar and the Company are met. If required
by the Trustee, the Registrar or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of the Company,
the Registrar and the Trustee, to protect the Company, the Registrar, the
Trustee and any Agent from any loss which any of them may suffer if a Note is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Note, including reasonable fees and expenses of counsel.
Every replacement Note is an additional obligation of the Company.
SECTION 2.8 Outstanding Notes. Notes outstanding at any time are all
the Notes that have been authenticated by the Trustee except those cancelled by
it, those delivered to it for cancellation, those reductions in the Global Note
effected in accordance with the provisions hereof and those described in this
Section as not outstanding. Subject to Section 2.9, a Note does not cease to be
outstanding because the Company or any of its Affiliates holds the Note.
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If a Note is replaced pursuant to Section 2.7 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.7.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest and Additional Amounts, if
any, on it cease to accrue.
If on a Redemption Date or the Maturity Date the Paying Agent holds
cash in U.S. dollars or U.S. Government Securities sufficient to pay all of the
principal and interest due on the Notes payable on that date, then on and after
that date such Notes cease to be outstanding and interest and Additional
Amounts, if any, on such Notes cease to accrue.
SECTION 2.9 Treasury Notes. In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, waiver or
consent, Notes owned by the Company or its Affiliates shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, waiver or consent, only Notes that a
Trust Officer of the Trustee actually knows are so owned shall be disregarded.
The Company shall notify the Trustee, in writing, when it or any of its
Affiliates repurchases or otherwise acquires Notes of the aggregate principal
amount of such Notes so repurchased or otherwise acquired. The Trustee may
require an Officers' Certificate listing Notes owned by the Company, a
Subsidiary of the Company or an Affiliate of the Company.
SECTION 2.10 Temporary Notes. Until permanent Definitive Notes are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Definitive Notes upon receipt of a Company Order in the form of an
Officers' Certificate. The Officers' Certificate shall specify the amount of
temporary Definitive Notes to be authenticated and the date on which the
temporary Definitive Notes are to be authenticated. Temporary Definitive Notes
shall be substantially in the form of permanent Definitive Notes but may have
variations that the Company considers appropriate for temporary Definitive
Notes. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate upon receipt of a Company Order pursuant to Section 2.2
permanent Definitive Notes in exchange for temporary Definitive Notes.
SECTION 2.11 Cancellation. The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and the Paying Agent
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shall forward to the Trustee any Notes surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent, and no one else, shall cancel and, at the written
direction of the Company, shall dispose of (subject to the record retention
requirements of the Exchange Act) all Notes surrendered for transfer, exchange,
payment or cancellation; provided, however, that the Trustee may, but shall not
be required to, destroy such cancelled Notes. Subject to Section 2.7, the
Company may not issue new Notes to replace Notes that it has paid or delivered
to the Trustee for cancellation. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12 Defaulted Interest. If the Company defaults in a payment
of interest on the Notes, it shall pay the defaulted interest, plus (to the
extent lawful) any interest payable on the defaulted interest, to the Holder
thereof on a subsequent special record date, which date shall be the fifteenth
day next preceding the date fixed by the Company for the payment of defaulted
interest. The Company shall notify the Trustee and Paying Agent in writing of
the amount of defaulted interest proposed to be paid on each Euro Note and the
date of the proposed payment (a "Default Interest Payment Date"), and at the
same time the Company shall deposit with the Trustee or Paying Agent an amount
of money equal to the aggregate amount proposed to be paid in respect of such
defaulted interest or shall make arrangements satisfactory to the Trustee or
Paying Agent for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such defaulted interest as in this Section 2.12; provided, however, that in
no event shall the Company deposit monies proposed to be paid in respect of
defaulted interest later than 11:00 a.m. New York City time on the proposed
Default Interest Payment Date with respect to defaulted interest to be paid on
the Euro Note. At least 15 days before the subsequent special record date, the
Company shall mail to each Holder, with a copy to the Trustee, a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
SECTION 2.13 CUSIP, ISIN and Common Code Numbers. The Company in
issuing the Notes may use a "CUSIP", "ISIN" or "Common Code" number, and if so,
the Trustee shall use the CUSIP, ISIN and Common Code number in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP, ISIN and Common Code number printed in the notice or on
the Notes, and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company shall promptly notify the Trustee of
any change in any CUSIP, ISIN or Common Code number.
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SECTION 2.14 Deposit of Moneys. Prior to 11:00 a.m. New York City time
on each Interest Payment Date and Maturity Date, the Company shall have
deposited with the Paying Agent in immediately available funds money sufficient
to make cash payments, if any, due on such Interest Payment Date or Maturity
Date, as the case may be, on all Euro Notes then outstanding. Such payments
shall be made by the Company in a timely manner which permits the Paying Agent
to remit payment to the Holders on such Interest Payment Date or Maturity Date,
as the case may be.
SECTION 2.15 Certain Matters Relating to Global Notes. (a) Members of,
or participants in, DTC ("Agent Members") shall have no rights under this
Indenture with respect to any Global Note held on their behalf by DTC or the
Trustee as its custodian, or under the Global Note, and DTC may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Note for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by DTC or impair, as
between DTC and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) The Holder of any Global Note may grant proxies and otherwise
authorize any person, including DTC and its Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
SECTION 2.16 Separation of Warrants and Notes. The Notes and Warrants
will not be separately transferable until the Separation Date. The "Separation
Date" will be the earliest of (i) May 15, 1999, (ii) the commencement of an
exchange offer or the effectiveness of a Shelf Registration Statement with
respect to the Notes, (iii) the Exercisability Date (as defined in the Warrant
Agreement) and (iv) such other date as the Representatives will determine in
their sole discretion. The surrender of a Unit Certificate (as defined in the
Unit Agreement) for separate Warrant and Note certificates is herein referred to
as a "Separation" and the related Notes being referred to as "Separated." Upon
Separation of the Warrants and the Notes, the Global Notes shall be transferred
to and deposited with the Trustee, as custodian for, and registered in the name
of DTC or its nominee, duly executed by the Company and countersigned by the
Trustee as provided herein.
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ARTICLE III
REDEMPTION
SECTION 3.1 Optional Redemption. The Company may redeem all or any
portion of the Notes, upon the terms and at the redemption prices set forth in
each of the Notes. Any redemption pursuant to this Section 3.1 shall be made
pursuant to the provisions of this Article III.
SECTION 3.2 Notices to Trustee. If the Company elects to redeem Notes
pursuant to Paragraphs 8 or 9 of such Notes it shall notify the Trustee in
writing of the Redemption Date and the principal amount of Notes to be redeemed
at least 15 days prior to the giving of the notice contemplated by Section 3.4
(or such shorter period as the Trustee in its sole discretion shall determine).
The Company shall give notice of redemption as required under the relevant
paragraph of the Notes pursuant to which such Notes are being redeemed.
SECTION 3.3 Selection of Notes To Be Redeemed. If less than all of the
Notes are to be redeemed at any time, selection of such Notes for redemption
will be made by the Trustee in compliance with the requirements of the principal
securities exchange, if any, on which such Notes are listed, or if such Notes
are not so listed or such exchange prescribes no method of selection, on a pro
rata basis, by lot or by such other method as the Trustee in its sole discretion
shall deem fair and appropriate (and in such manner as complies with applicable
legal and exchange requirements); provided, however, that no Euro Note of 1,000
in aggregate principal amount or less shall be redeemed in part. In the event of
partial redemption by lot, the particular Notes to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the Redemption Date by the Trustee from the outstanding Notes not
previously called for redemption.
SECTION 3.4 Notice of Redemption. At least 30 days but not more than 60
days before a Redemption Date, the Company shall publish in a leading newspaper
having a general circulation in New York (which is expected to be The Wall
Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad) (and, if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or in the case of Definitive Notes, mail to Holders by
first-class mail, postage prepaid, at their respective addresses as they appear
on the registration books of the Registrar (and, if and so long as the Notes are
listed on the Luxembourg Stock Exchange and the rules of such Stock
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Exchange shall so require, publish in a newspaper having a general circulation
in Luxembourg (which is expected to be the Luxemburger Wort)). At the Company's
request made at least 45 days before the Redemption Date (or such shorter period
as the Trustee in its sole discretion shall determine), the Trustee shall give
the notice of redemption in the Company's name and at the Company's expense;
provided, however, that the Company shall deliver to the Trustee, an Officers'
Certificate requesting that the Trustee give such notice and setting forth the
information to be stated in such notice as provided in the following items. Each
notice for redemption shall identify the Notes to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Prices and the amount of interest, if any,
and Additional Amounts, if any, to be paid;
(c) the name and address of the Paying Agent;
(d) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued and
unpaid interest, if any, and Additional Amounts, if any;
(e) that, unless the Company defaults in making the redemption
payment, interest, and Additional Amounts, on Notes called for
redemption cease to accrue on and after the Redemption Date, and the
only remaining right of the Holders of such Notes is to receive payment
of the Redemption Price upon surrender to the Paying Agent of the Notes
redeemed;
(f) (i) if any Global Note is being redeemed in part, the
portion of the principal amount of such Note to be redeemed and that,
after the Redemption Date, interest and Additional Amounts, if any,
shall cease to accrue on the portion called for redemption, and upon
surrender of such Global Note, the Global Note with a notation on
Schedule A thereof adjusting the principal amount thereof to be equal
to the unredeemed portion, will be returned and (ii) if any Definitive
Note is being redeemed in part, the portion of the principal amount of
such Note to be redeemed, and that, after the Redemption Date, upon
surrender of such Definitive Note, a new Definitive Note or Notes in
aggregate principal amount equal to the unredeemed portion thereof will
be issued in the name of the Holder thereof, upon cancellation of the
original Note;
(g) if fewer than all the Notes are to be redeemed, the
identification
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of the particular Notes (or portion thereof) to be redeemed, as well as
the aggregate principal amount of Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding after such
partial redemption;
(h) the paragraph of the Notes pursuant to which the Notes are
to be redeemed; and
(i) the , ISIN or Common Code number, and that no
representation is made as to the correctness or accuracy of the , ISIN
or Common Code number, if any, listed in such notice or printed on the
Notes.
SECTION 3.5 Effect of Notice of Redemption. Once notice of redemption
is given in accordance with Section 3.4, Notes called for redemption become due
and payable on the Redemption Date and at the Redemption Price plus accrued and
unpaid interest, if any, and Additional Amounts, if any. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price (which shall include accrued and unpaid interest thereon, if
any, and Additional Amounts, if any, to the Redemption Date), but installments
of interest, the maturity of which is on or prior to the Redemption Date, shall
be payable to Holders of record at the close of business on the relevant Record
Dates.
SECTION 3.6 Deposit of Redemption Price. Prior to 11:00 a.m. New York
City time on the Redemption Date, the Company shall deposit with the Paying
Agent cash in U.S. Euros sufficient to pay the Redemption Price plus accrued and
unpaid interest, if any, and Additional Amounts, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Company any
cash in U.S. dollars so deposited which is not required for that purpose upon
the written request of the Company.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued and unpaid
interest, if any, and Additional Amounts, if any, interest, and Additional
Amounts on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
With respect to Definitive Notes, if a Definitive Note is redeemed on or after
an interest Record Date but on or prior to the related Interest Payment Date,
then any accrued and unpaid interest, and Additional Amounts, if any, shall be
paid to the Person in whose name such Note was registered at the close of
business on such Record Date. If any Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest, and Additional Amounts, if any,
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal,
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in each case at the rate provided in the Notes and in Section 4.1.
SECTION 3.7 Notes Redeemed in Part. Upon surrender and cancellation of
a Definitive Note that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Definitive Note equal in principal amount to the unredeemed portion of the
Definitive Note surrendered and cancelled; provided, however, that each such
Definitive Note shall be in a principal amount at maturity of 1,000 or an
integral multiple thereof. Upon surrender of a Global Note that is redeemed in
part, the Paying Agent shall forward such Global Note to the Trustee who shall
make a notation on Schedule A thereof to reduce the principal amount of such
Global Note to an amount equal to the unredeemed portion of the Global Note
surrendered; provided, however, that each such Global Note shall be in a
principal amount at maturity of 1,000 or an integral multiple thereof.
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ARTICLE IV
COVENANTS
SECTION 4.1 Payment of Notes. (a) The Company shall pay the principal,
premium, if any, interest and Additional Amounts, if any, on the Euro Notes in
the manner provided in such Euro Notes and this Indenture. An installment of
principal of or interest on the Euro Notes shall be considered paid on the date
it is due if the Trustee or Paying Agent holds at 11:00 a.m. New York City time
on that date money deposited by the Company in immediately available funds and
designated for, and sufficient to pay the installment in full and is not
prohibited from paying such money to the Holders pursuant to the terms of this
Indenture.
(b) The Company shall pay, to the extent such payments are lawful,
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and on overdue installments of interest
(without regard to any applicable grace periods) and on any Additional Amounts
from time to time on demand at the rate borne by the Notes plus 1.5% per annum.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
SECTION 4.2 Maintenance of Office or Agency. The Company shall maintain
the office or agency (which office may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-Registrar) required under Section 2.3
where Notes may be surrendered for registration of transfer or for exchange and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 11.2. The Company hereby initially
designates the office of CT Corporation System, located at 1633 Broadway, New
York, New York, 10019, as its office or agency outside The Netherlands as
required under Section 2.3 hereof. If Definitive Notes are issued, and if the
Notes are listed on the Luxembourg Stock Exchange, the Company will appoint
Kredietbank S.A. Luxembourgeoise, or such other Person located in Luxembourg and
reasonably acceptable to the Trustee, as an additional paying and transfer
agent.
SECTION 4.3 Limitation on Restricted Payments. (a) The Company will
not, and will not permit any Restricted Subsidiary to, directly or indirectly,
(i) declare or pay any dividend or make any distribution on account of any
Equity Interest in the Company or any Restricted Subsidiary to the holders
thereof, including any dividend or distribution payable in connection with any
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merger or consolidation (other than (A) dividends or distributions payable
solely in Equity Interests (other than Redeemable Stock) of the Company, (B)
dividends or distributions made only to the Company or a Restricted Subsidiary
and (C) pro rata dividends or distributions on Capital Stock of a Restricted
Subsidiary held by Persons other than the Company or a Restricted Subsidiary),
(ii) purchase, redeem, retire or otherwise acquire for value any Equity
Interests of the Company or any Equity Interests of any Restricted Subsidiary
(other than any such Equity Interests owned by the Company or any Restricted
Subsidiary), (iii) make any principal payment or redeem, repurchase, defease, or
otherwise acquire or retire for value, in each case, prior to any scheduled
repayment, or maturity, any Indebtedness of the Company that is subordinated in
right of payment to the Notes, or (iv) make any Investment, other than a
Permitted Investment, in any Person (all such payments or any other actions
described in clauses (i) through (iv) above being collectively referred to as
"Restricted Payments") unless, at the time of, and after giving effect to, the
proposed Restricted Payment:
(A) no Default or Event of Default shall have occurred and be
continuing;
(B) the Company could Incur at least $1.00 of additional Indebtedness
under Section 4.4(a); and
(C) the aggregate amount expended for all Restricted Payments (the
amount so expended, if other than in cash, to be determined in good faith by the
Board of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) after the Issue Date is less than the sum of (1) Cumulative
Consolidated Cash Flow minus 150% of Cumulative Consolidated Fixed Charges plus
(2) 100% of the aggregate Net Cash Proceeds received by the Company after the
Issue Date as a capital contribution or from the issuance and sale of its Equity
Interests (other than Redeemable Stock, and excluding any Ordinary Shares issued
in connection with the Offering or the Recapitalization, as defined in the
Offering Memorandum) to a Person (other than a Restricted Subsidiary of the
Company), plus (3) the aggregate amount by which Indebtedness (other than any
Indebtedness subordinated in right of payment to the Notes) of the Company or
any Restricted Subsidiary is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Restricted Subsidiary of the Company)
subsequent to the Issue Date into Equity Interests (other than Redeemable Stock
and less the amount of any cash, or the fair value of property, distributed by
the Company or any Restricted Subsidiary upon such conversion or exchange) and
plus (4) without duplication of any amount included in the calculation of
Consolidated Net Income, in the case of repayment of, or return of capital in
respect of, any Investment constituting a Restricted Payment made after the
Issue
<PAGE> 46
47
Date, an amount equal to the lesser of the repayment of, the return of
capital with respect to, such Investment and the cost of such Investment, in
either case less the cost of the disposition of such Investment and net of
taxes.
(b) The foregoing provisions in Section 4.3(a) shall not
prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof if, at said date of declaration, such payment
would comply with the provisions of the Indenture; (ii) the redemption,
repurchase, defeasance or other acquisition or retirement for value of
Indebtedness that is subordinated in right of payment to the Notes
including premium, if any, and accrued and unpaid interest, with the
proceeds of, or in exchange for, Indebtedness Incurred under clause
(iii) of paragraph Section 4.4(b); (iii) the repurchase, redemption or
other acquisition of Equity Interests in the Company in exchange for,
or out of the Net Cash Proceeds of, a substantially concurrent capital
contribution or offering of Equity Interests (other than Redeemable
Stock) in the Company to any Person (other than a Restricted
Subsidiary); (iv) the repurchase, redemption or other acquisition of
Indebtedness of the Company which is subordinated in right of payment
to the Notes in exchange for, or out of the Net Cash Proceeds of, a
substantially concurrent capital contribution or offering of Equity
Interests (other than Redeemable Stock) in the Company to any Person
(other than a Restricted Subsidiary); (v) the purchase of any
subordinated Indebtedness at a purchase price not greater than 101% of
the principal amount thereof following a Change of Control pursuant to
an obligation in the instruments governing such subordinated
Indebtedness to purchase or redeem such subordinated Indebtedness as a
result of such Change of Control; provided, however, that no such
purchase or redemption shall be permitted until the Company has
completely discharged its obligations described under Section 4.15
(including the purchase of all Notes tendered for purchase by holders)
arising as a result of such Change of Control; (vi) repurchases of
Warrants in accordance with Section 5.3 of the Warrant Agreement; (vii)
repurchases of Existing Warrants in accordance with Section 5.3 of the
First Offering Warrant Agreement; and (viii) repurchases of Equity
Interests of the Company from employees of the Company or any of its
Restricted Subsidiaries deemed to occur upon exercise of stock options
if such Equity Interests represent a portion of the exercise price of
such options; provided that any payments made pursuant to this clause
(viii) may not exceed in aggregate $500,000 in any fiscal year of the
Company;
provided that in the case of clauses (ii) through (viii), no Default or Event of
Default shall have occurred and be continuing or occur as a consequence of the
actions or payments set forth therein.
<PAGE> 47
48
Each Restricted Payment permitted pursuant to this Section 4.3(b) (other than
the Restricted Payment referred to in clause (ii) hereof) and the Net Cash
Proceeds from any capital contribution or issuance of Equity Interests referred
to in clauses (iii) and (iv), shall be included in calculating whether the
conditions of clause (C) of Section 4.3(a) have been met with respect to any
subsequent Restricted Payments. In the event the proceeds of an issuance of
Equity Interests (other than Redeemable Stock) of the Company are used for the
redemption, repurchase or other acquisition of the Notes, then the Net Cash
Proceeds of such issuance shall be included in clause (C) of the Section 4.3(a)
only to the extent such proceeds are not used for such redemption, repurchase or
other acquisition of the Notes.
(c) Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.3 were computed, which calculations may
be based upon the Company's latest available financial statements. The Trustee
shall have no duty to recompute or recalculate or verify the accuracy of the
information set forth in such Officers' Certificate.
SECTION 4.4 Limitation on Indebtedness. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness;
provided, however, that if no Default or Event of Default shall have occurred
and be continuing at the time, or would occur as a consequence, of the
Incurrence of any such Indebtedness, the Company may Incur Indebtedness if
immediately thereafter the ratio of (i) the aggregate principal amount of
Indebtedness of the Company and its Restricted Subsidiaries on a consolidated
basis outstanding as of the Transaction Date to (ii) the pro forma Consolidated
Cash Flow (the "Indebtedness to Consolidated Cash Flow Ratio") for the preceding
two full fiscal quarters multiplied by two, determined on a pro forma basis as
if any such Indebtedness had been Incurred and the proceeds thereof had been
applied at the beginning of such two fiscal quarters, would be greater than zero
and less than or equal to 5.0 to 1.
(b) Notwithstanding the foregoing, (except for Indebtedness under
subsection (vii) below) the Company and (except for Indebtedness under
subsections (v), (vi) and (x) (A) below) any Restricted Subsidiary may Incur
each and all of the following:
(i) Indebtedness (other than Acquired Indebtedness) Incurred to finance
the cost (provided that such Indebtedness is Incurred at any time on or before,
or within 90 days following, the incurrence of such cost) (including the cost of
design, development, construction, acquisition, installation or integration) of
assets used in the Permitted Business or Equity Interests of (A) a Restricted
<PAGE> 48
49
Subsidiary, that owns principally such assets, from a Person other than the
Company or a Restricted Subsidiary of the Company or (B) any Person that is
principally engaged in the Permitted Business, that would become a Restricted
Subsidiary and owns principally such assets; provided that (x) any such
Indebtedness of a Restricted Subsidiary must be Incurred under one or more
Credit Facilities, under one or more Capitalized Leases or from the vendor of
the assets, property or services acquired with the proceeds of such
Indebtedness, (y) the amount of such Indebtedness of a Restricted Subsidiary may
not exceed the Fair Market Value of the assets so acquired and (z) the amount of
such Indebtedness of the Company, Incurred to acquire Equity Interests under
clauses (A) and (B) above, may not exceed the Fair Market Value of such assets
of any Restricted Subsidiary or any such Person so acquired;
(ii) Indebtedness of any Restricted Subsidiary to the Company or
Indebtedness of the Company or any Restricted Subsidiary to any other Restricted
Subsidiary; provided that any subsequent issuance or transfer of any Capital
Stock which results in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of such Indebtedness not permitted by this
clause (ii) (other than to the Company or another Restricted Subsidiary) shall
be deemed, in each case, to constitute the Incurrence of such Indebtedness not
permitted by this clause (ii); and provided, further, that Indebtedness of the
Company owing to and held by a Restricted Subsidiary must be unsecured and
subordinated in right of payment to the Notes;
(iii) Indebtedness issued in exchange for, or the net proceeds of which
are used to refinance or refund, then outstanding Indebtedness of the Company or
a Restricted Subsidiary, other than Indebtedness Incurred under this Section
4.4(b) (ii), (iv), (vii), (viii) and (xii), and any refinancings thereof in an
amount not to exceed the amount so refinanced or refunded (plus premiums,
accrued interest, and reasonable fees and expenses); provided that such new
Indebtedness shall only be permitted under this Section 4.4(b) (iii) if (A) in
case the Notes are refinanced in part or the Indebtedness to be refinanced or
refunded is pari passu with the Notes, such new Indebtedness, by its terms or by
the terms of any agreement or instrument pursuant to which such new Indebtedness
is issued or remains outstanding, is expressly made pari passu with, or
subordinate in right of payment to, the remaining Notes, (B) in case the
Indebtedness to be refinanced is subordinated in right of payment to the Notes,
such new Indebtedness, by its terms or by the terms of any agreement or
instrument pursuant to which such new Indebtedness is issued or remains
outstanding, is expressly made subordinate in right of payment to the Notes at
least to the extent that the Indebtedness to be refinanced or refunded is
subordinated to the Notes, (C) the Stated Maturity of
<PAGE> 49
50
such new Indebtedness, determined as of the date of Incurrence of such new
Indebtedness, is no earlier than the Stated Maturity of the Indebtedness being
refinanced or refunded and (D) such new Indebtedness, determined as of the date
of Incurrence of such new Indebtedness, has a Weighted Average Life to Maturity
which is not less than the remaining Weighted Average Life to Maturity of the
Indebtedness to be refinanced or refunded; and provided, further, that in no
event may Indebtedness of the Company be refinanced or refunded by means of any
Indebtedness of any Restricted Subsidiary pursuant to this Section 4.4(b) (iii);
(iv) Indebtedness (A) in respect of performance, surety or appeal bonds
or letters of credit supporting Trade Payables, in each case provided in the
ordinary course of business, (B) under Currency Agreements and Interest Rate
Agreements; provided that such agreements do not increase the Indebtedness of
the obligor outstanding at any time other than as a result of fluctuations in
foreign currency exchange rates or interest rates or by reason of fees,
indemnities and compensation payable thereunder, and (C) arising from agreements
providing for indemnification, adjustment of purchase price or similar
obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Restricted Subsidiaries pursuant to such agreements, in any case Incurred in
connection with the disposition of any business, assets or Restricted Subsidiary
of the Company (other than Guarantees of Indebtedness Incurred for the purpose
of financing such acquisition by the Person acquiring all or any portion of such
business, assets or Restricted Subsidiary), in a principal amount not to exceed
the gross proceeds actually received by the Company or any Restricted Subsidiary
in connection with such disposition;
(v) Indebtedness, to the extent that the net proceeds thereof are
promptly (A) used to repurchase Notes tendered in a Change of Control Offer or
(B) deposited to defease all of the Notes as described in Sections 8.1 and 8.2;
(vi) Indebtedness of the Company represented by the Notes;
(vii) Indebtedness represented by a Guarantee of the Notes and
Guarantees of other Indebtedness of the Company by a Restricted Subsidiary, in
each case permitted by and made in accordance with Section 4.17;
(viii) Indebtedness under one or more Credit Facilities, in an
aggregate principal amount at any one time outstanding not to exceed the greater
of (x) NLG 70.0 million and (y) 80.0% of Eligible Accounts Receivable at any one
time outstanding, subject to any permanent reductions required by any other
terms of the Indenture;
(ix) Acquired Indebtedness; provided that the aggregate amount of
<PAGE> 50
51
such Acquired Indebtedness (other than the Indebtedness Incurred under one or
more Credit Facilities, under one or more Capitalized Leases or from the vendor
of assets, property or services acquired with the proceeds of such Indebtedness)
of the Person that is to become a Restricted Subsidiary or be merged or
consolidated with or into the Company or any Restricted Subsidiary in the
contemplated transaction, outstanding at the time of such transaction does not
exceed the Fair Market Value of the plant, property and equipment (excluding
property, plant and equipment securing any of the Credit Facilities or vendor
financings or subject to any Capital Leases referred to in this clause (ix)) of
any Restricted Subsidiary so acquired;
(x) Indebtedness of (A) the Company not to exceed, at any one time
outstanding, 2.00 times the Net Cash Proceeds from (1) the issuance and sale,
other than to a Subsidiary, of Equity Interests (other than Redeemable Stock and
excluding any Ordinary Shares issued in connection with the Recapitalization) of
the Company and (2) capital contributions made in the Company (other than by a
Subsidiary) less, in each case, the amount of such proceeds used to make
Restricted Payments as provided in Section 4.3(a) (C)(2) or Section 4.3(b) (iii)
or (iv) and (B) the Company or Acquired Indebtedness of a Restricted Subsidiary
(provided that any such Indebtedness of such Restricted Subsidiary must be
incurred under one or more Credit Facilities, under one or more Capitalized
Leases or from the vendor of the assets, property or services acquired with the
proceeds of such Indebtedness) not to exceed, at any one time outstanding, the
fair market value of any Telecommunications Assets acquired by the Company or
such Restricted Subsidiary in exchange for Equity Interests of the Company
issued after the Issue Date; provided, however, that in determining the fair
market value of any such Telecommunications Assets so acquired, if the estimated
fair market value of such Telecommunications Assets exceeds (x) $2.0 million (as
estimated in good faith by the Board of Directors), then the fair market value
of such Telecommunications Assets will be determined by a majority of the Board
of Directors of the Company, which determination will be evidenced by a
resolution thereof, and (y) $10.0 million (as estimated in good faith by the
Board of Directors), then the Company will deliver the Trustee a written
appraisal as to the fair market value of such Telecommunications Assets prepared
by an internationally recognized investment banking or public accounting firm
(or, if no such investment banking or public accounting firm is qualified to
prepare such an appraisal, by an internationally recognized appraisal firm); and
provided, further, that such Indebtedness (other than the Indebtedness Incurred
under one or more Credit Facilities, under one or more Capitalized Leases or
from the vendor of assets, property or services acquired with the proceeds of
such Indebtedness) does not mature prior to the Stated Maturity of the Notes and
the Weighted
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52
Average Life to Maturity of such Indebtedness is longer than that of the Notes;
(xi) Indebtedness outstanding as of the Issue Date; and
(xii) Indebtedness (in addition to Indebtedness permitted
under clauses (i) through (x) above) in an aggregate principal amount
outstanding at any one time not to exceed the greater of (A) NLG 100
million and (B) an amount equal to 5% of the Company's consolidated net
tangible assets as of such date.
(c) For purposes of determining any particular amount of Indebtedness
under Section 4.4(b), Guarantees, Liens or obligations with respect to letters
of credit supporting Indebtedness otherwise included in the determination of
such particular amount shall not be included; provided, however, that the
foregoing shall not in any way be deemed to limit the provisions of Section
4.17. For purposes of determining compliance with Section 4.4, (A) in the event
that an item of Indebtedness meets the criteria of more than one of the types of
Indebtedness described above, the Company, in its sole discretion, shall
classify (or from time to time reclassify) such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of such
clauses and (B) the principal amount of Indebtedness issued at a price that is
less than the principal amount thereof shall be equal to the amount of the
liability in respect thereof determined in conformity with U.S. GAAP.
SECTION 4.5 Corporate Existence. Except as otherwise permitted by
Article V, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, partnership, limited liability or other existence of each of its
Subsidiaries in accordance with the respective organizational documents (as the
same may be amended from time to time) of each Subsidiary and the rights
(charter and statutory) of the Company and each of its Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right, or
the corporate, partnership, limited liability or other existence of any
Subsidiary, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and each of its Subsidiaries, taken as a whole, and that the loss
thereof is not, and will not be, adverse in any material respect to the Holders.
SECTION 4.6 Payment of Taxes and Other Claims. The Company shall pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon it or any of its Subsidiaries or upon the income, profits or
property of it or any of its Subsidiaries and (ii) all lawful claims for labor,
materials and supplies which, in each case, if unpaid, might by law become a
material liability or Lien upon the property of it or any of its
<PAGE> 52
53
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate provision has been
made.
SECTION 4.7 Maintenance of Properties and Insurance. (a) The Company
shall cause all material properties owned by or leased by it or any of its
Subsidiaries useful and necessary to the conduct of its business or the business
of any of its Subsidiaries to be improved or maintained and kept in normal
condition, repair and working order and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
its judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.7 shall prevent the Company or any of its Subsidiaries
from discontinuing the use, operation or maintenance of any of such properties,
or disposing of any of them, if such discontinuance or disposal is, in the
judgment of the Board of Directors or of the board of directors of any
Subsidiary of the Company concerned, or of an officer (or other agent employed
by the Company or of any of its Subsidiaries) of the Company or any of its
Subsidiaries having managerial responsibility for any such property, desirable
in the conduct of the business of the Company or any Subsidiary of the Company,
and if such discontinuance or disposal is not adverse in any material respect to
the Holders.
(b) To the extent available at commercially reasonable rates, the
Company shall maintain, and shall cause its Subsidiaries to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance provisions, as
are customarily carried by similar businesses of similar size.
SECTION 4.8 Compliance Certificate; Notice of Default. (a) The Company
shall deliver to the Trustee, within 90 days after the close of each fiscal
year, an Officers' Certificate stating that a review of the activities of the
Company and its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
it has kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill its obligations under this
Indenture and further stating, as to each such Officer signing such certificate,
that, to the best of his knowledge, the Company during such preceding fiscal
year has kept, observed, performed and fulfilled, and has caused each of its
Subsidiaries to keep, observe, perform and fulfill each and every such covenant
contained in this Indenture and no Default occurred during such year and at the
date of such certificate there is no Default which has occurred and is
continuing or, if such signers do know of such Default, the certificate shall
describe its status, with particularity and that, to the best of his or her
knowledge, no event has occurred
<PAGE> 53
54
and remains by reason of which payments on the account of the principal of or
interest, if any and Additional Amounts, if any, on the Notes is prohibited or
if such event has occurred, a description of the event and what action each is
taking or proposes to take with respect thereto. The Officers' Certificate shall
also notify the Trustee should the Company elect to change the manner in which
it fixes its fiscal year end. The Company shall notify the Trustee of any
default or defaults in the performance of any covenants or agreements under this
Indenture within five Business Days of becoming aware of any such default.
(b) The annual financial statements delivered pursuant to Section
4.10 shall include, so long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, a written report of
the Company's independent accountants (who shall be a firm of established
international reputation) that in conducting their audit of such financial
statements nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Articles IV, V or VI of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(b) The Company shall deliver to the Trustee, within 5
Business Days, upon any officer becoming aware of any Default or any default or
event of default under any document, instrument or agreement representing
Indebtedness of the Company, an Officers' Certificate specifying the Default or
such default or event of default and describing its status with particularity.
SECTION 4.9 Compliance with Laws. The Company shall comply, and shall
cause each of its Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders of the relevant jurisdiction in which they are incorporated
and/or in which they carry on business, all political subdivisions thereof, and
of any relevant governmental regulatory authority, in respect of the conduct of
their respective businesses and the ownership of their respective properties,
except for such noncompliances as would not in the aggregate have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole.
SECTION 4.10 Reports. (a) The Company will file on a timely basis with
the SEC, to the extent such filings are accepted by the SEC and whether or not
the Company has a class of securities registered under the Exchange Act, (i) all
annual and quarterly financial statements and other financial information that
would be required to be contained in a filing with the Commission
<PAGE> 54
55
on Forms 20-F and 10-Q if the Company were required to file such Forms
(which financial statements shall be prepared in accordance with U.S. GAAP),
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual financial information, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports. Such quarterly financial
information shall be filed with the Commission within 45 days following the end
of each fiscal quarter of the Company, and such annual financial information
shall be furnished within 90 days following the end of each fiscal year of the
Company. Such annual financial information shall include the geographic segment
financial information required to be disclosed by the Company under Item 101(d)
of Regulation S-K under the Securities Act. The Company shall also (a) file with
the Trustee, and provide to each holder, without cost to such holder, copies of
such reports and documents within 15 days after the date on which the Company
files such reports and documents with the Commission or the date on which the
Company would be required to file such reports and documents if the Company were
so required, and (b) if filing such reports and documents with the Commission is
not accepted by the Commission or is prohibited under the Exchange Act, to
supply at the Company's cost copies of such reports and documents to any
prospective holder promptly upon request. In addition, for so long as the Notes
remain outstanding and the Company is not subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act nor exempt from reporting under Rule
12g3-2(b) of the Exchange Act, the Company shall furnish to the Holders and to
securities analysts and prospective investors, upon their request, any
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act and, to any beneficial holder of Notes, information of the type
that would be filed with the Commission pursuant to the foregoing provisions,
upon the request of any such holder, and if, and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such exchange shall so
require, copies of all such reports and documents described above will be
deposited with the Company's listing agent in Luxembourg.
(b) Such reports shall be delivered to the Registrar and the Registrar
will mail them at the Company's expense to the Holders at their addresses
appearing in the register of Notes maintained by the Registrar.
(c) The Company shall also comply with the provisions of TIA Section
314(a).
SECTION 4.11 Waiver of Stay; Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it shall not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law that
would
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56
prohibit or forgive the Company from paying all or any portion of the principal
of and/or interest on the Notes as contemplated herein, wherever enacted, now or
at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture, and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 4.12 Limitation on Transactions with Shareholders and
Affiliates. (a) The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into, renew or extend any
transaction or series of transactions (including, without limitation, the
purchase, sale, lease or exchange of property or assets, or the rendering of any
service) with any direct or indirect holder (or any Affiliate of such holder) of
5% or more of any class of Capital Stock of the Company or with any Affiliate of
the Company or any Restricted Subsidiary, unless:
(i) such transaction or series of transactions is on terms
that are no less favorable to the Company or such Restricted Subsidiary
than could reasonably be obtained in a comparable arm's-length
transaction with a Person that is not such a holder or Affiliate;
(ii) if such transaction or series of transactions involves
aggregate consideration in excess of $2.0 million, then the Company
shall deliver to the Trustee a resolution set forth in an Officers'
Certificate adopted by a majority of the Board of Directors, including
a majority of the independent, disinterested directors, approving such
transaction or series of transactions and certifying that such
transaction or series of transactions comply with Section 4.12(a)(i);
and
(iii) if such transaction or series of transactions involves
aggregate consideration in excess of $5.0 million, then the Company
will deliver to the Trustee a written opinion as to the fairness to the
Company or such Restricted Subsidiary of such transaction or series of
transactions from a financial point of view from an internationally
recognized investment banking firm (or, if an investment banking firm
is generally not qualified to give such an opinion, by an
internationally recognized appraisal firm or accounting firm).
(b) The foregoing limitation does not limit and will not apply to (i)
any transaction between the Company and any of its Restricted Subsidiaries or
between Restricted Subsidiaries; (ii) the payment of reasonable and customary
regular fees to directors of the Company who are not employees of the Company;
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and (iii) payment of dividends or other distributions in respect of Equity
Interests of the Company or any Restricted Subsidiary permitted by Section 4.3.
SECTION 4.13 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. (a) The Company will not, and will not permit
any Restricted Subsidiary to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any consensual encumbrance or restriction
of any kind on the ability of any Restricted Subsidiary to:
(i) pay dividends or make any other distributions
permitted by applicable law on any Equity Interests of such
Restricted Subsidiary owned by the Company or any other Restricted
Subsidiary,
(ii) pay any Indebtedness owed to the Company or any other
Restricted Subsidiary,
(iii) make loans or advances to the Company or any other
Restricted Subsidiary, or
(iv) transfer any of its property or assets to the Company
or any other Restricted Subsidiary.
(b) The foregoing provisions shall not prohibit any
encumbrances or restrictions:
(i) existing under or by reason of any agreement in effect
on the Issue Date, and any amendments, supplements, extensions,
refinancings, renewals or replacements of such agreements; provided
that the encumbrances and restrictions in any such amendments,
supplements, extensions, refinancings, renewals or replacements are
no more restrictive than those encumbrances or restrictions that are
then in effect and that are being amended, supplemented, extended,
refinanced, renewed or replaced;
(ii) existing under or by reason of applicable law;
(iii) existing with respect to any Restricted Subsidiary
acquired by the Company or any Restricted Subsidiary after the Issue
Date, or the property or assets of such Restricted Subsidiary, and
existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person
other than such Person or the property or assets of such
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Person so acquired, and any amendments, supplements, extensions,
refinancings, renewals or replacements of agreements containing such
encumbrances or restrictions; provided that the encumbrances and
restrictions in any such amendments, supplements, extensions,
refinancings, renewals or replacements are no more restrictive than
those encumbrances or restrictions that are then in effect and that are
being amended, supplemented, extended, refinanced, renewed or replaced;
(iv) in the case of Section 4.13(a)(iv), (A) that restrict in
a customary manner the subletting, assignment or transfer of any
property or asset that is, or is subject to, a lease, purchase mortgage
obligation, license, conveyance or contract or similar property or
asset, (B) existing by virtue of any transfer of, agreement to
transfer, option or right with respect to, or Lien on, any property or
assets of the Company or any Restricted Subsidiary not otherwise
prohibited by this Indenture or (C) arising or agreed to in the
ordinary course of business, not relating to any Indebtedness, and that
do not, individually or in the aggregate, materially detract from the
value of property or assets of the Company or any Restricted Subsidiary
to the Company or any Restricted Subsidiary;
(v) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock in, or
property and assets of, such Restricted Subsidiary; provided that such
restriction shall terminate if such transaction is abandoned or if such
transaction is not consummated within six months of the date such
agreement was entered into; or
(vi) contained in the terms of any Indebtedness or any
agreement pursuant to which such Indebtedness was issued if (A) the
encumbrance or restriction applies only in the event of a payment
default or a default with respect to a financial covenant contained in
such Indebtedness or agreement, (B) the encumbrance or restriction is
not materially more disadvantageous to the holders of the Notes than is
customary in comparable financings (as determined by the Board of
Directors) and (C) the Board of Directors determines that any such
encumbrance or restriction will not materially affect the Company's
ability to make principal or interest payments on the Notes.
Nothing contained in this Section 4.13 shall prevent the Company or any
Restricted Subsidiary from creating, incurring, assuming or suffering to exist
any Liens otherwise permitted in Section 4.14 that limit the right of the debtor
to dispose of the assets securing such Indebtedness.
SECTION 4.14 Limitation on Liens. The Company will not, and
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59
will not permit any Restricted Subsidiary to, directly or indirectly, create,
incur, assume or suffer to exist any Lien (other than Permitted Liens) on any
asset or property of the Company or any Restricted Subsidiary without making
effective provisions for all of the Notes and all other amounts due under the
Indenture to be directly secured equally and ratably with (or, if the obligation
or liability to be secured by such Lien is subordinated in right of payment to
the Notes, prior to) the obligation or liability secured by such Lien.
SECTION 4.15 Change of Control. (a) Upon the occurrence of a Change of
Control, the Company will make an offer to purchase all or any part (equal to
1,000 aggregate principal amount and integral multiple thereof) of the Notes
pursuant to the offer described below (the "Change of Control Offer") at a price
in cash (the "Change of Control Payment") equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, thereon to the date
of repurchase, plus Additional Amounts, if any, to the date of repurchase (and
in the case of Definitive Notes, subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date and Additional Amounts, if any, in respect thereof). Within 30 days
following any Change of Control, the Company will publish notice of such in a
leading newspaper having a general circulation in New York (which is expected to
be The Wall Street Journal) and in Amsterdam (which is expected to be Het
Financieele Dagblad) (and, if and so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
a newspaper having a general circulation in Luxembourg (which is expected to be
the Luxemburger Wort)) or, in the case of Definitive Notes, mail a notice to
each Holder postage prepaid (and if and so long as the Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
will publish notice in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)), with a copy to the Trustee,
with the following information: (i) a Change of Control Offer is being made
pursuant to this Section 4.15 and all Notes properly tendered pursuant to such
Change of Control Offer will be accepted for payment; (ii) the purchase price
and the purchase date, which will be no earlier than 30 days nor later than 60
days from the date such notice is published, or where relevant, mailed, except
as may be otherwise required by applicable law (the "Change of Control Payment
Date"); (iii) any Note not properly tendered will remain outstanding and
continue to accrue interest; (iv) unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment pursuant to the
Change of Control Offer will cease to accrue interest on the Change of Control
Payment Date; (v) Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the form
entitled "Option of Holder to Elect
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Purchase" on the reverse of the Notes completed, to the Paying Agent and at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (vi) Holders will be
entitled to withdraw their tendered Notes and their election to require the
Company to purchase such Notes; provided, however, that the Paying Agent
receives, not later than the close of business on the last day of the offer
period, a facsimile transmission or letter setting forth the name of the Holder,
the principal amount of Notes tendered for purchase, and a statement that such
Holder is withdrawing his tendered Notes and his election to have such Notes
purchased; and (vii) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the principal amount of the Notes surrendered, which unpurchased portion must be
equal to 1,000 in principal amount or an integral multiple thereof.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder and will
comply with the applicable laws of any non-U.S. jurisdiction in which a Change
of Control Offer is made, in each case, to the extent such laws or regulations
are applicable in connection with the repurchase of the Notes pursuant to a
Change of Control Offer. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Indenture, the Company
will comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations contained in this Indenture by virtue
thereof. The provisions relating to the Company's obligation to make an offer to
repurchase the Notes as a result of a Change of Control may be waived or
modified with the written consent of the Holders of a majority in principal
amount of the Notes.
(b) On the Change of Control Payment Date, the Company will, to the
extent permitted by law, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the aggregate Change of Control Payment in
respect of all Notes or portions thereof so tendered and (iii) deliver, or cause
to be delivered, to the Trustee for cancellation the Notes so accepted together
with an Officers' Certificate stating that such Notes or portions thereof have
been tendered to and purchased by the Company. The Paying Agent will promptly
either (x) pay to the Holder against presentation and surrender (or, in the case
of partial payment, endorsement) of the Global Notes or (y) in the case of
Definitive Notes, mail to each Holder of Notes postage prepaid, the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
deliver to the Holder of the Global Notes a new Global Note or Notes or, in the
case of Definitive Notes, mail to each Holder a new Definitive Note, as
applicable, equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, however, that each new Definitive Note will be in
a principal amount of 1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of
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Control Offer on or as soon as practicable after the Change of Control Payment
Date.
SECTION 4.16 Limitation on Asset Sales. (a) The Company will not, and
will not permit any Restricted Subsidiary to, make any Asset Sale unless (i) the
Company or the Restricted Subsidiary, as the case may be, receives consideration
at the time of such Asset Sale at least equal to the Fair Market Value of the
assets sold or disposed of and (ii) at least 80% of the consideration received
for such Asset Sale consists of cash or Cash Equivalents or Replacement Assets
or the assumption of Indebtedness which ranks pari passu in right of payment
with the Notes.
(b) The Company shall, or shall cause the relevant Restricted
Subsidiary to, apply the Net Cash Proceeds from an Asset Sale within 270 days of
the receipt thereof to (A) permanently repay unsubordinated Indebtedness of the
Company or Indebtedness of any Restricted Subsidiary, in each case owing to a
Person other than the Company or any of its Restricted Subsidiaries, (B) invest
in Replacement Assets, or (C) in any combination of repayment, prepayment, and
reinvestment permitted by the foregoing clauses (A) and (B). Any Net Proceeds
from the Asset Sale that are not invested as provided and within the time period
set forth in the first sentence of this Section 4.16(b) will be deemed to
constitute "Excess Proceeds."
If at any time the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall, within 30 Business Days thereafter, make an offer to
all Holders of Notes (an "Asset Sale Offer") to purchase on a pro rata basis the
maximum principal amount of Notes, that is an integral multiple of 1,000 that
may be purchased out of the Excess Proceeds at an offer price in cash in an
amount equal to 100% of the outstanding principal amount thereof, plus accrued
and unpaid interest thereon, plus Additional Amounts, if any, to the date fixed
for the closing of such offer (and, in the case of Definitive Notes, subject to
the right of a Holder of record on the relevant record date to receive interest
due on the relevant interest payment date and Additional Amounts, if any, in
respect thereof), in accordance with the procedures set forth in this Indenture.
The Company will commence an Asset Sale Offer with respect to Excess Proceeds
within thirty Business Days after the date that Excess Proceeds exceeds $5.0
million by publishing or, where relevant, mailing the notice required pursuant
to the terms of the Indenture, with a copy to the Trustee. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the Excess Proceeds, subject to applicable law, the Company may use any
remaining Excess Proceeds for general corporate purposes. Upon completion of any
such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The Asset Sale Offer shall remain open for a period of 20 Business
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Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the maximum principal amount of Notes that
may be purchased with such Excess Proceeds (or such pro rata portion) (which
maximum principal amount of Notes shall be the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer.
If the Purchase Date is on or after an interest Record Date and on or
before the related Interest Payment Date, any accrued and unpaid interest will
be paid in the case of a Global Note, to the Holder thereof or, in the case of a
Definitive Note, to the Person in whose name such Definitive Note is registered
at the close of business on such Record Date, and no additional interest will be
payable to Holders with respect to Notes tendered pursuant to the Asset Sale
Offer.
At least 30 days but not more than 60 days before a Purchase Date, the
Company shall publish in a leading newspaper having a general circulation in New
York (which is expected to be The Wall Street Journal) and in Amsterdam (which
is expected to be Het Financieele Dagblad ) (and, if and so long as the Notes
are listed on the Luxembourg Stock Exchange and the rules of such Stock Exchange
shall so require, a newspaper having a general circulation in Luxembourg (which
is expected to be the Luxemburger Wort)) or, in the case of Definitive Notes,
mail to Holders by first-class mail, postage prepaid, at their respective
addresses as they appear on the registration books of the Registrar with a copy
of such notice to the Trustee (and, if and so long as the Notes are listed on
the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, publish in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)). The notice shall contain all
instructions and materials (or instructions on how to obtain instructions and
materials) necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(A) that the Asset Sale Offer is being made pursuant to
this Section 4.16 and the length of time the Asset Sale Offer shall
remain open;
(B) the Offer Amount (including the amount of accrued and
unpaid interest, if any), the purchase price and the Purchase Date;
(C) that any Note or portion thereof not tendered or
accepted for payment shall continue to accrue interest and Additional
Amounts, if any, in accordance with the terms thereof;
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(D) that, unless the Company defaults in making payment
therefor any Note or portion thereof accepted for payment pursuant to
the Asset Sale Offer shall cease to accrue interest and Additional
Amounts, if any, after the Purchase Date;
(E) (1) if any Global Note is being purchased in part, the
portion of the principal amount of such Note to be purchased and that,
after the Purchase Date, interest and Additional Amounts, if any, shall
cease to accrue on the portion to be purchased, and upon surrender of
such Global Note, the Global Note with a notation on Schedule A thereof
adjusting the principal amount thereof to be equal to the unpurchased
portion, will be returned and (2) if a Definitive Note may be purchased
in part, that, after the Purchase Date, upon surrender of such
Definitive Note, a new Definitive Note or Notes in aggregate principal
amount equal to the unpurchased portion thereof will be issued in the
name of the Holder thereof, upon cancellation of the original Note;
(F) that Holders electing to have a Note or portion thereof
purchased pursuant to any Asset Sale Offer shall be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three Business Days before the
Purchase Date and must complete any form letter of transmittal proposed
by the Company and acceptable to the Trustee and the Paying Agent;
(G) that, subject to applicable law, Holders shall be entitled
to withdraw their election if the Company, depositary or Paying Agent,
as the case may be, receives, not later than the second Business Day
before the Purchase Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Note or
portion thereof the Holder delivered for purchase, the Note certificate
number and a statement that such Holder is withdrawing his election to
have the Note or portion thereof purchased;
(H) that, if the aggregate principal amount of Notes
tendered by Holders exceeds the Offer Amount, the selection of such
Notes for purchase will be made by the Trustee in compliance with the
requirements of the principal securities exchange, if any, on which
such Notes are listed, or if such Notes are not so listed or such
exchange prescribes no method of
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selection, subject to applicable law, on a pro rata basis by lot or by
such other method as the Trustee in its sole discretion shall deem fair
and appropriate (and in such manner as complies with applicable legal
and exchange requirements); provided, however, that no Notes of 1,000
or less shall be purchased in part; provided further, that, subject to
applicable law, in the event of partial purchase by lot, the particular
Notes to be purchased shall be selected, unless otherwise provided
herein, by the Registrar or Trustee from the outstanding Notes not
previously called for purchase; and
(I) the instructions that Holders must follow to tender their
Notes.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes or portions
thereof tendered, and deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 4.16. On the Purchase Date, the Paying
Agent shall promptly cause the principal amount of any Global Note so tendered
to be adjusted on Schedule A thereof to be equal to any unpurchased portion of
such Global Note which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof, and shall promptly authenticate and mail
or deliver to each tendering Holder of a Definitive Note, a new Definitive Note
or Notes equal in principal amount to any unpurchased portion of the Definitive
Note surrendered which unpurchased portion must be equal to 1,000 in principal
amount or an integral multiple thereof. DTC, the Paying Agent or the Company, as
the case may be, shall promptly (but in any case not later than five Business
Days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the Offer Amount of the Notes tendered by such Holder and accepted by
the Company for purchase. Any Notes not so accepted shall be promptly mailed or
delivered by or on behalf of the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer not later than the
second Business Day following the Purchase Date.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder and will
comply with the applicable laws of any non-U.S. jurisdiction in which an Asset
Sale Offer is made, in each case, to the extent such laws or regulations are
applicable in connection with the repurchase of the Notes pursuant to an Asset
Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with the provisions hereunder, the Company will comply with
the applicable securities laws and regulations and shall not be deemed to have
breached its obligations described in this Indenture by virtue thereof.
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SECTION 4.17 Limitation on Issuance of Guarantees of Indebtedness by
Restricted Subsidiaries. (a) The Company shall not permit any Restricted
Subsidiary, directly or indirectly, to guarantee, assume or in any other manner
become liable with respect to any Indebtedness of the Company unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to this Indenture providing for a Guarantee of all of the Company's
obligations under the Notes and this Indenture on terms substantially similar to
the guarantee of such Indebtedness, except that if such Indebtedness is by its
express terms subordinated in right of payment to the Notes, any such
assumption, Guarantee or other liability of such Restricted Subsidiary with
respect to such Indebtedness shall be subordinated in right of payment to such
Restricted Subsidiary's assumption, Guarantee or other liability with respect to
the Notes substantially to the same extent as such Indebtedness is subordinated
to the Notes and (ii) such Restricted Subsidiary waives, and will not in any
manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Guarantee; provided that any Restricted Subsidiary may
guarantee Indebtedness of the Company under a Credit Facility if such
Indebtedness is Incurred in accordance with Section 4.4.
(b) Notwithstanding the foregoing Section 4.17(a), any Guarantee of all
of the Company's obligations under the Notes and this Indenture by a Restricted
Subsidiary may provide by its terms that it will be automatically and
unconditionally released and discharged upon (i) any sale, exchange or transfer,
to any Person not an Affiliate of the Company, of all of the Company's and each
Restricted Subsidiary's Equity Interests in, or all or substantially all of the
assets of, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture) or (ii) the release or discharge of the guarantee
which resulted in the creation of such Guarantee, except a discharge or release
by or as a result of payment under such guarantee.
SECTION 4.18 Business of the Company; Restriction on Transfers of
Existing Business. The Company will not, and will not permit any Restricted
Subsidiary to, be principally engaged in any business or activity other than a
Permitted Business. In addition, the Company and any Restricted Subsidiary will
not be permitted to, directly or indirectly, transfer to any Unrestricted
Subsidiary (i) any of the licenses, permits or authorizations used in the
Permitted Business of the Company and any Restricted Subsidiary or (ii) any
material portion of the "property and equipment" (as such term is used in the
Company's consolidated financial statements) of the Company or any Restricted
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Subsidiary used in the licensed service areas of the Company and any Restricted
Subsidiary.
SECTION 4.19 Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary, directly or indirectly, to issue, transfer, convey, sell,
lease or otherwise dispose of any shares of Capital Stock (including options,
warrants or other rights to purchase shares of such Capital Stock) of such
Restricted Subsidiary or any other Restricted Subsidiary to any Person (other
than (i) to the Company or a Wholly Owned Restricted Subsidiary, (ii) issuances
of director's qualifying shares or sales to foreign nationals of shares of
Capital Stock of foreign Restricted Subsidiaries, in each case, to the extent
required by applicable law and (iii) Strategic Minority Capital Stock Issues),
unless (A) immediately after giving effect to such issuance, transfer,
conveyance, sale, lease or other disposition, such Restricted Subsidiary would
no longer constitute a Restricted Subsidiary and (B) any Investment in such
Person remaining after giving effect to such issuance, transfer, conveyance,
sale, lease or other disposition would have been permitted to be made under
Section 4.3 if made on the date of such issuance, transfer, conveyance, sale,
lease or other disposition (valued as provided in the definition of "Investment"
in Section 1.1).
SECTION 4.20 Additional Amounts. At least 10 days prior to the first
date on which payment of principal, premium, if any, or interest on the Notes is
to be made, and at least 10 days prior to any subsequent such date if there has
been any change with respect to the matters set forth in the Officers'
Certificate described in this Section 4.20, the Company will furnish the Trustee
and the Paying Agent, if other than the Trustee, with an Officers' Certificate
instructing the Trustee and the Paying Agent whether such payment of principal,
premium, if any, or interest on the Notes (whether or not in the form of
Definitive Notes) shall be made to the Holders without withholding for or on
account of any present or future tax, duty, assessment or other governmental
charges of whatever nature (collectively "Taxes") imposed or levied by or on
behalf of The Netherlands or any jurisdiction in which the Company or any
Surviving Entity is organized or is otherwise resident for tax purposes or any
political subdivision thereof or any authority having power to tax therein or
any jurisdiction from or through which payment is made (each a "Relevant Taxing
Jurisdiction"), unless the withholding or deduction of such Taxes is then
required by law. If any deduction or withholding for, or on account of, any
Taxes of any Relevant Taxing Jurisdiction, shall at any time be required on any
payments made by the Company with respect to the Notes, including payments of
principal, redemption price, interest or premium, then such Officers'
Certificate shall specify the amount, if any, required to be withheld on such
payments to such Holders and the Company will pay to the Trustee or the Paying
Agent the additional amounts pursuant to paragraph 2 of the Notes (the
"Additional Amounts") and upon request shall provide the Trustee with
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documentation satisfactory to the Trustee evidencing the payment of such
Additional Amounts. Copies of such documentation shall be made available to the
Holders upon request. The Company shall indemnify the Trustee and the Paying
Agent for, and hold them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished to them pursuant to this Section 4.20.
SECTION 4.21 Payment of Non-Income Taxes and Similar Charges. The
Company will pay any present or future stamp, court or documentary taxes, or any
other excise or property taxes, charges or similar levies which arise in any
jurisdiction from the execution, delivery or registration of the Notes or any
other document or instrument referred to therein, or the receipt of any payments
with respect to the Notes, excluding any such taxes, charges or similar levies
imposed by any jurisdiction outside of The Netherlands, the United States of
America, or any jurisdiction in which a Paying Agent is located, other than
those resulting from, or required to be paid in connection with, the enforcement
of the Notes or any other such document or instrument following the occurrence
of any Event of Default with respect to the Notes.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1 Consolidation, Merger, and Sale of Assets. The Company will
not consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all of its property and assets (as an
entirety or substantially an entirety in one transaction or in a series of
related transactions) to, any Person or permit any Person to merge with or into
the Company and the Company will not permit any of its Restricted Subsidiaries
to enter into any such transaction or series of transactions if such transaction
or series of transactions, in the aggregate, would result in the sale,
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company or the Company and
its Restricted Subsidiaries, taken as a whole, to any other Person or Persons,
unless: (i) the Company will be the continuing Person, or the Person (if other
than the Company) (the "Surviving Entity") formed by such consolidation or into
which the Company is merged or that acquired or leased such property and assets
of the Company will be a corporation organized and validly existing under the
laws of The Netherlands, Germany, France, Belgium, the United Kingdom or the
United States of America,
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any state thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture, executed and delivered to the Trustee, all of the
obligations of the Company with respect to the Notes and under this Indenture;
(ii) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Company, or any Person
becoming the successor obligor of the Notes, shall have a Consolidated Net Worth
equal to or greater than the Consolidated Net Worth of the Company immediately
prior to such transaction; (iv) immediately after giving effect to such
transaction on a pro forma basis the Company, or any Person becoming the
successor obligor of the Notes, as the case may be, (A) prior to the third
anniversary of the Issue Date, would have an Indebtedness to Consolidated Cash
Flow Ratio no greater than such ratio immediately prior to such transaction or
(B) on or after the third anniversary of the Issue Date, could Incur at least
$1.00 of Indebtedness under Section 4.4(a); (v) the Company delivers to the
Trustee an Officers' Certificate (attaching the arithmetic computations to
demonstrate compliance with clauses (iii) and (iv)) and an Opinion of Counsel,
in each case stating that such consolidation, merger or transfer and such
supplemental indenture complies with the Indenture and (vi) the Company shall
have delivered to the Trustee an opinion of tax counsel reasonably acceptable to
the Trustee stating that (A) Holders will not recognize income, gain or loss for
U.S. federal or Netherlands income tax purposes as a result of such transaction
and (B) no taxes on income (including taxable capital gains) will be payable
under the tax laws of the Relevant Taxing Jurisdiction by a Holder who is or who
is deemed to be a non-resident of the Relevant Taxing Jurisdiction in respect of
the acquisition, ownership or disposition of the Notes, including the receipt of
principal of, premium and interest paid pursuant to such Notes.
SECTION 5.2 Successor Corporation Substituted. Upon any such
consolidation, merger, assignment, conveyance, lease, transfer or other
disposition in accordance with Section 5.1, the Successor Company will succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such Successor Company
had been named as the Company herein, and thereafter (except in the case of a
sale, assignment, transfer, lease, conveyance or other disposition) the
predecessor corporation will be relieved of all further obligations and
covenants under this Indenture and the Notes.
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.1 Events of Default. Wherever used herein with
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respect to any series of the Notes, "Event of Default" means any one of the
following events which shall have occurred and be continuing:
(a) default for 30 days or more in the payment when due of interest on
the Notes or Additional Amounts, if any, with respect to the Notes;
(b) default in the payment of principal of (or premium, if any, on) any
Note when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise;
(c) default in the payment of principal or interest on Notes required
to be purchased pursuant to an Asset Sale Offer as described under Section 4.16
or pursuant to a Change of Control Offer as described under Section 4.15;
(d) failure to perform or comply with the provisions described in
Article V;
(e) default in the performance of or breach of any other covenant or
agreement of the Company in this Indenture or under the Notes and such default
or breach continues for a period of 30 consecutive days after written notice by
the Trustee or the holders of 25% or more in aggregate principal amount of the
Notes;
(f) a default occurs on any other Indebtedness of the Company or any
Restricted Subsidiary if either (x) such default is a failure to pay principal
of such Indebtedness when due after any applicable grace period and the
principal amount of such Indebtedness is in excess of $5.0 million or (y) as a
result of such default, the maturity of such Indebtedness has been accelerated
prior to its scheduled maturity and such default has not been cured within the
shorter of (i) 60 days and (ii) the applicable grace period, and such
acceleration has not been rescinded, and the principal amount of such
Indebtedness together with the principal amount of any other Indebtedness of the
Company and its Restricted Subsidiaries that is in default as to principal, or
the maturity of which has been accelerated, aggregates $5.0 million or more;
(g) failure to pay final judgments and orders against the Company or
any Restricted Subsidiary (not covered by insurance) aggregating in excess of
$5.0 million (treating any deductibles, self-insurance or retention as not so
covered), which final judgments remain unpaid, undischarged and unstayed for a
period in excess of 30 consecutive days following entry of the final judgment or
order that causes the aggregate amount for all such final judgments or orders
outstanding and not paid, discharged or stayed to exceed $5.0 million;
(h) a court having jurisdiction in the premises enters a decree or
order for (A) relief in respect of the Company or any of its Significant
Subsidiaries
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in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, (B) appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Company or any of its Significant Subsidiaries or for all or substantially
all of the property and assets of the Company or any of its Significant
Subsidiaries or (C) the winding up or liquidation of the affairs of the Company
or any of its Significant Subsidiaries and, in each case, such decree or order
shall remain unstayed and in effect for a period of 30 consecutive days; or
(i) the Company or any of its Significant Subsidiaries (A) commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, (B) consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Company or any of its Significant
Subsidiaries or for all or substantially all of the property and assets of the
Company or any of its Significant Subsidiaries or (C) effects any general
assignment for the benefit of creditors.
SECTION 6.2 Acceleration. If an Event of Default (other than an Event
of Default specified in Sections 6.1 (h) or (i)) occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Notes, then outstanding, by written notice to the Company, may declare the
principal of, premium, if any, interest and other monetary obligations
(including Additional Amounts, if any on all the then outstanding Notes to be
immediately due and payable. Upon such a declaration, such principal of,
premium, if any, interest and other monetary obligations on the Notes shall be
immediately due and payable. In the event of a declaration of acceleration
because an Event of Default set forth in Section 6.1 (f) above has occurred and
is continuing, such declaration of acceleration shall be automatically rescinded
and annulled if the event of default triggering such Event of Default pursuant
to Section 6.1 (f) shall be remedied or cured by the Company and/or the relevant
Restricted Subsidiaries or waived by the holders of the relevant Indebtedness
within 60 days after the declaration of acceleration with respect thereto. If an
Event of Default specified in Sections 6.1 (h) or (i) above occurs, the
principal of, premium, if any, accrued interest and other monetary obligations
on the Notes then outstanding shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
The Trustee shall have no obligation to accelerate the Notes if in the
best judgment of the Trustee acceleration is not in the best interest of the
Holders
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of such Notes.
SECTION 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of or, premium, if any, interest,
or Additional Amounts, if any, on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
SECTION 6.4 The Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto.
SECTION 6.5 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes in Section 2.7, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders of Notes is intended to be exclusive
of any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent or subsequent assertion or employment of any
other appropriate right or remedy.
SECTION 6.6 Delay or Omission Not Waiver. No delay or omission of the
Trustee or of any Holder of any Note to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Trustee or to the Holders of Notes
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Holders of Notes.
SECTION 6.7 Waiver of Past Defaults. Subject to Sections 6.10 and 9.2,
at any time after a declaration of acceleration with respect to the Notes as
described in Section 6.1, the Holders of at least a majority in principal amount
of the outstanding Notes by written notice to the Company and to the Trustee,
may waive all past defaults and rescind and annul a declaration of acceleration
and its consequences if (i) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, interest and other monetary
obligations on the Notes that have become due solely by such declaration of
acceleration, have been cured or waived and (ii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction. Such
waiver shall not excuse a continuing Event of Default in the payment of
interest, premium, if any, principal or Additional Amounts, if any, on such Note
held by a
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non-consenting Holder, or in respect of a covenant or a provision which cannot
be amended or modified without the consent of all Holders. In the event of any
Event of Default specified in Section 6.1(f) above, such Event of Default and
all consequences thereof (including, without limitation, any acceleration or
resulting payment default) shall be annulled, waived and rescinded,
automatically and without any action by the Trustee or the Holders of the Notes,
if within 60 days after such Event of Default arose (x) the Indebtedness or
guarantee that is the basis for such Event of Default has been discharged, or
(y) the holders thereof have rescinded or waived the acceleration, notice or
action (as the case may be) giving rise to such Event of Default, or (z) if the
default that is the basis for such Event of Default has been cured. The Company
shall deliver to the Trustee an Officers' Certificate stating that the requisite
percentage of Holders have consented to such waiver and attaching copies of such
consents. When a Default or Event of Default is waived, it is cured and ceases.
SECTION 6.8 Control by Majority. Subject to Section 2.9, the Holders of
not less than a majority in principal amount of the outstanding Notes may, by
written notice to the Trustee, direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power conferred on it. Subject to Section 7.1, however, the Trustee may
refuse to follow any direction that conflicts with any law or this Indenture
that the Trustee determines may be unduly prejudicial to the rights of another
Holder of Notes, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 6.9 Limitation on Suits. A Holder of Notes may not pursue any
remedy with respect to this Indenture or the Notes unless:
(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(ii) the Holder or Holders of at least 25% in principal amount
of the outstanding Notes make a written request to the Trustee to
pursue the remedy;
(iii) such Holder or Holders offer and, if requested, provide
to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(iv) the Trustee does not comply with the request within 30
days after receipt of the request and the offer and, if requested, the
provision of
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indemnity; and
(v) during such 30-day period the Holder or Holders of a
majority in principal amount of the outstanding Notes do not give the
Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
SECTION 6.10 Rights of Holders To Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of, premium, if any, interest and Additional Amounts, if any on a
Note, on or after the respective due dates expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.11 Collection Suit by Trustee. If an Event of Default in
payment of principal, premium, if any, interest or Additional Amounts, if any,
specified in Section 6.1(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Notes for the whole amount of principal and
accrued interest remaining unpaid, together with interest on overdue principal
and, to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the Notes
and such further amount as shall be sufficient to cover the costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7.
SECTION 6.12 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, accountants and experts) and the Holders
allowed in any judicial proceedings relating to the Company, its creditors or
its property or other obligor on the Notes, its creditors and its property and
shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same,
and any Custodian in any such judicial proceedings is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the
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Trustee under Section 7.7. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties which the
Holders of the Notes may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
SECTION 6.13 Priorities. If the Trustee collects any money or property
pursuant to this Article VI, it shall pay out the money or property in the
following order:
First: to the Trustee, the Agents and their agents and
attorneys for amounts due under Section 7.7, including payment of all
compensation, expense and liabilities incurred, and all advances made,
by the Trustee and the costs and expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal, premium, if any, interest and Additional Amounts, if any,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium, if any,
interest, and Additional Amounts, if any, respectively; and
Third: to the Company or any other obligor on the Notes, as
their interests may appear, or as a court of competent jurisdiction may
direct.
The Trustee, upon prior notice to the Company, may fix a record date
and payment date for any payment to Holders pursuant to this Section 6.13;
provided that the failure to give any such notice shall not affect the
establishment of such record date or payment date for Holders pursuant to this
Section 6.13.
SECTION 6.14 Restoration of Rights and Remedies. If the Trustee or any
Holder of any Note has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has ben discontinued or abandoned for
any reason, or has been determined adversely to the Trustee or to such Holder,
then and in every such case, subject to any determination in such proceeding,
the Company, the Trustee and the Holders of Notes shall be restored severally
and respectively to their former positions hereunder and thereafter all rights
and remedies of the Trustee and the Holders of Notes shall continue as though no
such proceeding had been instituted.
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SECTION 6.15 Undertaking for Costs. In any suit for the enforcement of
any right or remedy under this Indenture or in any suit against the Trustee for
any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.15 does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.10, or a suit
by a Holder or Holders of more than 10% in principal amount of the outstanding
Notes.
SECTION 6.16 Compliance Certificate; Notices of Default. The Company is
required to deliver to the Trustee annually a statement, in the form of an
Officers' Certificate, regarding compliance with this Indenture, and the Company
is required, within five Business Days, upon becoming aware of any Default or
Event of Default or any default under any document, instrument or agreement
representing Indebtedness of the Company, to deliver to the Trustee a statement,
in the form of an Officers' Certificate, specifying such Default or Event of
Default.
ARTICLE VII
TRUSTEE
SECTION 7.1 Duties of Trustee. (a) If an Event of Default actually
known to a Trust Officer of the Trustee has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under this Indenture at the
request of any of the Holders of Notes, unless they shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
(b) Except during the continuance of an Event of Default
actually known to the Trustee:
(i) The Trustee and the Agents will perform only those
duties as are specifically set forth herein and no others and no
implied covenants or obligations shall be read into this Indenture
against the Trustee or the Agents.
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(ii) In the absence of bad faith on their part, the Trustee
and the Agents may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon certificates or opinions and such other documents delivered to
them pursuant to Section 11.4 hereof furnished to the Trustee and
conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision
hereof are required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of subsection
(b) of this Section 7.1.
(ii) Neither the Trustee nor Agent shall be liable for any
error of judgment made in good faith by a Trust Officer of such
Trustee or Agent, unless it is proved that the Trustee or such Agent
was negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.8.
(d) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or to take or omit
to take any action under this Indenture or take any action at the request or
direction of Holders if it shall have reasonable grounds for believing that
repayment of such funds is not assured to it or it does not receive an indemnity
satisfactory to it in its sole discretion against such risk, liability, loss,
fee or expense which might be incurred by it in compliance with such request or
direction.
(e) Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to the Trustee is
subject to subsections (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on
any money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
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(g) Any provision hereof relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 7.1 and the TIA.
SECTION 7.2 Rights of Trustee. Subject to Section 7.1:
(a) The Trustee and each Agent may rely conclusively on and
shall be protected from acting or refraining from acting based upon
any document believed by them to be genuine and to have been signed
or presented by the proper person. Neither the Trustee nor any Agent
shall be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent order, approval, appraisal,
bond, debenture, note, coupon, security or other paper or document,
but the Trustee or its Agent, as the case may be, in its discretion,
may make reasonable further inquiry or investigation into such facts
or matters stated in such document and if the Trustee or its Agent as
the case may be, shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, at reasonable times during normal business
hours, personally or by agent or attorney. The Trustee shall not be
deemed to have notice or any knowledge of any matter (including
without limitation Defaults or Events of Default) unless a Trust
Officer assigned to and working in the Trustee's Corporate Trust
Administration has actual knowledge thereof or unless written notice
thereof is received by the Trustee, attention: Corporate Trust
Administration and such notice references the Notes generally, the
Company or this Indenture;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate or Company Order and any resolution of the Board of
Directors of the Company, as the case may be, may be sufficiently
evidenced by a Board Resolution;
(c) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both,
which shall conform to the provisions of Sections 11.4 and 11.5.
Neither the Trustee nor any Agent shall be liable for any action it
takes or omits to take in good faith in reliance on such certificate
or opinion.
(d) The Trustee and any Agent may act through their
attorneys and agents and shall not be responsible for the misconduct
or negligence of any
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agent (other than an agent who is an employee of the Trustee or such
Agent) appointed with due care.
(e) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this
Indenture; provided, however, that the Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(f) The Trustee or any Agent may consult with counsel of
its selection and the advice or opinion of such counsel as to matters
of law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion
of such counsel.
(g) Subject to Section 9.2 hereof, the Trustee may (but
shall not be obligated to), without the consent of the Holders, give
any consent, waiver or approval required by the terms hereof, but
shall not without the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time
outstanding (i) give any consent, waiver or approval or (ii) agree to
any amendment or modification of this Indenture, in each case, that
shall have a material adverse effect on the interests of any Holder.
The Trustee shall be entitled to request and conclusively rely on an
Opinion of Counsel with respect to whether any consent, waiver,
approval, amendment or modification shall have a material adverse
effect on the interests of any Holder.
SECTION 7.3 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company, its Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights. The Trustee must comply with Sections
7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer. The Trustee and the Agents shall not
be responsible for and make no representation as to the validity, effectiveness
or adequacy of this Indenture or the Notes; it shall not be accountable for the
Company's use of the proceeds from the Notes or any money paid to the Company or
upon the Company or upon the Company's direction under any provision hereof; it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein of the Company, or any
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document issued in connection with the sale of Notes or any statement in the
Notes other than the Trustee's certificate of authentication.
SECTION 7.5 Notice of Default. If an Event of Default occurs and is
continuing and a Trust Officer of the Trustee receives actual notice of such
event, the Trustee shall mail to each Holder, as their names and addresses
appear on the list of Holders described in Section 2.5, notice of the uncured
Default or Event of Default within 30 days after the Trustee receives such
notice. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, interest or Additional Amounts, if any, on any
Note, including the failure to make payment on (i) the Change of Control Payment
Date pursuant to a Change of Control Offer or (ii) the Asset Sale Purchase Date
pursuant to an Asset Sale Offer, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of the Holders.
SECTION 7.6 Report by Trustee to Holders. Within 60 days after each May
15 beginning with May 15, 1999, the Trustee shall, to the extent that any of the
events described in TIA Section 313(a) occurred within the previous twelve
months, but not otherwise, mail to each Holder a brief report dated as of such
date that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Sections 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Company and filed with the SEC and each securities exchange, if
any, on which the Notes are listed.
The Company shall promptly notify the Trustee if subsequent to the date
hereof the Notes become listed on any securities exchange or of any delisting
thereof.
SECTION 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time such compensation as the Company and the Trustee shall
from time to time agree in writing for its acceptance of this Indenture and
services hereunder. The Trustee's and the Agents' compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances (including reasonable fees and expenses of counsel)
incurred or made by it in addition to the compensation for their services,
except any such disbursements, expenses and advances as may be attributable to
the Trustee's or any Agent's negligence or bad faith. Such
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expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's and Agents' accountants, experts and counsel and any taxes or
other expenses incurred by a trust created pursuant to Section 8.4 hereof.
The Company shall indemnify each of the Trustee, any predecessor
Trustee and the Agents for, and hold them harmless against, any and all loss,
damage, claim, expense or liability including taxes (other than taxes based on
the income of the Trustee) incurred by the Trustee or an Agent without
negligence, willful misconduct or bad faith on its part in connection with
acceptance of administration of this trust and its duties under this Indenture,
including the reasonable expenses and attorneys' fees and expenses of defending
itself against any claim of liability arising hereunder. The Trustee and the
Agents shall notify the Company promptly of any claim asserted against the
Trustee or such Agent for which it may seek indemnity. However, the failure by
the Trustee or the Agent to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the Trustee
or such Agent shall cooperate in the defense (and may employ its own counsel
reasonably satisfactory to the Trustee) at the Company's expense. The Trustee or
such Agent may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its written consent, which consent shall not be unreasonably
withheld. The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee or such Agent as a result of the
violation of this Indenture by the Trustee or such Agent if such violation arose
from the Trustee's or such Agent's negligence or bad faith.
To secure the Company's payment obligations in this Section 7.7, the
Trustee and the Agents shall have a senior Lien prior to the Notes against all
money or property held or collected by the Trustee and the Agents, in its
capacity as Trustee or Agent, except money or property held in trust to pay
principal or premium, if any, or interest on particular Notes.
When the Trustee or an Agent incurs expenses or renders services after
an Event of Default specified in Section 6.1(h) or Section 6.1(i) occurs, the
expenses (including the reasonable fees and expenses of its agents and counsel)
and the compensation for the services shall be preferred over the status of the
Holders in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 7.7 and any claim arising hereunder shall survive the
termination of this Indenture, the resignation or removal of any Trustee or
Agent, the discharge of the Company's obligations pursuant to Article VIII and
any rejection or termination under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may
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resign at any time by so notifying the Company in writing. The Holders of a
majority in principal amount of the outstanding Notes may remove the Trustee by
so notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. A resignation or removal of the Trustee and
appointment of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this section. The
Company may remove the Trustee if:
(i) the Trustee fails to comply with Section 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(iii) a receiver or other public officer takes charge of
the Trustee or its property; or
(iv) the Trustee becomes incapable of acting with respect
to its duties hereunder.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the then outstanding Notes may, with the Company's consent, appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.7, all property held by it as Trustee to the
successor Trustee, subject to the Lien provided in Section 7.7, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee after written request by any Holder who has been a
Holder for at least six months fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the
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appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee and the Company shall pay to any replaced or removed
Trustee all amounts owed under Section 7.7 upon such replacement or removal.
SECTION 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee. In case any Notes shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by consolidation, merger or conversion to such authenticating Trustee
may adopt such authentication and deliver the Notes so authenticated with the
same effect as if such successor Trustee had itself authenticated such Notes.
SECTION 7.10 Corporate Trustee Required; Eligibility. There shall be at
all times a Trustee hereunder which shall be eligible to act as Trustee under
the TIA and shall have a combined capital and surplus of at least $50,000,000
and have its Corporate Trust Office in the Borough of Manhattan, The City of New
York. If such Person publishes reports of condition at least annually, pursuant
to law or to the requirements of a Federal, State or District of Columbia
supervising or examining authority within the United States of America, then for
the purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article.
SECTION 7.11 Disqualification; Conflicting Interests. If the Trustee
has or shall acquire a conflicting interest within the meaning of the TIA, the
Trustee shall either eliminate such interest or resign, to the extent and in the
manner provided by, and subject to the provisions of, the TIA and this
Indenture.
SECTION 7.12 Preferential Collection of Claims Against Company. The
Trustee, in its capacity as Trustee hereunder, shall comply with TIA Section
311(a), excluding any creditor relationship listed in TIA Section 311(b). A
Trustee who has resigned or been removed shall be subject to TIA Section 311(a)
to the extent indicated.
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83
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1 Option To Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, with respect
to the Notes, elect to have either Section 8.2 or 8.3 be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article VIII.
SECTION 8.2 Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.1 of the option applicable to this Section 8.2, the
Company shall be deemed to have been discharged from its obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
all the Obligations relating to the outstanding Notes and the Notes shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.6,
Section 8.8 and the other Sections of this Indenture referred to below in this
Section 8.2, and to have satisfied all of their other obligations under such
Notes and this Indenture and cured all then existing Events of Default (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal of,
premium, if any, interest, and Additional Amounts, if any, on such Notes when
such payments are due or on the Redemption Date solely out of the trust created
pursuant to this Indenture; (b) the Company's obligations with respect to Notes
concerning issuing temporary Notes, or, where relevant, registration of such
Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an
office or agency for payment and money for security payments held in trust; (c)
the rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith; and (d) this Article VIII and the
obligations set forth in Section 8.6 hereof.
Subject to compliance with this Article VIII, the Company may
exercise its option under Section 8.2 notwithstanding the prior exercise of its
option under Section 8.3 with respect to the Notes.
SECTION 8.3 Covenant Defeasance. Upon the Company's exercise
under Section 8.1 of the option applicable to this Section 8.3, the Company
shall be released from any obligations under the covenants contained in Sections
4.3, 4.4, 4.10, 4.12, 4.13, 4.14, 4.15, and 4.16 hereof with respect to the
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84
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or Event of Default under Section 6.1(e), nor shall any event referred to in
Sections 6.1(f) or (g) thereafter constitute a Default or Event of Default, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.
SECTION 8.4 Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.2 or
Section 8.3 to the outstanding Notes:
(i) the Company must irrevocably deposit, or cause to be
irrevocably deposited, with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, Government Securities
or a combination thereof in such amounts as will be sufficient, in the
opinion of an internationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, interest, and
Additional Amounts, if any, due on the outstanding Notes on the stated
maturity date or on the applicable Redemption Date, as the case may be,
of such principal, premium, if any, interest and Additional Amounts, if
any, due on the outstanding Notes;
(ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee (A) an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, (1) the Company has received
from, or there has been published by, the U.S. Internal Revenue Service
a ruling or (2) since the Issue Date, there has been a change in the
applicable U.S. federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel in the United States
shall confirm that, subject to customary assumptions and exclusions,
the Holders of the outstanding Notes will not recognize income, gain or
loss for U.S. federal income tax
<PAGE> 84
85
purposes as a result of such Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had
not occurred and (B) an Opinion of Counsel in The Netherlands
reasonably acceptable to the Trustee to the effect that (1) Holders
will not recognize income, gain or loss for Netherlands income tax
purposes as a result of such Legal Defeasance and will be subject to
Netherlands income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had
not occurred and (2) payments from the defeasance trust will be free
and exempt from any and all withholding and other income taxes of
whatever nature imposed or levied by or on behalf of The Netherlands or
any political subdivision thereof or therein having the power to tax;
(iii) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee (A) an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that, subject to
customary assumptions and exclusions, the Holders of the outstanding
Notes will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such Covenant Defeasance and will be
subject to such tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had
not occurred and (B) an Opinion of Counsel in The Netherlands
reasonably acceptable to the Trustee to the effect that (1) Holders
will not recognize income, gain or loss for Netherlands income tax
purposes as a result of such Covenant Defeasance and will be subject to
Netherlands income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance
had not occurred and (2) payments from the defeasance trust will be
free and exempt from any and all withholding and other income taxes of
whatever nature imposed or levied by or on behalf of The Netherlands or
any political subdivision thereof or therein having the power to tax;
(iv) no Default or Event of Default shall have occurred and be
continuing with respect to certain Events of Default on the date of
such deposit;
(v) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under any
material agreement or instrument to which the Company is a party or by
which the Company is bound;
(vi) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that, as of the date of such opinion
and subject to customary assumptions and exclusions following the
deposit, the trust funds will not be
<PAGE> 85
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subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally
under any applicable Netherlands and U.S. federal or state law, and
that the Trustee has a perfected security interest in such trust funds
for the ratable benefit of the Holders;
(vii) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of defeating, hindering, delaying or defrauding
any creditors of the Company or others; and
(viii) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel (which opinion of
counsel may be subject to customary assumptions and exclusions) each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be, have
been complied with.
SECTION 8.5 Satisfaction and Discharge of Indenture. This
Indenture will be discharged and will cease to be of further effect as to all
Notes issued thereunder when either (i) all such Notes theretofore authenticated
and delivered (except lost, stolen or destroyed Notes which have been replaced
or paid and Notes for whose payment money has theretofore been deposited in
trust and thereafter repaid to the Company) have been delivered to the Trustee
for cancellation; or (ii) (A) all such Notes not theretofore delivered to such
Trustee for cancellation have become due and payable by reason of the making of
a notice of redemption or otherwise or will become due and payable within one
year and the Company has irrevocably deposited or caused to be deposited with
such Trustee as trust funds in trust an amount of money sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation for principal, premium, if any, and accrued and unpaid
interest, and Additional Amounts, if any, to the date of maturity or redemption;
(B) no Default with respect to this Indenture or the Notes shall have occurred
and be continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the Company is a party
or by which it is bound; (C) the Company has paid, or caused to be paid, all
sums payable by it under this Indenture; and (D) the Company has delivered
irrevocable instructions to the Trustee under this Indenture to give the notice
of redemption and apply the deposited money toward the payment of such Notes at
maturity or the Redemption Date, as the case may be. In addition, the Company
must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee
stating that all conditions precedent to satisfaction and discharge have been
satisfied.
<PAGE> 86
87
SECTION 8.6 Survival of Certain Obligations. Notwithstanding
the satisfaction and discharge of this Indenture and of the Notes referred to in
Section 8.1, 8.2, 8.3, 8.4 or 8.5, the respective obligations of the Company and
the Trustee under Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.10, 2.11, 2.12, 2.13,
2.14, 4.1, 4.2, 4.5, 4.21, 6.10, Article VII, 8.7, 8.8, 8.9 and 8.10 shall
survive until the Notes are no longer outstanding, and thereafter the
obligations of the Company and the Trustee under Sections 7.7, 8.7, 8.8, 8.9 and
8.10 shall survive. Nothing contained in this Article VIII shall abrogate any of
the obligations or duties of the Trustee under this Indenture.
SECTION 8.7 Acknowledgement of Discharge by Trustee. Subject
to Section 8.10, after (i) the conditions of Section 8.4 or 8.5 have been
satisfied, (ii) the Company has paid or caused to be paid all other sums payable
hereunder by the Company and (iii) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of all
of the Company's obligations under this Indenture except for those surviving
obligations specified in this Article VIII.
SECTION 8.8 Application of Trust Moneys. All cash in U.S.
dollars and Government Securities deposited with the Trustee pursuant to Section
8.4 or 8.5 in respect of Notes shall be held in trust and applied by it, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent as the Trustee may determine, to the
Holders of the Notes of all sums due and to become due thereon for principal,
premium, if any, interest, and Additional Amounts, if any, but such money need
not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the Government
Securities deposited pursuant to Section 8.4 or 8.5 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding Notes.
SECTION 8.9 Repayment to the Company; Unclaimed Money. The
Trustee and any Paying Agent shall promptly pay or return to the Company upon
Company Order any cash or Government Securities held by them at any time that
are not required for the payment of the principal of, premium, if any, interest,
and Additional Amounts, if any, on the Notes for which cash or Government
Securities have been deposited pursuant to Section 8.4 or 8.5.
Any money held by the Trustee or any Paying Agent under this
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88
Article, in trust for the payment of the principal of, premium, if any, interest
and Additional Amounts, if any, on any Note and remaining unclaimed for two
years after such principal, premium, if any, interest and Additional Amounts, if
any, has become due and payable shall be paid to the Company upon Company Order
or if then held by the Company shall be discharged from such trust; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company give notice to the
Holders or cause to be published notice once, in a leading newspaper having a
general circulation in New York (which is expected to be The Wall Street
Journal) and in Amsterdam (which is expected to be Het Financieele Dagblad )
(and, if and so long as the Notes are listed on the Luxembourg Stock Exchange
and the rules of such Stock Exchange shall so require, a newspaper having a
general circulation in Luxembourg (which is expected to be the Luxemburger
Wort)) or in the case of Definitive Notes, mail to Holders by first-class mail,
postage prepaid, at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, publish in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)), that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such notification, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.10 Reinstatement. If the Trustee or Paying Agent is
unable to apply any cash or Government Securities, as applicable, in accordance
with Section 8.2, 8.3, 8.4 or 8.5 by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2, 8.3, 8.4 or 8.5 until such time as
the Trustee or Paying Agent is permitted to apply all such cash or Government
Securities in accordance with Section 8.2, 8.3, 8.4 or 8.5; provided, however,
that if the Company has made any payment of interest on, premium, if any,
principal, and Additional Amounts, if any, of any Notes because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money or
Government Securities, as applicable, held by the Trustee or Paying Agent.
ARTICLE IX
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89
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1 Without Consent of Holders of Notes.
Notwithstanding Section 9.2 hereof, the Company and the Trustee together may
amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note (i) to cure any ambiguity, omission, defect or inconsistency,
(ii) to provide for uncertificated Notes in addition to or in place of
certificated Notes, (iii) to provide for the assumption of the Company
obligations to Holders of such Notes in the case of a merger or consolidation
pursuant to Article V, (iv) to provide for the assumption of the Company's
obligations to Holders of such Notes, (v) to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under this Indenture of any such Holder, (vi)
to add covenants for the benefit of the Holders or to surrender any right or
power conferred upon the Company or (vii) to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
indenture, and upon receipt by the Trustee of the documents described in Section
9.6, the Trustee shall join with the Company in the execution of any amended or
supplemental indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental indenture which adversely affects its own rights, duties
or immunities hereunder or otherwise.
SECTION 9.2 With Consent of Holders of Notes. The Company and
the Trustee may amend or supplement this Indenture or the Notes or any amended
or supplemental indenture with the written consent of the Holders of at least a
majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes), and
any existing Default or Event of Default and its consequences or compliance with
any provision of this Indenture or the Notes may be waived with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes). However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder of Notes): (i) reduce the principal amount of the Notes
whose Holders must consent to an amendment, supplement or waiver, (ii) reduce
the principal of or change the fixed maturity of any such Note or alter or waive
the provisions with respect to the redemption of the Notes with respect to the
timing or
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90
amount of payment thereof, (iii) reduce the rate of or change the time for
payment of interest, including defaulted interest, on any Note, (iv) waive a
Default in the payment of principal of, premium, if any, interest and Additional
Amounts, if any, on the Notes (except a rescission of acceleration of the Notes
by the Holders of at least a majority in aggregate principal amount of the Notes
and a waiver of the payment default that resulted from the acceleration) or in
respect of a covenant or provision contained in this Indenture which cannot be
amended or modified without the consent of all Holders, (v) make any Note
payable in money other than that stated in the Notes, (vi) make any change in
the provisions of this Indenture relating to waivers of past Defaults or the
rights of Holders of the Notes to receive payments of principal, premium, if
any, interest and Additional Amounts, if any, on the Notes, (vii) make any
change in the amendment and waiver provisions contained in this Indenture,
(viii) make any change in paragraph 3 of the Notes that adversely affects the
rights of any Holder of the Notes, (ix) amend the terms of the Notes or this
Indenture in a way that would result in the loss of an exemption from any Taxes
or an exemption from any obligation to withhold or deduct Taxes unless the
Company agrees to pay Additional Amounts, if any, in respect thereof or (x)
impair the right of any Holder of the Notes to receive payment of principal of,
or interest on such Holder's Notes on or after the due dates therefor or to
institute suit for the enforcement of any payment on or with respect to such
Holder's Notes.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such amended or supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.6, the Trustee shall join
with the Company in the execution of such amended or supplemental indenture
unless such amended or supplemental indenture adversely affects the Trustee's
own rights, duties or immunities hereunder or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of
Notes under this Section 9.2 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver.
SECTION 9.3 Compliance with TIA. Every amendment, waiver
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91
or supplement of this Indenture or the Notes shall comply with the TIA as then
in effect.
SECTION 9.4 Revocation and Effect of Consents. Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Note is a continuing consent by the Holder of a Note and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder of a Note.
The Company may fix a record date for determining which
Holders of the Notes must consent to such amendment, supplement or waiver. If
the Company fixes a record date, the record date shall be fixed at (i) the later
of 30 days prior to the first solicitation of such consent or the date of the
most recent list of Holders of Notes furnished to the Trustee prior to such
solicitation pursuant to Section 2.5 or (ii) such other date as the Company
shall designate.
SECTION 9.5 Notation on or Exchange of Notes. The Trustee may
place an appropriate notation about an amendment, supplement or waiver on any
Note thereafter authenticated. The Company in exchange for all Notes may issue
and the Trustee shall authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
IX; provided, however, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which adversely affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive indemnity reasonably satisfactory to it, and shall
be fully protected in relying upon, an Opinion of Counsel and an Officers'
Certificate each stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture and constitutes the legal, valid and binding obligations of the
Company enforceable in accordance with its terms. Such Opinion of Counsel shall
not be an expense of the Trustee.
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 TIA Controls. If any provision of this Indenture
limits, qualifies, or conflicts with the duties imposed by operation of Section
3.18(c) of the TIA, the imposed duties shall control.
SECTION 10.2 Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telecopier or first-class mail, postage
prepaid, addressed as follows:
if to the Company:
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam-Z.O.
The Netherlands
Facsimile No: 31-20-501-10-11
Attention: Raj Raithatha
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile No: 212-848-7179
Attention: John D. Morrison, Jr. Esq.
if to the Trustee:
United States Trust Company of New York, as Trustee,
Registrar or Paying Agent
114 West 47th Street
New York, New York 10036-1532
Attention: Corporate Trust Administration
Facsimile: (212) 852-1626
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93
Each of the Company and the Trustee by written notice to each
other such Person may designate additional or different addresses for notices to
such Person. Any notice or communication to the Company and the Trustee, shall
be deemed to have been given or made as of the date so delivered if personally
delivered; when receipt is acknowledged, if telecopied; and five (5) calendar
days after mailing if sent by first class mail, postage prepaid (except that a
notice of change of address and a Notice to the Trustee shall not be deemed to
have been given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed
to such Person by first-class mail or other equivalent means at such Person's
address as it appears on the registration books of the Registrar and shall be
sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Notices regarding the Notes will be (i) published in a leading
newspaper having a general circulation in New York (which is expected to be The
Wall Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad ) (and, if and so long as the Notes are listed on the Luxembourg Stock
Exchange and the rules of such Stock Exchange shall so require, a newspaper
having a general circulation in Luxembourg (which is expected to be the
Luxemburger Wort)) or (ii) in the case of Definitive Notes, mailed to Holders by
first-class mail at their respective addresses as they appear on the
registration books of the Registrar (and, if and so long as the Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, published in a newspaper having a general circulation in Luxembourg
(which is expected to be the Luxemburger Wort)). Notices given by publication
will be deemed given on the first date on which publication is made and notices
given by first-class mail, postage prepaid, will be deemed given five calendar
days after mailing.
SECTION 10.3 Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other person shall have the protection of TIA
Section 312(c).
SECTION 10.4 Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee or an
Agent to take any action under this Indenture, the Company shall furnish to the
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94
Trustee at the request of the Trustee:
(1) an Officers' Certificate, in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 10.5), stating that, in the opinion of the signers,
all conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been satisfied or
complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee or such Agent (which shall include the
statements set forth in Section 11.5) stating that, in the opinion of
such counsel, all such conditions precedent and covenants have been
satisfied or complied with.
SECTION 10.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, such
Person has made such examination or investigation as is necessary to
enable such Person to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public officials.
SECTION 10.6 Rules by Trustee, Paying Agent, Registrar. The
Trustee, Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 10.7 Legal Holidays. If a payment date is not a
Business Day, payment may be made on the next succeeding day that is a
<PAGE> 94
95
Business Day, and no interest shall accrue for the intervening period.
SECTION 10.8 Governing Law. THIS INDENTURE AND THE NOTES, AND
THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10.9 Submission to Jurisdiction; Appointment of Agent
for Service; Waiver. To the fullest extent permitted by applicable law, the
Company irrevocably submits to the non-exclusive jurisdiction of any federal or
state court in the Borough of Manhattan in The City of New York, County and
State of New York, United States of America, in any suit or proceeding based on
or arising under this Indenture and the Notes, and irrevocably agrees that all
claims in respect of such suit or proceeding may be determined in any such
court. The Company, to the fullest extent permitted by applicable law,
irrevocably and fully waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding and hereby irrevocably designates and
appoints CT Corporation System (the "Authorized Agent"), [for a period of ten
years from the date hereof or until such time as no Notes are outstanding,] as
its authorized agent upon whom process may be served in any such suit or
proceeding. The Company represents that it has notified the Authorized Agent of
such designation and appointment and that the Authorized Agent has accepted the
same in writing. The Company hereby irrevocably authorizes and directs its
Authorized Agent to accept such service. The Company further agrees that service
of process upon its Authorized Agent and written notice of said service to the
Company mailed by first class mail or delivered to its Authorized Agent shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. Nothing herein shall affect the right of any person to
serve process in any other manner permitted by law. The Company agrees that a
final action in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other lawful
manner. Notwithstanding the foregoing, any action against the Company arising
out of or based on this Indenture, the Notes or the transactions contemplated
hereby may also be instituted in any competent court in The Netherlands, and the
Company expressly accepts the jurisdiction of any such court in any such action.
The Company hereby irrevocably waives, to the extent permitted
by law, any immunity to jurisdiction to which it may otherwise be entitled
(including, without limitation, immunity to pre-judgment attachment,
post-judgment attachment and execution) in any legal suit, action or proceeding
against it arising out of or based on this Indenture, the Notes or the
transactions contemplated hereby.
The provisions of this Section 11.9 are intended to be
effective upon the execution of this Indenture and the Notes without any further
action by the
<PAGE> 95
96
Company or the Trustee and the introduction of a true copy of this Indenture
into evidence shall be conclusive and final evidence as to such matters.
SECTION 10.10 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of any of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.11 No Personal Liability of Directors, Officers,
Employees, Stockholders or Incorporators. No director, officer, employee,
incorporator or stockholder of the Company shall have any liability for any
obligations of the Company under the Notes or this Indenture or for any claim
based on, in respect of, or by reason of such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.
SECTION 10.12 Currency Indemnity. The Euro is the sole
currency of account and payment for all sums payable by the Company under or in
connection with the Notes, including damages. Any amount received or recovered
in a currency other than Euros (whether as a result of, or the enforcement of, a
judgment or order of a court of any jurisdiction, in the winding-up or
dissolution of the Company or otherwise) by any Holder of a Note in respect of
any sum expressed to be due to it from the Company shall only constitute a
discharge to the Company to the extent of the Euro amount which the recipient is
able to purchase with the amount so received or recovered in that other currency
on the date of that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is practicable to do
so). If that Euro amount is less than the Euro amount expressed to be due to the
recipient under any Note, the Company shall indemnify it against any loss
sustained by it as a result. If the Euro amount is greater than the Euro amount
expressed to be due to the recipient under this Agreement, the Company shall be
entitled to the amount of such excess. In any event, the Company shall indemnify
the recipient against the cost of making any such purchase. For the purposes of
this subsection, it will be sufficient for the Trustee or any Holder of a Note
to certify in a satisfactory manner (indicating the sources of information used)
that it would have suffered a loss had an actual purchase of Euros been made
with the amount so received in that other currency on the date of receipt or
recovery (or, if a purchase of Euros on such date had not been practicable, on
the first date on which it would have been practicable, it being required that
the need for a change of date be certified in the manner mentioned above). These
indemnities constitute a separate and independent obligation from the Company's
other obligations, shall give rise to a
<PAGE> 96
97
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the Trustee or any Holder of a Note and shall continue in
full force and effect despite any other judgment, order, claim or proof for a
liquidated amount in respect of any sum due under any Note.
SECTION 10.13 Successors. All agreements of the Company in
this Indenture and the Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 10.14 Counterpart Originals. All parties hereto may
sign any number of copies of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent one and the same
agreement.
SECTION 10.15 Severability. In case any one or more of the
provisions in this Indenture or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
SECTION 10.16 Table of Contents, Headings, etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
<PAGE> 97
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, as of the date first written above.
VERSATEL TELECOM INTERNATIONAL
N.V.,
By
-------------------------------------
Name: R. Gary Mesch
Title: Managing Director
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee, Registrar and
Paying Agent,
by
-------------------------------------
Name:
Title:
<PAGE> 98
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Euro Note
due 2009
1. Interest. VERSATEL TELECOM INTERNATIONAL N.V., a company
organized under the laws of The Netherlands (the "Company"), promises to pay
interest on the principal amount of this Note at the rate and in the manner
specified below. Interest on the Euro Notes will accrue at -% per annum on the
principal amount then outstanding, and be payable semi-annually in arrears on
each May 15 and November 15, or if any such day is not a Business Day on the
next succeeding Business Day, commencing May 15, 2000 (the "Interest Payment"),
to the Holder hereof. Notwithstanding any exchange of this Euro Note for a
Definitive Euro Note during the period starting on a Record Date relating to
such Definitive Euro Note and ending on the immediately succeeding Interest
Payment Date, the interest due on such Interest Payment Date shall be payable to
the Person in whose name this Global Euro Note is registered at the close of
business on the Record Date for such interest. Interest on the Euro Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from December 3, 1999. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) and on any Additional Amounts from time to time on demand at the rate
borne by the Euro Notes plus 1.5% per annum to the extent lawful. Any interest
paid on this Euro Note shall be increased to the extent necessary to pay
Additional Amounts as set forth herein.
2. Additional Amounts. All payments made by the Company on the
Euro Notes will be made without withholding or deduction for, or on account of,
any present or future Taxes imposed or levied by or on behalf of The Netherlands
or any jurisdiction in which the Company or any Surviving Entity is organized or
is otherwise resident for tax purposes or any political subdivision thereof or
any authority having power to tax therein or any jurisdiction from or through
which payment is made (each a "Relevant Taxing Jurisdiction"), unless the
withholding or deduction of such Taxes is then required by law. If any deduction
or withholding for, or on account of, any Taxes of any Relevant Taxing
Jurisdiction, shall at any time be required on any payments made by the Company
with respect to the Euro Notes, including payments of principal, redemption
price, interest or premium, the Company will pay such additional amounts (the
"Additional Amounts") as may be necessary in order that the net amounts received
in respect of such payments by the Holders of the Euro Notes or the Trustee, as
the case may be, after such withholding or deduction, equal the respective
amounts which would have been received in respect of such payments in the
absence of such withholding or deduction; except that no such Additional Amounts
will be payable with respect to:
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<PAGE> 99
(a) any payments on a Euro Note held by or on behalf of a
Holder or beneficial owner who is liable for such Taxes in respect of
such Euro Note by reason of the Holder or beneficial owner having some
connection with the Relevant Taxing Jurisdiction (including being a
citizen or resident or national of, or carrying on a business or
maintaining a permanent establishment in, or being physically present
in, the Relevant Taxing Jurisdiction) other than by the mere holding of
such Euro Note or enforcement of rights thereunder or the receipt of
payments in respect thereof;
(b) any Taxes that are imposed or withheld as a result of a
change in law after the Issue Date where such withholding or imposition
is by reason of the failure of the Holder or beneficial owner of the
Euro Note to comply with any request by the Company to provide
information concerning the nationality, residence or identity of such
Holder or beneficial owner or to make any declaration or similar claim
or satisfy any information or reporting requirement, which is required
or imposed by a statute, treaty, regulation or administrative practice
of the Relevant Taxing Jurisdiction as a precondition to exemption from
all or part of such Taxes;
(c) except in the case of the winding up of the Company, any
Euro Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction;
(d) any Note presented for payment (where presentation is
required) more than 30 days after the relevant payment is first made
available for payment to the Holder, except to the extent that the
Holder would have been entitled to such Additional Amounts on presenting
note for payment on the thirtieth day after the relevant payment is
first made available.
(e) any estate, inheritance, gift, sale, transfer, personal,
property or similar tax, assessment or other governmental charge;
(f) any tax, assessment or other governmental charge which is
payable otherwise than by withholding any interest on, the Euro Notes;
or
(g) any combination of clauses (a) through (f) above.
Such Additional Amounts will also not be payable where, had the
beneficial owner of the Euro Note been the Holder of the Euro Note, he would not
have been entitled to payment of Additional Amounts by reason of clauses (a) to
(g) inclusive above.
3. Method of Payment. The Company shall pay interest on the
Euro
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<PAGE> 100
Notes (except defaulted interest) to the Person in whose name this Euro Note is
registered at the close of business on the Record Date for such interest.
Holders must surrender Euro Notes to a Paying Agent to collect principal
payments. The Company shall pay principal and interest in Euros or in such other
coin or currency of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Immediately available
funds for the payment of the principal of (and premium, if any), interest and
Additional Amounts, if any, on this Euro Note due on any Interest Payment Date,
Maturity Date, Redemption Date or other repurchase date will be made available
to the Paying Agent to permit the Paying Agent to pay such funds to the Holders
on such respective dates.
4. Paying Agent and Registrar. Initially, United States Trust
Company of New York will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act in any such capacity.
5. Indenture. The Company issued the Euro Notes under an
Indenture, dated as of July -, 1999 (the "Indenture"), between the Company and
United States Trust Company of New York (the "Trustee"). This Note is one of a
duly authorized issue of Euro Notes of the Company designated as its -% Senior
Euro Notes due 2009 (the "Euro Notes") denominated in Euros. The terms of the
Euro Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture. Notwith-
standing anything to the contrary herein, the Euro Notes are subject to all such
terms, and Holders of Euro Notes are referred to the Indenture and the TIA for a
statement of them. The Euro Notes are not secured by any of the assets of the
Company, and will become general unsecured obligations of the Company. The Euro
Notes are limited in aggregate principal amount to - subject to the terms of the
Indenture. Each Holder, by accepting a Euro Note, agrees to be bound by all of
the terms and provisions of the Indenture, as the same may be amended from time
to time.
6. Ranking. The Euro Notes will be general unsecured
obligations of the Company and will rank senior in right of payment to all
future indebtedness of the Company that is, by its terms or by the terms of the
agreement or instrument governing such indebtedness, expressly subordinated in
right of payment to the Euro Notes and pari passu in right of payment with all
existing and future senior indebtedness of the Company.
7. Optional Redemption. The Euro Notes will be redeemable, at
the Company's option, in whole or in part, on and after May 15, 2004 upon not
less than 30 nor more than 60 days' prior notice published in a leading
newspaper having a general circulation in New York (which is expected to be The
Wall Street Journal) and in
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<PAGE> 101
Amsterdam (which is expected to be Het Financieele Dagblad ) (and if, and so
long as the Euro Notes are listed on the Luxembourg Stock Exchange and the rules
of such Stock Exchange shall so require, a newspaper having a general
circulation in Luxembourg (which is expected to be the Luxemburger Wort)) or, in
the case of Definitive Euro Notes, mailed by first-class mail to each Holder's
registered address (and, if, and so long as the Euro Notes are listed on the
Luxembourg Stock Exchange and the rules of such Stock Exchange shall so require,
published in a newspaper having a general circulation in Luxembourg (which is
expected to be the Luxemburger Wort)), at the redemption prices (expressed as a
percentage of principal amount) set forth below, plus accrued and unpaid
interest and Additional Amounts, if any, to the applicable Redemption Date (and
in the case of Definitive Euro Notes, subject to the right of Holders of record
on the record date to receive interest and Additional Amounts, if any, due on
the relevant interest payment date in respect thereof), if redeemed during the
twelve-month period beginning on May 15 of each of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- -----
<S> <C>
2004 -%
2005 -
2006 -
2007 and thereafter -
</TABLE>
In addition, at any time on or prior to November 15, 2002, the
Company may, at its option, redeem up to 35% of the aggregate principal amount
of the Euro Notes at a redemption price equal to |X| % of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Amounts, if any, to the date of redemption, with the Net Cash Proceeds (as
defined in the Indenture) of one or more Public Equity Offerings (as defined in
the Indenture) received by, or invested in, the Company; provided that, in each
case, at least [65%] of the aggregate original principal amount of the Euro
Notes remains outstanding immediately after the occurrence of such redemption;
and provided, further, that notice of any such redemption must be given within
30 days of the date of the closing of any such Public Equity Offering.
8. Special Tax Redemption. The Euro Notes may be redeemed, at
the option of the Company in whole but not in part, at any time upon giving not
less than 30 nor more than 60 days' notice to the Holders (which notice shall be
irrevocable), at a redemption price equal to the aggregate principal amount
thereof, plus accrued and unpaid interest to the date fixed by the Company for
redemption (a "Tax Redemption Date"), and, all Additional Amounts, if any, then
due and which will become due on the Tax Redemption Date as a result of the
redemption or otherwise, if the Company determines that, as a result of (i) any
change in, or amendment to, the laws or treaties (or any regulations or rulings
promulgated thereunder) of The Netherlands (or any
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<PAGE> 102
political subdivision or taxing authority thereof) or any Relevant Taxing
Jurisdiction affecting taxation which becomes effective on or after the Issue
Date,(ii) any change in position regarding the application, administration or
any new or different interpretation of such laws, treaties, regulations or
rulings (including a holding, judgment or order by a court of competent
jurisdiction), which change, amendment, application or interpretation becomes
effective on or after the Issue Date, or (iii) the issuance of Definitive Euro
Notes due to (A) DTC being at any time unwilling or unable to continue as or
ceasing to be a clearing agency registered as a clearing agency under the
Exchange Act, and a successor to DTC registered as a clearing agency under the
Exchange Act is not able to be appointed by the Company within 90 days or (B)
the Depositary being at any time unwilling or unable to continue as Depositary
and a successor Depositary is not able to be appointed by the Company within 90
Days, the Company is, or on the next Interest Payment Date would be, required to
pay Additional Amounts, and the Company determines that such payment obligation
cannot be avoided by the Company taking reasonable measures. Notwithstanding the
foregoing, no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Company would be obligated to make such
payment or withholding if a payment in respect of the Euro Notes were then due.
Prior to the publication or, where relevant, mailing of any notice of redemption
of the Euro Notes pursuant to the foregoing, the Company will deliver to the
Trustee an opinion of an independent tax counsel of recognized standing to the
effect that the circumstances referred to above exist. The Trustee shall accept
such opinion as sufficient evidence of the satisfaction of the conditions
precedent described above, in which event it shall be conclusive and binding on
the Holders.
9. Notice of Redemption. Notice of redemption will be given at
least 30 days but not more than 60 days before the Redemption Date by publishing
in a leading newspaper having a general circulation in New York (which is
expected to be The Wall Street Journal) and in Amsterdam (which is expected to
be Het Financieele Dagblad ) (and, if and so long as the Euro Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, a newspaper having a general circulation in Luxembourg (which is
expected to be the Luxemburger Wort)) or in the case of Definitive Euro Notes,
mailed to Holders by first-class mail at their respective addresses as they
appear on the registration books of the Registrar (and, if and so long as the
Euro Notes are listed on the Luxembourg Stock Exchange and the rules of such
Stock Exchange shall so require, published in a newspaper having a general
circulation in Luxembourg (which is expected to be the Luxemburger Wort)). Euro
Notes in denominations of 1,000 may be redeemed only in whole. The Trustee may
select for redemption portions (equal to 1,000 or any integral multiple thereof)
of the principal of Euro Notes that have denominations larger than 1,000.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Notes called for redemption
shall have been deposited with the Paying Agent for redemption on such
Redemption Date, then, unless
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<PAGE> 103
the Company defaults in the payment of such Redemption Price, the Euro Notes
called for redemption will cease to bear interest and Additional Amounts, if
any, and the only right of the Holders of such Euro Notes will be to receive
payment of the Redemption Price.
10. Change of Control Offer. Upon the occurrence of a Change of
Control, the Company will be required to make an offer to purchase all or any
part (equal to 1,000 aggregate principal amount and integral multiples thereof)
of the Euro Notes on the Change of Control Payment Date at a purchase price in
cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, thereon to the date of repurchase and Additional Amounts, if
any, to the date of repurchase (and in the case of Definitive Euro Notes,
subject to the right of Holders of record on the relevant record date to receive
interest due on the relevant interest payment date and Additional Amounts, if
any, in respect thereof). Holders of Euro Notes that are subject to an offer to
purchase will receive a Change of Control Offer from the Company prior to any
related Change of Control Payment Date and may elect to have such Euro Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
11. Limitation on Disposition of Assets. When the aggregate
amount of Excess Proceeds from Asset Sales exceeds $5.0 million, the Company
will be obligated, within 30 Business Days thereafter, to make an offer to
purchase the maximum principal amount of Euro Notes, that is an integral
multiple of 1,000, that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, plus Additional Amounts, if
any, to the date fixed for the closing of such offer (and, in the case of
Definitive Euro Notes, subject to the right of a Holder of record on the
relevant record date to receive interest due on the relevant interest payment
date and Additional Amounts, if any, in respect thereof). If the aggregate
principal amount of Euro Notes surrendered by Holders thereof exceeds the amount
of Excess Proceeds, subject to applicable law, the Trustee shall select the Euro
Notes to be redeemed in accordance with the Indenture; provided, however, that
no Euro Notes of 1,000 or less shall be purchased in part. Holders of Euro Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Euro Notes purchased by completing the form entitled "Option of Holders to Elect
Purchase" appearing below.
12. Denominations; Form. The Global Euro Notes are in bearer
form, without coupons, in denominations of 1,000 and integral multiples of
1,000.
13. Persons Deemed Owners. The registered Holder of this Euro
Note shall be treated as the owner of it for all purposes, subject to the terms
of the Indenture.
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<PAGE> 104
14. Unclaimed Funds. If funds for the payment of principal,
interest or Additional Amounts remain unclaimed for two years, the Trustee and
the Paying Agents will repay the funds to the Company at its written request.
After that, all liability of the Trustee and such Paying Agents with respect to
such funds shall cease.
15. Legal Defeasance and Covenant Defeasance. The Company may
be discharged from its obligations under the Indenture and the Euro Notes except
for certain provisions thereof ("Legal Defeasance"), and may be discharged from
their obligations to comply with certain covenants contained in the Indenture
("Covenant Defeasance"), in each case upon satisfaction of certain conditions
specified in the Indenture.
16. Amendment; Supplement; Waiver. Subject to certain
exceptions specified in the Indenture, the Indenture or the Euro Notes may be
amended or supplemented with the written consent of the Holders of at least a
majority in principal amount of the Euro Notes then outstanding, and any
existing Default or Event of Default or compliance with any provision of the
Indenture or the Euro Notes may be waived with the consent of the Holders of a
majority in principal amount of the Euro Notes then outstanding.
17. Restrictive Covenants. The Indenture imposes certain
covenants that, among other things, limit the ability of the Company and its
Restricted Subsidiaries to, incur additional Indebtedness, pay dividends or make
other distributions or investments, repurchase Equity Interests or make certain
other Restricted Payments, enter into certain consolidations or mergers or enter
into certain transactions with Affiliates and consummate certain mergers and
consolidations or sales of all or substantially all assets. The limitations are
subject to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
18. Successors. When a successor assumes all the obligations of
its predecessor under the Euro Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
19. Defaults and Remedies. If an Event of Default (other than
an Event of Default specified in Sections 6.1(h) or (i) of the Indenture) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Euro Notes may declare all the Euro Notes to be
due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Euro Notes may not enforce the Indenture or the Euro Notes
except as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Euro Notes unless it has received indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the
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<PAGE> 105
Euro Notes then outstanding to direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of Euro Notes notice of any
continuing Default or Event of Default (except a Default in payment of
principal, premium, interest and Additional Amounts, if any, including an
accelerated payment) if it determines that withholding notice is in their
interest.
20. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Euro Notes and may otherwise deal with the Company, its Subsidiaries
or their respective Affiliates as if it were not the Trustee.
21. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Euro Notes or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of the Euro Notes by accepting a Euro
Note waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Euro Notes.
22. Authentication. This Euro Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Euro Note.
23. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Euro Note or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Unless otherwise
defined herein, terms defined in the Indenture are used herein as defined
therein.
24. CUSIP, ISIN and Common Code Numbers. Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company will cause CUSIP, ISIN and Common Code numbers to be
printed on the Euro Notes as a convenience to the Holders of the Euro Notes. No
representation is made as to the accuracy of such numbers as printed on the Euro
Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law THE INDENTURE AND THE EURO NOTES, AND THE
RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SCHEDULE A
SCHEDULE OF PRINCIPAL AMOUNT
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<PAGE> 106
The initial principal amount at maturity of this Euro Note
shall be . The following decreases/increases in the principal amount at
maturity of this Euro Note have been made:
<TABLE>
<CAPTION>
Total Principal
Amount at Notation
Decrease in Increase in Maturity Made by
Date of Principal Principal Following such or on
Decrease/ Amount at Amount at Decrease/ Behalf of
Increase Maturity Maturity Increase Trustee
- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
- ----------- ----------- ----------- ----------- -----------
</TABLE>
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<PAGE> 107
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Euro Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Euro Note
purchased by the Company pursuant to Section 4.15 or Section 4.16 of the
Indenture, state the amount:
Date:_____________ Your Signature:________________
(Sign exactly as your name appears on the
other side of this Euro Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
A-108
<PAGE> 108
EXHIBIT A
[FORM OF FACE OF GLOBAL Euro NOTE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Euro Note
due 2009
CUSIP NO.: [ ]
ISIN NO.: [ ]
COMMON CODE NO.. [ ]
No.____ ____________
VERSATEL TELECOM INTERNATIONAL N.V., a limited liability
company organized under the laws of The Netherlands (the "Company", which term
includes any successor corporation), for value received promises to pay to the
bearer upon surrender hereof the principal sum indicated on Schedule A hereof,
on Schedule A hereof, on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing May
15, 2009
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Euro Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-109
<PAGE> 109
IN WITNESS WHEREOF, the Company has caused this Euro Note to be
signed manually or by facsimile by its duly authorized officers.
VERSATEL TELECOM INTERNATIONAL
N.V.,
by /s/ R. Gary Mesch
-------------------------------------
Name: R. Gary Mesch
Title: Managing Director
by /s/ John Guiliano
-------------------------------------
Name: John Guiliano
Title: Vice President
This is one of the Euro Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by
-------------------------
Name:
Title:
Dated:
A-110
<PAGE> 110
EXHIBIT B
[FORM OF FACE OF DEFINITIVE Euro NOTE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Euro Note
due 2009
CUSIP NO.: [ ]
ISIN NO.: [ ]
COMMON CODE NO.. [ ]
No.____ ____________
VERSATEL TELECOM INTERNATIONAL N.V., a limited liability
company organized under the laws of The Netherlands (the "Company", which term
includes any successor corporation), for value received promises to pay
__________ __________, or registered assigns, upon surrender hereof the
principal sum of __________________ Euros, on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing May
15, 2000
Record Dates: May 1 and November 1
Reference is made to the further provisions of this Euro Note
contained herein, which will for all purposes have the same effect as if set
forth at this place.
<PAGE> 111
IN WITNESS WHEREOF, the Company has cause this Euro Note to be
signed manually or by facsimile by its duly authorized officers.
VERSATEL TELECOM INTERNATIONAL,
N.V.,
by: /s/ R. Gary Mesch
------------------------------------
Name: R. Gary Mesch
Title: Managing Director
by: /s/ John Guiliano
--------------------------
Name: John Guiliano
Title: Vice President
This is one of the Euro Notes
referred to in the within-mentioned
Indenture:
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee,
by:
Name:
Title:
Dated:
<PAGE> 112
[FORM OF REVERSE]
VERSATEL TELECOM INTERNATIONAL N.V.
-% Senior Note
due 2009
1. Interest. VERSATEL TELECOM INTERNATIONAL N.V., a company
organized under the laws of The Netherlands (the "Company"), promises to pay
interest on the principal amount of this Euro Note at the rate and in the manner
specified below. Interest on the Euro Notes will accrue at -% per annum on the
principal amount then outstanding, and be payable semi-annually in arrears on
each May 15 and November 15, or if any such day is not a Business Day on the
next succeeding Business Day, commencing May 15, 2000 to the Holder hereof.
Interest on the Euro Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from December 3, 1999.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal and on
overdue installments of interest (without regard to any applicable grace
periods) and on any Additional Amounts from time to time on demand at the rate
borne by the Euro Notes plus 1.5% per annum to the extent lawful. Any interest
paid on this Euro Note shall be increased to the extent necessary to pay
Additional Amounts as set forth herein.
2. Additional Amounts. All payments made by the Company on the
Euro Notes will be made without withholding or deduction for, or on account of,
any present or future Taxes imposed or levied by or on behalf of The Netherlands
or any jurisdiction in which the Company or any Surviving Entity is organized or
is otherwise resident for tax purposes or any political subdivision thereof or
any authority having power to tax therein or any jurisdiction from or through
which payment is made (each a "Relevant Taxing Jurisdiction"), unless the
withholding or deduction of such Taxes is then required by law. If any deduction
or withholding for, or on account of, any Taxes of any Relevant Taxing
Jurisdiction, shall at any time be required on any payments made by the Company
with respect to the Euro Notes, including payments of principal, redemption
price, interest or premium, the Company will pay such additional amounts (the
"Additional Amounts") as may be necessary in order that the net amounts received
in respect of such payments by the Holders of the Euro Notes or the Trustee, as
the case may be, after such withholding or deduction, equal the respective
amounts which would have been received in respect of such payments in the
absence of such withholding or deduction; except that no such Additional Amounts
will be payable with respect to:
(a) any payments on a Euro Note held by or on behalf of a
Holder or beneficial owner who is liable for such Taxes in respect of
such Euro Note by
<PAGE> 113
reason of the Holder or beneficial owner having some connection with the
Relevant Taxing Jurisdiction (including being a citizen or resident or
national of, or carrying on a business or maintaining a permanent
establishment in, or being physically present in, the Relevant Taxing
Jurisdiction) other than by the mere holding of such Euro Note or
enforcement of rights thereunder or the receipt of payments in respect
thereof;
(b) any Taxes that are imposed or withheld as a result of a
change in law after the Issue Date where such withholding or imposition
is by reason of the failure of the Holder or beneficial owner of the
Euro Note to comply with any request by the Company to provide
information concerning the nationality, residence or identity of such
Holder or beneficial owner or to make any declaration or similar claim
or satisfy any information or reporting requirement, which is required
or imposed by a statute, treaty, regulation or administrative practice
of the Relevant Taxing Jurisdiction as a precondition to exemption from
all or part of such Taxes;
(c) except in the case of the winding up of the Company, any
Euro Note presented for payment (where presentation is required) in the
Relevant Taxing Jurisdiction;
(d) any Euro Note presented for payment (where presentation is
required) more than 30 days after the relevant payment is first made
available for payment to the Holder, except to the extent that the
Holder would have been entitled to such Additional Amounts on presenting
such note for payment on the thirtieth day after the relevant payment is
first made available.
(e) any estate, inheritance, gift, sale, transfer, personal,
property or similar tax, assessment or other governmental charge;
(f) any tax, assessment or other governmental charge which is
payable otherwise than by withholding any interest on, the Euro Notes;
or
(g) any combination of clauses (a) and (f) above.
Such Additional Amounts will also not be payable where, had the
beneficial owner of the Euro Note been the Holder of the Euro Note, he would not
have been entitled to payment of Additional Amounts by reason of clauses (a) to
(g) inclusive above.
3. Method of Payment. The Company shall pay interest on the
Euro Notes (except defaulted interest) to the Persons who are the registered
Holders Euro Notes at the close of business on the Record Date immediately
preceding the Interest
<PAGE> 114
Payment Date for such interest. Holders must surrender Euro Notes to a Paying
Agent to collect principal payments. The Company shall pay principal and
interest in Euros or in such other coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that with respect to any payment of principal,
interest, Additional Amounts, if any, in excess of 100,000 to any payee or group
of related payees, such payment will be made, at the option of the Holder
hereof, by wire transfer of same day funds to the Paying Agent, who in turn will
wire such funds to the Holder hereof or to such individuals as the Holder hereof
may in writing to the Paying Agent direct; provided that the Paying Agent has
received written wire transfer instructions at least fifteen days prior to the
date of any such payment.
4. Paying Agent and Registrar. Initially, United States Trust
Company of New York will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Company or any of its Subsidiaries may, subject to certain
exceptions, act in any such capacity.
5. Indenture. The Company issued the Euro Notes under an
Indenture, dated as of July -, 1999 (the "Indenture"), between the Company and
United States Trust Company of New York (the "Trustee"). This Euro Note is one
of a duly authorized issue of Notes of the Company designated as its -% Senior
Notes due 2009 (the "Euro Notes"). The terms of the Euro Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture. Notwithstanding anything to the contrary
herein, the Euro Notes are subject to all such terms, and Holders of Euro Notes
are referred to the Indenture and the TIA for a statement of them. The Euro
Notes are not secured by any of the assets of the Company. The Euro Notes are
limited in aggregate principal amount to subject to the terms of the Indenture.
Each Holder, by accepting a Euro Note, agrees to be bound by all of the terms
and provisions of the Indenture, as the same may be amended from time to time.
6. Ranking. The Euro Notes will be general unsecured
obligations of the Company and will rank senior in right of payment to all
future indebtedness of the Company that is, by its terms or by the terms of the
agreement or instrument governing such indebtedness, expressly subordinated in
right of payment to the Notes and pari passu in right of payment with all
existing and future senior indebtedness of the Company.
7. Optional Redemption. The Euro Notes will be redeemable, at
the Company's option, in whole or in part, on and after May 15, 2004 upon not
less than 30 nor more than 60 days' prior notice published in a leading
newspaper having a general circulation in New York (which is expected to be The
Wall Street Journal) and in Amsterdam (which is expected to be Het Financieele
Dagblad ) (and if, and so long as the Euro Notes are listed on the Luxembourg
Stock Exchange and the rules of such Stock Exchange shall so require, a
newspaper having a general circulation in
<PAGE> 115
Luxembourg (which is expected to be the Luxemburger Wort)) and mailed by
first-class mail to each Holder's registered address), at the redemption prices
(expressed as a percentage of principal amount) set forth below, plus accrued
and unpaid interest and Additional Amounts, if any, to the applicable Redemption
Date (and, subject to the right of Holders of record on the relevant record date
to receive interest and Additional Amounts, if any, due on the relevant interest
payment date in respect thereof), if redeemed during the twelve-month period
beginning on May 15 of each of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ---- -----
<S> <C>
2004 -%
2005 -
2006 -
2007 and thereafter -
</TABLE>
In addition, at any time on or prior to November 15, 2002, the
Company may, at its option, redeem up to [35%] of the aggregate principal amount
of the Euro Notes at a redemption price equal to -1/4% of the aggregate
principal amount thereof plus accrued and unpaid interest and Additional
Amounts, if any, to the date of redemption, subject to the right of Holders of
record on the relevant record date to receive interest due to the relevant
interest payment date and Additional Amounts, if any, in respect thereof, with
the Net Cash Proceeds (as defined in the Indenture) of one or more Public Equity
Offerings (as defined in the Indenture) received by, or invested in, the
Company; provided that, in each case, at least 65% of the aggregate original
principal amount of the Euro Notes remains outstanding immediately after the
occurrence of such redemption; and provided, further, that notice of any such
redemption must be given within 30 days of the date of the closing of any such
Public Equity Offering.
8. Special Tax Redemption. The Euro Notes may be redeemed, at
the option of the Company in whole but not in part, at any time upon giving not
less than 30 nor more than 60 days' notice to the Holders (which notice shall be
irrevocable), at a redemption price equal to the aggregate principal amount
thereof, plus accrued and unpaid interest to the date fixed by the Company for
redemption (a "Tax Redemption Date"), and all Additional Amounts, if any, then
due and which will become due on the Tax Redemption Date as a result of the
redemption or otherwise, if the Company determines that, as a result of (i) any
change in, or amendment to, the laws or treaties (or any regulations or rulings
promulgated thereunder) of The Netherlands (or any political subdivision or
taxing authority thereof) or any Relevant Taxing Authority affecting taxation
which becomes effective on or after the Issue Date or (iii) the issuance of
Definitive Euro Notes due to (A) DTC being at any time unwilling or unable to
continue as or ceasing to be a clearing agency registered as a clearing agency
under the Exchange Act, and a successor to DTC registered as a clearing agency
under the Exchange Act is not able to be appointed by the Company within 90 days
or (B) the Depositary being at any time unwilling or unable to continue as
Depositary and a
<PAGE> 116
successor Depositary is not able to be appointed by the Company within 90 days,
or (ii) any change in position regarding the application, administration or any
new or different interpretation of such laws, treaties, regulations or rulings
(including a holding, judgment or order by a court of competent jurisdiction),
which change, amendment, application or interpretation becomes effective on or
after the Issue Date, the Company is, or on the next Interest Payment Date would
be, required to pay Additional Amounts, and the Company determines that such
payment obligation cannot be avoided by the Company taking reasonable measures.
Notwithstanding the foregoing, no such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which the Company would be
obligated to make such payment or withholding if a payment in respect of the
Euro Notes were then due. Prior to the publication or, where relevant, mailing
of any notice of redemption of the Euro Notes pursuant to the foregoing, the
Company will deliver to the Trustee an opinion of an independent tax counsel of
recognized standing to the effect that the circumstances referred to above
exist. The Trustee shall accept such opinion as sufficient evidence of the
satisfaction of the conditions precedent described above, in which event it
shall be conclusive and binding on the Holders.
9. Notice of Redemption. Notice of redemption will be given at
least 30 days but not more than 60 days before the Redemption Date by publishing
in a leading newspaper having a general circulation in New York (which is
expected to be The Wall Street Journal) and in Amsterdam (which is expected to
be Het Financieele Dagblad ) (and, if and so long as the Euro Notes are listed
on the Luxembourg Stock Exchange and the rules of such Stock Exchange shall so
require, a newspaper having a general circulation in Luxembourg (which is
expected to be the Luxemburger Wort)) and mailed to Holders by first-class mail
at their respective addresses as they appear on the registration books of the
Registrar). Euro Notes in denominations of 1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to 1,000 or any integral
multiple thereof) of the principal of Euro Notes that have denominations larger
than 1,000.
Except as set forth in the Indenture, from and after any
Redemption Date, if monies for the redemption of the Euro Notes called for
redemption shall have been deposited with the Paying Agent for redemption on
such Redemption Date, then, unless the Company defaults in the payment of such
Redemption Price, the Euro Notes called for redemption will cease to bear
interest and Additional Amounts, if any, and the only right of the Holders of
such Euro Notes will be to receive payment of the Redemption Price.
10. Change of Control Offer. Upon the occurrence of a Change of
Control, the Company will be required to make an offer to purchase all or any
part (equal to 1,000 aggregate principal amount and integral multiples thereof)
of the Euro Notes on the Change of Control Payment Date at a purchase price in
cash equal to
<PAGE> 117
101% of the aggregate principal amount thereof plus accrued and unpaid interest,
thereon to the date of repurchase and Additional Amounts, if any, to the date of
repurchase (and, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date and
Additional Amounts, if any, in respect thereof). Holders of Euro Notes that are
subject to an offer to purchase will receive a Change of Control Offer from the
Company prior to any related Change of Control Payment Date and may elect to
have such Euro Notes purchased by completing the form entitled "Option of Holder
to Elect Purchase" appearing below.
11. Limitation on Disposition of Assets. When the aggregate
amount of Excess Proceeds from Asset Sales exceeds $5.0 million, the Company
will be obligated, within 30 Business Days thereafter, to make an offer to
purchase the maximum principal amount of Euro Notes, that is an integral
multiple of 1,000, that may be purchased out of the Excess Proceeds at an offer
price in cash in an amount equal to 100% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, plus, Additional Amounts, if
any, to the date fixed for the closing of such offer (and, subject to the right
of a Holder of record on the relevant record date to receive interest due on the
relevant interest payment date and Additional Amounts, if any, in respect
thereof). If the aggregate principal amount of Euro Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, subject to applicable law, the
Trustee shall select the Euro Notes to be redeemed in accordance with the
Indenture; provided, however, that no Euro Notes of 1,000 or less shall be
purchased in part. Holders of Euro Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Euro Notes purchased by completing the
form entitled "Option of Holders to Elect Purchase" appearing below.
12. Denominations; Form. The Definitive Euro Notes are in
bearer form, without coupons, in denominations of 1,000 and integral multiples
of 1,000.
13. Persons Deemed Owners. The Holder of this Euro Note shall
be treated as the owner of it for all purposes, subject to the terms of the
Indenture.
14. Unclaimed Funds. If funds for the payment of principal,
interest Additional Amounts remain unclaimed for two years, the Trustee and the
Paying Agents will repay the funds to the Company at its written request. After
that, all liability of the Trustee and such Paying Agents with respect to such
funds shall cease.
15. Legal Defeasance and Covenant Defeasance. The Company may
be discharged from its obligations under the Indenture and the Euro Notes except
for certain provisions thereof ("Legal Defeasance"), and may be discharged from
their obligations to comply with certain covenants contained in the Indenture
("Covenant Defeasance"), in each case upon satisfaction of certain conditions
specified in the Indenture.
16. Amendment; Supplement; Waiver. Subject to certain
exceptions
<PAGE> 118
specified in the Indenture, the Indenture or the Euro Notes may be amended or
supplemented with the written consent of the Holders of at least a majority in
principal amount of the Euro Notes then outstanding, and any existing Default or
Event of Default or compliance with any provision of the Indenture or the Euro
Notes may be waived with the consent of the Holders of a majority in principal
amount of the Euro Notes then outstanding.
17. Restrictive Covenants. The Indenture imposes certain
covenants that, among other things, limit the ability of the Company and its
Restricted Subsidiaries to, incur additional Indebtedness, pay dividends or make
other distributions or investments, repurchase Equity Interests or make certain
other Restricted Payments, enter into certain consolidations or mergers or enter
into certain transactions with Affiliates and consummate certain mergers and
consolidations or sales of all or substantially all assets. The limitations are
subject to a number of important qualifications and exceptions. The Company must
annually report to the Trustee on compliance with such limitations.
18. Successors. When a successor assumes all the obligations of
its predecessor under the Euro Notes and the Indenture in accordance with the
terms of the Indenture, the predecessor will be released from those obligations.
19. Defaults and Remedies. If an Event of Default (other than
an Event of Default specified in Sections 6.1(h) or (i) of the Indenture) occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Euro Notes may declare all the Euro Notes to be
due and payable immediately in the manner and with the effect provided in the
Indenture. Holders of Euro Notes may not enforce the Indenture or the Euro Notes
except as provided in the Indenture. The Trustee is not obligated to enforce the
Indenture or the Euro Notes unless it has received indemnity satisfactory to it.
The Indenture permits, subject to certain limitations therein provided, Holders
of a majority in aggregate principal amount of the Euro Notes then outstanding
to direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Euro Notes notice of any continuing Default or Event of
Default (except a Default in payment of principal, premium, interest, Additional
Amounts, if any, including an accelerated payment) if it determines that
withholding notice is in their interest.
20. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Euro Notes and may otherwise deal with the Company, its Subsidiaries
or their respective Affiliates as if it were not the Trustee.
21. No Recourse Against Others. No stockholder, director,
officer, employee or incorporator, as such, of the Company shall have any
liability for any obligation of the Company under the Euro Notes or the
Indenture or for any claim based on, in respect of or by reason of, such
obligations or their creation. Each Holder of the Euro Notes by accepting a Euro
Note waives and releases all such liability. The
<PAGE> 119
waiver and release are part of the consideration for the issuance of the Euro
Notes.
22. Authentication. This Euro Note shall not be valid until the
Trustee or authenticating agent signs the certificate of authentication on this
Euro Note.
23. Abbreviations and Defined Terms. Customary abbreviations
may be used in the name of a Holder of a Euro Note or an assignee, such as: TEN
COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). Unless otherwise
defined herein, terms defined in the Indenture are used herein as defined
therein.
24. CUSIP, ISIN and Common Code Numbers. Pursuant to a
recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company will cause CUSIP, ISIN and Common Code numbers to be
printed on the Euro Notes as a convenience to the Holders of the Euro Notes. No
representation is made as to the accuracy of such numbers as printed on the Euro
Notes and reliance may be placed only on the other identification numbers
printed hereon.
25. Governing Law THE INDENTURE AND THE EURO NOTES, AND THE
RIGHTS AND DUTIES OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE> 120
-----------------------------------------------------------
ASSIGNMENT FORM
To assign this Euro Note fill in the form below:
I or we assign and transfer this Euro Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Euro
Note on the books of the Company. The agent may substitute another to act for
him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------- ----------------------
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Euro Note.
<PAGE> 121
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Euro Note purchased by the
Company pursuant to Section 4.15 or Section 4.16 of the Indenture, check the
appropriate box:
Section 4.15 [ ] Section 4.16 [ ]
If you want to elect to have only part of this Euro Note
purchased by the Company pursuant to Section 4.15 or Section 4.16 of the
Indenture, state the amount:
Date:_____________ Your Signature:________________
(Sign exactly as your name appears on the
other side of this Euro Note)
Signature Guarantee: _____________________________________
Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor program reasonably acceptable to the Trustee)
<PAGE> 1
Exhibit 5.1
[SHEARMAN & STERLING LETTERHEAD]
(212) 848-4000
July 21, 1999
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam - Zuidoost
The Netherlands
Ladies and Gentlemen:
We have acted as special United States counsel to VersaTel Telecom
International N.V., a Netherlands company (the "Company"), in connection with
the filing by the Company under the Securities Act of 1933, as amended (the
"Act") of a registration statement on Form F-1 (the "Registration Statement")
with the United States Securities and Exchange Commission (the "Commission").
Pursuant to the Registration Statement, U.S.$150,000,000 aggregate principal
amount of the U.S dollar denominated senior notes due 2009 (the "Dollar Notes")
and euro 100,000,000 aggregate principal amount of euro denominated senior notes
due 2009 (the "Euro Notes", and together with the Dollar Notes, the "Notes") are
to be issued pursuant to a U.S. dollar note indenture (the "Dollar Indenture")
and a euro note indenture (the "Euro Indenture", and together with the Dollar
indenture, the "Indentures"), respectively, each between the Company and United
States Trust Company of New York, as trustee (the "Trustee").
In our capacity as special United States counsel to the Company, we
have examined the Registration Statement, the form of Dollar Indenture and the
form of Euro Indenture filed as Exhibits 4.1 and 4.2, respectively, to the
Registration Statement, a form of a Dollar Note and a form of a Euro Note
contained in the Dollar Indenture and the Euro Indenture, respectively, and
originals or copies certified or otherwise identified to our satisfaction of
such documents as we have deemed necessary or appropriate to enable us to render
the opinions expressed below.
Based upon the foregoing, it is our opinion that, assuming the
Indentures will be executed substantially in the form as filed as Exhibits 4.1
and 4.2 to the Registration Statement, and that the Notes have been duly
authenticated by the Trustee and have been duly authorized, executed, issued and
delivered by the Company under the laws of The Netherlands, the Notes will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as enforcement
thereof may be limited by
<PAGE> 2
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium and other similar laws
relating to or affecting enforcement of creditors' rights generally and by
possible judicial action giving effect to foreign governmental actions or
foreign laws affecting creditors' rights and except as enforcement thereof is
subject to general principles of equity (regardless of whether such enforcement
may be sought in a proceeding in equity or law).
The opinion set forth in the above paragraph is qualified to the extent
that we have assumed the due authorization, execution and delivery of the
Indentures by the Trustee.
We are attorneys admitted to practice law in the State of New York and
we do not express herein any opinion as to any matters governed by or involving
conclusions under the laws of any other jurisdiction other than the federal law
of the United States of America. In rendering the opinion expressed herein, we
have, with your approval, relied without independent investigation as to all
matters governed by or involving conclusions under the law of the Netherlands
upon the opinion (including the qualifications, assumptions and limitations
expressed therein) of Stibbe Simont Monahan Duhot, Dutch counsel for the
Company, of even date herewith, a copy of which is attached hereto.
This opinion may be delivered to Stibbe Simont Monahan Duhot which may
rely on this opinion to the same extent as if such opinion were addressed to it.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" contained in the prospectus which is included in the Registration
Statement.
Very truly yours,
Shearman & Sterling
<PAGE> 1
Exhibit 5.2
[STIBBE SIMONT MONAHAN DUHOT LETTERHEAD]
A.F.J.A. Leijten, advocaat
VersaTel Telecom International N.V.
P.O. Box 22697
1100 DD Amsterdam
21 July 1999
Dear Sirs,
We are acting as special legal counsel in the Netherlands on matters of Dutch
law to VersaTel Telecom International N.V. (the "Company") in connection with
the filing by the Company of a registration statement on Form F-1 with the
United States Securities and Exchange Commission (the "Registration Statement").
Pursuant to the Registration Statement, up to $ 250,000,000 aggregate principal
amount of the Company's [ ]% Senior Dollar Notes due 2009 and EURO [ ]% Senior
Euro Notes due 2009 (the "Senior Notes") will be sold to the public as soon as
practicable after the effective date of the Registration Statement referred to
above. The sale of the Senior Notes will be made pursuant to an Underwriting
Agreement between the Company and Lehman Brothers International (Europe) as
representative of the several underwriters named in Schedule 1 thereof to be
dated 22 July 1999 (the "Underwriting Agreement"), an indenture (the "Dollar
Indenture") to be dated 22 July 1999 between the Company and United States Trust
Company of New York, as trustee (the "Dollar Trustee") and an indenture (the
"Euro Indenture") to be dated 22 July 1999 between the Company and United States
Trust Company of New York as trustee (the "Euro Trustee").
In rendering this opinion we have examined and relied upon the following
documents:
(1) A draft of the Underwriting Agreement, marked ST&B Draft July 18, 1999;
(2) Drafts of the Dollar Indenture and the Euro Indenture (together:
the "Indentures"), both marked STB Draft 7/19/99;
(3) a copy of the Preliminary Offering Memorandum (the "Preliminary Offering
Memorandum") in relation to the issue of the Senior Notes, dated 30 June
1999;
<PAGE> 2
(4) an on-line excerpt dated 21 July 1999 of the registration of the Company
in the Trade Register of the Chamber of Commerce of Amsterdam, The
Netherlands (the "Excerpt");
(5) the draft amended articles of association (statuten) of the Company to be
dated 23 July 1999, to be executed on that date before Mr. J.H.M. Carlier,
civil-law notary, officiating in Amsterdam, The Netherlands (the "New
Articles");
(6) a copy of the Deed of Incorporation of the Company (the "Deed of
Incorporation"), executed on 10 October 1995, before Mr Albert Peter van
Lidth de Jeude, civil-law notary, officiating in Amsterdam, The
Netherlands;
(7) a company certificate of even date hereof attached hereto as Annex 1 (the
"Company Certificate");
and such other documents and such treaties, laws, rules, regulations, and the
like, as we have deemed necessary as a basis for the opinions hereinafter
expressed.
The documents referred to under (1) and (2) above shall hereinafter collectively
be referred to as the "Agreements".
We have assumed:
(i) the genuineness of all signatures;
(ii) the authenticity of all agreements, certificates, instruments, and other
documents submitted to us as originals;
(iii) the conformity to the originals of all documents submitted to us as
copies;
(iv) that the documents referred to under (1), (2) and (5) above will be duly
and validly signed and executed by all parties thereto on the dates
indicated, substantially in the form as examined by us as drafts; and
(v) that the contents of the Excerpt and the Company Certificate are true and
complete as of the date hereof.
Based on the foregoing and subject to any factual matters or documents not
disclosed to us in the course of our investigation, and subject to the
qualifications and limitations stated hereafter, we are of the opinion that:
A. The Company has been duly incorporated and is validly existing as a
"naamloze vennootschap" (company with limited liability) under the laws of
The Netherlands.
B. The Senior Notes, to be sold as contemplated in the Registration Statement,
when duly executed, authenticated, issued and delivered in accordance with
the provisions of the Indentures, will constitute the legal, valid, binding
and enforceable obligations of the
-2-
<PAGE> 3
Company, except that enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfer), reorganization, moratorium and other similar laws relating to or
affecting enforcement of creditors' rights generally.
C. The choice of New York law as the law governing the Senior Notes is valid
and binding under the laws of The Netherlands, except (i) to the extent
that any term of the Agreements or any provision of New York law applicable
to the Agreements is manifestly incompatible with the public policy (ordre
public) of The Netherlands, and except (ii) that a Dutch court may give
effect to mandatory rules of the laws of another jurisdiction with which
the situation has a close connection, if and insofar as, under the laws of
that other jurisdiction those rules must be applied, whatever the chosen
law. However, in our opinion, (i) there is nothing in Dutch law which would
render any term of the Agreements manifestly incompatible with the public
policy (ordre public) of The Netherlands, and (ii) no such mandatory rules
of Dutch law are applicable to the Agreements, except that to the extent
that issues would involve the corporate organisation of the Company, the
courts of The Netherlands will apply Netherlands law as mandatorily
applicable to such issues, regardless the chosen law applicable to the
Agreements.
In rendering the opinions expressed herein, we have, with your approval, relied
without independent investigation as to all matters governed by or involving
conclusions under the federal law of the United States of America and the law of
the State of New York, upon the opinion (including the qualifications,
assumptions and limitations expressed therein) of Shearman & Sterling, United
States counsel to the Company, of even date herewith.
In addition to the other assumptions and qualifications contained herein, this
opinion letter is further subject to the following qualification:
Since there is no treaty between the United States and The Netherlands
providing for the reciprocal recognition and enforcement of judgments,
United States judgments are not enforceable in The Netherlands. However, a
final judgment for the payment of money obtained in a United States court,
which is not subject to appeal or any other means of contestation and is
enforceable in the United States, would in principle be upheld by a
Netherlands court of competent jurisdiction when asked to render a judgment
in accordance with such final judgment by a United States court, without
substantative re-examination or relitigation on the merits of the subject
matter thereof; provided that such judgment has been rendered by a court of
competent jurisdiction, in accordance with rules of proper procedure, that
it has not been rendered in proceedings of a penal or revenue nature and
that its content and possible enforcement are not contrary to public policy
or public order of The Netherlands. We resume our opinion as to whether
this practice extends to default judgments.
We express no opinion on any law other than the law of The Netherlands as it
currently stands
-3-
<PAGE> 4
and has been interpreted in published case law of the courts of The Netherlands
as per the date hereof. We express no opinion on any laws of the European
Communities (insofar as not implemented in The Netherlands in statutes or other
regulations of general application).
This opinion is strictly limited to the matters stated herein and may not be
read as extending by implication to any matters not specifically referred to.
Nothing in this opinion should be taken as expressing an opinion in respect of
any representations or warranties, or other information, or any other document
examined in connection with this opinion except as expressly confirmed herein.
We hereby consent to the use of this opinion as Exhibit 5.2 to the Registration
Statement and to the use of our name under the caption "Legal Matters" contained
in the prospectus which is included in the Registration Statement.
Yours sincerely,
/s/ A.F.J.A. Leijten /s/ M.W. Josephus Jitta
- ---------------------- ------------------------
A.F.J.A. Leijten M.W. Josephus Jitta
-4-
<PAGE> 5
ANNEX 1
COMPANY CERTIFICATE
The undersigned, J.A. van Berne, Corporate Secretary of VersaTel Telecom
International N.V. (the "Company") and authorised to represent the Company,
hereby declares the following to Stibbe Simont Monahan Duhot in order for them
to rely on the contents hereof in the framework of the legal opinion to be
issued by them to us in relation to the Registration Statement on Form-1
relating to the proposed offering of up to $ 250,000,000 aggregate principal
amount of our $ [ ]% Senior Dollar Notes due 2009 and EURO [ ]% Senior Euro
Notes due 2009:
1. The Company has not proposed and the shareholders of the Company have not
resolved to dissolve the Company;
2. The Company is not involved in legal proceedings which are aimed at the
dissolution of the Company;
3. The Company has not applied for suspension of payment and has not been
declared bankrupt;
4. Since the shareholders resolution of 14 July 1999 to amend the Company's
articles of association, no resolution to amend the articles of association
of the Company has been taken;
5. Prior to the shareholders resolution of 14 July 1999 to amend the Company's
articles of association, no resolution to amend the articles of association
of the Company has been taken, which has not been carried out up to this
date;
Signed by J.A. van Berne on 21 July 1999.
/s/ J.A. van Berne
_____________________________
<PAGE> 1
[SHEARMAN & STERLING LETTERHEAD]
EXHIBIT 8.1
July 22, 1999
VersaTel Telecom International N.V.
Paalbergweg 36
1105 BV Amsterdam - Zuidoost
The Netherlands
Ladies and Gentlemen:
We have acted as special United States tax counsel to VersaTel
Telecom International N.V., a Netherlands company (the "Company"), in connection
with the filing by the Company under the Securities Act of 1933, as amended (the
"Act"), of a registration statement dated July 22, 1999 on Form F-1 (the
"Registration Statement") with the United States Securities and Exchange
Commission (the "Commission"), relating to the registration and the sale of
US$150,000,000 aggregate principal amount of the Company's Senior Dollar Notes
due 2009 and E100,000,000 aggregate principal amount of the Company's Senior
Euro Notes due 2009 (collectively, the "Notes"), as set forth in the prospectus
dated July 22, 1999 contained in the Registration Statement (the "Prospectus").
In our capacity as such counsel, we hereby confirm as of the
date hereof that, although the discussion set forth under the caption "Tax
Considerations -- U.S. Tax Considerations" in the Prospectus does not address
all of the possible United States federal income tax considerations that may be
relevant to a potential purchaser of Notes, such discussion, insofar as it
relates to statements of law or legal conclusions under the laws of the Untied
States, fairly presents the information called for and, subject to the
limitations and qualifications stated therein, represents our opinion as to the
material United States federal income tax consequences to a "U.S. Holder" (as
defined in the Prospectus) of the receipt of interest on, and the disposition
of, Notes.
In rendering our opinion, we have examined (i) the
Registration Statement, (ii) the Prospectus, and (iii) such other documents and
material as we have considered necessary or appropriate for purposes of this
opinion (together, the "Documents"). This opinion is premised, among other
things, on the initial and continuing accuracy of the facts, representations,
covenants
<PAGE> 2
and other information set forth in the Documents and assumes that the
transactions contemplated by the Documents will be consummated in accordance
with the terms thereof. We have also assumed that any Documents that were
reviewed in draft form will be duly executed or finalized substantially in the
form that we have reviewed and that, where applicable, they will be valid and
binding as of the date hereof in accordance with their terms.
This opinion is based on presently applicable United States
federal income tax law and no assurance can be given that future legislative,
judicial or administrative developments will not adversely affect the
conclusions expressed herein. Moreover, in rendering this opinion, we undertake
no responsibility to advise you of any new developments in the application or
interpretation of United States federal income tax law and this opinion may not
be relied upon to the extent that there is any new development in such law as it
relates to the conclusions expressed herein.
We have not considered and do not express any opinion other
than as expressly set forth above with respect to United States federal income
tax. Nor have we addressed the tax consequences, if any, under the laws of any
state, locality or foreign jurisdiction.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement and to the reference to
us in the first paragraph under the caption "Tax Considerations -- U.S. Tax
Considerations" in the Prospectus. In giving such consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act, and the rules and regulations of the Commission
promulgated thereunder.
Very truly yours,
Shearman & Sterling
<PAGE> 1
EXHIBIT 23.3
CONSENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to use of our reports
(and to all references to our Firm) included in or made part of this
Registration Statement on Form F-1 for VersaTel Telecom International N.V.
Arthur Andersen
Amsterdam, The Netherlands
July 22, 1999
<PAGE> 1
EXHIBIT 23.4
CONSENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the inclusion of our report dated March 15, 1999, with
respect to the balance sheets of Svianed B.V. as of December 31, 1998 and 1997
and the related statements of operations, shareholder's equity and cash flows
for the years then ended, in the Registration Statement on Form F-1 of VersaTel
Telecom International N.V. and to the reference to our firm under the heading
"Experts" in the prospectus.
KPMG Accountants N.V.
Amsterdam, The Netherlands
July 22, 1999
<PAGE> 1
EXHIBIT 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(B)(2)
------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW YORK 13-3818954
(JURISDICTION OF INCORPORATION IF NOT A U. S. (I. R. S. EMPLOYER IDENTIFICATION NO.)
NATIONAL BANK)
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036-1532
(ADDRESS OF PRINCIPAL (ZIP CODE)
EXECUTIVE OFFICES)
</TABLE>
NONE
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
VERATEL TELECOM INTERNATIONAL N.V.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
THE NETHERLANDS 00-0000000
(STATE OR OTHER JURISDICTION OF (I. R. S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
PAALBERGWEG 36
1105 BV AMSTERDAM- ZUIDOOST
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
$150,000,000 SENIOR DOLLAR NOTES DUE 2009
E100,000,000 EURO SENIOR NOTES DUE 2009
(TITLE OF THE INDENTURE SECURITIES)
<PAGE> 2
GENERAL
1. GENERAL INFORMATION
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
FEDERAL RESERVE BANK OF NEW YORK (2ND DISTRICT), NEW YORK, NEW YORK
(BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM)
FEDERAL DEPOSIT INSURANCE CORPORATION, WASHINGTON, D.C.
NEW YORK STATE BANKING DEPARTMENT, ALBANY, NEW YORK
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
THE TRUSTEE IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
2. AFFILIATIONS WITH THE OBLIGOR
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
NONE
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 AND 15:
THE OBLIGOR IS CURRENTLY NOT IN DEFAULT UNDER ANY OF ITS OUTSTANDING
SECURITIES FOR WHICH UNITED STATES TRUST COMPANY OF NEW YORK IS TRUSTEE.
ACCORDINGLY, RESPONSES TO ITEMS 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 AND
15 OF FORM T-1 ARE NOT REQUIRED UNDER GENERAL INSTRUCTION B.
16. LIST OF EXHIBITS
<TABLE>
<C> <C> <S>
T-1.1 -- ORGANIZATION CERTIFICATE, AS AMENDED, ISSUED BY THE STATE OF
NEW YORK BANKING DEPARTMENT TO TRANSACT BUSINESS AS A TRUST
COMPANY, IS INCORPORATED BY REFERENCE TO EXHIBIT T-1.1 TO
FORM T-1 FILED ON SEPTEMBER 15, 1995 WITH THE COMMISSION
PURSUANT TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED BY
THE TRUST INDENTURE REFORM ACT OF 1990 (REGISTRATION NO.
33-97056).
T-1.2 -- INCLUDED IN EXHIBIT T-1.1.
T-1.3 -- INCLUDED IN EXHIBIT T-1.1.
T-1.4 -- THE BY-LAWS OF UNITED STATES TRUST COMPANY OF NEW YORK, AS
AMENDED, IS INCORPORATED BY REFERENCE TO EXHIBIT T-1.4 TO
FORM T-1 FILED ON SEPTEMBER 15, 1995 WITH THE COMMISSION
PURSUANT TO THE TRUST INDENTURE ACT OF 1939, AS AMENDED BY
THE TRUST INDENTURE REFORM ACT OF 1990 (REGISTRATION NO.
33-97056).
T-1.6 -- THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(B) OF THE
TRUST INDENTURE ACT OF 1939, AS AMENDED BY THE TRUST
INDENTURE REFORM ACT OF 1990.
T-1.7 -- A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR
EXAMINING AUTHORITY.
</TABLE>
NOTE
AS OF JULY 21, 1999, THE TRUSTEE HAD 2,999,020 SHARES OF COMMON STOCK
OUTSTANDING, ALL OF WHICH ARE OWNED BY ITS PARENT COMPANY, U.S. TRUST
CORPORATION. THE TERM "TRUSTEE" IN ITEM 2, REFERS TO EACH OF UNITED STATES TRUST
COMPANY OF NEW YORK AND ITS PARENT COMPANY, U. S. TRUST CORPORATION.
IN ANSWERING ITEM 2 IN THIS STATEMENT OF ELIGIBILITY AS TO MATTERS
PECULIARLY WITHIN THE KNOWLEDGE OF THE OBLIGOR OR ITS DIRECTORS, THE TRUSTEE HAS
RELIED UPON INFORMATION FURNISHED TO IT BY THE OBLIGOR AND
1
<PAGE> 3
WILL RELY ON INFORMATION TO BE FURNISHED BY THE OBLIGOR AND THE TRUSTEE
DISCLAIMS RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.
------------------------
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, UNITED STATES TRUST COMPANY OF NEW YORK, A CORPORATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE STATE OF NEW YORK, HAS DULY CAUSED THIS STATEMENT
OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, ALL IN THE CITY OF NEW YORK, AND STATE OF NEW YORK, ON THE 21TH OF
JULY 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, TRUSTEE
BY: /s/ GERARD F. GANEY
----------------------------------
GERARD F. GANEY
SENIOR VICE PRESIDENT
2
<PAGE> 4
THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(B) OF THE ACT.
UNITED STATES TRUST COMPANY OF NEW YORK
114 WEST 47TH STREET
NEW YORK, NY 10036
JULY 21, 1999
SECURITIES AND EXCHANGE COMMISSION
450 5TH STREET, N.W.
WASHINGTON, DC 20549
GENTLEMEN:
PURSUANT TO THE PROVISIONS OF SECTION 321(B) OF THE TRUST INDENTURE ACT OF
1939, AS AMENDED BY THE TRUST INDENTURE REFORM ACT OF 1990, AND SUBJECT TO THE
LIMITATIONS SET FORTH THEREIN, UNITED STATES TRUST COMPANY OF NEW YORK ("U.S.
TRUST") HEREBY CONSENTS THAT REPORTS OF EXAMINATIONS OF U.S. TRUST BY FEDERAL,
STATE, TERRITORIAL OR DISTRICT AUTHORITIES MAY BE FURNISHED BY SUCH AUTHORITIES
TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST THEREFOR.
VERY TRULY YOURS,
UNITED STATES TRUST COMPANY OF
NEW YORK
BY: /S/ GERARD F. GANEY
------------------------------------
GERARD F. GANEY
SENIOR VICE PRESIDENT
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1999
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
CASH AND DUE FROM BANKS................................... $ 139,755
SHORT-TERM INVESTMENTS.................................... 85,326
SECURITIES, AVAILABLE FOR SALE............................ 528,160
LOANS..................................................... 2,081,103
LESS: ALLOWANCE FOR CREDIT LOSSES......................... 17,114
----------
NET LOANS......................................... 2,063,989
PREMISES AND EQUIPMENT.................................... 57,765
OTHER ASSETS.............................................. 125,780
----------
TOTAL ASSETS...................................... $3,000,775
==========
LIABILITIES
DEPOSITS:
NON-INTEREST BEARING................................. $ 623,046
INTEREST BEARING..................................... 1,875,364
----------
TOTAL DEPOSITS.................................... 2,498,410
SHORT-TERM CREDIT FACILITIES.............................. 184,281
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES.................. 126,652
----------
TOTAL LIABILITIES................................. $2,809,343
==========
STOCKHOLDER'S EQUITY
COMMON STOCK.............................................. 14,995
CAPITAL SURPLUS........................................... 53,041
RETAINED EARNINGS......................................... 121,759
UNREALIZED GAINS (LOSSES) ON SECURITIES
AVAILABLE FOR SALE, NET OF TAXES....................... 1,637
----------
TOTAL STOCKHOLDER'S EQUITY........................ 191,432
----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY........ $3,000,775
==========
</TABLE>
I, RICHARD E. BRINKMANN, MANAGING DIRECTOR & COMPTROLLER OF THE NAMED BANK DO
HEREBY DECLARE THAT THIS STATEMENT OF CONDITION HAS BEEN PREPARED IN CONFORMANCE
WITH THE INSTRUCTIONS ISSUED BY THE APPROPRIATE REGULATORY AUTHORITY AND IS TRUE
TO THE BEST OF MY KNOWLEDGE AND BELIEF.
RICHARD E. BRINKMANN,
MANAGING DIRECTOR & COMPTROLLER
MAY 18, 1999
